Vimicro is a Beijing company founded by the Ministry of Information Industry and run by John Deng, a 35-year-old Beijing native who studied at Berkeley and worked for IBM before returning to China. His company, operating in a nondescript building with scores of bicycles in the parking lot, makes imaging and video chips found in digital cameras, Webcams, mobile phone cameras and the like.

The small firm is one of just five worldwide authorized by Microsoft to use Windows XP for digital imaging chips. Vimicro has 90% of the Chinese market for these chips. In the last Party Congress, Chinese officials praised a Vimicro chip along with China's historic space flight and rice-gene sequencing.

"Some government officials are not very happy with Microsoft, but they are happy with our partnership with Microsoft," Deng says. "They believe a big company can help a Chinesehigh-tech startup go international." Vimicro started out just three years ago. But Deng already has achieved something Bill Gates hasn't managed after a decade of struggle in this enigmatic market: Last year Vimicro earned several million dollars in profit.