With the establishment of Google's (GOOG) Engineering Research Institute in Shanghai this week, Google has now formed a development system in Greater China that covers Beijing, Shanghai and Taipei.

This also marks the first step that the company has taken in enlarging its investment in China. A representative from Google China has told local media that Google set up the research institute in Shanghai in order to retain its talents there.

Wang Jin and Dr. Yang Wenluo will lead the technical team in Shanghai. Wang, who had worked as chief technology officer at eBay China, joined Google in August last year. Dr. Yang worked at Intel's Asia Pacific R&D Center before he joined Google. Both of them had been recommended by Dr. Kai-fu Lee, president of Google China.

Google's Shanghai R&D base is currently recruiting more talent. Google says the new center will focus on advertisement related technology, including advertisement tools and applications, but it has not revealed the exact number of staff it plans to employ.