Over the last week, 10 lucky companies have been getting the calls from HAXLR8R: they’ve been admitted to the inaugural session of the startup world’s newest venture incubator. Following the popular model pioneered by TechStars and Y Combinator, HAXLR8R will provide teams with a stipend of $6,000 per founder and about three months of mentorship, in return for a 6- to 10-percent equity stake. At the end of the session in June, companies will pitch their businesses to investors at a “demo day” in San Francisco.

There are just two big differences between HAXLR8R and all the other incubators. First, the program isn’t admitting software or Internet startups. It’s designed for companies building real stuff, rather than the usual mobile apps or consumer Web services. Second, it’s not actually located in San Francisco or any of the other typical U.S. startup hubs, like Boston, New York, or Boulder. In fact, it’s not even in the same hemisphere. HAXLR8R will gather its first class of startups at the Shiling Industrial Park in the Nanshan district of Shenzhen, a high-tech manufacturing city north of Hong Kong.

A recruiting poster for HAXLR8R

The theory behind the new program is that successful gadget builders—whether they’ve developed a toy, an appliance, or some kind of consumer device for health, fitness, or travel—will eventually have to figure out where to mass-produce their products. And chances are the answer will be China. Despite the new scrutiny being applied to U.S. consumer electronics companies over labor conditions in Chinese plants, China still has the world’s richest supply of low-cost manufacturing facilities, along with the engineers who know how to get them tooled up to make new things.

But to get something built in China, you have to know who to talk to, and the program at HAXLR8R is intended to smooth the way. Startups in the program will be “coming into an environment where they can work on their product and figure out how to manufacture it,” says Cyril Ebersweiler, one of the program’s co-founders. “They will get instant access to relationships which would take a year or more to develop on their own.”

HAXLR8R finished its selection process last week and began notifying the admitted companies. Ebersweiler says the program received “way more applicants than we expected,” from all over the world. The majority of the applications came from U.S. startups, but the organization also heard from companies in Europe, Asia, and India. The mix of applicants included “startup entrepreneurs, hackers, makers, and [people from the] open source movement; social entrepreneurs as well,” Ebersweiler says. “Most of the applicants have a working prototype.”

The 15-week HAXLR8R program starts on March 1. Teams will spend the first 13 weeks in Shenzhen, building their prototypes and gathering feedback from potential customers. Then they’ll decamp to San Francisco, where they’ll … Next Page »

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First of all, students should be studying what they are passionate about. Clearly, computer science will continue to spread into all aspects of human life. Within computer science, I believe machine learning and AI are perhaps the biggest study opportunity today. Biology and medicine are also undergoing vast changes. Personalized medicine will become a big issue; the understanding of the human genome and cell chemistry will open up entire new opportunities for innovation. So any study in the area of life sciences that connects to those new opportunities will be important. The will be amazing bioengineering opportunities, e.g., by developing materials and systems that connect with human tissue. Nanotechnology will become a major driver of new technologies in the future, with tons of great things to study at the intersection of new materials and human life.

I also believe some of the mundane aspects are ripe for overhaul, such as transportation and manufacturing. Studying robotics, rapid prototyping, autonomy in fields such as Aero-Astro, mechanical engineering, or computer science, should position students today to become the technology leaders of tomorrow. For students studying in humanities, I urge them to connect to the digital revolution that is unfolding right now. I am less excited about studying finance, since too many of us are already too creative in inventing new financial instruments that make society less stable.

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Portable ultrasound maker SonoSite is being acquired by Japan’s Fujifilm for just under $1 billion. SonoSite will remain based in Bothell, WA, under its current leadership team, the companies said in a joint announcement.

The $995 million price represents a cash offer to purchase all SonoSite (NASDAQ: SONO) shares for $54 each, a 50 percent premium on the average closing stock price for the past three months. The price also includes payments in connection with SonoSite’s convertible debt. The companies’ boards have already approved the deal.

In the announcement, SonoSite President and CEO Kevin Goodwin said joining Fujifilm “will enable us to significantly accelerate our international business and product development efforts, and respond to the fast-evolving needs of physicians around the world.”

SonoSite was itself an acquirer last year, paying $71 million for Toronto-based Visualsonics, whose initial market was in preclinical biology labs. At the time of the deal, SonoSite said the ultrasound market for preclinical research was estimated to be worth $350 million with projected double digit annual growth rates.

