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Zhongguancun aims to become tech innovation center with expanding global influence
By Wang Yifei (chinadaily.com.cn)
Updated: 2013-10-25

Xiaomi has sold 15 million mobile phones since the company was established three years ago, and two graduates from Beihang University received 20 million yuan in venture capital only one year after they started their own enterprise.

These are two examples of companies that have thrived at Zhongguancun Science Park, and an increasing number of young entrepreneurs are now emerging at the park, which aims to become a technology innovation center with an expanding global influence, as it continues to push innovation in China.

Wave of innovation in Zhongguancun impresses U.S. columnist

A total of 100,000 sets of Xiaomi 3 - the latest version of the Xiaomi mobile phone - were sold on Oct 15 within 1 minute and 26 seconds after it became available to purchase online. And Xiaomi sold 7.03 million mobile phones in the first half of the year, twice as many as during the same period last year.

Xiaomi has received much overseas investment – despite the fact that it is a newly established company - and, according to Lei Jun, the company’s president, Xiaomi’s revenue could reach 100 billion yuan within a few years.

Xiaomi is only one of the many tech companies in Zhongguancun that have been developing rapidly. Statistics show that 4000 high-tech enterprises have been established each year since 2008, and a total of 11 science and technology enterprises are set up in Zhongguancun each day.

Yang Yanru, head of the science park’s innovation services department, said mobile internet, big data and cloud computing are transforming the global industry landscape - and these tech enterprises are leading the way. He also said that Zhongguancun entrepreneurs are now showing much more dynamism and more potential within a short period of time. 

Beijing Yiheng Technology Co, which was founded by two graduates of Beihang University, focuses on memory storage technology transformation. The company has developed a new generation of fast storage appliances which are purchased by internet giants such as Baidu, and it has attracted venture capital worth 20 million yuan.

There are many fast developing companies in Zhongguancun that are similar to Yiheng technology, and they have also attracted the attention of experts overseas.

Ted Greenwald,a journalist with MIT Technology Review, said many cities in the world are imitating Silicon Valley and are attracting many high-tech companies worth over one billion US dollars. However, he said that the only competitive rival is the science park in Beijing–Zhongguancun.

Guo Hong, director of the Zhongguancun Administrative Committee, told Xinhua news agency that Silicon Valley is regarded as a global innovation center not because it is an innovation center in terms of technology but because it is the most attractive innovation center in the world.

Guo added that since the authorities received approval for the construction of Zhonguancun, in 2009, a model similar to Silicon Valley is developing in this science park.

More than 500 VC are located in Zhonguancun, with a total capital of 200 billion yuan. And several innovation service agencies, such as Innovation Work, Star of Lenovo, Cheku Cafe and 36Kr.com, are also located in the park.

The operators of these organizations have much knowledge and experience and are committed to providing quality services to start-ups or projects. The agencies are rewarded through "incubation and investment" which makes them sustainable.

Innovation Work, which was established in 2009, offers all-round services including offices, finance, technology, marketing, human resources, law and training. Due to its success, Innovation Work has had to relocate three times - in order to move into larger premises.

36kr.com is a technology blog set up at the end of 2010 by several members of China’s post-80s generation. The blog focuses on overseas technology and financing information for tech start-ups, and it averages over 200,000 visitors per day. Over 500 new start-ups promote their services and products on 36ke.com each month.

Zhongguancun has set up an innovative eco-system which includes leading enterprises, scientific research institutes, venture capitals and innovative services, and the system enhances the potential of these enterprises.

In 2010, the start-ups in Zhongguancun enjoyed higher revenues and margins compared with other companies in the science park. And the number of patents owned by the 10,000 people working in Zhongguancun increased by 15 percent, higher than the 9 percent of Silicon Valley.

But maintaining a balance between the requirements of the government and the market place remains a challenge for Zhongguancun, and Guo said that the science park stresses the role of the market, ”while not neglecting government.”

In recent years, Zhongguancun experts in various fields have achieved breakthroughs in scientific research, including Loongson CPU of the Chinese Academy of Sciences and the antineoplastic drugs developed by Tshinghua University.

"This may add to the dynamics of the emerging market," said He Cun, of the technical financial department of the Zhongguancun Administrative Committee.

Initial financing is the key for a start-up but, despite the mutual interests, financial institutions are reluctant to bear risks when enterprises lack a credit record - thus making transactions impossible.

The Zhongguancun Administrative Committee has set up a risk compensation mechanism, which means that the government will help out if the market fails.

From 2006 to 2009, a total of 87 projects of 19 Zhongguancun enterprises received 62.06 million yuan in subsidies from the government and invested 1.27 billion yuan in the park, and this led VC's to make Zhongguancun a key investment choice.

"The government is playing the role of creating a fair environment for the companies to compete in rather than getting involved in the market itself. The fundamental role should be carried out by the market," said Guo.

Edited by Niva Whyman


Zhang Yiping

Director of the Minor Enterprise Service Center of the BMDRC


Yu Jun

President of Zhongguancun Development Group


Yu Yang

President and CEO of Analysys International


Zhongguancun Science Park