May 26th, 2010

Hajime Sasaki Special Advisor NEC Corporation


Introduction

The 8th International Business Leaders Advisory Council Meeting for the Mayor of Beijing was held concurrently with the Beijing Olympics in August 2008. For that meeting, I submitted a paper on the theme of “Lessening the Problems Presented by Growing Metropolises, Worsening Demographics, Limited Resources, and a Fragile Environment.” The paper presented my personal views on the urban structures and transport systems required for future societies.
This time, I would like to focus on increasing the capacity for local innovation to develop Beijing into a center of science, technology, and innovation with international influence, which is one of this meeting’s five themes. I will cover the theme from the perspective of “Urban Development Targeting the Creation of an International High-Tech Park.” Specifically, I will evaluate the relationship using indices that illustrate the vitality of urban areas close to the Zhong Guan Cun Science & Technology Zone in Beijing, making references to two other internationally recognized high-tech parks: Silicon Valley in the U.S. and Tsukuba Science City in Japan. 

1.High-Tech Parks

According to Wikipedia Japan, a high-tech park is a type of industrial zone where high-tech companies have naturally been drawn together or which has been established by national or regional governments to encourage the growth of the high-tech industry. Wikipedia goes on to say that, depending on the region or unique characteristics, these zones are referred to by various names, including techno-park, techno polis, high-tech zone, software park, science park, and science city. A variety of government incentives are also offered to companies setting up operations in these zones, including reduced rent on land, lower-cost buildings, lower taxes, and assistance with the training of human resources. Next is a comparison of Silicon Valley, Tsukuba Science City, and the Zhong Guan Cun Science & Technology Zone. (Also, see Table 1.)

1.1 Silicon Valley

Silicon Valley, which has the longest history, is a region around San Jose in Northern California comprising all of Santa Clara County and parts of the adjacent San Mateo, Alameda, and Santa Cruise Counties. Silicon Valley covers an area of about 3,840 km2 and has a population of about 2.44 million. It is said that the starting point for the development of Silicon Valley was when Professor Frederick Terman of Stanford University’s School of Engineering encouraged his students to start up their own companies instead of accepting employment at one of the big companies on the East Coast. In 1951, he helped to establish Stanford Industrial Park, through which portions of university-owned land were leased to high-tech companies, thereby contributing to the growth of industry in that area. In 1956, William Shockley, one of the inventors of the transistor at Bell Laboratories, established the Shockley Semiconductor Laboratory. In addition, it is said that the area came to be known as Silicon Valley in reference to the many semiconductor companies, including Fairchild Semiconductor and Intel, which were created by researchers who left Shockley Semiconductor. Since then, many Fortune 1000 companies, including Apple, Sun Microsystems, Cisco, Yahoo, and Google, have established their bases in Silicon Valley. One unique feature of the Valley is that small and medium-sized companies with fewer than 500 employees account for 77% of all employment in the region, compared to 50% for the United States as a whole. This means that the creation of new venture business acts as the core engine that drives the labor market in the Valley. At the same time, a great deal of venture capital has been invested in promising startups. Some analyses indicate that about one-third of all venture capital in the United States has been invested in companies in the Valley.

1.2 Tsukuba Science City

In 1963, a Cabinet decision was made to begin construction of Tsukuba Science City to establish a base for high-level research and education and to alleviate the excessive concentration of such activities in Tokyo. By 1980, when the construction of facilities was complete and Tsukuba Science City began full-scale operations, large numbers of national research laboratories, universities, and other institutions had either been transferred to or newly established in the area. Its area of about 27 km2 is roughly equivalent to the area within the Yamanote Line that circles central Tokyo. Tsukuba Science City comprises several systematically positioned zones. There is a Metropolitan Zone, with the cultural facilities required for sophisticated lifestyles, along with government facilities and commercial facilities. There is also a Research and Educational Zone divided into areas for education and culture, construction, sciences, biology, and shared use. In addition, there is a Residential Zone, which has a shopping center, post offices, banks, clinics, and other facilities to make living in the area convenient. The surrounding region has been designated a Development Region, where efforts are underway to promote balanced development. Tsukuba Science City also offers lodging facilities for researchers from overseas to support their research activities and encourage their interactions with other researchers, and it has private-sector hotels for visitors as well. In 2005, the Tsukuba Express went into operation, connecting Tsukuba with Tokyo’s Akihabara Station, enabling transportation to and from Tokyo in just 45 minutes. Currently, Tsukuba Science City is Japan’s largest base for research and development, with some 12,000 researchers, including 5,000 from outside Japan.

