Understanding China’s Silicon Valley

30 family entrepreneurs from Germany, Austria and Italy, visited with ALPHAZIRKEL visited the Silicon Valley of China, also known as the Pearl River Delta.

This southern Chinese region is the epicenter of Chinese innovation and an impressive showcase of China’s rapid development from being the cheap manufacturing hub of the world to a center of high-tech production and global innovation leadership in numerous industries. Especially Shenzhen has developed rapidly over the last 30 years – from a fishing village into a thriving and modern city with wide avenues and modern skyscrapers. Some of China’s most innovative companies like Huawei or the world leader in drones “DJI” reside in Shenzhen. Thousands of startups, accelerators creative workspaces and venture capitalists are fostering a culture of innovation and progress that is truly impressive, with strong government support along the way.

“10 years ago, China started innovating local-for-local, some might say copying international products for the Chinese market”. “Back then, one expected that China would emerge as global leader in radically new systems and disruptive business models in about 10 years. Although it was hard to grasp, then leading European firms such as Siemens, Bosch, Daimler etc set-up R&D centers in China to embed themselves to what was expected to come. And this is exactly what we can see today! The global balance of innovation leadership has changed, especially in areas such as Smart Cities, robotics, Artificial Intelligence, Trade Technology and Modern Payment. Today, China leads globally in significant parts of those industries.”

Shenzhen and the Pearl River Delta have become the embodiment of this development. As Professor Bergfeld summarizes: “China, with Shenzhen as great example, is now a local-for-global innovator, having claimed the forefront of systemic innovation, which is the most valuable of all, in many fields. The world order of global innovation leadership has therefore changed, and one should absorb this insight with an open-mind and the willingness to collaborate with Chinese innovation to find new opportunities of mutual creation of prosperity.”

In short, China has outgrown the mere copying of Western products or technologies and is now characterized by genuine technological innovation. Government investment in scientific research and its link to entrepreneurship plays a strong role and is remarkable, which the delegation was able to observe in a visit to the Research Institute of Tsinghua University in Shenzhen (LINK en.tsinghua-sz.org), where Renchen Liu, the Deputy Dean hosted the delegation. Beyond being a research and innovation center, RITS as it is commonly known, also managed 15 venture funds to finance innovation, with a total of more than a billion USD of capital, fueling significant progress in areas such as water technology, supercomputing, smart sensors and robotics.

The delegation was fortunate to visit the robot manufacturer Dorabot Inc [LINK: www.dorabot.com], where software for robots is developed to facility rapid sorting for e-commerce logistics. Its CEO Spencer Deng, member of Forbes’ Magazines Top 30 under 30 showed the delegation the smart robots in action, leveraging artificial intelligence (AI) to distinguish, pick-and-pack, intelligently consolidate and fill containers with all sorts of parcels.

Further, the world market leader in drone technology, DJI (Da Jiang Innovation, which equals Large Land Innovation) (LINK: www.dji.com) has its headquarter in Shenzhen. The company has grown from just 20 employees in 2006 to over 20.000 employees today, shipping over 5 million drones every year, and experiencing a 50% YoY growth of its enterprise solutions division, for example providing smart drones to the agricultural industry. The delegation was hosted by DJI’s President Office and received a detailed insight into the company’s products and plans.

Innovation is supported strongly by the government too, including the public sector serving as early client of innovative solutions such as video and biometric technology, and also including provincial and municipal governments that act as shareholders in Venture Capital funds, own industrial parks and research campuses, a help young firms establish themselves by being landlords with very favorable rental terms. Private funds have also emerged and are thriving for start-up investments, such as for example Green Pine Capital Partners (link: http://www.pinevc.com.cn/en_us)

Intelligent hardware and software integration is also promoted by specific incubation space and capital providers such as Shenzhen Valley Ventures (LINK: www.svv.io) and China Merchants Group Holdings (Link: www.cmsk1979.com/en/about.aspx).

The delegation was also fortunate to visit all of the above and discuss with the respective CEO’s and top managers.

A highlight of the packed program was, of course, a private visit to the Huawei R&D campus, which houses over 23,000 researchers in a park setting with immaculate reproductions of historic buildings such as the University of Bologna, the castle of Heidelberg or palaces of Luxembourg as office buildings for the employees. After a tour of the entire campus, the delegations was welcomed at Huawei’s HQ by its Chief Digital Transformation Officer and VP of Government and Public Sector Business Unit and Sven Ursenius, Member of the German “Hauptstadt” Büro of Huawei in Berlin, giving the delegation a extensive tour of the technology demonstration center, especially showcasing the Smart City technologies of the concern.

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