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In ancient Roman times, Ingenuitas was a legal term for those who had been born free, and the word served to distinguish those who had enjoyed freedom since birth from freemen who started out in slavery. Nathan Oostendorp, Katherine Scott, and Anthony Oliver chose Ingenuitas as the name of their startup tech company because the “born free” ethos is a clever nod to their mission to revolutionize the manufacturing sector through open-source software.

Launched in April, Ann Arbor-based Ingenuitas was created with the goal of bringing the technology used on factory floors into the post-Internet age.

“There’s a big deficiency in smarts when it comes to the computers used in manufacturing,” says Oostendorp, who was a co-founder of Slashdot.org and director of SourceForge.net prior to starting Ingenuitas. “The computers used on the line are based on technology that’s 20 to 30 years old.”

What Katherine Scott, Ingenuitas’ director of R&D, wants to eliminate are the inefficiences in the current system of checking for product defects as they roll off the assembly line. “Right now, a person stares at the assembly line all day. That’s not only expensive, it’s a very monotonous job that leads to high turnover,” Scott says.

What Ingenuitas has developed is software called Simple CV, which uses a Python interface to open-source vision libraries to give users access to algorithms in feature detection, filtering, and pattern recognition. It’s supposed to enable camera-equipped computers to take over line-inspection duties.

“Manufacturing is probably the least startup-friendly sector right now,” Oostendorp says. “Certainly in the last decade, it’s been a really unfashionable sector. But a lot of people in the manufacturing sector who have survived realize we need different models to compete globally—we need to change from a labor-based model to a tech-based model.”

A startup that proposes to change manufacturing from a labor-based model in a state that is arguably the last bonafide labor-union stronghold in the United States? Sounds tricky. Not so, say Oostendorp and Scott, who acknowledge that some jobs would be lost as part of their vision, but the payoff would be local manufacturers who are lean and profitable enough to survive and grow in the global market.

“The people who make things in factories would still be involved in the process,” Scott says. “What we’d see is more custom production. Manufacturers would have the ability to pivot quickly and change what they’re making according to the market.”

The other advantage to workers is that their system, they say, is open-source, meaning that anyone can learn the software and teach themselves skills that are highly transferable.

“Something we’re trying is running free classes in hacker spaces in Ann Arbor and New York,” Oostendorp says. “It makes the technology accessible, and we want to court the people who are experimenting with the software as a hobby.”

After successfully releasing version 1.2 of Simple CV a few months ago, Ingenuitas is now developing ServoHub, a social showcase for innovations in Machine Vision, Robotics, Sensors, and Control Systems, and Seer, which transforms any PC with a camera into a Network Managed Machine Vision appliance.

Ingenuitas is still in the process of writing the user’s manual for Simple CV, but right now, Oostendorp says, they’re collecting feedback on Simple CV’s deployment (“very positive”) and what the software is still missing, as well as meeting with local manufacturers to demo the product.

Oostendorp is a Michigan native; Scott is a University of Michigan graduate who has a lot of family living here. Both say they can’t imagine starting their company anywhere besides Southeast Michigan.

“If there’s a capital for U.S. manufacturing, it’s the midwestern region,”  Oostendorp says. “Michigan is the place to be in the manufacturing sector, and the story of Ingenuitas is very much a Michigan story.”

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Waltham, MA-based A123 Systems (NASDAQ: AONE), the lithium-ion battery maker, has laid off about 125 employees at its manufacturing facilities in Livonia and Romulus, MI. The news originally broke the week of Thanksgiving and was reported by media outlets including the Observer & Eccentric and Crain’s Detroit Business.

The layoffs are apparently the result of lower demand from Fisker Automotive after its plug-in hybrid sports car ran into production delays. A123 invested in Irvine, CA-based Fisker early last year. Media reports quote Jason Forcier, the vice president and general manager of A123′s automotive group, and PR manager Dan Borgasano as saying the layoffs are temporary and the workers should be hired back within six months.

Forcier spoke with me last year around the opening of the Livonia plant. At the time, he noted that “the battery industry is really a rejuvenation for the whole area. This is extremely important for Michigan from an economic standpoint.”

A123 still employs about 600 people at its two Michigan plants and its research and development center in Ann Arbor, according to the Crain’s report.

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Ah, the good old days of April. Spring was in the air, and bankers were running the numbers on IPOs for Northwest technology companies. It was fun while it lasted.

