startups

Shenzhen extends its economic clout with startups – Yonhap News Agency


SHENZHEN, China, April 12 (Yonhap) — The southeastern port city of Shenzhen, dubbed China’s tech hub, is emerging as a new economic development model for other cities in the country, as its first special economic zone aims to take another leap with a startup boom, experts said Friday.

Studded with high-rise skyscrapers, the city, recently challenging the United States’ Silicon Valley, has become a magnet for big-name multinational companies, talented people and money.

Since 1979, when the city, a small fishing town, was designated as China’s first special economic zone, Shenzen has enjoyed stellar economic performance on the back of policy support. More recently, the city, home to some 10,000 startups as of 2017, is reshaping its identity as a tech hub.

Among others, Shenzen stands out for its favorable environment for startups, ranging from infrastructure to financial support.

“Shenzhen boasts a whopping 500 organizations that support startups, and the city boasts excellent infrastructure for new companies,” said Jeong Joon-kyu, the general director of the Shenzhen-based office of the Korea Trade-Investment Promotion Agency (KOTRA).

“The city is packed with IT hardware firms along with large-sized factories,” Jeong said, claiming that such an environment allows startups to promptly produce hardware products. “Companies can quickly make test products and find partners to commence mass production.”

For instance, the Huaqiangbei district of Shenzhen is filled with 20,000 shops employing 150,000 workers that sell various electronics parts, helping startups to easily obtain necessary equipment and parts.

“Shenzhen serves as a complex supply chain, helping firms to turn a concept into an actual product quickly,” added Morgan Guo, the sales director of Shenzhen-based AI solution firm Reconova.

On top of easy access to a wide range of manufacturers armed with experience making products for foreign firms, Shenzhen is also attractive as the city is one of the top Chinese cities in terms of purchasing power, with its per-capita GDP hovering around US$30,000 — similar to that of South Korea.

“Lower production costs may be beneficial for companies, but that also leads to weak purchasing power,” Jeong said, claiming that while China may no longer be a strongly attractive option for global tech firms seeking to cut labor costs, the trend indicates that Chinese people are also willing to spend more, which is the case for Shenzhen.

The city is also helping startups with low-rate loans, and many investors are funneling money into promising companies to help them focus more on their innovative ideas and technologies.

Any potential CEO of a startup here can receive a subsidy of up to 5,000 Chinese yuan (US$750) per person from the city, and the amount can reach up to 50,000 Chinese yuan depending on the number of co-founders.

The government also in part funds employees’ salaries and shares as much burden as possible for startups that may face financial struggles in early stages.

As of 2016, there were 144 authorized accelerators in Shenzhen, which have 7,900 firms employing 200,000 staff members under its wing, a KOTRA report showed.

Shenzhen hosted the China Information Technology Expo (CITE) 2019 earlier this week, which invited 1,600 technology firms from around the globe, with the number of participants estimated at some 100,000, reflecting the vibrant business environment for IT firms here.

“Shenzhen is full of young people, and the city is open to innovation,” Vice Manager Zhou Xiang of Shenzhen-based tech firm Minieye said, expecting that the city will continue to be a hot spot for business ventures.



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