Shenzhen: China’s innovation engine room
Latest research from JLL highlights strong performance by Chinese cities among world’s leading innovation hubs
SHANGHAI, 3 September 2019 – Shenzhen’s dynamic young population has helped elevate it to among the top cities in the world for innovation according to research from global real estate consultant JLL (NYSE: JLL). The recently published Innovation Geographies report examines areas such as investment in high-tech industries, research and development expenditure, and venture capital (VC) funding, to create a global ranking of the cities with the most robust innovation ecosystems. China performed strongly, with three of the country’s cities making the top 20, second only to the USA with five.
While the long-established mega-cities of Beijing (4th) and Shanghai (11th) lead the way, Shenzhen’s innovative and forward-looking business environment, boosted by strong performance in areas such as patent applications and R&D expenditure, have elevated the southern Chinese tech hub to 14th in the Global Top 20 for Innovation. “Shenzhen’s continued rapid development over the past decade has secured its position as the Greater Bay Area’s technology hardware hub and a hotbed of innovation, a fact which is clearly supported by our latest global report,” says Jex Ng, Managing Director, JLL South China. “We continue to support the city’s development, using professional research and analysis to help our clients in Shenzhen and the Greater Bay Area to achieve their ambitions.”
An engine room to drive the country
From its humble beginnings as a modest-sized fishing village to its current position as an international metropolis and first-tier city, Shenzhen’s transformation has centered around its consistent ability to attract workers from all over China and overseas. The city’s dynamic young workforce is made up of talent attracted from every province in the country, who come to advance their careers, develop new ideas, and break fresh ground. This has made Shenzhen a focal point of exchange and growth for a new generation of Chinese innovators. In fact, Shenzhen had the highest proportion of “engine room” population of any city globally to be featured in the report, with Guangzhou also making the global Top 10 in 7th place.
With well over 60% of the city’s residents falling in to the 20-40 age bracket, Shenzhen’s remarkably youthful population demographics place it eight percentage points ahead of second-placed Dubai, and a remarkable 20 percentage points ahead of the average of all other featured cities. As Jeremy Kelly, Director of Global Research, JLL points out, “Shenzhen is a prime example of how internal migration since reform and opening has served the growth of Chinese cities which embrace innovation and offer opportunities. The city’s huge pool of young and motivated workers is one of the major factors behind its innovative environment, and they are steadily driving Shenzhen toward global-city status.”
When it comes to innovation, patent applications act as an important measure of how innovative a city or region truly is. While Tokyo continues to dominate the global landscape when it comes to annual patent application numbers, it is notable that Shenzhen now outstrips traditional leaders in this field such as the well-established tech hubs of Seoul and Silicon Valley, placing it second in the world. The city’s cutting-edge technology hardware industry, as well as major bases of tech giants such as Alibaba, Tencent, and Huawei, all help create a competitive and inventive environment with the city’s firms submitting an average of almost 100 new patent applications per day.
Beijing also makes the top ten, with the capital’s wide range of government-backed startups and its incubation of enterprises such as e-commerce giant JD.com and smartphone maker Xiaomi hailing a bright future for new ideas and applications of technology originating from the capital. However, the figures from the report show that Shenzhen is clearly both a national leader and global frontrunner when it comes to registering and protecting creative invention. What is more, recent policy direction at national level looks set to accelerate the implementation of an innovation-driven development strategy for Shenzhen. Under a new guideline issued by the Central Committee of the Communist Party of China and the State Council on August 18th, the central government will support Shenzhen in building a demonstration pilot zone for socialism with Chinese characteristics. This strong show of support from the very highest level signals a bright future for the city’s innovative environment.
China investing in R&D
So how will the global landscape change when it comes to innovation? One of the key factors that affects the next generation’s ability to continue breaking new ground is current levels of R&D spending. The Innovation Geographies report lists four Chinese cities in the Global 20 for R&D expenditure, with Beijing heading the pack in fifth place, followed by Xi’an (8th), Shenzhen (17th), and Shanghai (20th). With spending levels 50%-150% higher than the global average, these cities require quality space in favorable locations to take full advantage of the pronounced clustering effect that has been so helpful to creating innovation hotspots in many Chinese cities.
“JLL has offices in all four of the Chinese cities which make the Top 20 for R&D expenditure,” points out Daniel Yao, Head of Research, JLL China. “We work with some of China’s biggest innovators, providing dedicated teams of industry professionals to help them secure quality space which fits their technical requirements, helping them to achieve ambitions across multiple fields of innovation.”
For more information, download the Innovation Geographies report here.
JLL’s Innovation Geographies study covers over 100 cities globally and tracks a broad range of factors to assess a city’s innovation capacity and the relative strength of its talent pool. Innovation is defined by the level of foreign direct investment in high-tech industries; research and development expenditure; the number of patents awarded and venture capital activity. The strength of a city’s talent pool is determined by its demographics, the quality of its higher education institutions, the proportion of people with a bachelor’s degree and employment in high-tech industries.
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.3 billion, operations in over 80 countries and a global workforce of nearly 92,000 as of June 30, 2019. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com