Here’s the flashback: Real-estate website Zillow filed its paperwork on April 18, and RFID maker Impinj followed suit three days later. I even interviewed Seattle-area investors and entrepreneurs about whether these were the first ripples of a new boom for local tech companies.

So much for all of that.

Zillow (NASDAQ: Z) did successfully go public, opening trading on July 20. But Impinj has moved slower, not updating its SEC filings since mid-July. And some other Washington state companies that say they have the fundamentals to go public are staying away until the markets improve.

Exhibit A is Inrix, the Kirkland-based provider of traffic data that started as a spinout from Microsoft. Back in late July, Inrix reported a new $37 million financing round, and CEO Bryan Mistele told me that the company was ready to go public “sooner rather than later,” and was doing better than Zillow when it filed.

That was just five days after Zillow started trading, and two weeks before S&P’s downgrade of the federal government sent the stock markets into a tailspin. These days, Inrix is taking a wait-and-see approach, spokesman Jim Bak says.

“Was it in he cards this year? Yes. Are we choosing to play the hand? No,” Bak says.

He points out that Inrix is having another good year—it’s a profitable, cash-flow-positive company that doesn’t need an IPO to sustain its business. So that makes the decision to wait and see even easier.

“We’ll probably have another year under our belt of 100 percent year-over-year cumulative annual revenue growth,” Bak says. “Everything is in place. The numbers are there, the growth curve is there … but the climate really isn’t ready.”

Vancouver, WA-based nLight Photonics, which makes semiconductor lasers, also has been talking up its IPO potential this year. In a series of news reports tied to its $17.5 million financing round in late August, company officials and investors said nLight was poised for an IPO—although they generally declined to put a timeline on taking that step.

But it definitely doesn’t sound like the step will come anytime soon. “When volatility is how we’ve seen, it’s not a good time to go public,” CEO Scott Keeney says.

In the meantime, nLight is profitable and growing 30-40 percent a year, Keeney says.

“It’s hard to speculate on how the current market changes the exact timing of how we’re thinking about the big step,” Keeney says. “I can say we are a fast-growing, strong venture-funded company, and that’s clearly in our plans.”

Impinj couldn’t comment on the timing and particulars of its IPO filing because it’s in the middle of the registration process, but said a public debut is still in its future.

“While the recent volatility in the capital markets has impacted many IPOs, we have no current intention of withdrawing our registration statement,” spokesman Jim Donaldson says. “The timing of Impinj’s IPO by will depend on many factors, including conditions in the capital markets, conditions in the markets for our products, and our financial performance.”

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In a very difficult climate for U.S. solar companies, one Boston-area startup has made some significant progress in solar technology. SiOnyx, a Beverly, MA-based semiconductor company known for its “black silicon” approach to various applications, including solar cells, is reporting today that it has achieved an overall efficiency that is higher than the current industry standard, and more uniform from cell to cell—and that this result should have commercial impact soon.

“We have a solar program that’s starting to have tremendous results,” says James Carey, the company’s co-founder and principal scientist.

When we last caught up with SiOnyx almost exactly a year ago, the company had just closed $12.5 million in second-round venture financing. (Its investors include Polaris Venture Partners, Crosslink Capital, and Vulcan Capital.) The firm’s black silicon technique involves peppering silicon wafers with ultrafast laser pulses to roughen their surface, such that they become more efficient at absorbing near-infrared light.

That means a solar cell made with the technique will absorb more light and, in principle, produce more electricity than one made of conventional silicon. But until now, the company hadn’t proven this to be the case in a manufacturing setting. In partnership with German research institute and chip foundry ISC Konstanz, SiOnyx has demonstrated an improvement of 0.3 percent in absolute efficiency—the ratio of electrical energy out to light energy in—over industry-standard silicon. (The cutting edge of conventional solar cells is just over 17 percent efficiency.)

Big deal? Well, it turns out that 0.3 percent represents roughly a year’s worth of progress in the traditional solar cell industry, says Chris Vineis, the company’s director of solar technology. “Existing solar cell manufacturers can take this [SiOnyx process], drop it into their line, and get an efficiency boost,” he says.

