TEDA Has It All When It Comes to Tempting Unicorns

TIANJIN, China--()--Beijing now produces the second-largest number of unicorns - startups valued at $1 billion or more - in the world.

The city is home to as many as 7,200 startups, making it the third-largest startup ecosystem in the world and the largest in Asia, and has produced 24 unicorns, according to the Global Startup Ecosystem Report 2017 published by Startup Genome.

Much like their mythical namesakes, tech unicorns are highly sought after for their magical properties, and are seen as a sign of success for emerging and established tech hubs.

The presence of unicorns is just one clear sign that efforts to build an integrated Beijing-Tianjin-Hebei tech hub are paying off.

China unveiled a massive “mega-region” developing around Beijing, Tianjin and Hebei back in 2014 – with the latest initiative being the launch of XiongAn New Area, announced in April 2017, to serve as an extension of Beijing. Under the plans, China will build the hub into an international city cluster and create a new growth engine by boosting technological innovation in the area.

Many of these unicorns are being attracted to make the move to TEDA (Tianjin Economic-Technological Development Area), which recently became the nation’s first industrial park to see its GDP exceed 300 billion RMB. In 2016, its GDP accounted for 304.98 billion RMB, with a 10.6% y-o-y growth rate.

Rather than simply plowing in money and incentives to attract tech giants, TEDA has taken a long-term strategic view focused on sustainable growth and building an ecosystem that benefits both large and small companies.

TEDA's tenants include Internet giants such as Tencent - Asia’s biggest Internet company and pioneer of mobile messaging with its WeChat service, boasting over 600 million users.

TEDA has also attracted the unicorns Mobike, Didi Chuxing, JD Finance, Guazi.com, Liepin.com and 36Kr. Other high-growth tech firms include Gome Finance Group, SOHU Video, Douban and Teamsun. Among the above, GOME, JD Finance and Didi Chuxing have each invested over 1 billion RMB in TEDA.

As Jonathan Ortmans, President of the Global Entrepreneur Network (GEN) who also lead-authored Global Startup Ecosystem Report 2017, said: "There is a lifecycle to the development of tech hubs. Doing the right thing at the right time of the lifecycle promises higher payoffs."

For TEDA, this has meant creating an anchor effect by ensuring a diverse mix of large and emerging tenants. It has also been careful to not focus exclusively on tech firms, ensuring it covers a breadth and depth in terms of sectors. Underlying all this has been an effort to provide seamless services and integration, along with an effective support system.

A diverse mix of both great and small

By attracting innovative tech giants, TEDA has boosted investment into the park, and also benefited from the prestige and skills that draw in more cutting-edge enterprises.

Tencent is a good example of the anchor effect tech giants can have. In March 2017, Mobike, a Tencent-invested startup and the world's largest bike-sharing company, announced it will locate its clearing and asset allocation headquarters along with a pilot lean-operation center at TEDA. With a valuation of $2 billion, Mobike is ranked 40th among China unicorns, and is already penetrating overseas markets such as Singapore and Europe.

Another firm in which Tencent holds a stake ($400 million) is leading classified services platform and peer-to-peer lender 58.com, listed on NYSE.

Tencent founder and president Pony Ma said this year that Tencent will further mobilize resources within its investment portfolio and endeavor to draw more business units from Tencent-invested Internet giants such as Meituan, Sogou, and JD to the Binhai New Area, where TEDA is located.

Other large-scale anchor tenants include Didi Chuxing, China’s homegrown ride-hailing app and the only company in the world to beat trailblazer Uber at its own game; the financial arm of NASDAQ-listed online retailer JD.com; and Guazi.com, the country's number-one e-broker for second-hand vehicles. Its financial leasing firm, newly-launched in TEDA, has registered capital of $30 billion, with 2017 revenue expected to reach 200 million RMB.

In addition, TEDA is also home to the country’s National Supercomputing Center, the China Electronic Information Development Center, and the Intelligent Manufacturing Innovation Center.

However, the administrators realize the importance of nurturing smaller firms too, as Xu Datong, the Chairman of the TEDA Administrative Committee, points out.

