Ellen Kullman
Group Vice President, DuPont Safety & Protection
At the 2005 Fortune Global Forum
Beijing, China
May 18, 2005

One question that has been posed at the Fortune Global Forum is: "Will Asia become the focal point of technology innovation?" We believe that Asia is one focal point of technology innovation, but it will not become the focal point. Instead, we believe in a model we call Interdependent Innovation, relationships between countries that are reciprocal in nature and foster an atmosphere of interdependence in the area of technological innovation.

Every age and every culture makes a contribution to the world through innovation that helps us lead better, healthier and safer lives. Just think of German engineering, Italian design, Japanese efficiency, French food and American information technology. As the oldest culture in the world, China is the birthplace of innovation. Just imagine what are world would be like without innovations such as the compass?

Today's complex world and global economy, however, require a customer-focused, collaborative and open border approach to science-driven technological innovation in healthcare, construction, communications, food production, energy, transportation and all areas of concern to people around the globe. None of us have the resources or wisdom to independently solve the needs of our citizens. Our challenges and opportunities have no borders and no boundaries.

Interdependent Innovation is mutually dependent and mutually beneficial. It answers the two questions required to respond to global technology needs. First, how can we rapidly and reliably convert technology into new products and processes? Second, how can we develop deep market insights and strengthen marketing and technical interactions globally?

At DuPont, our current strategy based on Interdependent Innovation is three-fold. First, we have basic corporate research facilities in the United Sates. Second, we target R&D and application development close to key customers in key markets. Third, we engage in continuous collaborations with customers, leading universities and research institutes in each market.

For example, in the Asia Pacific Region, we have or are putting labs in Japan, China, Korea, Malaysia, and India. These labs focus on key market opportunities. Our newest lab is a $15MM facility in Shanghai that opened first quarter 2005. Eventually this facility will house over 400 scientists and engineers. This lab is focused on working closely with customers in China to solve their problems in markets such as electronics, automotive, food, plastics, biotechnology and construction. The China lab plays a key role in training customers in the use of our products so that they get the most value for their investment. This facility will also be the platform to facilitate collaborations between DuPont and local science communities in China.

We have proof that Interdependent Innovation works based on a recent success in China. One of the materials that we developed through basic research in the United States is NOMEX®, which provides essential thermal protection. As a fiber, it protects against high levels of electrical, chemical and mechanical stress. One of its most visible uses is to the creation of personal protection equipment to protect firefighters in extreme conditions.

As a material, NOMEX® has other interesting applications. When it is converted into paper in various sheet forms, it can extend the life of electrical equipment, reduce premature failures and repairs, and act as a safeguard in unforeseen electrical stress situations. One of its primary global applications is the production of energy in transformers.

When we looked to introduce NOMEX® in China, we knew that huge growth was driving demand for safe, reliable power so transformers seemed like an obvious entry point for our technology. However, when we entered the market, we hit a serious roadblock in transferring technology. We could not penetrate the market even though we knew there was a need. We then relocated one of our top scientists to China to gain insights. What we found out was that the state of the transformer industry in China was not ready for our materials. Quite simply, the transformers were not reliable enough.

We then developed a multi-layered approach. We got involved working to link the local transformer producers to their international peers. We set up a technology transfer between a European manufacturer of transformers and companies in China to build transformers that would reflect the global industrial trend. We established transformer manufacturers in China who could produce these new transformers to the specifications our materials demanded. About two years ago, China's State Environmental Protection Agency certificated the new type of transformer using NOMEX® paper as a "Green Product" thanks to its environmental stewardship.

In effect, we created a model of Interdependent Innovation that has been a win-win story for everyone. The Chinese people are benefiting from safe, reliable power. Chinese businesses are making the transformers. And DuPont has a good market and new revenue streams. Everyone needs each other to succeed. We are now taking this model to other areas which have similar situations with their transformers such as Eastern Europe, Korea and India.

Independent Innovation can not happen through industry alone; governments play a vital role in helping promote the model. For example, the government in China has helped significantly in facilitating the setting up of technology parks. The governments of Taiwan and Korea have taken the lead to drive their countries to become leaders in electronics and telecommunications both in the region and globally.

Equally important in promoting Interdependent Innovation is the role of government in strongly protecting intellectual property rights. Progress is being made, but there is much to do. DuPont will continue to work with China and other governments and strengthen partnerships with other multi-national companies to promote the enactment and enforcement of laws and systems to protect the hard work of our employees worldwide and the trust of our shareholders. We believe that strong intellectual property regulations and enforcement provide the incentive to drive local innovation and ultimately benefit the consumer as well as local innovators.

05/18/05