The SiOnyx technique is inserted in the early part of the conventional silicon wafer processing. The method substitutes lasers for chemicals in the initial texturing step, but the rest of the manufacturing process is untouched, Vineis says. The end result, he says, is slightly higher efficiency, potentially thinner wafers that use less silicon, and more uniform efficiency across wafers. Together, those factors could lead to savings of “several cents per watt,” Vineis says.

But it’s still early days for the company’s solar business. SiOnyx, which has nearly 30 employees and says it is still growing, is in initial conversations with potential solar customers. The idea is the company will license its black silicon process to solar cell manufacturers. “We’re not actually making solar cells, which is good for us,” Vineis says. “The industry is in a very tough spot.”

Solar is actually only a small part of the startup’s overall business, however. SiOnyx plans to make about 80 percent of its revenues on its image sensor products and 20 percent on its solar process, Carey says. The image sensor application, which I wrote about last year, uses the same black silicon technology to create fundamentally more sensitive cameras and other imaging equipment.

“We’re more than a one trick pony,” Carey says.

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Read part 1 of this post for background.

By the early 1920s General Motors realized that Ford, which was now selling the Model T for $290, had an unbeatable monopoly on low-cost automobile manufacturing. Other manufacturers had experimented with selling cars based on an image and brand. (The most notable was an ad by the Jordan Car company.) But General Motors was about to take consumer marketing of cars to an entirely new level.

Market Segmentation

General Motors had turned the independent car companies acquired by its founder Billy Durant into product divisions. But in a stroke of genius GM transformed these divisions into a weapon that Ford couldn’t match. With the rallying cry “a car for every purse and purpose,” GM positioned its car divisions (Chevrolet, Pontiac, Oldsmobile, Buick and Cadillac) so they would cover five price segments – from low-price to luxury. It targeted each of its brands (and models inside those brands) to a distinct economic segment of the population. Chevy was directly aimed at Ford – the volume car for the working masses. Pontiac came next, then Oldsmobile, then Buick. The top-of- the-line Cadillac offered luxury and prestige announcing you had finally arrived at the top of the conspicuous consumption heap. Consumers could announce their status and lives had improved by upgrading their brands.

GM had one more trick to make this happen. Within each brand, the top of the line was just a bit less expensive than the lowest priced model of the next expensive brand. The goal was to convince the consumer to spend a little more to trade up to a more prestigious brand.

Market segmentation by price was something no other automotive manufacturer had ever done. While other car companies could compete with one of GM’s divisions, few had GM’s capital and resources to compete simultaneously with the onslaught of car models from all five divisions.

Planned Obsolescence

While market segmentation allowed GM to use its divisions to reach a wider market than Ford or Chrysler, this didn’t solve the problem of market saturation. By the late 1920’s, most everyone in the U.S. had a car. And cars lasted 6 to 8 years. Even worse, the market was now filled with used cars that provided even lower cost basic transportation. Sloan, the General Motors CEO, faced two seemingly unsolvable challenges:

• How do you get consumers to abandon their perfectly fine cars and buy a new one?
• How do you turn a product that competed on price and features into a need?

In another stroke of genius, GM invented the annual model change. Sloan borrowed this idea from fashion where styles changed every year and applied it to automobiles starting in the 1920s. General Motors would change the external appearance of cars every year. Sloan preferred to call it “dynamic obsolescence.”

Styling and design became an integral part of GM’s strategy. Sloan hired Harley Earl to set up GM’s in-house styling staff. Earl would run it from 1927 to 1958.

Before Earl, cars were designed by in-house body-engineers who focused on practical issues like function, costs, features, etc. Each exterior component was designed separately to be functional – radiator, bumpers, hood, passenger compartment, etc. Some companies used third-party bodymakers to set the style , but GM was the first to take car design away from the engineers and give it to the stylists.

The concept of yearly “improvements”, whether styling or incremental technology improvements, every model year gave GM an unbeatable edge in the market. (Henry Ford hated the idea. He had built Ford on economies of scale – the Ford Model T lasted for 19 years.) Smaller car makers could not afford the constant engineering and styling changes they had to make to … Next Page »

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It was the most advanced consumer product of the century. The industry started with its innovators located in different cities over a wide region. But within 20 years it would be concentrated in a single entrepreneurial startup cluster. At first it was a craft business, then it was driven by relentless technology innovation and then a price war as economies of scale drove efficiencies in production. When the market was finally saturated the industry reinvented itself again—one company discovered how to turn commodity products into “needs.”