“From a tech ecosystem point of view, our vision for TEDA is to build a thriving hub composed of not only ‘category kings’ but also ‘baby dragons’," Xu said.

TEDA's success in this respect is illustrated by the large number of its tenants achieving listing on the ChiNext, China’s over-the-counter, Nasdaq-style start-up board in Shenzhen. These include software services solutions provider Forever Oss, virtual operations provider Uniflor Network, and AI services provider HKW Info.

Reaching wider than the Internet

TEDA's industrial depth and breadth and the potential for shared expertise is also a key factor attracting tech firms, as Sun Hongyu, the Director of TEDA Administrative Committee’s General Office, figures out.

“The synergy is more conspicuous particularly when connectivity may ‘plug into’ wider products and services,” Sun noted, citing advanced manufacturing, pharmaceuticals and smart machinery as sample areas with abundant “Internet Plus” opportunities.

The latest showcase comes from Mobike, which thanks to being located at TEDA has abundant access to a supply chain that can manufacture vehicles and intelligent parts to its specifications.

“The underlying industrial strength at TEDA offers a launch pad to create truly joined-up technology at the forefront of smart connectivity,” said Zou Fang, director of TEDA’s investment promotion bureau. “Digitalization reinvents the world of manufacturing and triggers what we call an upgraded version of the bricks-and-mortar economy.”

Another example is that of Volkswagen AG. A long time flagship tenant of TEDA with record-level investment, the German auto giant has dedicated itself to developing a variety of digitally coordinated manufacturing systems along with new car-sharing programs. According to Zou, initiatives such as these have been a draw for a growing cohort of industrial robot makers such as Kawasaki Robot, FANUC, and Makino to invest in operations in the region.

The positive effects have a wide reach beyond the industry arena. Tech innovators also bring about optimization solutions that can be applied to urban management issues. “Take the case of bike- and car-sharing companies whose capabilities in IoT, analytics and lean-operation can be a valuable resource for city administrators in optimizing city transportation, parking and mass transit systems,” said Zou.

Easing the transition

When it comes to attracting tenants, particularly those from Beijing, providing a seamless relocation process is key, according to Li Weihua, the Deputy Director of TEDA Administrative Committee’s General Office.

“The best way to attract Beijing entrepreneurs is by making the dual city relation ‘seamless’ – and even making our environment a better choice for them," Li said.

Important factors cited by Li included the rise of high-speed rail links and the integration of surrounding public transport links, helping create a “one-hour commuting circle” between TEDA and Beijing.

“For innovators and entrepreneurs seeking an optimal place to expand their business, this really is an appealing factor," he said.

58.com is just one example of a tech company that has benefited from TEDA's advantages. When it launched its TEDA operations in 2012, the office had just 40 people. That number has since reached 2,800. According to 58.com Tianjin Officer Tian Ye, the company (which has seen monthly revenue just over 100 million RMB in 2013 but annual output reaching 3 billion RMB in 2016) has benefited from the reduced labor and operation costs afforded by TEDA.

Underlying these advantages are the extensive support and services available at TEDA, as expounded by Ma Jie, General Manager of TEDA’s Science & Technology Group.

“Startup tenants not only benefit from unparalleled financing resources and tax rebate programs, but also professional coaching support and incentives for talent attraction and acquisitions, such as living allowances and discounted rents,” he said.

While TEDA's success in establishing a tech hub is clear, there is to be no resting on its laurels. Xu Datong, the Chairman of the TEDA Administrative Committee, says that the team intends to ensure an approach that is just as vigorous as the effort they put in from day one.

"With the same heartfelt devotion we had when we started from scratch over three decades ago, going forward, we will be building an upgraded version of the development zone," he said.

Contacts

Z. H. STUDIO
Lan Shen, 86-21-3257-2065
lan.shen@zhstudio.net

Release Summary

Beijing now produces the second-largest number of unicorns in the world. The presence of unicorns is a clear sign that efforts to build an integrated Beijing-Tianjin-Hebei tech hub are paying off.

Contacts

Z. H. STUDIO
Lan Shen, 86-21-3257-2065
lan.shen@zhstudio.net