Jinan: China International IT Innovation Cluster

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Jinan China International IT Innovation Cluster
CIIIC
Wang Xu

• Research Fellow, Development Research Center of
  the State Council
• Deputy Secretary General, Jinan Municipal
  Government

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Joint Venture Between Microsoft and Chinese
Software Companies
In 2005,Microsoft signed letters of
investment intent with three Chinese software
firms, INSPUR, IESLAB, and DHC. Two of the three
firms and half of the other are from the same
city of China
Jinan
Why Jinan?
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Where is Jinan Shandong Province
Area150,000 k?
Population92 million
GDP225 billion (2005)
GDP Growth Rate15.2(2005)
?2 Both in Economy and Population
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Jinan Capital City of Shandong Province
Political, Economic, and Cultural Center
Area8,177 k?
Population6 million.
GDP23.3 Billion, Growth Rate 15.6
GDP Per Capita4,000
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Jinan China International IT Innovation Cluster

• The biggest software park in China
• National software industrial base  Under
• the  National Torch  Program
• 460 companies registered
• 20,000 software engineers
• 9 out of the top 100 software companies in China
• 2 out of the top 10 outstanding leaders in
  China's software industry
• 3 billion in 2005,annual growth
• rate 50

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Case 1 INSPUR in Jinan

• How did INSPUR grow so fast in Jinan?
• Established in 1989, the biggest server
  manufacturer and IT solutions supplier in
  China
• Two publicly listed companies, Langchao
  Information and Langchao Software,
  respectively in China and Hong Kong stock
  market
• 2 billion in 2005, increased 7 times in 10
  years
• 4,500 employees

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Case 2 CVIC SE in Jinan

• How did CVIC SE grow so fast in Jinan??
• Established in 1991, the biggest supplier
  in China for financial management software
  and mid-ware products
• 2004 Star Enterprise in 20 Years of Chinas
  Software
• Most valuable electronic enterprise brand rated
  by Ministry of Information Industry
• Strategic partnership with IBM, Microsoft,
  and Intel
• 180 million in 2005, 10 time increase in 10
  years
• 950 employees.

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• Why do these global and Chinese software
  giants all choose to grow in Jinan?

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What Do Software Firms Need to Innovate and Grow?

• Talents
• Market/Clients
• Co-developers
• Financing
• Public Services
• Living Environment

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• Does Jinan have what software firms need to
  innovate and grow?

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What Jinan Can OfferTalent Development

• 66 universities, 200 research institutions,5 out
  of 100 hold a degree of bachelor or above
• Qilu Software College
• Software engineer training programs
• Talent Attraction Fund established by the
  State Foreign Expert Bureau, 9 firms
  benefited in 2005

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Low Cost for Software Engineers
170
130
130
100
(Thousand RMB)
80
70
65
65
50
42
Salary of manager
Salary of programmer
Shanghai
Guangzhou
Beijing
Jinan
Shenzhen
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What Jinan Can Offer- Talents with Good
Characters
??
23.1
18.2
16.7
12
Charity
Duty
Propriety
Wisdom
Truth
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Here is where the spirit of Confucian originates
Turnover Rates
Beijing
Shanghai
Guangzhou
Shenzhen
Jinan
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What Jinan Can Offer-Diverse Markets/Clients for
Software Firms

• Local Market
• ?1 for power generation in China, ?2 for
  coal and petroleum production in China
• ?1 for paper, construction material
  production in China
• ?1 for highway length in China
• ?1 for heavy duty truck manufacturing in
  China
• Residential telephones 28 million, mobile
  phone users 23 million, internet browsers
  10 million
• Household electronic appliances Haier,
  Hisence as world known brands
• 23 of Fortune 500 in Jinan, and 116 in Shandong

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What Jinan Can Offer-Diverse Markets/Clients for
Software Firms

• Domestic Market
• Domestic electronic and information industry
  production 480 billion, annual growth rate
  25, much higher than that of other
  industries
• State development strategies E-Government,
• E-Business
• National E-Manufacturing Program 120 billion
  demand on IT products, currently 80 of which
  need to be imported
• Growing demand for life improvement digital TV,
  cartoon, medical service, education

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What Jinan Can Offer-Diverse Markets/Clients for
Software Firms