They opened retail outlets across the country and figured out how to convince consumers to flock to buy the newest “gotta have it” version and abandon the perfectly functional last year’s model.

No, it’s not Apple and the iPhone.

It was General Motors and the auto industry.

In the Beginning
At the beginning of the 20th century the auto industry was still a small hand-crafted manufacturing business. Cars were assembled from outsourced components by crews of skilled mechanics and unskilled helpers. They were sold at high prices and profits through nonexclusive distributors for cash on delivery. But by 1901, Ransom Olds invented the basic concept of the assembly line and in the next decade was quickly followed by other innovators who opened large scale manufacturing plants in Detroit – Henry Packard, Henry Leland’s Cadillac, and Henry Ford with the Model A.

The Detroit area quickly became the place to be if you were making cars, parts for cars, or were a skilled machinist. By 1913 Ford’s first conveyor belt-driven moving assembly line and standardized interchangeable parts forever cemented Detroit as the home of 20^th century auto manufacturing.

Feature Wars
The automobile industry was founded and run by technologists: Henry Ford, James Packard, Charles Kettering, Henry Leland, the Dodge Brothers, Ransom Olds. The first twenty-five years of the century were a blur of technology innovation – moving assembly line, steel bodies, quick dry paint, electric starters, etc. These men built a product that solved a problem – private transportation first for the elite, and then (Ford’s inspiration) – transportation for the masses.

Market Saturation
Ford tried to escape the never-ending technology feature wars by becoming the low cost manufacturer. Fords River Rouge manufacturing complex – 93 buildings in a 1 by 1.5 mile manufacturing complex, with 100,000 workers – vertically integrated and optimized mass production.

By 1923, through a series of continuous process improvements, Ford had used the cost advantages of economies of scale to drive down the price of the Model T automobile to $290.

When the 1920’s began there were close to a 100 car manufacturers, but the relentless drive for low cost production forced most of them out of business as they lacked capital to scale. For a brief moment, half the cars in the world were now Fords. To make matters worse, … Next Page »

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Semiconductor laser manufacturer nLight Corp. is heading toward a possible public stock offering after completing a $17.5 million round of venture financing from existing investors.

In an interview with VentureWire, chief financial officer Dave Schaezler said nLight is ”at a size where it makes sense to plan for an IPO,” although the Vancouver, WA-based company doesn’t have specific dates in mind for an initial IPO filing. (The full VentureWire story is behind a paywall, but a the Wall Street Journal’s Venture Capital Dispatch has a summary.)

The latest venture round included participation from longtime investors Oak Investment Partners, Mohr Davidow Ventures, and Menlo Ventures, which nLight described in a release as having “a strong record of companies achieving initial public offerings.” nLight’s total equity funding stands at about $110 million.

The company, founded in 2000, makes lasers for a wide array of uses in medical, defense, and industrial scenarios. The company said it has continued to grow its profitability while adding more than 100 employees in the past year and booking more than $60 million in orders in the first six months of 2011.

The news is part of a long-term survivor’s tale for nLight. The company was started in Seattle, and initially focused on the telecommunications industry. That quickly changed when telecoms went through a huge downturn in 2001.

As we reported in this 2009 profile, nLight dropped from about 80 employees down to 20 and refocused on different sectors, an era that CEO Scott Keeney said the company “barely survived.” Looks like it’s paying off now.

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Ventower Industries, the Monroe, MI-based fabricator and supplier of utility-scale wind turbine towers, opened the doors yesterday to its new, 115,000-square-foot manufacturing facility with direct dock access to Lake Erie. The high-tech plant is the culmination of four years of planning that came to fruition in part thanks to local, state, and federal incentives.

The location of this new plant is key, as Ventower is targeting original equipment manufacturers and other customers throughout the Great Lakes and Atlantic regions by touting its readily accessible waterborne, rail, and truck transportation options—a legitimate selling point when you’re shipping an object as large as a utility-scale wind tower.

Ventower will begin production later this month for tower deliveries through the end of this year and during 2012.

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Natick, MA-based medical device firm Boston Scientific (NASDAQ: BSX) announced today that it will invest $150 million over five years to establish a manufacturing facility in China. Boston Scientific said that it will use the site as a medical device training facility, and that it will also invest in R&D activites in China and increase its employee base in the country from 200 to 1,200. The company said it expects these moves to push its revenues in China to more than $500 million at the end of 2016.

