As the masterplan of turning the nine cities in Guangdong as well as Hong Kong and Macau into an integrated technology hub unfolds, incubators and accelerators have been springing up around the region, all rushing to gain a foothold in the rise of China’s Silicon Valley.
Incubators, in the Western script, are companies staffed by experienced investors and executives that help startups by providing them with professional training, working space and venture capital. Accelerators are basically doing the same job, but focused on scaling up existing business models.
The landscape is rather different in China, where the central and local governments are dominant. Here, startup support services are established largely to facilitate the country’s economic development agenda laid down by the Party, and lines are always blurred in terms of the functions of incubators, accelerators and scientific laboratories.
Organizations are also classified into different categories, which entitles them to varying levels of government subsidies. There are incubators which provide a suite of services, and co-working spaces which only provide subsidized office space. The highest among these are National-Level incubators, those with more than 10,000 sqm of land, more than 5 million yuan of seed funds and a team of professional mentors accounting for over 80% of total personnel.
Guangdong is home to some of the most aggressive of China’s local governments in funding and supporting tech startups. According to official data, there are around 1,000 incubators based in the province, with a tenth of them being National-Level. There are also 817 co-working spaces, 158 of which are National-Level. These numbers have been surging recently – in 2018, over 200 incubators or co-working spaces were created in the province.
Hong Kong and Macau provide a lot of support to their startup community as well, but in these two SARs the private sector tends to be more dominant and, hence, failure rates are higher. Yet both are clearly getting more support from their governments as competition heats up in the battle for talent throughout the GBA.
Here is a closer look at these organizations based in the region. The following is not intended to be comprehensive, as the startup community in the Greater Bay Area is diverse. Links are provided for further reading. A good resource we have found is the Whub “GBA White Paper”, which has a list of incubators, accelerators and labs around the region.
Shenzhen: Strong base
Shenzhen, not surprisingly given its reputation as a tech-oriented megacity, has been the base for no fewer than 463 incubating bodies.
The biggest of these is situated at the center of the prestigious Nanshan district, home to one third of listed companies in the city: Shenzhen Bay Entrepreneur Plaza, a 400-metre-long block with 18 high-rise office buildings where some of the best-known tech firms can be found. This is home to Tencent’s headquarters, Baidu’s southern China headquarters, and Alibaba’s southern base for R&D.
Around these big names are scattered hundreds of smaller, up-and-coming tech firms. It is designed this way, as the city government wants the giants to help lead the startups in their growth. The plaza is essentially a cluster of individual incubators or accelerators. Currently it has over 30 registered, including those of Tencent, JD.com and Lenovo.
It is an interesting mix, to say the least. Observers might be forgiven for thinking that Shenzhen is a private-sector tech Nirvana of sorts in China, yet be surprised to see how strong the guiding hand of the state is here.
The first incubator established in the plaza was Stargeek, set up by computer manufacturing giant Lenovo in 2014, focused on investing and offering supply chain service to smart hardware startups. The incubator, itself valued at over 2 billion yuan in 2018, has served more than 300 projects in the past four years, of which over 30% have passed a Series A financing round.
Social media behemoth Tencent has an incubator called WeStart near its headquarters. The 10,000 sqm space in the plaza can accommodate around 1,000 people working on 100 projects. Mentors on hand have backgrounds not only from Tencent, but other giants like Huawei, as well as Shenzhen’s state-owned investment company. It provides subsidies of up to 10 million yuan to companies and 500,000 yuan to individuals.
Probably the most influential accelerator for foreign firms sits within the city’s biggest company, Ping An Group. The Ping An Cloud Accelerator has the support of the Futian district government and has dozens of late-stage startups in its stable. (A longer feature on this is coming up soon.) Ping An doesn’t get as much attention in international media as Tencent or Alibaba does, yet its tech resources and distribution channels are just as powerful.
The plaza also has 10 banks and five securities company on site, signaling strong financial support made accessible to the startups.
Another incubator in the city that draws media attention is Qianhai Shenzhen-Hong Kong Youth Entrepreneur and Innovation Hub. What makes it different is the focus on cooperation with Hong Kong entrepreneurs.
Located in the pilot district for cooperation between mainland China and Hong Kong, the incubator was established in 2014 by the Qianhai Authority. The largest youth associations in Shenzhen and Hong Kong – the Hong Kong Federation of Youth Groups and Shenzhen Youth Federation – are jointly responsible for its operation.
By providing discounted office space, financial support and startup training, it is designed to attract entrepreneurs aged 18 to 45, with a large proportion from Hong Kong. Up to the middle of last year, it had served 388 startups, of which 190 are from Hong Kong and Macau, said Wang Yanxia, deputy director of Qianhai Authority. The project is now expanding to a second phase with 19,000 sqm of floor area added to the original hub, which is expected to open by the end of this year, Wenweipo reported.
Shenzhen also has dozens of privately funded incubators, from established global brand names, such as Startup Grind (backed by Google), to smaller firms focused primarily on the co-working industry. Some of the better-known names are Shenzhen Open Innovation Lab, Accenture, and KPMG.