1.3 Zhong Guan Cun Science & Technology Zone

China’s Zhong Guan Cun Science & Technology Zone is located just northwest of central Beijing. It goes without saying that since its establishment in 1988, Zhong Guan Cun has built a reputation as a sacred ground for industrialists. It has received various types of government support, for example, in the form of intellectual resources and investment capital. It has an area of 232 km2 and a population of approximately 680,000. There are roughly 300 universities and research institutions. In addition, there are about 230,000 researchers. The number of companies in the Zone is estimated to be at 20,000. Zhong Guan Cun has gained worldwide attention as being the true Silicon Valley of China. Moreover, China published a proposal in April 2009 about its intent to construct a Zhong Guan Cun national model park to create the world’s most influential science and technology innovation center.

Table 1: Three Well-Known High-Tech Parks

	-Area (km2) -Population (1,000 people)	Universities/ Research Institutes	Researchers (foreigners)	Companies	Location
Silicon Valley	-3,840 -2,440	4 universities	NA	12,000	50 km from San Francisco
Tsukuba Science City	-27 -200	31	12,000 (5,000)	200	65 km from Tokyo
Zhong Guan Cun Science & Technology Zone	-232 -68	300	227,000 (4,500)	20,000	8 km from central Beijing

2.Rankings of Strengths of Neighboring Cities

Next are indices that illustrate the vitality of San Francisco, Tokyo, and Beijing as cities adjacent to the three high-tech parks described above. A number of rankings have been published with regard to cities around the world. In 2008, the Mori Memorial Foundation Institute for Urban Strategies, a Japanese think tank for urban redevelopment and environmental management, published the “Global Power City Index,” which has comprehensive rankings of the world’s major cities. The Institute selected 30 of the world’s biggest cities and evaluated their comprehensive strengths from multiple perspectives. They created a matrix comprised of five main fields representing city strengths: the economy, research and development, cultural interaction, livability, and space and access. In addition, they then got the perspectives of four types of ‘global actors’ who represent the drivers behind modern urban activities – corporate executives, researchers, artists, and visitors – in addition to residents, who are seen as ‘local actors.’

2.1 Rankings by Field

The rankings in the five fields represent the order of scores calculated using indices from statistical data and other information related to indicators for each field. The comprehensive rankings show the combined total for all five fields. San Francisco was 20th, Tokyo 4th, and Beijing 28th. For the economy, San Francisco was 22nd, Tokyo 3rd, and Beijing 4th. In the R&D category, the respective ranks were 19th, 1st, and 24th. For cultural interaction, they were 22nd, 14th, and 15th; for livability, 14th, 21st, and 29th; and for space and access, 16th, 23rd, and 30th (See Table 2).

Table 2: Comprehensive City Rankings and Rankings by Field; (  ) = Scores

	Comprehensive Rankings for Five Fields	Economy	Research and Development	Cultural Interaction	Livability	Space & Access
San Francisco	20th (188.9)	22nd (35.3)	19th (25.2)	22nd (20.7)	14th (72.8)	16th (35.0)
Tokyo	4th (233.3)	3rd (52.0)	1st (63.9)	14th (24.4)	21st (65.6)	23rd (27.3)
Beijing	28th (154.9)	4th (47.3)	24th (18.3)	15th (24.3)	29th (49.6)	30th (15.4)

The results showed that Tokyo received high evaluations for economy and research and development. However, Tokyo was similar to the other cities for livability, which incorporates safety and security, and for space and access, which includes international and urban transportation infrastructure.

In terms of the relationship to high-tech parks, both Tsukuba Science City and the Zhong Guan Cun Science & Technology Zone are maintained as national projects. Therefore, they are strongly influenced by the superior economies of Tokyo and Beijing. In contrast, the direct effects of San Francisco on Silicon Valley are minimal. Consequently, it is safe to assume that it was Stanford University that attracted intellect and companies, including venture companies, to the area.

The coefficients of correlation between the scores by field and the comprehensive scores for each city were as follows: Cultural interaction: 0.82; R&D: 0.75; space and access: 0.67; economy: 0.41; and livability: 0.38. This suggests that cities strong in cultural interaction and R&D tended to receive higher comprehensive evaluations (See Table 3).

Table 3: Coefficients of Correlation between Comprehensive and Field Scores

Fields	Correlations with Comprehensive Scores
Economy	0.41
Research and Development	0.75
Cultural Interaction	0.82
Livability	0.38
Space and Access	0.67

2.2 Rankings by Actor

The rankings by the five actors represent the order of scores calculated using indices from factors emphasized by each actor and data related to those indicators. For corporate executives, San Francisco was 26th, Tokyo 14th, and Beijing 19th. For researchers, the respective ranks were 17th, 3rd, and 23rd; for artists, 15th, 7th, and 25th; for visitors, 20th, 23rd, and 25th; and for residents, 18th, 7th, and 26t h(See Table 4).