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Nothing like a semi-serious Steven Chu joke to start your morning.

Speaking at an energy conference in Detroit today, the U.S. Energy Secretary and Nobel Prize winner recalled as a boy in the 1950s the Soviet Union launching Sputnik into space.

“It was very disconcerting. The German rocket scientists living in the Soviet Union were better than German rocket scientists living in the United States,” Chu said, as the crowd snickered.

Chu was referring to how German scientists, not American or Soviet, were responsible for the best rocket technology at the time.

Ironic that Chu referenced the space race between the Cold War foes, as the United States, who one-upped Sputnik by sending men to the moon, recently retired its space shuttle program. In its place, the United States is engaged in a great “energy race” with other countries like China to develop next generation energy such as solar and biofuels, Chu said.

“Despite the fact that times are tough, we have to think about the future,” he said. “If we don’t get moving, we will be importing these technologies instead of exporting them.” The Energy Secretary was also in Michigan to tour lithium battery maker A123 Systems’ new facility in Romulus, MI, made possible with federal stimulus money.

To that effect, Chu announced a new Detroit-based alliance between the U.S. Department of Energy (DOE) and the U.S Department of Defense (DOD) to boost development of cleantech technologies for the military, including lightweight composite materials for vehicles, alternative fuels, and advanced combustion engines.

Detroit makes sense to anchor the partnership for a number of reasons. The city’s Big Three Automakers-Ford, Chrysler, and General Motors-frequently collaborate with the DOE. The U.S. Army’s Tank Automotive Research Development and Engineering Center (TARDEC) is also based in Warren, MI.

The military needs Detroit’s help, DOD officials say. Last year, the armed forces spent $13 billion on energy, … Next Page »

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China has been a Godsend to Detroit. Even as Ford Motor, General Motors, and Chrysler have stumbled in recent years, the country has provided a nice boost to sales of American cars equipped with traditional internal combustible engines.

But when it comes to electric vehicles…well, China has its own plans.

The country is spending billions of dollars to develop home-grown battery and motor technology, hybrids, and full plug-in cars, trucks, and buses. And to protect its nascent industry, the Chinese central government has recently issued draft guidelines that limit foreign investment in certain electric vehicle components and require overseas firms to disclose intellectual property secrets to Chinese companies.

“China wants to place some serious restrictions” on foreign auto makers, says Kevin See, an analyst with Lux Research in Boston. “Clearly, the companies inside China are well positioned to benefit. China wants to protect its value chain all the way to the vehicle.”

The proposed restrictions have alarmed American officials. In an April  letter to U.S. Trade Representative Ron Kirk, Michigan Senators Carl Levin and Debbie Stabenow said the guidelines would block U.S. auto makers from accessing a potentially huge market for electric vehicles.

“We are concerned that these draft regulations continue China’s long history of breaking international trade rules,” the letter reads. “These new draft regulations appear to represent another attempt to illegally gain an unfair advantage over the U.S. automobile industry that will cost our country jobs.”

“If China does implement these practices, [Kirk's office] must use all its available resources—including possible legal action at the World Trade Organization—to end China’s discrimination,” the letter warns.

Since 2009, China has overtaken the United States as the world’s largest auto market. One trip to the country and you’ll see why.

Three years ago, I visited the Changan Ford Mazda car factory in Chongqing, China’s largest municipality, … Next Page »

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I recently had the pleasure of taking a two week academic trip to China with Babson’s MBA program, where several dozen of my classmates and I were led through Beijing, Dalian, and Shanghai by the inimitable Robert Eng. During the course of the journey, our group visited with government officials, leaders from state-owned enterprises, and a number of businesses operated by domestic and foreign owners. While there are many interesting and non-trivial idiosyncrasies of doing business in China, such as the need for government contacts, I thought it would be more informative to share some of the broader business trends that became clear during the course of our visit.

First, China is beginning to capture more of the value chain. As the world’s third largest manufacturer, China has developed a solid reputation as a nation that builds products for Western companies to attach their brands. Apple is one of the most famous examples of this. Perhaps more surprisingly, Nike and Reebok both have their shoes manufactured in the same facility. Li Ning, China’s leading sports apparel maker and the number four sports apparel company in the world, also has its shoes made there. If you’ve heard of Li Ning, you’re ahead of the curve. If not, you probably will soon. Li Ning has begun opening stores in the United States and other countries overseas. In the U.S., it decided to launch its pilot store in Portland, OR, which seems like an odd choice until you realize that it’s right in Nike’s backyard. It’s a bold statement from a bold company and serves an appropriate example for the changing mentality of Chinese business; no longer content with the margins available to them making things for others to sell, the Chinese are now looking for ways to move up the value chain and capture the margins commanded by being a globally recognized brand.

