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By Yuan Dongming, Enterprise Research Institute of DRC

Research Report No, 093, 2007

I. The Background of the Development of Zhongguancun(ZGC) Industrial Alliances: The Innovation System of Z-Park

After over two decades of development and exploration, Z-Park has developed into a world first-rate science park from the original "Electronic Street"; it has gradually moved into the endogenous development phase with enterprises as the main bodies, with the combination of policy, production, study and research, and based on institutional innovation from the extensive development phase focusing on attracting merchants and importing funds, land transfer and "trade-industry-technology"; it has blazed an independent innovation development path of new and high technologies with enterprises as the main bodies, and has initially formed an open regional innovation system with fairly complete mechanism which is taking a leading position in China. In the new development phase, Z-Park is faced with the global technological transfer and the tremendous changes of technological competition form. International competition and the competition between park enterprises and international multinationals are becoming increasingly fierce, so the united innovation relying on ZGC innovation system has become an important mode for the development of park enterprises.

Gathering together the superior resources of independent innovation in China, ZGC innovation system is an important part of China's innovation system, holds a significant strategic status in the long-term plan of the development of an innovative country, and is a magnificent strategic breakthrough for China to face the challenges and opportunities of globalization and knowledge economy and to search for the enhancement of international labor division status. Firstly, ZGC innovation system possesses first-class knowledge innovation system in China. It owns the most intensive and top-notch scientific and research resources in the country, with 68 famous universities represented by Peking University and Tsinghua University and 270 scientific and research institutions represented by the Chinese Academy of Sciences. It has 51 national key laboratories, 22 national engineering research centers and 20 national engineering and technique research centers, which account for 28%, 22% and 20% respectively of the country, and 65 R&D centers established by multinationals additionally. Secondly, ZGC innovation system has the most active innovative enterprises in the country. ZGC region is an area with the largest amount and most intensive innovative enterprises. There are over 17,000 enterprises in the park, most of which are hi-tech ones, and over 4,000 newly-approved innovative enterprises every year. Thirdly, ZGC innovation system possesses the nationally first-rate fundamental conditions for innovation. ZGC has the most abundant talent resources with the highest educational background in the country. It owns domestic first-rate fundamental facilities for innovation, having established nine national university science parks, eight open laboratories and national engineering and technique innovation bases, and boasts capital political resources, including policies, laws and regulations and news media. Fourthly, ZGC innovation system possesses the greatest potential market resources in China. The headquarters of almost all domestic super-large enterprises and of Asian business of some multinationals are located in Beijing, and the decision-making center of government procurement is also in Beijing. As an international metropolis, Beijing also generates huge market demands. Fifthly, governments at all levels support the development of ZGC innovation system vigorously. As the first national hi-tech park in China, Z-Park received strong support from the central government and Beijing Municipal Government in over two decades of development. In 2005, the State Council put forward requirements on strengthening Z-Park and issued eight policies and measures supporting the development of ZGC. Beijing Municipal Government also issued "Twenty-three Suggestions on the Further Development of Zhongguancun Science Park", and decided to "further develop Zhongguancun Science Park with efforts of the whole city" .

II. The Rapid Development of ZGC Industrial Alliances and the Reasons

1. ZGC industrial alliances have developed rapidly with many innovations

ZGC industrial alliances have developed rapidly with various types. Since the founding of TD-SCDMA Alliance --- the first industrial alliance in ZGC in 2002, over 20 industrial alliances of five varieties have been founded in ZGC region, including R&D cooperation, technical standard, industrial chain cooperation, market cooperation and social regulations. According to preliminary understanding, ZGC industrial alliances lead the country in both quantity and type.

ZGC industrial alliances cover a wide range of industries, including software, integrate circuit, communication, internet, new materials, biological medicine, cultural originality, environment protection and mobile phone animation, some of which are the current pillar industries in ZGC, and some have huge development potential and need strong cultivation. These industries are mostly hi-tech and emerging ones, which are under growing period or leap-frogging development phase, and have many common industrial problems to solve.

ZGC industrial alliances are innovative in many aspects. There is no experience of industrial alliance development in other places in China to refer to since the development of ZGC industrial alliances is taking the lead in the country, and domestic laws and regulations on industrial alliances development are incomplete, so all main bodies of alliances development should carry out all kinds of systematic innovation. ZGC industrial alliances are innovative in the legal form of alliances, governance methods, management means and many works of the alliances.

2．Main reasons for the rapid development of ZGC industrial alliances

First, ZGC is the first-rate regional innovation system in China, with willingness and foundation of the cooperation among production, study and research. In ZGC, there are plenty of original innovations which are in need of industrialization and research institutions are in need of establishing close cooperative relationship with industrial departments. Besides, plenty of vigorous innovative enterprises in ZGC need allied innovation to enhance international competitiveness against the background of globalization.

Second, in ZGC, the industrial structure focusing on hi-tech industries, especially the information industry has objective demands on industrial alliances. (1) The R&D of new hi-tech industries needs high costs and has great risks, and enterprises need allied innovation to share the costs and risks of innovation. (2) The technologies of hi-tech industries have rapid progress, short transitional period and many commons, and cooperation among production, study and research should be strengthened. (3) Information industry has distinctive network characteristics. The competition of innovative products is not only competition among individual enterprises, but also competition among industrial chains and technical standards, so allied innovation must be carried out in information industry.

Third, the rapid development of ZGC industrial alliances is related with the characteristics of the enterprises in Z-Park. In ZGC, there are plenty of small and medium-sized enterprises (SMEs) as well as leading enterprises in each industry such as Lenovo, Vimicro and Datang. (1) Though leading enterprises in each industry are ahead of the country, they are still in a comparatively weak position in international competition, and are restricted by foreign enterprises in intellectual property right and technical standards, so they need alliance to make technical breakthroughs. Enterprises are willing to organize spontaneously industrial alliances, such as the Intelligent Grouping and Resource Sharing. (2) Though SMEs have strong innovative vigor, they are small in scale and week in strength, and cannot compete with big enterprises. Therefore, they need alliance to achieve scale economy and obtain certain market access.

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The paper is one of sub-reports of the general research report entitled "Industrial Alliance and Innovation".