Cluster Leadership? Look to China

by Christian Rangen

As the world is looking to build better innovation clusters, most would benefit from studying the Chinese models. Last night I led a panel on Chinese high-tech clusters, and the key take-aways could be useful for many as we strive to build better clusters of innovation.

Learning from China

Yesterday I lead a panel on high tech clustering, with an emphasis on Chinese tech companies. In short, I am deeply, deeply impressed with what I came away with. Listening to a highly experienced panel, representing views from the Pearl River Delta (120 million people), the US Bay Area (5 million), Canada and global biotech ecosystems; it becomes clear that we have a lot to learn, research study and, eventually, teach to build better innovation ecosystems and clusters around the world.

The panel consisted of cluster managers (China), serial entrepreneurs, tech founders and tech gurus (Alex, that’s you). Combined the panel brought forth a series of viewpoints, case studies, personal experiences and thoughts on the future of innovative ecosystems.

Backdrop; in 2001 I lived and studies in Macau, China, a part of the Pearl River Delta. Since then I have worked, travelled and experienced China’s growth over the past 20 years. Over the years, my studies have included Chinese history, business, politics and philosophy, trying to understand the past, present and the future of the Middle Kingdom. Yet even I have a hard time fully grasping the economic explosion that is this highly innovative ecosystem that is the Pearl River Delta.

The Bay Area vs. The Greater Bay Area

A big part of the panel discussion centered on the evolution of the “two bay areas” over the last 20+ years. Not always widely recognized, the “other bay”, often known as Pearl River Delta, has been at the very tip of the Chinese policy ever since Deng Xiaoping said “to get rich is glorious”, and set out on the initial economic reforms in 1979.

Today, counting more than 120 million people, rapidly upscaling from manufacturing to increasingly world-leading software, hardware and tech development, the area has become what is probably the world’s best example of successful economic reform – and innovation clusters have played a significant role in that development.

Peng Shujian, Deputy Director of the GuangDong Hunational Investment Industrial Co. spoke passionately of the growth of high tech companies, the supporting services, access to funding and the wide government support for developing new ecosystems in the Delta. Representing more than 40 innovation clusters, Peng struck me as far more entrepreneurial than comparatively managers in the West.

On the role of government in shaping ecosystems and clusters the panel had diverging views, with some taking the view of “hands off”, “don’t try to pick winners”. While, others, myself included suggest a more hands-on approach. Where government programs, policy and leadership matter in the long-term development of building new growth industries or the industries of the future.

My examples, brought up in the panel was the role Israel’s Yozma program (1993) played as the core foundation for what later become “Startup Nation”. Initiated by the Israeli government in 1993, Yozma was the very first seeds of the Israeli venture capital industry. Equally important, but less understood in the West is the Chinese Torch Program (1988). Initiated by State Council of China, Torch was a national masterplan to develop hi-tech industries in China. Today, analysts often look back at 1988, as the year China started its investments in innovation parks, ecosystems and clusters.

Building Innovation Superclusters – now in Mandarin

Also discussed in the panel in Las Vegas was our recent report, Building Innovation Superclusters. Our team recently published the report in Mandarin, making it available to Chinese ecosystems and clusters.

Get Building Innovation Superclusters here.

From Reading to Experiencing

One of the things that drew significant interest from the audience was the story on how we had gamified the process of learning about building Innovation Superclusters. Fittingly with both Chinese culture and the event taking place in Las Vegas, was the fact you can competitively gamify the process of learning and development of Innovation Superclusters.

With China, Norway, Canada and Switzerland, all represented on the panel and all represented in the simulation, the panel was a true representation of some of the world’s leading ecosystems and clusters.

Learn more about the Innovation Supercluster Simulation here.

Takeaways for Europe

So, what are some of the take away for innovation leaders and government officials in the west and notably the on-going European reinvention of its cluster programs?

Following the panel, I sketched out three main points, I think are important to reflect on, summaries as the Chinese Model.

Summary of the Chinese Model

#1 Significant government leadership

Government leadership matters. Simply.

#2 Long term plans, programs and policy – matched with massive amounts of funding

Countries and regions need to develop long term plans, much longer than many of the European programs we currently see. Equally, governments need to work smarter to build massive funding programs in future technologies. Following China’s recent $29BN semi-conductor fund, European leaders need to understand the fundamental long-term consequence of continuing to falling behind in the global tech race.

#3 Gladiator Entrepreneurs

Chinese tech investor Kai-Fu Lee recently coined the term, Gladiator Entrepreneurs, a fitting term to understand the current culture, energy and attitude in Chinese tech entrepreneurs. In his superb book, AI Superpowers, Lee “uses the metaphor of a gladiator arena to describe how startups struggle on the Chinese market. It is a bloody battle scene where hundreds of players, regardless of their relative weight, gather to battle for the rule of each market domain. Only a few remain standing in the end, and nobody leaves the field unscathed”(medium).

That leaves the question, as the US and China compete race ahead in the global tech race, how can Europe compete? After my days in Las Vegas, with the Horasis China event I can only say the question is very, very real.