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  • Jack Lau

Role of University research in Southern China

For the longest time, probably before the millennium, conventional wisdom has it that a technology hub must be powered by some local but world class research universities. Silicon Valley is only possible with Stanford and Berkeley, for instance. And, Route 128 has to give much credit to MIT. Cambridge Science Park benefited from Cambridge. So, people are not surprised when Beijing begin to spawn technology companies near Tsinghua and Beijing University, both elite schools in China.

But, then wait a minute…. Shenzhen? Really?

There can probably be a myriad of explanations….. I will try to postulate some:

  1. First mover advantage: Overall China has started in a vacuum. Shenzhen was the first to promote itself as a technology hub.

  2. Nearby and itself being the place for low cost manufacturing: When China first changed its national policy and encouraged manufacturing, Shenzhen and nearby Dongguan attracted massive foreign direct investment from Hong Kong, Taiwan and overseas. So, technology innovations naturally spawned from these factories.

  3. Proximity to Hong Kong: Probably more important at the beginning than now, it is not uncommon that senior management from both the mainland and Hong Kong can easily take advantage of Hong Kong's education and health systems while the entrepreneur him or herself work in Shenzhen, the rest of the family stay in Hong Kong. Proximity to Hong Kong also means easier access to the financial capital market in the beginning.

  4. Significant and Targeted Research and Development budget: More than 4% of Shenzhen GDP is directed towards research and development. It is also true that Shenzhen tends to be more focus in the areas it picks. In other words, Shenzhen picks winners. Shenzhen has also put out a 5 year plan in 2016 outlining its intention to achieve more than 40% of its GDP from technology industries. (

  5. Looser funding policies: Especially compared with that of Hong Kong, the funding mechanism is a lot looser.

  6. Aggressive zoning arrangement: Using landfill and re-zoning, Shenzhen has literally carved out a significant portion of its city for high tech development. This attracts major players to anchor in Shenzhen. The vision is that venture fund, big corporation, stock market, entrepreneurs, and engineers will form a happy eco system in some of the new areas, such as those closer to the Shenzhen Hong Kong bridge.

While we speak in awe about the developments in Shenzhen, they are probably not without its own potential peril:

  1. Fundamentally, any city which relies too heavily on any one single sector, may experience its boom and bust more easily. The ability of the city to deal with an inevitable downturn will bring true testimony of the city's resilience.

  2. Most of the technologies being developed in Shenzhen are consumer based. The argument is that these are not "essential" and demand is cyclical. As a drastic example to explain, pharmaceutical products are far less cyclical.

  3. Despite its effort, Shenzhen still does not have a local world class research university to churn out next generation technology leaders. (It is being compensated by a combination of graduates from overseas, and from institutions outside of Shenzhen.) However, in a classic technology start-up model, many of the most successful startups are based on intensive collaborations between the University's faculty, students and industries. And, most recent startups are actually formed by students immediately or soon after they graduates. So, having someone who parachuted in the Shenzhen area may not have the same impact.

What Hong Kong can Play

  1. The fact is that in the long term, there must be a world class university to sustain a vibrant technology hub. We don't see historically there is any other possibility.

  2. There is now a vacuum of such a university in Shenzhen, and actually in the entire southern China.

  3. We call for universities in Hong Kong, such as HKUST, to have the ambition and vision to be the dominant player in the technology industry for the entire Southern China. And, we also call for the University to plan on strategically on how to achieve that goal.

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