This is part of a series looking at China’s ambitions across innovation, commercialization and the entrepreneurship ecosystemin healthcare and life sciences that were the focus of my Eisenhower Zhi-Xing Fellowship.
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Innovation can happen anywhere. But it seems to happen in some places more than others. While innovation is not, by definition, formulaic, most of us recognize that certain elements have contributed to the success of innovation ecosystems like the Bay area and Cambridge. The Brookings Institution describes the elements of innovation districts as economic assets, physical assets, and networking assets. Philadelphia, St. Louis, Rotterdam, and other post-industrial centers of North America and Europe are increasingly being recognized as emerging innovation centers as they accumulate these elements – although the jury is still out on the right mix and mechanism.
During my travels in eastern and central China, I was interested in the importance of place — and whether I could find places where the ingredients of emerging innovation districts could be found.
I started with some of China’s ubiquitous research parks. Research and science parks in China are typically gargantuan municipal (sometimes national level) development zones with mouthful names like Zhongguancun National Innovation Demonstration Zone (colloquially known as Z-Park) in Beijing’s Haidian District, the Xi’an High-Tech Industries Development Zone, and Shanghai Zizhu Hi-Tech Industrial Development Zone. These are then subdivided into parks — Z-Park has 10 such subparks — typically with industry focuses (like software) or affiliations with universities.
Unlike business parks in the US, China’s research parks are town-sized developments – the Chengdu Hi-Tech Industrial Development Zone, for example, is approximately 50 square miles. In addition to development sites for establishing R&D or manufacturing facilities, they boast schools, hospitals, and transportation systems. It is difficult not to feel dazzled by the multi-media exhibit halls at each park, complete with storyboards, interactive models, artifacts from the resident companies, and fully-scored video presentations. Admittedly, the line between reality and imagined is blurred – most still seem to be in planning stages. The municipal nature of these parks is obvious, all pushing a fairly consistent message, and drawing liberally from President Xi’s famous “one belt one road” strategy for China – each park seeming to try and outdo the next with the number of belts and roads included in their own development plans.
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When it comes down to it, these are real estate developments, plain and simple. And their targets are the Microsofts, Samsungs, and Huaweis of the world. So I decided to shift my search to places that were targeting entrepreneurs and startups. I was searching for places that emphasize the importance of amenities and community. Of congregation and collaboration.
One such place is an incubator, NeoBay, located in Shanghai’s Minhang District, describing itself as a “Global Entrepreneurship and Innovation Community”. Although it also seeks to attract larger companies, it focuses on incubating startups, many from Shanghai Jiao Tong University, one of three partners in NeoBay, along with the municipal government and a real estate developer. The first 28 companies moved in when the space opened in June 2015.
NeoBay boasts access to firms who provide legal consulting, financial assistance, and access to university resources for its residence, as well as workspace. Although I did not encounter any of the community first hand, I did see the space – and compared with the tiled floors, laminated tables, and plastic chairs I saw in many other incubators in China, neoBay’s modern, glass-filled designer workspace is certainly high end.
Some places are starting to focus on elements beyond just workspace. In Central China, in Pixian county, is Jingrong Innovation Town. Arriving at Jingrong is a little surreal. One moment you’re coasting through small-scale farmland, then suddenly you’re in a four lane main street with traffic lights and lined by twelve-story office and apartment blocks. Jingrong was once a workers’ dormitory town, serving regional factories. But as traditional industry has slowed down, the local government has repurposed the buildings for young entrepreneurs who might otherwise look to start their enterprises in Beijing or Shanghai. Newly-refitted apartments are being offered free of charge to entrepreneurs who start their businesses in Jingrong. On one corner is a business incubation center, with a coffee shop on the ground floor, space for events and gatherings (and, of course, shiny office space being offered with cash incentives). A big data center offers access to municipal data for technology startups.
Entrepreneurs can even take advantage of weekly visits by practitioners of Tui na – a form of traditional massage (it’s supposed to be good for you, but believe me – it isn’t relaxing).
However, Jingrong still seems a little like a ghost town – it just doesn’t yet have the crackle and buzz that you feel when you’re standing in the heart of Kendall Square or even University City. There is still the sense that they have not yet achieved the critical mass – or perhaps it’s the right balance – of entrepreneurs, investors, and other stakeholders that make up vibrant innovation districts. Entrepreneurs who are setting up in places like Jingrong Innovation Town and even NeoBay are still considered pioneers.
This is a key point. One of the features that make places like Silicon Valley a crucible of innovation and entrepreneurship is the ability to leverage serendipitous connections, often with people who have “gone before”. There is a culture of camaraderie and mentorship in established innovation districts – the “networking assets”. And this was something that many of the places I visited just didn’t seem to have yet. Many of the people I spoke with seemed slightly baffled when I tried to describe it.
Nevertheless, networking assets are definitely forming in China’s entrepreneurial ecosystem.
Tucked away in an unassuming courtyard somewhere in Beijing’s northeast is Café 1898. Established in 2013 by crowdfunding from members of the Alumni Venture Association of Peking University, the café does double-duty as an investment for its 200 shareholders, and as a location for alumni association activities – including weekly power lunches and over 800 seminars and speeches. Its members recently launched 1898 Capital – an angel fund to allow members to syndicate investment deals.
The entrepreneurial café culture is a growing phenomenon in China. Café 1898 is franchising in other Chinese cities and plans to launch a branch in California. There are others, too. Shanghai Jiao Tong University’s alumni association has about ten such cafes. But from my discussions at Café 1898, at least, most of the networking seemed to be among peers, and somewhat exclusive in its nature.It also seemed primarily transactional – a vehicle for syndicating investments, to be sure, but not necessarily a mentoring environment.
One place I visited did seem to have something of a scrappy, entrepreneurial ecosystem. Chengdu is a mid-sized city in central China’s Sichuan Province. Some years ago, Chengdu Entrepreneur’s Meetup was started by a group of ex-pats from the U.S., Canada, and Europe. The movement took off and today several entrepreneurs’ meetups exist in Chengdu, including a number that have been formed by Chinese entrepreneurs and are conducted entirely in Chinese language. This was one of the few examples of a grass-roots entrepreneurial network I encountered in China. I wondered what made Chengdu special in this way.
In speaking with local entrepreneurs I discovered that Chengdu presents challenges (and advantages) that will be familiar to entrepreneurs in many emerging ecosystems in the U.S. Chengdu, as a second-tier city, offers a much lower cost of doing business when compared with Beijing or Shanghai. As the only major city in Sichuan province with work-life opportunities renowned throughout China, recruiting and retaining talent is relatively easy. However, venture funding is scarce – and many businesses need to raise capital in Shanghai or Hong Kong. The environment is also challenging for B2B businesses since most corporate headquarters are in Beijing or Shanghai. I wondered whether the need to navigate these advantages and challenges by a community growing in a large, but manageable city, had contributed to the ability of entrepreneurs to self-assemble in Chengdu. The classic intersection of necessity and opportunity.
I left China with the feeling that while I had found plenty of physical assets and economic assets, there is still some way to go in terms of networking assets. Perhaps this isn’t surprising given that private enterprise was only officially sanctioned in Communist China 30 years ago (and flourishing for much less time than that). I also couldn’t help but feel that some of the places I’d seen were probably similar to what Cambridge and the Bay area might have been like 40 years ago – and I don’t think they’ll take that long to catch up.
Photo: NeoBay incubator exterior by Shanghai Gsir Architectural Engineering Technology Co.
