Monday, July 04, 2005

Zhongguancun Before and Now

Zhongguancun: “Electronics Avenue” Returns to Its Position as “China’s Silicon Valley”

June 8, 2005

((Translated from the Chinese by Tyler Rooker on July 3, 2005 for

Text/ Zheng Jinwu and Xiong Juan
On October 23, 1980, as if he was on a mission, Chinese Academy of Sciences researcher Chen Chunxian took the lead in establishing the first science and technology organization run by individuals in Beijing’s Zhongguancun--the Advanced Development Technology Service Department [sic] of the Beijing Plasma Physics Association. Thereafter, science and technology companies run by individuals, such as Kehai, Jinghai, Sitong [Stone], and Xintong, were all established in the Zhongguancun region. By the end of 1986, there were close to 100 development companies in Zhongguancun. Gradually the domestically and internationally famous “Zhongguancun Electronics Avenue” was formed, with development and business in electronics as its main essence.

In the course of 20 years, the dilapidated past of Zhongguancun has been replaced by row upon row of towering office buildings and modern, bustling markets. 13,000 small, medium, and large enterprises, close to 60 listed companies, and over 100 billion yuan in total industrial production have lifted the reputation of Zhongguancun domestically and internationally. Because of its unique clans of science and technology personnel, and its entrepreneurial atmosphere, Zhongguancun has entered the history books as a synonym for “China’s Silicon Valley.”

Out with the Old, In with the New--20 Years of Experience in Zhongguancun

Strictly speaking, Chen Chunxian’s “Advanced Technology Development Service Department” was not a high-tech company. We can only say that it was a prototype for high-tech companies. But it made people realize that something along the lines of high-tech companies created in “Silicon Valley” or Boston’s Route 128 of the USA could be possible under conditions existing in China.

In May of 1995, the Central Committee of the Communist Party of China and the State Council published a report entitled “Decision Regarding the Acceleration of Progress in Science and Technology.” In it, they clearly pointed out that, “science and technology enterprises run by individuals are an important part of the advancement of science and technology for all of society; they are an effective force in the development of high-technology industries in China; they must be given continued encouragement and led to healthy development.” With inspiration from the “Decision,” the Beijing city committee of the communist party and the city government decided to reexamine strategies for Beijing’s economic development. As a result, they decided to build a Beijing New Technology Industry Development Experimental Zone, which would be structured as one zone with many parks, including the Haidian Experimental Park, the Fengtai Park, and the Changping Park. In 1999, the “Beijing New Technology Industry Development Experimental Zone” was officially renamed the “Zhongguancun Science & Technology Zone.” Today, the Zhongguancun Science & Technology Zone includes seven science parks: Haidian, Fengtai, Changping, Desheng, Electronics City, Yizhuang, and Jianxiang. These form a true high-technology industry development structure of one zone and many parks. The name Zhongguancun is valuable--hence many places that are far from the central area of Zhongguancun have been brought into the Zhongguancun domain. The concept of a “big Zhongguancun” has gradually formed.

The establishment of a science & technology zone has made a big impact on people’s thoughts. The obsolete pattern that had existed for many years has been broken piece by piece as researchers, professors, engineers, and students from the dozens of universities, such as Peking University, and hundreds of research institutes, lead by CAS. They have left the academic and research buildings and become an entrepreneurial vanguard of knowledge heroes. Wang Xuan, Ni Guangnan, Wang Zhidong, Wang Jizhi, and Liu Chuanzhi are some of the outstanding people who emerged from this background.

The Name Speaks the Truth--Zhongguancun Top of China Science & Technology

The reason for the success of Zhongguancun lies in the birth of Lenovo, Stone, and Founder here. These three companies created the miracles of the Lenovo [Legend] Mandarin Card, the Founder laser typesetting system, and the Stone typewriter. Sina and XiaoLingTong lead the race in the Chinese internet and communication industries; Yaxin and Baidu have provided system integration and search technology for the information superhighway. China Semiconductor Engineering of Zhongguancun has, in only a few short years, has given birth to multiple series of large-scale integrated circuit chips such as Fangzhou [Ark], Longxin [Dragon Chip], and Xingguang [Starlight]. China Semiconductor changed the history of China’s chip industry from non-existent to existent; and from existent to excellent.

Xia Yingqi, assistant director of the Zhongguancun Science & Technology Zone Management Committee, pointed out that Zhongguancun’s technology and products have gone from made in China to created in China. For this reason, Zhongguancun has become the brand name for science and technology in China--it is perfectly justifiable to call it “China’s Silicon Valley.”

This reporter spoke with a certain Mr. Liu. He became a sales distributor in Zhongguancun in 1997. He knows the evolution of computer brands, from IBM and Intel to Lenovo, from Founder to Jing Dongfang and TCL, like the palm of his hand. Not with emotion he said that, viewing the situation from the present, there is still some differences between domestically-produced and internationally-produced products. Yet, as the amount of core, independent technology increases, domestically-produced brands will certainly become a new force in the market.