Second, China is starting to look inward for markets. While the rest of the world is still staggering from financial crisis to financial crisis, China’s chugging along at a brisk 9 percent annual growth rate. Shanghai has joined the list of top tier metropolises, on par with London and Moscow, complete with a Starbucks and a McDonald’s around every corner. Shopping malls are awash in luxury brands. With that kind of affluence at home comes increased spending power, and Chinese companies are beginning to recognize the potential of the domestic market. (By Chinese companies, I also mean the Chinese government. State-owned enterprises still command roughly half of the country’s industrial assets, and the government has tentacles in just about every successful business in the country, private ownership or no.) As evidence of this, the 12th Five Year Plan explicitly discusses the yawning trade imbalance that China has created with the U.S. and other nations, and proposes to address this dependence on foreign consumption by directing more goods to the domestic market. It’s uncertain what the government will do about Chinese households’ astronomical savings rate.

Third, national stability is not a guarantee. Incidents of social unrest have been growing more frequent in the past couple years. Chaffed by a widening wealth disparity and the trampling approach to development, Chinese citizens are expressing their dissatisfaction in a way that makes government officials and many members of the business community nervous. Restrictions on freedom of speech and the flow of capital have done a great deal to boost the Communist Party agenda of security and growth, but they’ve also created an economic and social pressure cooker. The 12th Five Year Plan seeks to address these concerns by explaining how the government plans to handle rising inflation and housing costs (regulatory controls), the income gap (higher taxes for the rich), and the blistering pace of development (cleaner environmental standards and lower growth targets). Perhaps more revealing, social stability was a concern voiced by several businessmen we visited during the trip. One Chinese business leader who spoke to our delegation put it especially elegantly: “China will continue to grow as long as the Communist Party is in power. The Communist Party will stay in power as long as China continues to grow.”

The state of Chinese development offers an interesting puzzle: free market incentives bounded by strict financial and political controls. The tremendous opportunities of doing business there are matched by equally tremendous challenges. From this point in history, it almost seems possible that Communist China will continue growing in perpetuity, achieving global dominance in our lifetimes. Or the entire system could collapse spectacularly, and we will ask each other why we didn’t see it coming. 

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If laser weapons and tools ever become mainstream, it might be because of a quiet little company called TeraDiode.

Sure, there are lots of more imminent (and perhaps more practical) applications for the Littleton, MA-based laser firm—welding, cutting metal, illuminating targets, and so forth—but blowing stuff up is what a laser was meant to do. At least if you grew up watching Star Trek phaser battles, Star Wars dogfights, and other forms of popular but admittedly dorky sci-fi entertainment.

TeraDiode, a two-year-old spinout from MIT Lincoln Laboratory, is commercializing a new kind of laser system, using what’s called a direct-diode laser, that it says is brighter, more powerful, and more focused than its predecessors. The technology is based on semiconductor lasers (which are electrically rather than chemically driven) plus a sophisticated optical system to manipulate individual beams to form a single output beam—a technique known as wavelength beam combining.

The 11-person company raised $4 million in a Series A round led by Stata Venture Partners in the fall of 2009, and is currently closing a second financing round from VCs and strategic investors, says founder and CEO David Sossen. The company has also landed some $3 million in U.S. defense contracts, he says.

Sossen, a veteran of Arthur D. Little and other firms, was a founding investor in TeraDiode, together with Fred Leonberger, a photonics expert from optical-tech firm JDSU. The startup’s laser technology, and its subsequent business development, is the handiwork of a couple of former Lincoln Lab scientists, Bien Chann and Robin Huang (no relation to the author), who both left to co-found the company in late 2009.

Lasers have been used in industrial applications for some 40 years. And the U.S. military has used lasers for decades, but in limited ways, because the devices tend to be bulky, inefficient (not enough power output), and prone to breakdown. To create a “directed energy weapon,” for example, a conventional chemical-based laser would need to be about the size of a building.

