Policy support, talent, money draw innovators to Beijing, Shenzhen
With a vigorous entrepreneurial culture, huge talent pool, efficient local government policy support and promising market niches, China's start-up friendly cities such as Beijing and Shanghai are attracting an increasing number of entrepreneurs.
Beijing, Shanghai and Shenzhen in South China's Guangdong Province are the most start-up friendly cities in China, according to a ranking released by business analysis platform biaozhun007.com, and co-working office space company UrWork over the weekend.
The ranking was based on data provided by Tencent Research Institute, taking into account such factors as the number of start-ups, business environment and talent support.
Other cities in the top 10 list include Guangzhou in Guangdong, Hangzhou in East China's Zhejiang Province, Wuhan in Central China's Hubei Province and North China's Tianjin Municipality.
In 2016, China was home to 35 companies out of 173 unicorns, or start-ups valued at more than billion, with most having their headquarters based in these cities, said a report released by Fortune.
Herny Yau, a Hong Kong resident who founded intelligent lighting company Everbright Technology Development in Shenzhen in May, spoke highly of the entrepreneurial environment and the large talent pools in these cities.
For example, under the "Mass Innovation and Entrepreneurship" national initiative, Shenzhen has become a young, inclusive and dynamic city where incubators are budding and giving birth to an increasing number of local start-ups, Yau said.
He noted that incubators such as Shenzhen-based Dream Factory, which is where his company has its office, offers rent-free offices for up to six years and professional consultants to advise on policies and fundraising, a boost for many start-ups.
Also, there are enormous resources such as venture capital in those cities for start-ups, Huang Zhuang, founder of virtual reality technology company Shenzhen Transmind Tech Co, told the Global Times.
Like Shenzhen, which is home to many of China's top-notch schools such as Shenzhen University, start-up friendly cities foster young graduates who learn quickly and "hit the ground running," and the local governments offer incentives for them to stay, Yau added.
For example, the local government in Wuhan is considering a policy that will allow graduates who start up businesses there to buy apartments at 20 percent below market prices, the Hubei Daily reported on Sunday.
Daniel G Rodriguez, founder of software localization company Beijing Asiglo Technology Company, told the Global Times that he finds the business environment in Beijing is very friendly for start-ups. For instance, there are new policies for the value-added tax, which could be helpful.
"Offering a combination of tax incentives, favorable policies and start-up funds has become a common strategy," said Liu Dingding, a Beijing-based independent Internet analyst.
But more importantly, local governments' open and encouraging attitude toward Internet-related businesses such as those in the burgeoning sharing economy weighs heavily in luring start-ups, Liu told the Global Times on Sunday.
"Beijing topped the list, but why does the capital excel? Why do Internet start-ups such as ride-hailing giant Didi and bike-sharing platforms Mobike and ofo set up their headquarters there?" Liu asked.
China has a potentially huge market, especially in first- and second-tier cities where residents are willing to accept new technologies, analysts pointed out.
"China's consumer base is able to provide far more user scenarios, which means that enterprises can push for more technological innovation from their applications," Xie Yinan, vice president of Beijing-based artificial intelligence company Face , told the Global Times in a recent interview.
In the US, technological research is still focused on the theoretical level, so there is less scope for real-life applications than in China, Xie added.
Liu agreed. "Besides, in the US, the market is monopolized by giants such as Facebook, Google and IBM, leaving just a small segment for latecomers to take advantage of. But in China, the untapped blue sea is large."
Therefore "it may only take a few years for China's start-up friendly cities to catch up with the US' Silicon Valley," given Chinese cities' competitive costs, Yau predicted.
In 2015, China for the first time eclipsed the US as the premier location for venture capital investment in Internet businesses, according to a report published by consultancy PricewaterhouseCoopers.