Shenzhen has six firms in the latest ‘50 smartest companies’ list from MIT Technology Review, but how does it stack up against China’s other tech hubs?
The first time that Huawei was mentioned in MIT Technology Review’s ‘50 Smartest Companies list (TR50) was three years ago. This year it zoomed to the top of the ranking, speaking volumes about its status as a flag bearer for the Greater Bay Area’s tech sector.
The Trump administration isn’t much of a fan. But Huawei is advancing on all fronts – not just at the head of the 5G revolution, but also in chipsets for its own smartphones and an operating system to rival Android (it has just been registered in Europe under the trade name Harmony, according to reports this week).
The TR50 showcases companies that best combine innovative technology and effective business models, also styling itself as a predictor for the dominant technologies of the future. And apart from Huawei, there were five other companies from Shenzhen in the list: Ping An, Tencent, SF Tech, DJI and UBTech.
We mentioned Ping An, an insurer that breeds tech unicorns by the hoof- load, earlier this month. Tencent, the undisputed leader in Chinese social media, needs little introduction as well, nor the way that it has been expanding into industries like digital payments and ‘new retail’.
DJI is the world’s dominant drone brand, making about 70% of drone sales to consumers. SF Tech, a unit of the delivery giant SF Express, is developing intelligent logistics solutions, and UBTech has made its name with humanoid robots, mostly deployed in the services sector. It told the press this week that it is preparing for an IPO, most likely in China, and probably on the new STAR Market in Shanghai.
Hong Kong-headquartered AI firm SenseTime also made the list, bringing the number of GBA firms to 7 as a group.
The number of Chinese companies in the TR50 has increased to about two-thirds of the total from fewer than ten a couple of years ago. But most of the newcomers come from other parts of the country to the GBA. Firms from Beijing make up the largest group (13), with another six hailing from Shanghai.
Many of the top performers have operations in more than one hub. SenseTime has offices in Beijing and Hong Kong, for instance, while Bytedance has just announced that it will be setting up a new R&D base in Shenzhen to tap into local talent.
All the same, there is a basic separation of roles between the main clusters, shaped by their respective histories and strengths.
As the capital, Beijing feeds from its closeness to political power, as well as its cluster of national research institutes such as the Chinese Academy of Sciences, and leading universities like Tsinghua and Peking.
Long before Shenzhen was showing signs of tech stardom, the Zhongguancun district of the capital was the country’s closest match-up to Silicon Valley. Flowering from a former electronics market, it enjoyed a head start in staffing and talent, access to venture capital, and policy support. As a result, Beijing is now home to about 9,000 hi-tech firms, with particular strengths in software and ‘platform’ businesses in areas such as blogging, search and video streaming. The roster includes established giants like Baidu, Sina and JD.com, as well as Bytedance and Meituan, both newcomers to the TR50.
Shanghai competes more as the financial hub, and with a diversified industrial base and fast-growing services sector that creates willing customers for tech start-ups. An example of a rising star is Envision Group, another of the top ten in the TR50. It started out as a wind turbine maker but has refocused as an energy specialist, branching into electric car batteries and the digitalisation of energy systems.
Hangzhou is another hotbed for innovators, drawing deeply from the inspiration of its anchor player Alibaba. That has tended to mean more of a focus on e-commerce, although Alibaba’s success has spawned mighty offshoots like Ant Financial. Cashed-up former employees have started businesses in other sectors as well.
As most people now know, Shenzhen’s edge is in hardware, honed from its years of expertise in manufacturing electronic devices. Yet today companies seem more excited about the prospects for the ‘industrial internet’, or industrial applications that leverage next-generation wireless networks, Big Data, AI and the internet of things (IoT). The idea is to bring hardware and software together, igniting new industries like smart manufacturing, and setting new production standards for factories around the world.
Shenzhen wants the starring role, so the city’s Information Technology Industrial Association has been pushing hard for closer cooperation between the main players. Earlier this month Huawei and Tencent said they had joined a new grouping called the Industrial Internet Union, and Taiwanese contract manufacturer Foxconn, which employs tens of thousands of people in Shenzhen, has just announced that it is joining as well.