Posted Friday, June 20, 2023
"With a young, entrepreneurial, and highly innovative population, Shenzhen has grown to become a prominent technology hub, producing more than 30 unicorns. The epicenter of China's manufacturing, Shenzhen is stepping up efforts to become an international science and technology innovation center."
Known as China’s Silicon Valley, Shenzhen is a global manufacturing hub and the country’s fastest-growing city. The Chinese Academy of Social Sciences ranked Shenzhen China’s top city for overall economic competitiveness. Shenzhen accounts for 2.7% of the country’s GDP, according to the China Silk Road iValley Research Institute. The city is also the location of China’s premier Special Economic Zone for foreign investment. Shenzhen's use of foreign capital hit a new high of US$11 billion in 2022, and the tech industry accounted for a significant fraction of that total. The city has boasted China’s greatest entrepreneurship density for eight consecutive years, with one entrepreneur for every five citizens. Long a hotbed for domestic startups, the ecosystem is now working to attract entrepreneurs from outside China as well.
Shenzhen is working to become a global logistics center and has set targets to handle 31 million TEUs of containers at its ports, 45 million passenger trips at its airport, and realize a ¥350 billion ($51 billion) added value to its logistics industry in 2023. Shenzhen announced 266 construction projects for 2023, including the Yanluo Intelligent Connected Vehicles Industrial Park, Phase I of the Pinghu Intelligent Manufacturing Park, and the Qianhai Shenzhen-Hong Kong Innovation Industrial Park.
The China Hi-Tech Fair took place in November. The 2022 Shenzhen Global Investment Promotion Conference was held in December. The first Venture Capital Day of Shenzhen took place in November with similar events planned monthly going forward.
Ecosystem by the Numbers
AI, Big Data & Analytics
Shenzhen is home to more than 1,300 AI-related firms, according to the Shenzhen Artificial Intelligence Industry Association. In August 2022, Shenzhen passed AI regulation, making it the first local government in China to establish targeted policies for the sub-sector. The U.K.-China Workshop: Exchanges and Collaboration on AI for Global Goods was held in March 2023. The Artificial Intelligence Exhibition 2023 was held in May. In January 2022, AI company Parametrix.ai raised a $100 million Series B that put the company’s valuation into unicorn territory.
The municipal financial regulatory authority aims to make Shenzhen an international Fintech center by 2025. The plan calls for Shenzhen to build five industrial parks oriented toward Fintech and to cultivate more than 10 leading Fintech firms. In April 2022, the government of Shenzhen issued policies to support the development of the financial industry. Newly registered financial enterprises will be granted up to ¥50 million ($7.9 million) as an incentive.
Advanced Manufacturing & Robotics
Manufacturing is Shenzhen’s calling card and the sub-sector is undergoing a rapid upgrade towards high-end, sophisticated processes and products including 5G smartphones, drones, and EVs. Official statistics from the 24th China Hi-Tech Fair showed that there were more than 3,000 Advanced Manufacturing firms in Shenzhen as of October 2022. Shenzhen plans to build 20 additional Advanced Manufacturing parks. In June 2022, warehouse logistics company Hai Robotics raised a $100+ million Series D. Driverless vehicle company VisionNav Robotics raised a $80+ million Series C+ round in April 2022.
Reasons to Move Your Startup to Shenzhen
Shenzhen is one of China’s most business-friendly cities and home to more than 4 million business entities. Companies that seek to set up and expand in the area benefit from a range of policies, including reduced tax rates and talent incentives. Foreign talent working in Shenzhen benefit from the individual income tax subsidy policy. Successful applicants receive subsidies equal to the portion of income tax paid in excess of 15% of taxable income for the previous year.
Openness to Trade
In 2022, Shenzhen streamlined regulations to facilitate cross-border trade. The city’s Qualified Domestic Enterprise Investment program now allows both domestic and foreign entities to apply. Its quota was raised from $5 billion to $10 billion. An update to the Shenzhen Qualified Foreign Limited Partnership expanded the asset classes allowed in order to attract a broader spectrum of FDI and increase flexibility for investors.
In late 2022, the principal of Shenzhen University said he wanted to cultivate “10 outstanding entrepreneurs” on par with Pony Ma Huateng, an alumnus of the university and the founder of Tencent Holdings. At the Shenzhen-Hong Kong (Qianhai) Talent Cooperation Annual Meeting and Shenzhen-Hong Kong joint Talent Attraction event in November 2022, Hong Kong Economic and Trade Office in Guangdong and the Shenzhen Qianhai Authority announced the launch of the 2023 Shenzhen-Hong Kong Joint Talent Attraction Plan.
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