By Accident or Design? Shenzhen as a Global Hub for Digital Entrepreneurs

Abstract

By 2019, the south China coastal city of Shenzhen was recognized worldwide as a digital technology powerhouse. The media branded it a second Silicon Valley. Shenzhen annually registered record numbers of patents under the international Patent Cooperation Treaty. Incubators and accelerators supported an exploding number of start-ups in such diverse fields as medical devices, new materials, robotics, and artificial intelligence. \n \nIn its early years, from 1981–93, the city’s GDP grew at an astonishing average 40 percent a year; that rate slowed to a still-impressive 16.3 percent for 2001–05 before settling at annual growth of 10 percent or less. In 2017, GDP hit CN¥2.2 trillion ($338 billion), higher than countries like Portugal or Ireland and double its 2011 output.1 Shenzhen became headquarters to multiple billion-dollar companies, and to 65 percent of global smartphone brands. With 90 per- cent of its companies in private hands, Shenzhen held pride of place as China’s capital of private industry. Investment money poured into what had become China’s wealthiest city. \n \nYet barely 40 years earlier, Shenzhen had been a backward area of fields, rice paddies, and fishing villages. How had China pulled off the seemingly impossible feat of building a world-class city in the blink of an eye? What accounted for its outsize expertise in digital technology? Why did entrepreneurs from China and abroad flock to live there? More specifically, how did government and public policies contribute to its status as a global mecca for digital entrepreneurs? Was Shenzhen a one-off, or might any government, through careful planning, create such a phenomenon?