In order to provide support to high-tech companies in the Zhongguancun Science & Technology Zone, government agencies including the Central Party, Beijing city, and even Zhongguancun Management Committee have announced numerous policy measures. In 2001, in order to build an entrepreneurial environment in Zhongguancun, the country allocated 10 billion yuan in special funds to be used in constructing and improving infrastructure in Zhongguancun. The Science & Technology Committee of the city of Beijing joined with other units in 2002 to establish the Beijing City High Technology Commoditization Service Center, providing convenient and quick “one-stop” service, from project application to policy fulfillment, for high-tech enterprises. Not too long ago, the city of Beijing also allocated 174 million yuan in special financing to encourage high-tech companies to engage in commoditization. The Zhongguancun Science & Technology Zone has also come out with a policy called “three reductions and two exemptions,” which gives benefits to entrepreneurs who decide to start-up in Zhongguancun. According to statistics provided by the Zhongguancun Management Committee, there are currently over 13,000 small- and medium-sized enterprises in the Zhongguancun Science & Technology Zone with a total industrial output value of 150 billion yuan. It is precisely this large-scale contingent of small- and medium-sized high-tech enterprises that gives Zhongguancun its liveliness and dynamism.

Foreign Enterprises’ Preemption--An Upsurge in Zhongguancun R&D

In July, 2004, the globally famous pharmaceutical development company Novolin set up only its second overseas R&D center in the Zhongguancun Life Sciences Park, expanding the scale of its R&D. The president of Novolin Greater China Area, Ke Ruilong, commented that they chose the Zhongguancun Life Sciences Park as an R&D center mainly because a national protein research center is located in the Park; also, the Park adjoins the CAS Institute of Zoology and other scientific units. “The R&D Center is not lead by the China market. Instead, we were attracted by China’s technology and talent.” Actually, this is not the only R&D center to settle down in Zhongguancun.

Institutes of scientific research and universities crowd Zhongguancun. According to reports, there are 3,813 currently active science & technology units in Beijing; there are 42 national engineering technology centers; and there are 49 key national laboratories. The vast majority of these units are all located in Zhongguancun. Beijing currently has 271,000 science and technology personnel of whom 383 are CAS academicians and 292 are China Academy of Engineering academicians. Again, the vast majority of these personnel are scattered in the various scientific research units and universities of Zhongguancun.

With a comparatively lower cost for real estate and talent, along with preferential policies from the government and the strong purchasing power of the Chinese market, Zhongguancun has attracted many multinational companies. Xia Yingqi said that Zhongguancun’s R&D ability is not easily ignored on the world science & technology stage. Establishing a subsidiary company, an R&D center, or a representative office in Zhongguancun has become a necessary action and current fad for multinational companies.

The assistant director of the Electronics City Science & Technology Park Management Committee of the Zhongguancun Science & Technology Zone, Xiong Xuehua, also pointed out that, in the future, the orientation of enterprises in the Zone must be R&D. Hence the Science & Technology Management Committee is building an R&D environment to allow enterprises to become focused on innovative technology.

With a Phoenix Comes Advantege--“Turtles [Returned Overseas Chinese]” Fall in Love with Zhongguancun

With the reform and open, China has had several hundred thousand students taken their books and gone far from home. The problem of losing talent to overseas study has created misgivings in society. But Zhongguancun today has become the first choice for students returning from overseas.

According to an official in the Overseas Student Start-Up Service Department of the Zhongguancun Science & Technology Zone Management Committee, the Zhongguancun Management Committee has established 5 liaison offices overseas in order to provide information, communication, and service to overseas students interested in returning to China to start a company. The government also provides assurances to returning overseas students for free grants, housing reimbursement, and loans guarantees to assist with starting-up.

Yan Changming is one of the entrepreneurs who returned from overseas study to start a company. In 1994, Yan Changming and others returning from Canada formed a team to establish the “Beijing Lanzi Ningshi Technology Company, Limited.” There are not preferential policies such as exist in the Zhongguancun Science & Technology Zone overseas, especially the type of help in terms of financing that the Management Committee gives. This help allowed Yan Changming’s enterprise through a difficult period in its development.

Materials from a recent report revealed that, in the past 4 years, the Zhongguancun Management Committee hosted 24,000 “sea turtles,” among which over 5,500 Ph.D.’s and Master’s have chosen to remain in Zhongguancun establishing over 2,300 high-tech enterprises. A large group of “turtles” have fallen in love with Zhongguancun. In terms of numbers and quality, this has re-established the core competitiveness of the Zone in terms of high-end innovative technology.

A specialist from the Zhongguancun Human Resources Association pointed out that attracted overseas students to return to China and start-up is not the same as simply attracting capital. Because overseas students have advantages in terms of specialized technology, credit laws, degree of internationalization, and market concepts, a large group of “turtle” enterprises is the same as adding an international “catalyst” of market economics to Zhongguancun. It will rapidly change from quantitative to qualitative the advancement of technology, management, finance, and international collaboration in Zhongguancun. Engaging in international competition will enable Zhongguancun to keep pace with the world economy.

Source: Science Times

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