Shanghai, the bustling metropolis known for its towering skyscrapers and vibrant business scene, is making big strides in cementing itself as China’s premier tech hub. The city’s municipal government has unveiled its first batch of “tech champions,” a list of 40 innovative businesses that will receive a wide array of incentives to boost innovation and drive economic growth. Among the companies included in this prestigious list are SenseTime, an artificial intelligence (AI) firm that has faced US sanctions, and miHoYo, a renowned video gaming studio.
These tech champions, which also include Shanghai Micro Electronics Equipment (SMEE), Jaka Robotics, Xiaodu Technology, and Bilibili, represent sectors such as semiconductors, biotech, AI, and the digital economy. By nurturing and supporting these industries, Shanghai aims to solidify its position as a leading tech powerhouse. Gong Zheng, Shanghai’s mayor, presented certificates to the named companies in a ceremony this week.
The move by the city’s government highlights the ongoing efforts of local administrations to leverage central government incentives and support to grow strategic industries favored by Beijing. This is particularly true in the case of semiconductors, a sector that Beijing has prioritized in its bid for greater self-sufficiency. Companies involved in semiconductor projects are eligible for various subsidies and assistance.
However, it remains to be seen whether these hand-picked tech champions can live up to the high expectations set for them. SMEE, for instance, has yet to deliver China’s first domestically-produced 28-nanometer lithography machine, despite decades of support. Its product falls behind that of ASML Holdings, a Dutch lithography equipment maker that can produce machines for chips below 7-nanometers.
SenseTime, once regarded as Asia’s leading AI company, has also faced challenges in turning a profit. Since its initial public offering in late 2021, its stock in Hong Kong has plummeted by two-thirds in value. Similarly, video-sharing platform Bilibili and miHoYo, the creator of the immensely popular Chinese-developed video game Genshin Impact, are among the 10 companies categorized under the digital economy sector. Each faces its unique set of hurdles as they strive for success in a highly competitive landscape.
Notably absent from the list is PDD Holdings, a company that temporarily surpassed Alibaba Group Holding as the most valued Chinese tech company listed in the US. PDD Holdings, which operates discount shopping apps Pinduoduo and Temu, revealed earlier this year that it had relocated some of its operations from Shanghai to Dublin, Ireland. Alibaba Group Holding, the parent company of the South China Morning Post, also did not make the cut.
Despite the challenges faced by some of these companies, Shanghai is optimistic that its first batch of tech champions will significantly enhance the city’s standing within China’s tech ecosystem. In February of this year, Shanghai released a policy document inviting businesses to apply for the list, with successful candidates receiving subsidies of up to 5 million yuan (approximately US$700,000) and up to 30% support towards office rent.
China, the world’s second-largest economy, is determined to solidify its position in AI and other high-tech fields as it competes with the US for tech dominance. As part of this vision, plans are underway to establish several regional AI “highlands” across the country. Shanghai, traditionally renowned as a financial hub, is doubling down on its efforts to become the nation’s powerhouse of digital growth, as outlined in the city’s digital economy master plan for 2023-2025.
With the unveiling of its tech champions, Shanghai is taking decisive steps to foster innovation, attract top talent, and bolster the city’s reputation as a leading tech hub. As these companies strive to fulfill their potential, the world watches with anticipation, eager to witness the next wave of cutting-edge advancements from this dynamic city at the forefront of technological innovation.
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