Instructor: Willy Lam
Course EAS-290
July 5, 2008
The Silicon Valley in China
Introduction
In the increasingly competitive economic world, China needed to have a new center of technological development to ensure that they would be able to catch up to the world’s greatest economic powers. To achieve this, they started the development of several intellectual clusters of development zones.
In 1995, the Chinese government reached the goal that they would achieve a GDP four times as big as the one they had in 1980- five years earlier than expected. They set another goal that they would achieve a GDP per a person two times bigger and four times big as the one they had in 2000 until 2020. In 2005, China’s economy became the fourth most powerful, half as much as Japan’s. In 2007, a growth rate of GDP increased 11 percent than the previous year. This means that they achieved the high growth rate of around 10 percent.

出所:IMF『International Financial Statistics』
There are some cities or zones in China which is called as “Chinese Silicon Valley” or “Science city”. Those areas are developing in high-tech industries. The Chinese government plans to invest 5.359 billion yuan into scientific funding this year, 25% more than last year (People's Daily Online, 2008). “Chinese Premier Wen Jiabao has called on the country's top scientists to make more contributions to the social and economic development with more science and technology achievements” (Xinhua, People’s Daily Online, 2008). Thus, Chinese government thinks that technology industries are the key of development in China.
There are five requirements for development of high-tech industries. First, there should be talented people around the area. There should be group of universities or R & D centers which talented people can study enough. By the end of 2005, the number of China's science and technology talents reached 42.46 million, slightly higher than the United States (42 million), second only to the EU's 54 million (People's Daily Online, 2008).
Second, there should be cluster effects which is cluster of companies can share their ideas and can produce a lot of new ideas. There is a thought that “the more, the better”.
Third, the area should be the place that investors can make investments of venture capital in companies.
Fourth, there should be the free flow of information area which accept and hire many foreign engineers.
Fifth, there should be the area which the government doesn’t interfere in. There are some high-tech developing areas in china such as Dalian, Zhongguancun in Beijing, Zhangjiang, Shenzhen, and Shanghai. I would like to write about three of them: Beijing, Shanghai and Tianjin because I think those cities are the best cities in China which have the best conditions for developing high-tech industries. Beijing and Shanghai are the top areas which are developing in new-economy sectors rapidly. Tianjin is also a developing city in China. Venture capital is also mainly focused on these three important cities.
1.Beijing
In Beijing which is capital city in China have about 14,000,000 people. There are a lot of talented people. It has the largest amount of high level universities, technology institutes in China. There are about 50 higher education schools and 413 national or public technology institutes there. Almost half of the universities or institutes of China is assembling in Beijing. For example, there are Beijing University, Beijing Institute of Technology, Beijing Polytechnic University (BJPU), Qinghua University, and Beijing University of Chemical Technology and so forth (People’s Daily Online, 2008). Thus, Beijing has a strong technology base.
Concentration of mental power is the top of the country in Beijing. Amount of information is huge in this area and transmission speed of the information is very high there. Since there are a lot of universities and institutes, high-tech or new technology firms can cooperate with those universities or institutes. In 1999, the fruit of science technology in Beijing was really big. This situation promotes the development of Beijing area. There are some companies which were established by universities or institutes. For example, the Fangzheng Company was set up by Beijing University in 1986. Beijing University made 100 percent of an investment in this company. It made an affiliate in Tokyo, Japan in 1996. In addition, Qinghua Ziguang Company (UNIS) was founded by Qinghua University 1988. There are over 2000 firms which were established based on the seed-money of universities in China (Sunami, 2001). Also, there are over 20 institutes of multinational companies in Beijing. Overall, there are 4000 to 5000 high-tech firms including other private companies, around Zhongguancun in Beijing, and the total take is over 100,000,000,000 yuan (Chinese Society Statistics inf. 2000). Thus, those institutes contribute to improve the environment of the technology development.
The government is supporting the high-tech industry providing special fund. Also, people who contributed to the development of technology development or high-tech industry can be admitted some advantages by the government. For example, those people can get appellation of honor, bounty, and exemption from the income tax.
2.Shanghai
Shanghai is the second top city in China in the technology field. In Shanghai there are about 17,000,000 people. There are also a lot of talented people as well as Beijing. There are also a lot of universities and institutes in Shanghai. There is also a subsidiary of Fangzheng Company.