Table 4: City Ranking by Actor; (  ) = Scores

	Corporate Executives	Researchers	Artists	Visitors	Residents
San Francisco	26th (38.3)	17th (30.6)	15th (37.2)	20th (42.8)	18th (57.0)
Tokyo	14th (44.1)	3rd (55.0)	7th (43.1)	23rd (40.7)	7th (61.6)
Beijing	19th (42.4)	23rd (26.3)	25th (31.0)	25th (39.4)	26th (49.6)

For these evaluations by the actors, an Internet survey was conducted that targeted between a few thousand and tens of thousands of people in the 30 cities covered. The results from a total of 2,315 responses were converted into scores. The breakdown for the relative importance of the elements for visitors, for whom Tokyo had a low ranking, was as follows. 1) Cultural appeal (16.2%); 2) Public safety (16.2%); 3) Convenience traveling to a destination (15.7%); 4) Tourist facilities, cultural spots, etc. (14.8%); 5) Accommodations at or exceeding a certain level (14.3%); and 6) Shopping environment, cost, appeal, etc. (10.4%). This suggests that the same improvements are required as in the case of the evaluation indicators for space and access and livability. For example, Tokyo needs higher mobility, lower living costs, and better transportation infrastructure.

Looking at the coefficients of correlation for the comprehensive scores and the fields with strong correlations to the scores for individual actors, the correlations between researchers and R&D were high, at 0.91 and 0.89. (See Table 5.) Specifically, the breakdown for the relative importance of the elements for researchers was as follows. 1) High-quality research institutions, researchers, and instructors (18.5%); 2) Concentration of research institutions and researchers (14.5%); 3) Space and opportunities for stimulation of new ideas during research activities (16.3%); 4) Acceptance (for example, the availability of research grants and subsidies) (16.3%); 5) Opportunities for employment in one’s own research field (17.7%); and 6) Everyday living environment (16.8%).

The indices for R&D were human resources, intellectual interactions, technical capabilities, the quality of research institutions, research and development expenses, and fundamental academic strengths.

Based on these analyses, we can say that the following are among the most important for “Urban Development Targeting the Creation of an International High-Tech Park.” We need a living environment that facilitates the gathering of high-quality research institutions and researchers. We also need to maintain international transportation infrastructure for accepting researchers and students from overseas along with an environment that allows these individuals to enjoy culturally rich and rewarding lifestyles. In that sense, it is important for all three high-tech parks – Silicon Valley, Tsukuba Science City, and the Zhong Guan Cun Science & Technology Zone – to continue efforts at further development of such infrastructure and environments.

Table 5: Coefficients for Actors and Fields

Actors	Fields with Strong Correlations	Coefficients of Correlation for Actors and Fields with Strong Correlations	Coefficients of Correlation with Comprehensive Scores
Corporate Executives	Economy	0.66	0.75
Researchers	Research and Development	0.91	0.89
Artists	Cultural Interaction	0.88	0.84
Visitors	Cultural Interaction	0.84	0.85
Residents	Livability	0.76	0.80

3. Conclusion

In the midst of the economic crisis that has continued since the autumn of 2008, governments of various countries have remained afloat by implementing economic measures. Nevertheless, improving the quality of science and technology is essential for overcoming issues such as the aging population and declining birth rate in advanced countries and the depletion of energy and resources resulting from the economic growth in developing nations. Better science and technology are also necessary for achieving sustainable growth.

The international high-tech parks covered here are essential bases for building science and technology nations*. To maintain these high-tech parks, it is important to keep in mind the interrelationship between national policies and the future image of cities. Specifically, as I mentioned near the start of this paper, promoting urban development from the perspective of strengthening research and development and cultural interaction tie into the comprehensive strengths of international cities. It is also extremely important to form industrial zones characterized by an integration of intelligence clusters and industrial clusters through collaborations between universities, research institutes, and companies. One area of activities that is common to both China and Japan can be seen in activities aimed at overcoming issues involved in measures such as introducing management staff to achieve these goals, creating environments for the establishment of new venture companies, offering industry incentives, and providing preferential treatment for small- and medium-sized companies.

It is my sincere hope that the comments I have made here will be of some assistance in the continued growth and development of the city of Beijing.

*The APPENDIX has reference materials related to science and technology and the competitiveness of various countries.