China National Science & Technology Industrial Parks (STIPs)

1. China National Science & Technology Industrial Parks (STIPs) Peng Haoshu Chinese Academy of Sciences, P.R. China 16 March 2009

2. 3 Contents 1 Overview of Background 2 Current Situation Policies and Administration 4 Strategies for Future Development

3. Background • The importance of STIPs in China: • Incubators of S&T companies • Important platforms for technology innovation • Congregation of innovation clusters • Representative areas of intensive economic growth models • Important engines of regional economic growth • Important carrier to improve international competency.

4. Current Status of Major Regions in China • Central: • Area: 10.7%； • Population: 360 million (28.2%) • Main Features: • （1）Fertile soil，major agricultural • production and output bases ； • （2）traditional culture stressing • agriculture while restraining • industry and despising commerce； • （3）industrial bases of various scales • formed in some areas • （4）impacted area, convenient • economic connections & easier • market support for industrial growth • （5）higher proportion of agricultural • population than national average but • lower than western areas • （6）absolute poverty basically eliminated • and therefore development has • become the priority。 Western： • Area: 71.6%； • Population: 370 million(28.7%) • Main Features： （1）unfavorable natural conditions ， most poverty population； （2）highest rural population proportion （3）more than 50 minorities (more than 80% of total minority population； （4）few and far between，inconvenient economic connections （5）upriver of Yongtse, Yellow River, ...，eco-safety of the whole country； （6）rich in energy and mineral resources • North-east: • Area: 8.2%； • Population: 110 million (8.3%) • Main Features: • （1）rich land resources and favorable • for agricultural production • （2）lowest rural population proportion • （3）old industrial bases facing • challenges of exhausting • resources • （4）good industrial conditions, reserve of talents, well developed infrastructure • （5）facing constructive problems

5. Background ：The Changing China Business Independent Innovation Created in China Gov. Initiative Foreign Investment Made in China Overview National Strategies Since 80’s 78’ Costal Cities 91’ STIPs 99’ Western Development 03’ North-east 04’ Central Areas

6. Background：The Changing China Gov. Initiative Foreign Investment Made in China Business Independent Innovation Created in China Independent Innovation • Made in China： No. 1 Manufacturer and Exporter in most industries • Toys 70% • Shoes 50% • Color TV 45% • Air Conditioner 30% • Textile 24% Tech Policy Talents Created in China Trade Volume/GDP: 60%(03’); 64%(05’) Excessive investment into processing trade (OEM), resulting in, labor, land and resources intensive lower-end products Capital Market Adjustment of Industrial Construction Moving up to higher end in the Value Chains

7. Background • Why STIPs • Breakthrough difficulties of lower-end manufacturing clusters; • Limited areas selected to concentrate policies and resources to congregate higher-end value chains to realize the “breakthrough”； • To promote the transformation of technology results and encourage indigenous innovation and entrepreneurship • To promote the commercialization of new & high-tech achievements, the industrialization of new & high-tech products and the internationalization of new & high-tech industries (China Torch Program) • The goal of STIPs：Innovation clusters

8. STIPs-Milestones Deng Xiaoping: Develop the Hi-technology, and bring it into Industry Jiang Zemin: To construct the STIPs is the most important pioneering work in the 20th century. 85’ 1st STIP in Shenzhen 88’ 1st National STIP in Zhongguncun 91’ 26 National STIPs approved 92’ 25 National STIPs approved 97’ The 53rd National STIP (agricultural, Yangling, Shanxi) 07’ The 54th National STIP (Ningbo)

9. Locations • STIPs-Favourable locations： • 29 in central cities with intensive intellectual resources and sound industrial bases • 13 in coastal cities with better conditions of opening-up to outside world • 12 in the cities with intensive military industries and traditional industrial bases.

10. Current Situation

11. Current Situation

12. Current Situation

13. Current Situation

14. Current Situation

15. Current Situation

16. Administration Scheme

17. Innovation clusterThe reason for existence and goal for development of STIPs in China • An innovation cluster is a pool of innovation resources. The highly efficient operation mechanism resulted from long-term competition and cooperation as well as the ever-improving innovation circumstance makes it possible for an innovation cluster to continuously attract innovation resources including talents and capital, etc. • An innovation clusters is a network within which various innovation players are linked via value chain or industrial chain.Competition and cooperation makes the players more and more synchronized and a symbiotic ecosystem is gradually established. • An innovation cluster is an interest community. The enterprises in the cluster compete with each other to obtain the maximum benefit within the cluster and this “small competition” is usually temporary while the unified competition with external industrial counterparts is to dominate the higher-end of the global value chain and such competition is for survival and permanent. • An innovation cluster is the headstream of innovation. The players in the cluster share the new technology and products brought out by the revolving process of combination, communication, cooperation and competition. • An innovation cluster is an innovation-oriented opening society. The innovation culture is gradually rooted in the cluster by the convergence of innovative and entrepreneurial spirits of the players. As a result of the moving in and moving out of the different players driven by this culture, the cluster becomes a vigorous innovation headstream.

