Is Shenzhen the new Silicon Valley?

As a regular traveler to China since 2001, I have visited various parts of this vast and diverse country, and like many, grew fascinated by its economic rise. So, I consider myself somewhat familiar with China and over time have forged deep friendships with Chinese business leaders and philanthropic institutions. However, nothing prepared me for what I witnessed in Shenzhen two weeks ago, during my first visit post COVID.

In just over 40 years, this city, or rather region, has transformed itself from a quiet fishing village with a few thousand inhabitants into a major metropolis of around 18 million people, spread across six districts. Today, Shenzhen is also home to technology powerhouses like Huawei, Tencent, WeChat, BYD (a manufacturer of electronic cars), BGI (a bio-science research and genomics giant), DJI (a leading drone maker), to name just a few. With a GDP of nearly US$450 billion, Shenzhen ranks third in China behind Shanghai and Beijing.

The fairytale of Shenzhen began in January 1992 during a visit by former Chinese leader Deng Xiaoping to the area. He made a speech on a small hill surrounded by many lakes and overlooking the future Special Economic Zone, labeling the Shenzhen economic model a "technology cluster experiment." What followed from this speech was a textbook definition of a technology cluster or ecosystem, which included business incubators, academics, researchers, investors, and businesses coexisting within a like-minded campus. The “icing on the cake” was building a desirable space for people to live and work that includes many amenities, fancy restaurants, shopping centers and locations to pursue hobbies.

During my recent visit, I was fortunate to be hosted by the District Chief of Guangming, a region within the outer Shenzhen city, ?located northwest of the downtown and within an hour’s drive. It is home to a new university that resembles the campus of Stanford University and hosts many technology companies, R&D parks and much more. As I sat next to the boss at the main table as an honored guest, he was very curious to learn what it would take to attract foreigners to come to his district and set up shop here – bringing their businesses and families along. While he was accustomed to receiving compliments and kind words from his foreign guests, he was keen on constructive external input to develop his city and make it appealing to foreigners.

After sharing several rounds of baijos following the welcoming rituals, I began to offer my candid perspective, risking at times to offend my host. I spoke from my previous experience as advisor to Dubai Government and then first tenant of the Dubai Internet City to my journey as founding director of the Masdar project in Abu Dhabi. Among the many suggestions, I confessed that most foreigners would be hesitant to bring their businesses to China primarily due to concerns about intellectual property protection. I explained that other concerns he needed to address would likely relate to freedoms they take for granted at home, such as fast and open internet access to sites outside mainland China, including as an example access to Google or Facebook products. He also seemed to particularly appreciate the idea of the one-stop-shop government services to allow newcomers to setup companies, obtain working permits, pay taxes and manage all types of government services through a single interface. This idea is not new and has proved very effective in Singapore and Dubai.

When I got back home, I tried my best to convey my enthusiasm and excitement about what I saw and learned in Shenzhen to my family. I also wanted to test my theory about what makes smart professionals move to new country on my own son Adam who I consider an ideal candidate that the Guangming district is trying to attract. Adam has an MSBA from USC, one of the best degrees in Data Science and a wannabe tech entrepreneur with many ideas and energy to create something new in tech. Sadly, I was either not persuasive enough or Shenzhen has so far not managed to spread and target its message to the young global entrepreneurs.

Despite the communication failure or perceived gap, I remain bewildered and optimistic about the opportunities of this new Silicon Valley as it continues to widen its ambition as a tech hub not only for Asia but for the rest of the world.