• International Market
• Software product export 30 million in 2005
• Expected software export100 million in 2010
• Much more if more US software firms join

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What Jinan Can Offer- Enterprise Collaboration

• Software Company Association in Power Industry
• Software Company Association in Transportation
  Industry
• International Cooperation Association
• DSP Technology Association

Aim to facility collaboration among small IT
companies and promote integrative innovation
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Software Company Association in Power Industry

• Affiliated companies 32
• Aims
• To set up data connections among diverse products
• To provide integrated digital power plant
  solution
• Methods
• Establish public experimental platform
• Training Courses in Qilu Software College
• Cross-guarantee for financing
• Key Fields
• Management and control systems
• in the power industry

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Software Company Association in Transportation
Industry

• Affiliated companies 17
• Aims
• To share the marketing and RD forces
• Methods
• Joint-Development of intelligence transportation
  system
• Integration of products among companies
• Key Fields
• GIS,GPS
• logistics
• Management system for highway
• and railway, etc.
• Monitoring control system

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International Cooperation Association

• Affiliated companies 22
• Aims
• To share the marketing and RD forces
• Access to international resources
• Methods
• Out-sourcing
• Alliances in product development
• On-shore service to the foreign
• companies in China
• Key Fields
• GIS, Logistics, Transportation.
• Health Products, Data Processing etc.

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What Jinan Can Offer- Financing Channels

• The Industrial Innovation Fund established by
  the Ministry of Science and Technology provides a
  variety of financing supports to incubating
  companies
• 70 of the guaranteeing fund from Jinan High-tech
  Development Zone are used for the support of IT
  companies
• Cross-guarantee for financing by software firms
• Several foreign venture capital firms have
  invested in companies in the park (VEGA STAP
  CAPITAL,SL to Jinan Yinquan Technology Co., ltd. )

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What Jinan Can Offer Customized Public Services

• Industrial planning
• Infrastructure
• Enterprise incubator
• One spot service
• Policy support
• Living, education, and entertainment facilities

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China International IT Innovation Cluster -
Planning
Software incubating area 230,000? RD area
990,000? Qilu Software College
350,000? Living area 800,000?
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China International IT Innovation Cluster A
Pioneer National Incubator of Information
Technology

• Facilities Exhibition Hall
• Conference Rooms
• Business Center
• Dinner Halls
• Residential Apartments
• Kindergartens
• International Schools

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What Jinan Can Offer-Technical Support Platform

• IBM Solution Lab
• Microsoft Solution Lab
• SUN Solution Lab
• Texas Instruments DSP Solution Lab
• Oracle Testing Lab

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What Jinan Can Offer- Policy Support

• No less preferential polices than any other
  cities in China
• Awards on new patents and fast growing firms
• Intellectual property right protection

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What Jinan Can Offer- Livable Environment
City of Springs
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What Jinan Can Offer-Livable Environment

• Jinan International Airport more than 30
  airlines to main domestic cities and LA, SF,
  Frankfurt, Tokyo, Seoul, Singapore, and Hong Kong
• Half an hour driving to Mt. Tai
• One hour driving to Qufu the home town of
  Confucius

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To Sum Up- Why Choose Jinan?

• Compared to Beijing and Shanghai, Jinan is
  competitive because
• Low labor cost and low turnover rate of talents
• More focus on soft environment

Technical Support Platform
Talent Development Platform
Enterprise Collaboration Platform
Enterprise Financing Platform
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To Sum Up- Why Choose Jinan?

• Compared to most other cities, Jinan
• is attractive because
• Ranked as the 8th by Forbes among the top 20
  Chinese cities most favorable for industrial
  investment
• Ranked by National Bureau of Statistics as one of
  the most competitive cities in China
• Ranked by Ministry of Public Security as one of
  the safest cities in China for 5 consecutive
  years

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Welcome to Jinan-The New Hub of Software
Industry in China!
www.qilusoft.org 86-531-88871003

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US-China Information Industry Seminar on
Innovation, Investment and Cooperation

• DateSept.19-21, 2006
• LocationJinan, China
• Sponsors
• Ministry of Science and Technology, PRC
• Shandong Provincial Government
• Chinese Information Network Association, USA
• New England Chinese Information Network
  Association, USA