18. The Development Status of Innovation Clusters in STIPs • Apparent conglomeration of higher-end industries • About 150 industrial cluster among 1300 cluster across the country, mainly in new & high-tech sectors • STIPs have attracted quite a number higher-end clusters in the sectors of hi-tech service, software, IC, new energy, bio-pharmaceutical, optical-telecom, etc. • Typical clusters: • Zhongguancun(Beijing): Creative & software industry • Donghu(Wuhan): optoelectronics • Zhangjiang(Shanghai): IC and pharmaceutical • Tianjin: biotech and new energy • Shenzhen: telecommunication • Zhengzhou: Super-hard materials • …

19. The Development Status of Innovation Clusters in STIPs • Main Features • Industrial scale and brand name being formed, gradually penetrating into international market • Comparatively complete industrial value chain • Innovation system basically shaped up • Moving up to higher end of value chain • New industries emerge continuously

20. The Development Status of Innovation Clusters in STIPs • The technology innovation system is forming up • Human resources: The STIPs have attracted • 560,000 technological people • 52,103 master graduates, • 9,358 PHDs • 5,615 returned overseas scholars • 1, 330,000 college graduates (accounting for 1/3 of 4 million employees in all national STIPs) • More than 250 Technology Business incubators and a batch of postdoctoral working station have been sep up • R&D Strength • R&D investment: 8 times higher than national average • R&D investment per capita: 6 times higher than national average

21. The Development Status of Innovation Clusters in STIPs • The technology innovation system is forming up (Cont.) • Closer cooperation between university, research institutions and STIPs • Local Innofund and VC Fund of funds are being set up in STIPs • Networking such as industrial technology alliances are coming forth • International cooperation prevalent

22. The Development Status of Innovation Clusters in STIPs 3. Challenges: • Endogenetic mechanism and entrepreneurial environment still to be perfected; innovation capacity of enterprises still insufficient due to lack of core or key technologies • Business relevancy not high, more focus on “conglomeration” than “clusters”, which in most cases are still in primary phases • Industrial features and advantages not prominent, lower end of the value chain • Unbalanced development among regions and areas with significant differences

23. Policies Latest Policies • Income tax exemption for first 2 years since profit-making and a reduced tax rate at 15% for the 3rd year on • Exemptions of operation, income, property and land use taxes within a certain period for ratified Technology Business Incubators and National University Science Parks • Pilot OTC (over the counter) system in Zhongguancun for unlisted high-tech companies

24. Policies New Historical Mission: A quaternity positioning

25. Strategies for future development “Strengthening the capacity of independent innovation and building an innovation-based country”- A national target proposed by the central government at the beginning of 2006. • A technological innovation system is to be established within which • The enterprises will be the main players • The market-orientation will be kept and • The cooperation between industry, educational and research side will be strengthened

26. Strategies for future development “The Compendium of the National Long Term Science and Technology Development Plan (2006-2020)” and its supplementary policies will facilitate the establishment of the technological innovation system by improving the overall conditions: • R&D Investment • Tax Incentives • Financial Support • Government Purchase • Re-innovation based on absorbing new technology from abroad and independent digestion • Creation and Protection of Intellectual Properties

27. Policy Improvement & Network Building • To improve the policy environment of STIPs • Preferential fiscal and financial policies • Intellectual Property Protection • Government Purchase • To construct the service networks (which are the key part to promote the development of innovation clusters) • To attract intermediary service providers into the parks • To construct the information service network • To set up various business associations and clubs

28. Promoting Interaction & Partnership 3. To promote the cluster-model innovation activities The soul of the innovation clusters is the clustering innovation among the enterprises and so we have to • Support the leading business and nurture SMEs to bring into full play of their respective innovation advantages. • Increase the investment into guiding fund to attract more social capital to sustain the long term and continual innovation • Attract and train the high-end professionals to ensure the non- exhausted innovation headspring • Encourage the inner and outer cooperation between the businesses, universities and research institutions to integrate them into an interest community • Set up various industrial technology alliances industry to break up the common technology barriers Ind. Edu. & Res. Technology Policy People Innovation Clusters Capital Market Industrial Alliances

29. Strengthening International Cooperation 4. To establish service platforms for international cooperation • Innovation clusters are an open clusters and the international capital, technology, human resources and information are all the propelling power for their development and growth. Therefore, all the STIPs in China are establishing various service platforms to make full use of the international innovation resources including capital, technology, information and talented people.

30. ZhongGuancun park

31. Zhongguancun Park

32. The First National STIP in ChinaZhongguancun Science Park • the embryonic period: 1980－1988 • the development period: 1988-1999 • the growth period: 1999 to now Leadership: more than 10,000 enterprises in the park and the total economic volume of the park is leading the 54 state-level high-tech areas in the whole country RIS: Haidian Park has maintained its leading position in the regional economy and the comparison among the multiple parks in ZhongGuancun Science Park.

33. “Ten parks”: 232 square kilometers

34. No. of High-tech Companies at ZGC Park

35. Growth of Total Income Hundred million yuan Total income Growth rate

36. Income structure Collectively-owned State-owned Joint stock limited company Limited liability company Private enterprises Sino-foreign joint ventures, Sino-foreign cooperative enterprises and wholly foreign-owned enterprises Other

37. Industrial Structure • electronics and information manufacturing industry • optical, mechanical and electronic integration • New material, new energy and environment science • new medicine bioengineering • others

38. Structure of Revenue • electronics and information manufacturing industry • optical, mechanical and electronic integration • new medicine bioengineering • New material, new energy and environment science • others

39. Total revenue and Gross industrial output value 100million

40. Taxes and Foreign exchange-earning

41. Companies with operating income greater than 100million

42. Success factors • Talents Circulation • S&T Network with Univs and Institutes • Capital: Foreign investment • R&D expense • Preferential policies • International Cooperation

43. Thank You !