Chengdu, emerging technological highland in Southwest China

When the U.S. is preparing for its high-tech exhibition “Celebration 2030” in Shanghai’s World Expo, some of Chinese cities have already started building high-tech towns. Chengdu, the provincial capital of China’s southwest Sichuan Province, has launched the construction of E-topia in its High-tech Industrial Development Zone (CDHT), hoping to change this area to a “wireless city”.

The E-topia involves an investment of RMB 3.9 billion, and covers an area of one square kilometer. It will be completed in the end of this year. After that, wireless network connection, mobile video phone and urban real-time traffic navigation can be realized in the CDHT.

Chengdu has made great efforts to improve its telecommunication capabilities. This year, the nation has approved Chengdu’s application to build the fourth state-level international telecommunication gateway after Beijing, Shanghai and Guangzhou, making Chengdu the only one in central and west China. The new gateway will not only increase its residents’ connection speed to the internet, but also ease the enterprises’ data transfer works. Software and outsourcing companies will be the major beneficiaries from these upgrades.

Chengdu’s ambition to become the one of the state-level telecommunication hubs is supported by China’s three telecommunication giants, China Telecom, China Mobile and China Unicom. They have reached agreements with Sichuan Provincial Government to invest totally RMB 46.4 billon in Chengdu, to build data transfer hub, telecommunication resource system, etc..

The E-topia is one epitome of Chengdu High-tech Industrial Development Zone (CDHT), which is among the first batch of China’s state-level hi-tech industrial development zones. Chengdu’s convenient telecommunication and traffic condition, as well as rich talent pool and comfortable habitat environment, have attracted lots of high-tech companies to investment in CDHT.

To date, 16000 companies have registered in CDHT, including 750 foreign enterprises with a total investment of over US$5.7 billion. There are 40 companies from the Fortune 500, such as Intel, Microsoft, Motorola, Siemens, Nokia, Ericsson, Corning, Sony, Sumitomo, Toyota, NEC, UPS, Alcatel, Ubisoft, etc.

As a high-tech development zone, CDHT emerges as an innovation center of Chengdu. To date, there are 9 state-level new-tech incubation centers, 23 private new-tech incubation centers, and over 1500 small and medium high-tech enterprises in CDHT. Although they were affected by the global financial crisis, many of them saw a revenue growth of 100%-300% in the first half of 2009.

In addition to CDHT’s R&D capabilities, Chengdu’s abundant talent reserve is also a bonus for the investors. As of the end of 2008, there were over 500,000 university and college students in Chengdu. Chengdu has about 1.55 million professional technicians, 70% of which hold college degrees or above. In terms of the number of professional technicians, Chengdu is the No. 4 among China’s large and medium cities and No. 1 in west China. Its talented labor maintains 8.9% annual growth rate.

Boosted by the innovation capability and rich talent pool, software & service outsourcing industry developed fast in CDHT. In 2008, this sector realized sales revenue of RMB 26 billion, with the software export reaching US$180 million. There are 520 software and service companies, with about 80,000 employees, engaging in the industries like IC design, outsourcing, information security and digital entertainment.

This year, three new players from the Fortune 500 came to invest in CDHT, including Accenture’s global service delivery center, DHL’s shared service center and Amazon’s western order service center.

Alibaba and VXI are the latest investors who came to CDHT. Alibaba Group, China’s largest e-commerce service provider and one of the world’s largest online B2B platforms, declared on June 29 to set up its western base in CDHT, with an investment of US$100 million. The new base will have the functions of R&D, call center, back office operation and maintenance, disaster-prevention backup, and training. Over 10,000 people will be employed.

VXI Global Solutions, a U.S. based outsourcing company who deliver services to Hewlett Packard, Kodak and Cisco, set up its western call center in CDHT on June 22. With 1000 employees, the scale of the new center equals to the sum of its call centers in Shanghai and Guangzhou. “Many Chinese cities have established outsourcing as their pillar industries, but not all of them are good at developing this industry,” said Liu Qianli, President of VXI China. “However, Chengdu has all the conditions.”

In the first half of 2009, CDHT realized value-added industrial output of RMB 12.2 billion, up 31.1% year on year. According to the latest evaluation from China’s Ministry of Science and Technology, CDHT ranks 4th among all the 56 state-level high-tech industrial development zones by overall strength.