Guangzhou: High growth
Growth has been accelerating: In 2018, the city established more than 100 incubators or co-working spaces, more than half of the whole province’s total for that year, as quoted by local media.
The top incubators, as ranked by the government, are found around the city’s “cores” of the Science and Technology Innovation Corridor (STIC), a blueprint for boosting the region’s technology advance within the overall GBA masterplan. The largest two in Guangzhou, Huaxin Park, or South China Advanced Materials Innovation Park, and Guangzhou Torch Hi-tech Innovation Centre, are both located in the center of Huangpu district, with a combined land area of 660,000 sqm.
Another big one has come out of Sun Yat-sen University Science Park, the incubator based on the academic resources of the leading university in southern China, which has multiple campuses spread out in the Haizhu district, Nansha district and the University Town in Panyu district.
The second highest-ranked university in the city, South China University of Technology, also has a national-level Science Park founded in 2005 in its Tianhe district campus. It provides training, intermediary services and consulting services to newly established companies in the areas of electronic information, advanced materials, biological engineering and environmental protection, among others. It also offers access to more than 10 venture capital firms, including Guangdong’s state-owned VC company, IDG Capital.
For the two other universities ranked by the Times Higher Education World University Rankings, Jinan University has a School of Entrepreneurship in Tianhe offering courses on setting up businesses to some 4,000 students each year, and Guangdong University of Technology has cooperation with four incubators and a co-working space in the province.
Nansha district, designated as a state-level New Area in 2012, has become a massive incubator itself with preferential policies in the fields of economy, technology and the service industry, as well as large subsidies – 100,000 yuan for individuals and up to 5 million yuan for companies. The Guangzhou government has been pouring resources into what it calls the Nansha Innovation Valley – a collection of incubators heavily focused on recruiting companies and people from Hong Kong.
Xiangjiang Unicorn Field is one of the incubators in Nansha. Jointly established in 2017 by the Nansha government, Microsoft and Guangzhou-based conglomerate Heungkong Group, it is aimed at nurturing “unicorns”. While much smaller, at 2,000 sqm, the incubator has been remarkably successful, serving more than 60 startups, which added up to 50 billion yuan to their valuations within a year. These have included some well-known names in the AI sector: iFlytek, Pony.ai and CloudWalk Technology. Some startups from Hong Kong have relocated their offices as well as their entire staff to Nansha, the incubator said.
Hong Kong’s University of Science and Technology has been a key early partner in establishing Nansha as a tech innovation center, and is currently expanding its presence with a large-scale new campus.
Hong Kong: High costs
With research showing nine out of 10 startups in Hong Kong have failed, as reported by SCMP, the city dominated by the financial industry has long been seen as unfriendly to local entrepreneurs due to high office rents and rigid regulations. That has been changing in recent years, however, as the government has realized it needs to do more to maintain the city’s edge as the GBA’s leading international gateway. Free or subsidized office space is now widely available, and subsidies are being provided to promising startups in larger amounts.
Behind the government’s efforts to boost startups are two organizations: the Hong Kong Productivity Council, and InvestHK. Both have financial and expert resources to support startups in the city.
One of the two main campuses for clusters of tech companies are Cyberport, wholly owned by the Hong Kong government with about 1,400 tech firms, of which 350 are in fintech. This includes big guns such as Microsoft, Lenovo, and Zhong’an, as well as homegrown startups such as Gogovan.
The project focuses on the commercialization of a variety of advanced technologies, including fintech, smart living, digital entertainment and esports, artificial intelligence and big data, blockchain and cybersecurity, according to its website. It has reported impressive achievements over the past years: 97% occupancy rate in the fourth quarter of 2018 as well as a surging number of applications from 100 to 600.
The second main tech hub receiving government support is the Hong Kong Science Park, out in Sha Tin. Founded in 2002, the first Hong Kong organization to be named a “National-level Technological Companies Incubator” by China’s Ministry of Science and Technology, the park accommodates five technology clusters: biomedical, electronics, green tech, information and communications technology, and material and precision engineering. Near the Chinese University of Hong Kong campus, the park focuses on smart city, healthy ageing and robotics. With HK$18 billion raised in 2018 for its incubatees, it has seen more than 660 startups graduating from the park, of which 78% are still in business.
InvestHK plays a key role in organizing major industry events, particularly the StartMeUpHK festival. The Hong Kong Productivity Council, an organisation established by statute in 1967 to help enterprises upgrade their business performance and lower operating costs, manages a dedicated one-stop service hub, SME one, which provides government funding, support programmes information and free consultation services to SMEs.
Macau: Small beginnings
Macau also has a couple of incubators, though small, aimed to improve the business link between the city’s young entrepreneurs and the mainland and overseas countries.
Macau Young Entrepreneur Incubation Centre was established in 2015 by the Macau Economic Bureau, and has been managed by Parafuturo de Macau, an investment and development company established by Macau and Zhongshan government. Located in Macau’s central business hub of ZAPE, the 1,300 sqm area offers a range of entrepreneurial services including shared office space, professional consulting and training and access to investment capital. It is based on two major platforms – the Youth Innovation and Entrepreneurship Centre of China and the Portuguese-speaking Countries, and the Macao Interactive Zone – to cooperate with other incubators in the mainland and overseas. As far as July 2019, there were around 100 startup teams in the incubator, half being IT projects, local media reported.
