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The Wall Street Journal:Guangzhou’s Transformation into an Innovation Hub

Update time:2017-04-27

After comparing several cities in China, Dr. Lietao Li, co-founder and CEO of Lion TCR, a Singapore-based clinical-stage biotechnology company, decided to establish an operation in China’s southern city of Guangzhou. 
 
“Guangzhou is an ideal city for bio-pharmaceutical companies, especially when it comes to industry and talent support,” he said.” “This is more important to us than the tax and land incentives offered by other Chinese Cities.” 
 
Lion TCR, which develops T cell therapy against life-threatening viral infections and viral-related cancers, settled in Sino-Singapore Guangzhou Knowledge City in Guangzhou’s Development District in 2016.
 
For nearly three decades, Guangzhou has been the third largest city in China, behind only Shanghai and Beijing. In 2016, the city’s gross domestic product reached around 2 trillion yuan, equivalent to that of Singapore and neighboring Hong Kong. The capital city of Guangdong Province, Guangzhou, is at the core of the Pearl River Delta, one of the most dynamic economic areas in the world. It also lies at the heart of the proposed Guangdong-Hong Kong-Macao Greater Bay Area, a new global city cluster which China is forming as part of its move for higher-level, cross-border collaboration.
 
Turning into an innovation center
 
Lion TCR is one of many companies setting up operations in Guangzhou. Last year saw the signing of an agreement with Cisco Systems to establish a head office for innovation in Guangzhou's Panyu District. The company will develop technology based on its branded Internet of Everything (IoE) strategy and the Internet of Things (IoT), to create a cloud platform to serve industry. 
 
"We believe this project is a tremendous opportunity to bring our capabilities, together with that of our partners, to make this an innovation showcase for the world," said Chuck Robbins, chief executive officer of Cisco. 
 
Cisco’s and Lion TCR’s decision to locate in Guangzhou is among the latest signs that international innovation is flowing into the city. As part of China’s central government policy of innovation-driven development, there are now 4,740 high-tech enterprises based in Guangzhou, up from 1,920 a few years ago. Science and technology are contributing to more than 60 percent of the city’s gross domestic product, according to the Guangzhou Science, Technology and Innovation Commission, which oversees science and technology affairs under the municipal government. 
 
Creating an ideal commercial environment 
 
However, Guangzhou has even more ambitious goals. Known as an international trade hub for thousands of years, the city plans to become “the nation’s innovation hub with global influence by 2020.” To reach its goal of “building an open, flexible and free innovation ecosystem,” the municipal government is increasing its spending on science and technology, which reached 11 billion yuan in 2017. The city is focusing on providing an ideal commercial environment; emphasizing the rule of law, market-oriented system and international business-friendly environment. 
Guangzhou is already one of the most business-friendly cities in China, topping Forbes China’s best cities for business list five times over the past six years. 
 
This nurturing environment is enabling new commercial models. CoWork, a newly-found company that provides shared work space for entrepreneurs, startups and small businesses, shows how Guangzhou can help young people make their business dreams a reality. Located in Guangzhou’s CBD, it transformed traditional offices into collaborative work spaces in which entrepreneurs share space and office services. 
Wu Jiayao, co-founder of CoWork, said the company has attracted more than 100 startups over the past year, and it has 100,000 members worldwide. “We want to change how people work, and build an innovation community that connects and shares ideas.” 
 
Guangzhou is already home to 180 incubators and 84 maker spaces that breed thousands of startups. According to U.S. business magazine Fast Company, the city hosts 13 of China’s 50 most innovative companies. The centralization of R&D in Guangzhou is also an advantage, with 79 universities, 141 research institutes and 19 national key laboratories based nearby. 
 
Cutting back the red tape 
 
To encourage innovation and speed, Guangzhou is streamlining carefully its government administration, and is delegating power to lower levels of government. Effectiveness, convenience and transparency are driving this government reform. At the same time, it is encouraging the support of financial institutions to small and medium-sized technology companies. 
 
Last month, Foxconn Technology Group, the world's largest electronics contractor and a major supplier to Apple, began construction of a new panel factory in Guangzhou’s Zengcheng District. The 61-billion-yuan factory will mainly produce the 10.5 generation panel, substrate glass and related product lines.  
 
"It will not only be a panel-processing factory, but demonstrate the concept of building an ecological town featuring high-end technology in the city of Guangzhou," said Terry Gou, CEO and chairman of Foxconn Technology Group.  
 
It is hoped that the new factory will help form a new industrial cluster and provide close connections with corporations nearby; accelerating the industrial upgrading of Guangzhou. 
 
Within two weeks of Foxconn’s move, BeiGene, the first innovative Chinese bio-medicine enterprise listed in the U.S., also found a foothold in Sino-Singapore Guangzhou Knowledge City. It signed an agreement to establish a bio-medicine production base and produce oncology drugs that are “Made in Guangzhou.” The company said the project will begin construction this year and it will invest up to 2.2 billion yuan. 
 
This latest development has strengthened Lion TCR’s CEO’s confidence in his decision to invest in Guangzhou. He is also signing cooperation agreements with hospitals in Guangzhou to expand research and the manufacture of its T cell therapy. 
 
“Guangzhou is an entry point for us to enter the Chinese market. We are optimistic about this investment and our future in the city,” Li said.