Chengdu Takes Up the High-Tech Challenge and It Is a Success!

©人民网，Hi-tech Industrial Development Zone (CDHT) in Chengdu

Chengdu, capital of Sichuan Province, located in the most central areas of China,  mostly known as one of the most populous cities in the country and as a land of abundance. Sichuan and Chengdu are generally called “Country of Heaven” (天府之国) because of its fertile surrounding, it is a natural crossroads that is increasingly gaining importance in international markets.

This heavenly land has found success in the thriving Chinese luxury market and it is now considered the third largest luxury market in China, after Beijing and Shanghai. The biggest international brands have long noticed this emerging Chinese reality and have invested in opening their stores in this city once famous for its tea and pandas.

Thanks to its central position and its Chinese tradition, Chengdu is the ideal tourist destination for Chinese customers who tend to avoid spoiled cities and saturated markets of the first-tier cities. Chengdu has thus become a luxury center in a very short time attracting international brands that see a high investment potential to which they entrust their most innovative projects.

Indeed, the well-known fashion brand Armani built its first residential project here, the Art Residence. In this metropolitan atmosphere, last January, the local government announced the goal to build Chengdu into a world-class central commercial city by 2022.

However, behind the loud Louis Vuitton and Cartier’s signs, an emerging market made the city of abundance essential for the Chinese economy: the high-tech market. The Sichuan capital’s response to the Beijing Made in China 2025 plan was quick and successful.

In 2015, Beijing launched the project of digital and technological development called Made in China 2025 (中国制造 2025): a project that includes the goal to become independent for what concerns high technology. This business plan provides for ten years of investments in technology in order to make China an Industry 4.0 power, thus undermining the current world geography of high-tech innovation.

By 2025, 80% of hi-tech components, vehicles and supplies will have to be made in China in order not only to make the country no longer dependent on imports of technologies but also to reach the technological lead previously belonged to Western countries.

Made in China 2025 is rewriting the geography of Chinese industrial development by placing the new high technology hub in the four cities that grew significantly in 2017: Chongqing, Kunming, Guiyang and finally Chengdu. These four economic centers are more internal compared to the previous coastal economic capital and they are located along the renewed “silk road”, Belt and Road Initiative, BRI.

“China wants to make sure to be self-sufficient in some key sectors”, explains Renzo Cavalieri, an expert in Chinese Commercial Law. Established in 1988, the CHIDZ ranks the 4th among all China’s state-level high-tech zones, plus, between 2011 and 2014 public spending in these sectors grew by 78.7%.

Among these new technological centers, Chengdu has always been one of the centers for Chinese production activities. Its long history of electronic and technological industries has easily led the city to be the center of high tech that attracts most a variety of multinationals including Nokia, Microsoft, IBM, Cisco, and more. However, Chengdu is not just about multinationals.

Chengdu aims especially to become a startup hub and plans to attract at least seven among the 150 Chinese startups with a valuation of over $1 billion. These private companies are called “Unicorns” and include companies such as Xiaomi, smartphones producer, Didi Chuxing, car reservation platform, or Meituan Dianping, e-commerce and reviews aggregator.

Led by the top, as often happens in China, the local government has followed the guidelines of the central government for innovation development. The help of local administrations for innovation, in addition to facilitation policies, can be measured by their spending on science and technology. Despite the fact that Chengdu has invested less than other cities in innovation (1.2% of its budget), between 2011 and 2014 public spending in these sectors grew by 78.7%.

With the aim of becoming a technology hub and the goal of attracting global talents and enterprises, the Chengdu Hi-tech Industrial Development Zone (CHIDZ) established in 1988, actually ranks the 4th among all China’s state-level high-tech zones. This high-tech development area has promoted countless Chinese technology companies to help them enter the international arena.

“When the company was established in 2009, the local authorities offered us favorable tax reductions and policies. A decade later, our company contributes tax of over 10 million RMB ($87,152) annually” said Wu Jiemin, President of Vision-Zenith Tech. Co., a local AI company.

This Hi-tech Industrial Development Zone has at least 30 of the most important companies in the United States and more than 12,000 domestic companies.

“I have visited the High-tech zone in Chengdu several times. The local authorities have provided foreign talents with many convenient services, including language services and simplified visa procedures. This is a good place for tech startups” said Zumin Rusputin, a 35-year-old Pharmaceutical researcher in Moscow.

Location is what makes Chengdu so significant for innovative development. Its strategic location within the BRI is one of the cornerstones for achieving innovation and technological leadership in China. The BRI map tracks three roads that will reach the heart of Europe from the Chinese hinterland; Africa from the Chinese sea; and that will also travel the polar road to Greenland. 

The idea is to connect Chinese and international markets with the aim of developing collaboration between China and at least 70 other countries located in an area that accounts for one-third of the world GDP.

An example of this connection started in Chengdu where, in collaboration with the Sino-US Business Innovation Center(Boston) and Curelong (a unit of US-based Cureport), the Chengdu Tianfu International Bio-town was established, which will be a nanobiomedical technology development, incubation, cooperation and commercialization center.

“With the promotion of international cooperation and the deepening of cooperation between schools and enterprises, it is expected that more internationally renowned enterprises and talent will settle down in the bio-town” said Li Xinwei, chairman of Chengdu Tianfu International Bio-town Investment and Development.

“As one of the best-performing cities in China when it comes to economic growth, industrial strength, and overseas investment, Chengdu has immense potential to add value to the former South Silk Road’s revival” said Steve Huang, CEO, DHL Global Forwarding China.

Growing internationally and integrating into global industrial networks, Chengdu has become the 4th pole of IT industry in China, after Beijing, Shanghai and Guangzhou, hosting some of the Information Technology giants such as Dell, Huawei and Alibaba.

Half of the laptop chips and two-thirds of all iPads are produced in the “Country of Heaven”, whose IT industry has generated 480billion yuan in revenue just last year. According to the city’s expectations, this figure will reach 1trillion yuan by 2020. Chengdu’s GDP has already surpassed $160 billion last year, with an increase of 7.7% from the previous year.

The city once famous for its giant panda now embodies the idea of Chinese development embracing concepts such as innovation, sustainable development, open and shared development.

Thanks to its fast growth and a policy of innovation and collaboration with international know-how, Chengdu has become the most promising Western investment center in China. It now ranks 2nd within the second-tier cities for foreign investments that now exceed $10,016 billion.