Until now, the limiting factors for laser diodes have been power output and beam quality. “We’ve broken through that barrier,” Sossen says, adding that his company’s relatively compact lasers (which for commercial uses are a bit bigger than a breadbox but smaller than competing devices) can output between several hundred and several thousand watts, and in principle up to 100 kilowatts (with a bigger laser)—enough power to do some real damage. And at different wavelengths, depending on the application.

TeraDiode envisions selling lasers “compact enough to be deployable on a tank or … Next Page »

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Seattle-based Dendreon (NASDAQ: DNDN) said today that it has won clearance from the FDA to start manufacturing its immune-boosting drug for prostate cancer at a new factory in the Los Angeles area. The manufacturing plant OK, which was widely expected by analysts, means that Dendreon now has its first new location to produce its treatment outside its original commercial factory in New Jersey.

The company is also seeking FDA clearance for a third facility in the Atlanta, GA area, which the company is hoping will get the green light by a regulatory deadline of August 28. The new capacity is important to Dendreon because it has been unable to meet all the demand from patients for its drug, sipuleucel-T (Provenge), in its first year on the market.

Getting FDA sign-off on the factories isn’t trivial. Dendreon’s first-of-its-kind manufacturing process is complicated, in that it requires running a patient’s own cells through a proprietary system to “teach” the cells to recognize hallmarks of prostate cancer cells, so that when they are re-infused into the patient, they should be able to start fighting the cancer cells like a virus. Getting all three factories running on schedule is critical for Dendreon if it is going to hit its sales forecast of $350 million to $400 million in sales of the treatment this year.

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BioMarin Pharmaceutical (NASDAQ: BMRN) of Novato, CA plans to buy a biotech manufacturing facility in Ireland that’s owned by New York-based Pfizer (NYSE: PFE), according to a press release. BioMarin will purchase the plant for $48.5 million—roughly a fifth of what it would have paid to build a facility like it from scratch. BioMarin will use the plant to make its treatment for Morquio A Syndrome, now in Phase 3 trials, and expects the facility to be licensed by 2015.

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Plan B it is.

When Xconomy first profiled InPore Technologies last year, the Michigan State University spinout was trying to woo wind turbine makers with a new nanomaterial they could use to build light-weight, scratch resistant blades.

But faced with deteriorating turbine sales, the company, based in East Lansing, MI, has reversed course and is now targeting the broader global market for flame retardant additives used on plastics and other polymers.

“As we really dug into [wind turbines], we thought there would be challenges with that,” CEO Gerald Roston told Xconomy. “We had a hard time getting the word out to the industry. And in 2010, the industry fell off the cliff. Moving out of the market turned out to be fortuitous.”

I’d say. InPore recently signed a letter of intent with a Fortune 50 company to develop and market the flame retardant technology. The partnership could lead to that company acquiring InPore, Roston says, though he declined to name the potential suitor.

Founded in 1996, InPore employs nanotechnology to manipulate the surface porosity (empty spaces) and chemistry of certain particles in a way that creates strong, heat and scratch resistant materials. The company says its Silapore particles can absorb harmful substances during an environmental cleanup and serve as a catalyst for petroleum refining and biofuel production.

But for now, InPore has its eye set on the $4.2 billion global market for flame retardant substances manufacturers use to fireproof highly flammable polymers like plastics. With the U.S. and other countries trying to phase out toxic flame retardant agents like decaBDE, the time is right for InPore’s Silapore particles, which Roston claims are non-hazardous.

The company is seeking $1.5 million to $2 million from institutional investors, Roston says InPore has already secured angel money but declined to disclose the amount. However, the company said it recently closed a $560,000 angel round, according to materials submitted to the Michigan Growth Capital Symposium.

Unlike wind turbine makers, potential customers are now seeking out InPore instead of the other way around, Roston says.

“Our struggle now is to supply sufficient samples,” he says. “People are asking for it.”

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The U.S. Department of Energy has offered 1366 Technologies a conditional commitment for a $150 million loan guarantee, the Lexington, MA-based developer of silicon wafers for solar cells announced today.The money will go to expanding 1366′s manufacturing capabilities and building another U.S. facility for producing silicon wafers more cheaply. The company’s first facility is expected to be completed in 2013 and add 100 jobs in Massachusetts, and the second facility, whose location is yet to be determined, is expected to add 300 jobs, 1366 said.

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