The Role of Business Incubators in China
3.2 Business Incubators and Service Sector
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the necessary resources and help their need. It is a place, where ideas meet capital. It
can be seen that the private incubators can stimulate the enthusiasm of private capital
into BIs ecosystem, as well as creating the unique culture of Chinese entrepreneurship.
In summary, BIs in China are focusing on nurturing entrepreneurs with the goals
of economic development, job creation and S&T services. However, these strategic
objectives tended to vary with the business model of the BIs and the type of sponsorship
of government involvement. The source of incubator funding in many instances
determines the BIs’ strategic focus and incubatees selection. For instance,
government-funded BIs operate with a goal of economic development, relative to a
university-affiliated BIs that may have technology transfer as its primary goal. Additionally, more
and more Chinese private entities join BIs market. Many specialized BIs provide
services with more distinctive features and objectives, focus on specific sectors and
more market-oriented. As BIs gain popularity in various parts of the world, incubator
models have evolved in variety and complexity along with the environment and society.
3.2 Business Incubators and Service Sector
The Chinese economy has witnessed tremendous transition and growth since the
reform and opening-up policy in 1978. The rapid growth of BIs plays an important role
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in facilitating China’s transitions from a centrally planned economy to a capitalist
market economy. The change is promoting the country toward a service-based economy.
China is the world's largest emerging market economy, both in terms of population
and total economic product. Its gross domestic product (GDP) is broadly contributed
by three broader sectors or industries, including primary industry (or agriculture),
secondary industry (or construction and manufacturing) and tertiary industry (or service
sector). In modern society, S&T sector is one of the most actives sectors in the tertiary
industry. To provide S&T services to high-tech enterprises, the incubation system is
included in the major part of Torch Program as BIs are an important carrier in
promoting S&T services in Chinese economy.
Since 1995, The service sector’s share of GDP has increased every year. Along
with the fact that the significant growth of service sector, the share of tertiary sector
was more than 50 per cent of China’s GDP for the first time in 2015 (see Figure 2). It
is a remarkable fact that the tertiary industry exceeded secondary industry for the first
time in 2013. Since then, the tertiary industry has become to the biggest industry in
China as well as being the main force to promote China's economic growth.
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Figure 2. The three broader sectors as percentage of China’s GDP, 1995-2015 Source: 中华人民共和国国家统计局 (2016)
The minister of MOST views that the high-tech sector of tertiary industry has the
ability to promote China's supply-side structural reform and economic transformation
and upgrading (中华人民共和国科学技术部, 2017a). Chinese BIs are viewed as big
innovative clusters which gather high-tech enterprises and offer business resources to
promote S&T progress. For instance, Beijing's Zhongguancun own the largest BIs
cluster in northern China, which contributed 24.7 per cent of GDP to Beijing in 2016
(中华网, 2017). Science and technology are closely related to each other, and BIs are
a platform to make it happen -- transfer research result to productivity.
The growth of Chinese economy has decreased significantly over the past few
years. Since 2008, the annual growth rate of GDP has gradually declined, while the
Primary industry Secondary industry
Tertiary industry
0 10 20 30 40 50 60
Industry Value Added (% of GDP)
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evidence can be observed in Figure 3. Although China's GDP growth rate dropped to 7
per cent in 2015, the growth rate of BIs and Incubatees reached 45.1 per cent and 29.4
per cent respectively. Figure 2 and Figure 3 have shown the positive correlation
between the increasing trends of BIs and tertiary industry. It is clearly that BIs as a key
carrier of S&T sectors playing one of the most essential roles in tertiary industry.
Figure 3. The growth rate of number of BIs, incubatees, and China’s GDP, 1996-2015 Source: 中华人民共和国国家统计局 (2016); 中华人民共和国科学技术部 (2015a)
China is trying to become a service-based economy through implementing various
economic tools and political measures. A report (Kelley et al., 2016) by the Global
Entrepreneurship Monitor (GEM) concluded that the establishment of BIs is one the
45.1%
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Annual Growth Rate of the Number of BIs Annual Growth Rate of the Number of Incubatees Annual Growth Rate of China's GDP
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essential means that can deal with youth unemployment in developing economies. In
China, the annual growing number of BIs reflects the growth of incubatees, and the rise
of incubatees leads a significant increase in job creation and annual income of BIs
market. Additionally, more and more incubating enterprises leave BIs system as they
have learnt the survivability of social adaptation. Those economic indicators including
the number of incubators, incubatees and employees of incubates are growing stably as
illustrated in Figure 4, which demonstrated that BIs have played a remarkable role on
regional economic development and job creation. The more BIs established in the areas
means the more job opportunities and income created in the regions. A surge of Chinese
BIs witnesses that BIs is one of the best choices for China’ startups. BIs have been
proved that there is a strong case on the role of BIs in the overall promotion of
entrepreneurship development and economic development by development of
enterprises and creation of jobs (Waeltring & Dornberger, 2014).
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Figure 4. The overall economic data of BIs, 1995-2015 Source: 中华人民共和国科学技术部 (2015a)