Industrial Parks in China

1. Industrial Parks in China Zhongguancun Science Park

2. Background • Long history of being an industrial area since 1950s • In June 1999, the State Council of China officially approved the request to Expedite the Building of Zhongguancun Science Park • Duplicate the idea from Silicon Valley • Aim: to make the park a first-rate science park in the world within 10 years • Area: 217 sq km (~1/5 of Hong Kong) • Known as the ‘’electronics avenue’’

3. biggest science park in China -makes a contribution of 60% of the total industrial growth of Beijing -accounts for 18% of the total income of all the 53 national hi-tech parks • high concentration of scientific and technological institutions and intellectual resources • composed of five science zones: Haidian Zone Fengtai Zone Changping Zone Electronic City Zone Yizhuang Zone • Sub-parks: (Haidian Park, Fengtai Park, Changping Park Electronic Town, Yizhuang Park, Desheng Park, Yonghe Park Shijingshan Park, Tongzhou Park, Daxing CBP)

4. Zhongguancun Science Park Distribution

5. Factors affecting Industrial Locations • Raw materials • Market • Labour • Transport • Institutional • Technology • Energy • Behavioural

6. Labour & Institutional

7. Require skilled and quality labour • Close to nearby universities and institutes • 39 institutions of higher learningWell-known universities : Beijing University and the Tsinghua University • (best known for science and engineering) encourage students and professors to start their business and set up their own companies for R&D in the park

8. 213 research institutions For example: the Chinese Academy of Sciences (CAS) the Chinese Academy of Engineering (CAE) • state-level laboratories and important engineering and technology centers Over 489,000 technicians are employed • Pleasant living environment • Nice-working environment • Beautiful SceneryFor example, The Summer Palace, The Yuanmingyuan Park and Xiangshan • to attract and retain good quality professional workers

9. Technology

10. Research and Development • Over 12,000 new and hi-tech enterprises in the estate For example: Legend, Zhongguancun Science and Technology, Tsinghua Tongfang, Netease • 1500 R&D centers and hi-tech companies • set up by or invested by renowned overseas transnational companies Such as: IBM, Microsoft, Mitsubishi, Siemens, NEC • Breed up many local enterprises like Stone Group (co-operated with Peking University), Founder Group (2nd largest personal computer manufacturer in China & spun off Chinese Academy of Sciences), Lenovo Group (the fourth largest computer manufacturer in the world)

11. Baidu and SINA Corporation are two companies known by China watchers in the West that were born and bred in Zhongguancun • accounts for 18% of the total income of all the 53 national hi-tech parks

12. Favorable factors

13. 1. Provision of infrastructure, transport and utilities • High accessibility: • 3rd Ring Road, 4th Ring Road and 5th Ring Road, Beijing Capital International Airport and railway • Sufficient facilities • Hospital, stadium, hotel, shopping mall, universities etc.

14. 2. To attract foreign investment • Favorable Policy • Self-use equipment and supporting technologies, accessories and reserve parts shall be exempted from import duty and import linkage tax. Incomes from transferring self-developed technology shall be exempted from the business tax.

15. 3. To promote IT industries • The development of the hi-tech industry, modern manufacturing and other projects invested under encouragement are encouraged. 4.To provide industrial land • To simplify the procedure for providing industrial land, land transfer fees, urban infrastructure construction expenses and partial administrative institutional fees are abatted 5. To encourage innovation • 《 Zhongguancun science park regulation》since 1-1-2001: • - To protect intellectual property • - To confiscate pirated software CDs

16. Unfavorable factors

17. 1. Lack of leveraged buyout channel • enterprise was difficult to raise capital • 2. Fail in protecting intellectual property • 《 Zhongguancun science park regulation》is ineffective • Numerous hawkers nearby selling pirated software produced in the science park • Discourage enterprise to research and develop • 3. Serious traffic congestion near the science park • Discourage professional engineer to work in the park

18. 4. Location mismatch between R&D and manufacturing • Zhongguancun is the R&D centre • Manufacturing base of electronic products and computers is in GuangDong • Inefficient to implement the new product developed in Beijing but produced in GuangDong (ShenZhen, Dongguan) • 5. International companies move their centre away from Zhongguancun • 52 international IT companies such as Intel, HP, IBM, Cisco set up their headquarter in Jiaoyang instead of Zhongguancun • Jiaoyang is close to foreign consulate, and enable companies for international communication • Jiaoyang provides the best infrastructure in Beijing

19. 6. Guangdong being a competitor of Zhongguancun • Guangdong has a lot of famous universities that provide many IT professionals(e.g.Guangdong university of Technology, Zhongshan University) • Guangdong is close to Hong Kong and ShenZhen that attract more investment than Zhongguancun • The manufacturing base of computer and electronic products is in Guangdong, it is more convenient to link up R&D and manufacturing