Shenzhen is expected to lead the way, with a digital economy that makes up 31% of its GDP, compared with the national average of 10%. Shenzhen’s digital transformation could set the tone for China’s broader economic policies and strategies.
No place is more emblematic of China’s economic transformation than Shenzhen, widely touted as the Silicon Valley of China. Officially a special economic zone, Shenzhen is a city-level policy experimentation zone: the first of its kind. As such, it attracted government resources that helped GDP grow an average 20.7% over 40 years, surpassing even Hong Kong and Singapore. On average, Shenzhen has 8.5 state-level high-tech enterprises per square kilometer and 71 invention patents approved daily. In 2020 it boasted the third-highest concentration of China’s 500 most valuable private companies, including Tencent, Huawei, and Vanke. Nearly 300 overseas Fortune 500 enterprises operate there. Under its five-year plan, Shenzhen has the mandate to become China’s “core engine” of reform and to power growth and innovation in a region comprising nine Guangdong cities, Macau and Hong Kong. The goal is to build a global digital-pioneer city that will help catalyze China’s transformation into a strong digital economy. Shenzhen’s own digital economy makes up 31% of its GDP, compared with the national average of 10%. Within Shenzhen, Longhua District is spearheading the transformation. Among its promising plans and policies: Platform + Ecology, which encourages partnerships between Longhua’s technology companies and traditional manufacturers to improve manufacturing productivity through digitization. Longhua also is constructing eight themed clusters of “application scenes” that together comprise its vision for the future, digitally empowered City.
Ecosystem by the numbers
AI, Big Data & Analytics
The Shenzhen AI Industry Association calculates China’s AI industry is now worth USD 50.75 billion. As of 2020, the number of AI-related companies in China reached 6,425. In June 2020 Shenzhen published draft regulations in order to establish a clear regulatory framework for the sub-sector. The municipal government also set up an AI ethics council. The Shenzhen Institute of AI and Robotics for Society is sponsored by 7 world-leading robotics and AI research institutions. Shenzhen is home to the International Artificial Intelligence Exhibition. AI chip maker Intellifusion raised nearly US$141 million in financing in April 2020. SmartMore Technology raised a $31 million Series B in June 2021, following a $100 million Series A in October.
Reasons to move your startup to Shenzhen
Dynamic Local Economy
The Shenzhen government is aiming to double the city’s GDP and GDP per capita in 15 years with a goal of having GDP reach US$618 billion by 2025. Ambitious plans call for Shenzhen to become a benchmark smart city and a model city of digital China. The city is a center for high-end manufacturing, CleanTeach, and the marine economy with plans in place to form an additional 3 industrial clusters in specific digital sectors.
Low Real Estate Costs
The costs of incorporating and maintaining a company in Shenzhen remain comparatively low. In late 2020 the cost of leasing office space was US$32 per square meter. Office space in the city has an overall vacancy rate of 18.4%.
Attractive Tax Regime
With a corporate tax rate of just 15%, Shenzhen offers an attractive tax regime to companies based there. Tax holidays are also available for companies engaging in certain preferred sectors, such as IT and knowledge process outsourcing.
Are you interested in diving deeper into this ecosystem? Drop us a message. Our Ambassadors and Partners can plug you in.