Zhongguancun Science Park, the largest high-tech research and development center in China, houses more than 10,000 companies ranging from small local firms to large coporations like Microsoft, Sun and NEC. The park, located in the northwestern part of Beijing and not far from the Summer Palace, is dubbed China’s “Silicon Valley.”
Today’s Zhongguancun was conceptualized and modeled after the Silicon Valley when physicist Chen Chunxian visited the area in 1980. Today, Zhongguancun has been officially renamed Zhongguancun Science & Technology Zone, with seven business parks concentrated in R&D. About 95 Fortune 500 companies established 148 branch offices in the park, 65 for research purposes. Last year, the park attracted foreign direct investments of US$41 billion.
The model park
Silicon Valley is home to high-tech giants like Intel and Hewlett Packard, while Zhongguancun is home to the country’s top computer manufacturer Lenovo and word processing giant Stone – China’s top IT companies. Like the Valley, Zhongguancun thrives on entrepreneurialism to define the vision of the high-tech industry and is most famed for churning out business visionaries like Liu Chuanzhi, founder of Legend Group Ltd, which owns Lenovo.
The similarities don’t stop here. Like the Silicon Valley, Zhongguancun relies on its top universities for talent. The difference is that the park has matured through knowledge transfers from Chinese returnees from the US.
But Beijing’s Valley is still some ways behind the West Coast original. China still lacks a critical mass of crucial intermediary agencies like law and accounting firms and financial services providers. The legal framework doesn’t give entrepreneurs and venture capitalists enough incentives to innovate and invest yet.
“Usually small companies lack a transparent system for accounting, capital flow and revenue planning. So if you want to receive venture capital, you need a system that is consistent with the international standard in every aspect, but there isn’t a clear strategy,” said Zhang Ya Qin, managing director of Microsoft Research Asia.
The question of intellectual property rights protection is also a huge bottleneck for Zhongguancun and the country, hindering long-term investments. As a result, agro-biological enterprises and institutions in the park, for example, are coming together to form alliances to protect their own registered trademarks, geographical indications and brands.
Tsinghua University is also in the process of building an infrastructure of business support, from venture capital and legal services to property management. Other entrepreneurial support groups are also available. The progress is gradual, but entrepreneurism is encouraging a more innovative environment conducive to market trends.
It may be a stretch to compare Zhongguancun to Silicon Valley for now, but most indications show China’s high-tech industries are on their way towards bridging the gap.