The Role of Business Incubators in China
3.1 Overview of Chinese Business Incubators
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Chapter III
The Role of Business Incubators in China
China has a different incubation market unlike the rest of the world, which unique
development and experiences create BIs sustained growth and innovative capacity.
Chinese BIs experienced the evolution of the past few years, and gradually became the
essential part of Chinese innovation systems as they provide services with more
distinctive features and objectives. In this Chapter, incubations in the two representative
regions, Wuhan and Shenzhen will be examined in order to understand the critical roles
of BIs in regional economic development.
3.1 Overview of Chinese Business Incubators
Most BIs in China were founded by the Chinese government in order to develop
China's S&T capacity. The incubators in China emerged in the year of 1988 when the
first state-level BIs was formally established in China. It was the first BI predominantly
founded and operated in a high-tech development zone by government. Over the past
decades, Chinese BIs have played a remarkable role in transforming the Chinese
economy as the government is aiming to improve China’s competitiveness in S&T
development.
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The director of Torch Center viewed that there are 5 types of BIs in China, which
includes type of Investment-Oriented, type of Counselling Training, type of Media
Extension, type of Professional Services and type of Makerspace (人民网, 2015).
Type of Investment-Oriented. This type of BIs are helping startups who meet
financing problems, helping incubatees connect investment resources, and advancing
ventures odds of success. Garage Café (chekucafe) is one of the representative
incubators, it provides one-stop investment and financing solution, helps incubatees get
financing assistance in the short time.
Type of Counselling Training. To enhance the entrepreneurial capacity, this type
of BIs focus on entrepreneurship education and training counseling, and making full
use of their network resources. They invite well-known entrepreneurs, venture capital
experts, industry experts as mentors, offer counselling for entrepreneurial companies.
Peking University Entrepreneur's Training Camp is one example, which provides a
series of curriculum training and mentor program by using university educational
resources and alumni resources during the earlier stage of incubatees.
Type of Media Extension. This type of BIs are founded by the media. These BIs
use the advantages of media promotion and make a combination of online and offline
services. They provide a comprehensive business resources, including publicity,
information and investment and more. The typical one is 36Kr, which is a technology
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media platform. 36Kr is one of the leading service providers for internet entrepreneurial
enterprise, including the media 36kr.com, financing platform and enterprise incubator
Kr Space.
Type of Professional Services. This type of BIs are established by leading
companies of the industry. They committed to serve mobile internet industry by
providing social networking, professional and technical services, and supporting
industrial resources. These BIs are having cloud computing ability, such as Microsoft
Cloud Accelerator Program. The Microsoft Cloud Accelerator Program is a series of
targeted learning resources and experiences that provides clear guidance on how
customers can increasingly take advantage of the benefits of cloud.
Lastly, Type of Makerspace. Makerspace is a concept of open workshop that
provide access to a range of tools and resources for making physical objects. To serve
enterprises who have individual needs, these BIs are set up on the ideas from internet
and technology fields, and providing open source hardware and 3D printed
manufacturing tools. They are such a converter transforming ideas into real products,
offering a platform for products making, workshop coaching and mentoring, product
design counseling, supply chain management services and idea brainstorming. The
typical one is Chaihuo Makerspace, which provides an open and collaborative
environment for makers who want able to make their ideas happened and encourages
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cross-field communication through meetup and workshop. Chinese people see
makerspace is an approach to help China cultivate an attitude of “self-making” and
“self-entrepreneurship”.
Along with a more open business environment in China, the number of
technology-related enterprises, including technopreneurial ventures engaged in
technological innovation, has increased significantly in the last couple of years. Also,
China’s incubators and incubatees have grown faster than in other countries and have
created millions of job openings. By the end of 2015, incubators and incubatees reached
2,536 and 102,170 respectively, and would be more than double in near future. The
number of employees of incubatees was less than 30,000 people in 1995 went up to
over 1.5 million people engaged in BIs system, nearly 65 times of growth over the last
two decades. The results are given in Figure 1.
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Figure 1. The number of BIs, incubatees, employee of incubatees, 1995-2015 Source: 科学技术部火炬高技术产业开发中心 (2017a)
As one of the most important policy initiatives, the MOST set up a Torch Center
to guide the development of BIs, and was put in place in 1988 with the purpose to
reinforce overall environment for technology innovation and to promote high-tech
industrialization (Torch Center, n.d.). Of all the programs initiated by Chinese
government, the Torch Program is not only the one program to start China's high-tech
innovation but to boost startup companies. The Torch Program has four major parts,
one of them is supporting BIs in providing technology services.
The Torch Program is a part of the MOST priority, aimed at providing great
1995 1996 1887 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Number of Employees of Incubatees (10,000 person) Number of Incubatees
Number of BIs
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incubating funds. In order to speed up the establishment of BIs fostering and tutorial
system, the government has several lines of dedicated funds to support BIs in the form
of “construction” funds for BIs, “seed capital” funds for startups and “innovation” funds
for SMEs that are in the growth phase of their life cycle (中华人民共和国科学技术
部, 2002a).
In the process of the development of socialist market economy with Chinese
characteristics, Chinese BIs have different features comparing to BIs in other countries.
They are grouped into three main characteristics by their organizer including high-tech
development zone, university science park and private entity (Ping, 2005).
High-tech Development Zone. With BIs program is an important component of
high-tech development zone. The first Chinese BI, also the first state-level BI, was
driven by the government and set up in the tech development zone. Chinese
high-tech development zones have led the country's industrial innovation, and played an
important role in the nation's social and economic development. The most
representative one is Zhongguancun Science Park. The park is the first state-level
high-tech development zone and has attracted countless incubators, accelerator programs,
startup grants and venture capital funds that are the elements needed to help Chinese
young entrepreneurs succeed.
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University Science Park. To encourage university students to start a business
while in college, the Chinese government has been actively constructing University
Science Park since the 1990s. The incubation form of university-based scientific
research facilities have strong research capabilities and scientific and technological
innovation to assist the promotion of regional economic development. According to a
survey, the number of University Science Park grew from 44 in 2002 to 100 in 2015
(凤凰新媒体, 2015). Peking University Science Park is a prime example. This park is
located at the center of the Zhongguancun Science Park, where talent resources and
technical personnel are the most concentrated and is often referred to the hotbed for
high technology in China.
Private Entity. With the growth of BIs, Chinese private entities also join BIs
market. The first private BIs was established at the end of 1999 in Nanjing (陈吴 &
殷群, 2008). Since 2002, Chinese private BIs began a trend of diversification in
operational models, becoming more market-oriented, focusing on specific sectors,
multiplicity of ownership and intensifying networks (陈吴 & 殷群, 2008). Garage
Café is one of the successful examples. Garage Café is a popular space in Beijing for
startups, entrepreneurs, investors, and companies to meet, work and talk. The space
focuses on nurturing internet and high-tech startups, and promotes people cooperation
in different fields. Garage Café designed the cafe as a platform for startups to find all
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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.