Can China have a Silicon Valley? – the WTO column(later at
Chinabiz)
Let’s start with the bad news: the answer is no. The slightly better news is that nobody can repeat Silicon Valley anywhere else, not in China, but also not elsewhere in the US.
Programmer and VC Paul Graham gave in a recent speech ten criteria that have made Silicon Valley what it is now.
But we can use his ten arguments reversely: what might be stopping China from developing a Silicon Valley? Taking away all barriers might be hard, but it makes a nice start of a discussion.
1. A generous immigration policy. China has been very successful in recent year in getting Chinese to return, but has a very poor record in getting non-Chinese academics and entrepreneurs in. A necessary mix of cultures is lacking.
2. Being rich. China is obvious becoming richer, but has still a long way to go compared to the US; policies to get capital from rich people to the universities would help though, like it does now in the US.
3. Be not a police state. Graham mentions here China as a bad example, but he might be mistaken here. What might be restraining Chinese universities is not a repressive government, but the terror of commerce. Universities have to focus on applied science and cannot really develop science as such.
4. American universities are better. It might take a while to develop universities that play worldwide a leading role. But without a good mixture of people (1) and money (2) it might never develop.
5. You can fire people in the US. Both Europe and China have a problem here. Very hard to solve at this stage, as it is even a sensation when a professor is being fired for being a fraud.
6. Work or employment. Compared to Europe in the US people tend to look at work less in terms of life-long employment with all rights and benefits attached. In China the picture is very mixed: strong protection for state-related employment – including universities – and no real protection at private companies. Those extremes still have to find an acceptable middle-ground.
7. Not being too fussy. Dealing with situations that might be technically illegal China might actually be leading the not-too-fussy Americans. There is a high level of unpredictability when you are forced into not-so-legal situations, but in most cases they tend to be solvable.
8. Having a large domestic market. Well, on this point China might be the only country that can match the US at least in size. Earnings of the average Chinese consumer might still restrain its real force, but that seems a matter of time.
9. Availability of venture funding. A very weak point in China: most startups rely on friends and family bringing seed capital together and even when a startup starts to grow up, getting capital is a tough struggle. While the government has been encouraging incubators, its sophistication in providing capitals is still troublesome.
10. Changing your career. In the larger cities many white collar workers decide often each six months about their career and that flexibility might be a bit too much, even in a fast developing economy. Short-term earning capacities might still be a larger draw than a long-term career strategy.
China is still a mixed bag, when you take these ten criteria into account. Performing very well at some, troublesome at others. Creating an attractive, culturally diverse climate for both academics and entrepreneurs still seems the largest challenge at this stage.
Fons Tuinstra