Of a smaller size in the city is Macau Envision Accelerator. Founded in 2017, it housed 10 startups in a year, including both local teams and mainland teams via Envision Capital. The platform has featured financial support from the company’s investment arm in Beijing, and has teamed up with zbj.com in 2018, hoping to benefit from the resource of 13 million users at the Chinese online creative service platform.
This is not to dismiss Macau’s future as a tech hub. On the contrary, it is just getting going, with major ambitions. Its path to tech stardom lies in the Hengqin New Area, the special zone facing the Cotai casino district on the Zhuhai side of the border. This is where the Macau-Hengqin Youth Entrepreneurship Valley (Inno Valley HQ) is situated. A 12.7 sqm cluster covering functions of co-working space, incubator and accelerator with the investment of 1.2 billion yuan, the project is aimed at attracting young entrepreneurs from Macau who aspire to start businesses in the mainland. Startups in the valley can receive subsidies of up to 80% for office rents, as well as up to 200,000 yuan of additional financial support, 21st Century Business Herald reported. A total of 94 experts have been recruited to provide mentorship over the past five years, serving 376 projects, of which 201 are from Macau.
However, much bigger plans are reportedly under way since the visit of President Xi Jinping in December 2019. The Macau and Guangdong provincial government are apparently planning to pour resources into the creation of a “Zhuhai-Macau Future Smart City” in Hengqin, which is expected to result in many more incubators and accelerators popping up in the zone.
Zhuhai currently has 34 incubators and 34 co-working spaces classified as national-level or provincial-level as far as December 2019, 10 and 12 being National-Level, respectively.
The most prominent include the city’s Hi-tech Innovation Service Centre which has two individual incubators, as well as the 145,000 sqm Nanfang Software Park serving more than 200 companies, and 357,000 sqm Tsinghua Science and Technology Park set up by Tsinghua University. All three were founded in the early 2000s.
As the once manufacturing-heavy city is still in the process of upgrading its industrial structure, Dongguan has a remarkably lower number of startup support centers: 67 incubators and around 10 co-working spaces.
However, Songshan Lake, one of the “ten cores” in the Science and Technology Innovation Corridor as well as the base of two of the country’s high-level research laboratories, has been widely praised as an up-and-coming research centre for the nation’s advanced material industry.
The propaganda has successfully grabbed the attention of top brands in Silicon Valley. In August 2019, Founder Space, one of the world’s best-known incubator/accelerator companies with over 50 partners in 22 countries, just opened an office in Songshan Lake in collaboration with Dongguan’s digital platform startup Foocaa-tech, providing office space and a range of services to help local startups.
Foshan has 30 incubators and 31 co-working spaces up to December 2019, with 18 and 20 being National-Level, respectively.
According to a report released by the city government in 2018, there were as many as 2710 incubatees in the city, with 263 of them graduated in the year, covering various industries including electronic information, biological medicine, advanced materials and new energy. Among the 32,100 people employed in the incubators, 15% are university students, southcn.com reported.
Zhongshan has 43 incubators and 34 co-working spaces by the end of 2018, 5 and 12 being national-level, respectively, Southern Metropolis Daily reported. By that time there were 1,264 companies in the incubators covering a total of 1.16 million sqm in floor area, with 544 graduated companies creating over 14,000 job opportunities.
Zhongshan has 11 incubators and 12 co-working spaces up to May 2019, most being classified as provincial-level. The only incubator came as national-level in 2019 – Zhongshan Zhangqi – was located in Zhongshan’s Huoju Development Zone, covering an area of 10,800 sqm with 46 companies.
Jiangmen has 33 incubators by November 2019, of which two are National-Level and three are Provincial-Level. Most are clustered in the city’s Pengjiang district and Hi-tech Zone – 11 and 8 each. Of those in Pengjiang covering more than 160,000 sqm of land, there is an incubator dedicated to Hong Kong and Macau companies, called Zhuxi Inno Valley, which is one of four of its kind in Guangdong. It has served 121 startups, 43% of which were set up by entrepreneurs from Hong Kong or Macau. Those in the Hi-tech Zone tend to focus more on small and micro businesses.
Zhaoqing plans to have 30 incubators or co-working places in the city by 2021, leveraging the resources from the Science and Technology Innovation Corridor, southcn.com reports. International Academy of Optoelectronics, a research institute jointly established in 2016 by the city government and South China Normal University in Zhaoqing, focuses on nurturing startups in the field of optoelectronics. By September 2019, 18 companies have graduated from the institute. The total output from the incubatees in 2019 is expected to exceed 100 million yuan.
While the kingdom of incubators keeps emerging across the GBA, it seems only a matter of time for investors to find out how many of them could give birth to next DJI or SenseTime, and how many would be kicked out of the race over time.
Editor’s note: Do you have feedback for us about incubators/accelerators in the GBA? We would like to build a more comprehensive database. If so, please contact us.
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