A Tech Hardware Dragon Service: A Case Study on a Chinese Approach to Promoting Innovation

Introduction

Over the past 40 years, China has enjoyed unprecedented economic growth. Initially, economic growth has been based mainly from manufacturing. This economic growth came from Chinese factories mass-producing items often conceived and designed elsewhere in the world. Nowadays, China is looking at other ways to diversify their economic growth, and transition the focus of its economy from “Produced in China” to “Created in China." Thus, there is an ever-increasing focus on China as a centre for innovation and technology. However, there are many challenges to shift from ‘following innovation’ to ‘subversive innovation’ and the creation of so-called digital unicorns. Since 2013 the World Intellectual Property Organisation has, together with partners including Cornell University, produced a yearly Global Innovation Index. In 2013 China was ranked 35^th in the world. By 2019, China hit its highest ever ranking of 14^th. In several of the sub-categories, including "patent applications by origin," "industrial designs by origin,” and “knowledge impact,” it demonstrates the possibility of China becoming a global leader of innovation.

Innovation and technology are regarded as the cornerstone of China’s future economic strategy. In 2019, the Chinese Government established a new National policy which sets out four priorities for innovation:¹

• 1.

  Becoming an Artificial Intelligence (AI) powered nation

• 2.

  Developing the Semiconductor industry

• 3.

  Developing new energy vehicles

• 4.

  Creating a Data-Driven economy

Aims Of The Case Study

In 2020, COVID-19 brought global attention to the Chinese city of Wuhan. However, what is less well known is that Wuhan, benefitting as it does from proximity to some of China’s leading universities, was originally China’s answer to Silicon Valley before it shifted to Shenzhen. Thus, our attention turns to Shenzhen as well as one particular community of innovation, CEC i-Valley.

CEC i-Valley is a centre for innovation and entrepreneurship in the Huagiangbei District, Shenzhen. CEC i-Valley aims to bring all stakeholders under one roof. More importantly, its vision offers a unique example of how a significant industry cluster has emerged. The CEC i-Valley's bold approach addresses the innovation gaps by creating more China-authentic digital unicorns and the challenges of sufficient capacity to innovate and commercialise intellectual properties underpinned by a collective philosophy. The Chinese culture's collective philosophy has contributed to nation-wide entrepreneurial efforts' successes, as shown in Huawei's share structure. Thus, Huawei is an example that provides us with rich insight into the business scale's fundamental factors up within the industry and beyond, both within the domestic market and globally. Significantly, though, this case study provides an example of how CEC i-valley plays a conduit role to legitimate the resources network for innovative products and services. It is also vital for any business to understand any potential impact that might be made from its operating environment.

The centre was set up by a company headquartered in Wuhan, China. However, despite this, the company chose to base CEC i-Valley, not in Wuhan, but in Shenzhen. This case study examines why that was so. It introduces CEC i-Valley and highlights the core components of its "one dragon service." It examines the critical aspects of its operating model, its strategic design, and some of its challenges. It then uses the Integrated and Categorical Innovation Path Framework of Regional Innovation system, developed by Bush and Tiwana (2015), to provide a contextual understanding of the strengths and challenges facing CEC i-Valley in the Shenzhen area as promoted by the Chinese Government policy (2019). Finally, it reflects on the lessons to take away from the case study.