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SHANGHAI, China, Sept. 9, 2003 – Zhao Yu Le, managing director of Shanghai’s Zuo Lun Nanoequipment, likes research and he likes results, which is why he got involved in the less glamorous, but more immediately useful segment of nanotechnology: tools.
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Tools have the advantage of turning a profit more quickly than a nanoproduct destined for consumers. The downside of the tool market is its relatively small size.
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Smaller, but not less competitive. There are more than 300 companies worldwide developing instruments for nanoscale research. Zhao identifies current commercial nanotechnology as two main branches. One is in nanotmaterials, mainly the manufacturing of powders. The other is in nanopositioning, manipulating atoms.
Zuo Lun, along with four domestic companies and 20 international ones, specializes in the scanning probe microscope (SPM).
SPMs are used to determine the surface characteristics of a sample. Adding NPS technology allows researchers to move molecules with the aid of a probe with a nano-size tip. This makes simple mapping and quantifying of a 3-D surface topography at molecular resolution possible. Scientists also can use NPS to test probe-sample interaction by swabbing the tip with different chemicals.
It is a useful product, but one that is hard to differentiate, says Wu Jinghang, the chief engineer of Benyuan, China’s biggest SPM manufacturer. “Packaging and service-related materials are pretty much the only way to separate equipment. We are the biggest company in China because we were the first,” explains Wu. Early entry has enabled the company with its yearly revenue of around 50 million RMB (U.S. $6.3 million) to be the only Chinese company to sell its products abroad through auctions.
Both Wu and Zhao agree that there aren’t enough nanotech companies in China to maintain four SPM manufacturers. And compared with a giant like Digital Instruments, Benyuan is just as much a neophyte as Zuo Lun.
Cost cutting is one method of competing, one that often does more harm than good. Zuo Lun’s cheapest SPM model sells for less than U.S. $7,500. Zhao and his five business partners, who have researched SPMs since 1996, believe, however, that their success depends on an original business concept that can make international waves.
Most nanoequpiment companies are following the Apple model, Zhao explains, trying to become a one-stop shop for everything a lab would need to do research. They’re focusing on being a tool manufacturer. Zuo Lun, in contrast, follows the IBM model and is pinning its hopes to an open platform technology it calls, simply, the Nano Positioning System (NPS).
Due for completion at the end of the year, NPS aims to become the basic operating system for nanoscale imaging and manipulation by encouraging modification and add-on components. In other words, it’s customizable. Current products are inflexible, a problem that is especially difficult for Chinese companies that import foreign equipment. If, post-purchase, a lab wants to alter the machinery for research purposes, the warranty becomes void.
NPS is different. It aims to be the mainframe in terms of hardware, and also to be the operating software. But it plans to encourage third-party applications and additional components. Zhao asserts that when NPS is completed, even a person who has only taken a two-week course in visual basic should be able to program new software for NPS.
Tools, after all, should be easy to use. Instrumentation should facilitate, not hinder, research. Wu believes customer relations are extremely important, especially at this stage. “We encourage (them) to tell us what they need and we try to invent it,” he says. “Meanwhile, we are also trying to develop new technologies that we then promote to our customers. It’s a give and take relationship.”
Trust is indeed an important component. Early adopters have to accept higher costs and more glitches. Chinese customers quickly became dissatisfied with first-generation tools. To counter this suspicion, Zuo Lun lends the equipment out first before asking for payment installments.
Zuo Lun believes the best way to expand business is not by fighting for greater market share, but by expanding the market. Using the payment-plan philosophy, Zhao wants to revolutionize the concept of toolmaker and become a technology facilitator. The key is to use Zuo Lun’s own machines and brain power to develop innovative products, then turn around and sell these proven ideas to enterprising businessmen. It is a conservative strategy. It is also efficient, in a market fraught with uncertainties and very little profit at the moment.
Equipment manufacturers will be the first to make money in the nano business, but more than any individual company, their success depends on the overall health and profit of the nanotechnology market. “We depend on our customers as much as they depend on us,” Wu says.