Will there be a Silicon Valley in China?

That is a non-question since Silicon valley is in California, but there is certainly something huge happening in China right now, esp. in the region of Shenzhen and the Pearl River Delta (PRD).

The focus on IP in this article introduces a bias that miss the real point about innovation in China. Design (and its protection by IP laws) were core business values but are now quickly fading away as most of the challenge has moved from “ideation “ to “execution “ (and delivery). Apple, for instance, have proved that the real value lies in the construction of a coherent supply chain, not only in the design of a new product. If Apple were to open-source all its models tomorrow, they may not even suffer so much from competition - expect from China maybe.

Being the global maker, Chinese have benefit from a huge experience when it comes to manufacturing and fast business execution. The ongoing modernization of the industry in PRD will increase the quality of their outcomes and management, pretty much like Japan did in the 90s. That will place them in the position of world leaders to support new products (i.e. innovation) with a real capacity to deliver behind promises.

After the next bubble of web and social media will have burst in SV, what will remain is hardware, robotics and biotech. China has an immense advantage on hardware because the PRD region has the ability to support the production of very advanced design faster than anyone by putting together all sorts of complex supply chains. For biotech, the Beijing Genomics Institute is in good position to define the standards for the rest of the world. This may lead as well to the creation of huge business ecosystem- like Stanford for the web. The headquarters of BGI are in Shenzhen too.

Shanghai and Beijing are driving the ecosystem so far because their reputation and local governments have helped to build successful communities and examples from China and abroad. Shenzhen is younger and more low-profile. The local government is thousand times more friendly and accessible here, plus you have Hong-Kong, its laws and its banks just right at the door. Shenzhen is incredibly dynamic, even the already breathtaking pace of Shanghai feels slow there. The whole place has the unique energy of youth and what really pleased me each time I go there is that nobody will get into big discourse about the “tech scene “ etc. Those people are actually trying hard to build their things without talking too much about it. By looking at what have become some of Shenzhen ‘s Kickstarter projects I will say that this approach works a blast.

I was discussing recently with a lady in charge of innovation at Tencent and she told me : * “When you live in Middle China you think everything is about finding capital for real estate and resources . Then you move to Beijing or Shanghai and you discover that what matters really are talented people. Finally, you go to Shenzhen and only then you realize that what matters ultimately are processes. “*  Clearly, the quite horizontal and distributed structure of power relationships in Shenzhen gives a crazy advantage over other places in China where hierarchy rules every inch.

I will add to this that China may actually not reproduce the model of one single big tech hub. Instead, you have currently many hubs with different specialties : e-commerce in Hangzhou, media in Beijing, hardware in Shenzhen, etc. Even cities like Qingdao, Nanjing or Wuhan are really worth following IMHO because they may emerge as strong players in unexpected fields.

This text was originally published in quora.