How Far is Zhongguancun from Silicon Valley?
Many Chinese and Western media outlets recently featured a headline that Zhongguancun had surpassed Silicon Valley as the world’s largest technology hub. A number of Chinese thought-leaders believe this was a misleading and inaccurate reflection of the true situation of the world’s two largest innovation incubators.
ZHENG Feng, a former entrepreneur and now one of the top five venture capitalists with a Chinese background in Silicon Valley, who has invested in both China and the US, and is now an investor in both Zhongguancun and Silicon Valley, pointed out the gaps between the two.
Firstly, Zhongguancun relies heavily on the Chinese government’s policy support. In addition, the government’s “nanny service” can be harmful to enterprises, which means there is a need to leave sufficient space for the market to decide the life or death of a start-up.
Secondly, there is severe segregation in China between universities and industry, whereas industries and universities are much better integrated in Silicon Valley facilities, which leads to greater skill and talent sharing.
Thirdly, high settling-down costs and other policies have resulted in living difficulties and constraints in Zhongguancun, meaning that it is not particularly competitive in attracting international talent.
Lastly, few B2B enterprises/business models exist in Zhongguancun, and in China in general. This reflects the fact that many B2B business might be still “guanxi/relationship”-based, which is unsustainable for a growing technology hub such as this.