We believe that tech and startup scene enthusiasts are all increasing their spotlight on China, both from its economy size and spectacular innovation. The success may not be possible without the support from every sector in the ecosystem. China has numerous ecosystems, all of which is unique to the economic landscape of each city such as in Shenzhen, Shanghai, and Beijing. Today, Digital Ventures will highlight Shanghai’s tech ecosystem. This is a city that has advanced from a port city that focused on logistics to a tech talent hub, especially for FinTech.
The beginning of the Shanghai tech ecosystem
Although it is not home to tech giants like Baidu, Alibaba, and Tencent, Shanghai is a highly significant city in China and has benefited from several policies. The policy which greatly allowed the tech ecosystem to flourish in Shanghai comes from the Mass Entrepreneurship and Innovation project, announced in mid-2014 by China’s Premier Li Keqiang.
This policy aimed to support China’s economic development which was deteriorating at the time. Also, it seeks to help employ new graduates by supporting small enterprises to grow. At the time, China viewed that tech startup and tech entrepreneur were a good solution to the problem. Thus, Shanghai invested heavily in tech startups. Moreover, an appointed department was supporting the risks for VC who invested in Shanghai startups. The coverage for VC investments was as high as 60%.
Overview of the Shanghai tech ecosystem
- Asia’s economic center. In the past, Shanghai’s prosperity comes from the fact that it was China’s strategic port. However, as the economy is turning to technology, Shanghai needed to adapt and upgrade itself into becoming the region’s economic center by providing greater financial services. By 2020, the Chinese government aims for Shanghai to become an International Financial Center. This has led to various supports for businesses, including tech companies and startups.
- Home to 21 unicorns. This ecosystem is successful in nurturing unicorns. When combined with other cities, this number makes China have the most unicorn startup in the world.
- The high portion of foreign clients. Shanghai startups hold the portion of servicing foreign clients at 32%. This is rather high when compared to Beijing which is only 7%.
- China’s incubating hub for science talents. Aside from being the economic center, China’s leading talents are created here in Shanghai. This is accomplished by intense education foundations at every level. This is especially true for talents in the science field from universities which will later be discussed. Moreover, the English of Shanghai inhabitants is the best in China according to the 2017 EF English Proficiency Index.
Shanghai’s tech industry highlights
We are familiar with Shanghai’s abilities in logistics as it is China’s strategic port. However, in terms of the tech industry, Shanghai is outstanding in these 2 industries.
- FinTech. Shanghai is considered to be the center of economy and finance; therefore, it is of no surprise that FinTech startups flock to this city. In 2012 to 2017, investments in FinTech startups account for 26.5% and in terms of quality, they are rather good. Furthermore, a ranking by KPMG’s China Leading Fintech 50 shows that 30% are FinTech startups from Shanghai. At the moment, rising FinTech startups are InsurTech startups like ThongAn and peer-to-peer lending developers such as PaiPaiDai, Lufax, and Dianrong (For more information about these startups, read more at Peer-to-peer lending in China)
- Gaming. China houses 600 million gamers, the highest in the world. Also, the portion of gamers on smartphones is as high as 49% which is the main platform for game developers in China. Shanghai is also the center for game developers in China who are earning as much as 7,300 million USD. Moreover, VCs are turning to invest in gaming startups. Shanda Interactive Games and Giant Interactive are the leading startups in the sector. Also, there are investments with Zhouhua Entertainment, developer of motion capture for video games.
Academic institutions: Incubating talents to serve startups
Academic institutions are another core factor driving Shanghai from a port city to becoming an incubating hub for the tech startup ecosystem. In 2015, China announced the national innovation development policy which triggered universities to roll out more curriculum for entrepreneurs. Today, most university students have their own startup projects with resource support from universities. Also, they are able to submit their projects as credits to graduate. Some renown universities in Shanghai are as follow:
- Fudan University. Shanghai’s long-established university houses a science park since 2000. It is outstanding in technologies such as cloud and data, education technology, and mobile technology with over 800 tech companies beginning its journey here. Moreover, Fudan University has a Student Entrepreneur Center which arranges space, equipment, mentor, and funds for student startups. In 2016, the center invested in 152 startups which accounts for 2.7 million USD.
- Shanghai Jiao Tong University is another university that supports entrepreneurship with a collaboration with Shanghai Human Resource and Social Security Bureau and the Bank of China in 2016. The project aimed to nurture qualitative innovation development for Shanghai’s ecosystem.
- East China University of Science and Technology houses a science park which emphasizes on the gaming and entertainment industry. Additionally, they also support the R&D for deep technology such as biotech and material.
It can be observed that in the tech era, Shanghai has utilized its advantage as a port city and advanced to become a center of the region’s economy via FinTech development. Also, they have incubated the country’s top talents. This is rather a remarkable move for the city. Next time, Digital Ventures will surely share more stories about drivers of the ecosystem.