A Silicon Valley in China?

At least, that’s what a city located 400km west of Shanghai wants to become by 2020.
The government of Hefei, the capital of Anhui province, aims at turning the city into a major centre for global technology companies. To this end, it has already invested USD 2 billion.

In itself, Hefei’s strategy is hardly surprising, given the ideological importance given to science and education in the reforms that started 30 years ago. In fact, it complements policies taken at the central government level: the Chinese State recently earmarked USD 800 million for 12 major scientific and technological developments in the period between 2006 and 2010. Another USD 600 million were earmarked for innovation-oriented projects in the Chinese Academy of Sciences. An additional USD 300 million will be used to finance the establishment of 100 State-level engineering labs, update 50 State-level engineering centers and help set up 300 corporate technology centers…

Can Hefei succeed? Costs are of course much lower and the software engineers are well-trained. But, the success of the Silicon Valley can hardly be attributed to a labour cost advantage – they probably come far behind a long list of factors including the organization of production, entrepreneurship, labor market flows, etc.

Don’t discard the plan all together. With close to 100 corporate and engineering technology centers the city of Shenzhen,  which used to be farmland not so long ago, has become the largest production base of communication terminal devices in the world, taking half of China’s market share and one third of the world’s.

Techno-nationalism redux or sound planning?