Shanghai has huge economic advantage and good industry base. Therefore, they can improve the environment for the development of industries. Shanghai is one of the cities in Changjiang delta economic area. The infrastructure of business is well-developed and physical distribution is flourishing. In 1978, Shanghai city set a goal for “Make Shanghai city developed level of technology base in the world”. Therefore, Shanghai pays attention to the development of high technology and new technology in the world all the time, and they pick out realms which would have great influence on economic development. They concentrate their investment on and study those realms. Shanghai city government invested 10,000,000 yuan and 30,000,000 yuan respectively in 1995 and 1998, then established some technology studying institutes and process technology institutes ( The Nation Economic Institute of China Economic Development Reform Institute Fund Committee (NEI), 2002). For example, there are Shanghai Institute of Applied Physics, Chinese Academy of Sciences, Shanghai Institute of Bioscience, and Shanghai Institute of New Material technology etc (NEI, 2002).
“Shanghai has attracted 27,900 investment projects from 91 countries and regions, involving US$94.2 billion of contracted investment. Actual investment was US$50.1 billion. More than half of the world's Top 500 companies have invested in Shanghai. Some have moved their regional headquarters to the city as well” (Shanghai Genomics, 2008). Thus, Shanghai is attracting more and more overseas investment, engineers, and companies from other countries.
3.Tianjin
Tianjin is a city under the direct control of the government, which is really close to Beijing. There are 9,000,000 people in Tianjin. In 1984, Tianjin economic development area was established by the Chinese government. These days, the electron communication technology, technical electricity, biotechnology medicine, new material, and new energy technology industry are the main five high-tech industry in the development area in Tianjin (Wang, China Radio International (CRI), 2005).
The establishment of Tianjin Economic and Technological Development Area (TEDA) was given government approval on December 6, 1984. One of the country’s first state-class development areas, TEDA has developed into one of the country’s most influential hotbeds for high-tech and new industries. There are about 200 researchers of the Chinese Academy of Sciences and the Chinese Academy of Engineering in TEDA (CRI, 2005). The Chinese Academy of Sciences was established in 1949 and the Chinese Academy of Engineering was established in 1994. Both of them are the top level Academies in terms of science and engineering in China. In 1996, spending 35,000,000 yuan, the TEDA International Establishment Center was set up and they supported 119 firms in Tianjin (CRI, 2005). “The Science and Technology Garden of Tianjin University (STGTU) was co-established by TEDA and Tianjin University on October 11, 1999. Taking up a total land area of 330,000 square meters and involving a total investment of RMB 500 million yuan (approx. USD60 million), it has become a muster point for high and new tech enterprises” (TEDA, 2006). There are also 33 foreign academicians in Tianjin. Those universities, institutes, and companies have multiple effects each other to develop the industry in this area.
Especially, Nankai development area which is developing the most in Tianjin is located in the centre of Tianjin city. Nankai area is very important place in terms of education in Tianjin. There are 16 universities such as Tianjin University or Nankai University, and more than 50 percent of university students are in the universities in Nankai area (CRI, 2006). In addition, there are 19 researchers of the Chinese Academy of Sciences and the Chinese Academy of Engineering in Nankai area.
The government is taking some measures to promote the development of high-tech industry in TEDA. For example, they will provide 50,000 yuan per year as a grant to each talented person who got a job in the area. Furthermore, they will give at most 3,000,000 yuan bounty to people who contributed the development very much.
Conclusion
According to meeting of China high-tech industry development, the development of high-tech industry had a good start in 2006 which is the first year of the “11th Five-Year Plan Period”, and the high-tech industry would be developed more with the increments of more than 940,000,000,000 yuan which is 20 percent more than last year (People’s Daily Online, 2006).
Through my research, I think that those three cities: Beijing, Shanghai, and Tianjin, have the best conditions for developing high-tech industries in China. When I look at those three cities, geotropically, those cities are close to the seacoast. It is a good condition to trade with other countries and all of them fulfill the requirements for development of high-tech industries. There are talented people and many groups of universities or R & D centers which talented people can study enough. There are also many high-tech companies and they cooperate with the universities or the academies. Moreover, the area the place in which investors can make a lot of investments of venture capital in companies. Actually, there is a great support of the government to promote the development. They spend a large amount of money for the development of those areas. Also, many kinds of information and many foreign engineers or companies can get into the area and the Chinese government permitted it.
In preparation for the Beijing Olympics, China have been developing a transport information systems to deal with traffic jams in the Chinese capital, a public information system to smooth the flow of information during the Games and also an infrastructures such as highway or a water recycling system for venues. In this summer, many people will come to China from all over the world. Chinese society and economy will get stimulation from outside a lot.
Lastly, I think that there is a problem in China’s Silicon Valley. The Silicon Valley in the U.S. has very creative environment and development of innovation. On the other hand, in China, their development is depending on the cluster of imitation yet. There are economic advantages but less cultural disadvantages in China. If the Silicon Valley in China could develop innovation really, China would be more and more powerful country in the world.
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