In Dream Town, a selection of creater office space model in the gritty fringe of this historic city, one tiny company is developing a portable 3-D printer. Another takes orders for traditional Chinese massages by smartphone. These are just a pair of the 710 start-ups being nurtured here.
Anywhere else, an incubator like Dream Town will be a vision of venture capitalists, angel investors or technology stalwarts. But this really is China. The Chinese Communist Party doesn’t trust the invisible hand of capitalism alone to encourage entrepreneurship, especially because it is a big part of the leadership’s strategy to reshape the sagging economy.
Which explains why government entities of Hangzhou – a former royal capital that has been a major commercial hub for over a millennium – built Dream Town and lavishes resources on start-ups. The businesses here get yourself a slate of advantages like subsidized rent, cash handouts and special training, all thanks to the metropolis.
Chemayi, that offers car repair services through a smartphone app, is staying rent-free at Dream Town for three years which is obtaining around $450,000 in subsidies from city authorities to aid pay salaries and buy equipment.
Continue reading the key story
“From the central government all the way down to local governments, we have seen a lot of warm support,” said Li Liheng, co-founder and chief executive of Chemayi.
For much of China’s long economic boom, young people flocked to manufacturing zones for jobs making bluejeans or iPhones. These days China is attempting to maneuver beyond just being the world’s factory floor. Policy makers want the next generation to locate better-paying operate in modern offices, creating the ideas, technologies and jobs to feed the country’s future growth.
Premier Li Keqiang frequently requires “mass entrepreneurship.” In March on the National People’s Congress, he bragged that 12,000 new companies were founded every day in 2015.
The entrepreneurial embrace comes with lots of financial support. Across the nation, officials are creating investment funds, providing cash subsidies and building incubators.
“Without these sorts of subsidies, you only count on private money, and you wouldn’t see so many technology start-ups happening today,” said Ning Tao, someone at Innovation Works, a venture capital fund in Beijing. “Without quantity, you can not have quality.”
Nevertheless the heavy spending is increasing worries about an inflating bubble worldwide of China’s tiniest companies. Combined with the government funds, venture capital funds are flooding the country. About $49 billion in deals were made just last year, making China second just to the United States, according to the accounting firm Ernst & Young.
Workers remodeling old houses in Dream Town, which is nurturing 710 start-ups. Credit Jes Aznar for that Ny Times
Some economists and entrepreneurs are worried the government is helping fuel a frenzy which may ultimately lead to failed businesses, wasted resources and financial losses. Only one city, Suzhou, near Shanghai, has announced it can open 300 incubators by 2020 to accommodate 30,000 start-ups.
Beijing’s policy makers use a long past of giving Shanghai creative parks comfortable access to loans and subsidies to propel certain industries, with both positive and negative consequences. Though that tactic lubricated the nation’s industrialization, in addition, it led to the surplus containing buried the country in empty apartment blocks, mothballed cement plants and sputtering steel mills – which threaten the economy’s stability.
“I think the subsidies shouldn’t become a long-term policy,” Jin Xiangrong, an economist at Zhejiang University in Hangzhou, said of the start-up support programs. “They can lead to overcapacity just like the kind we percieve now in China’s manufacturing sector, which is largely a result of government support.”
At Dream Town, Mr. Li, 39, frets a little more about his own business. He got the first idea for Chemayi in 2009 right after a vehicle accident. To discover a trustworthy mechanic, he searched online, asked friends for advice and visited repair shops.
But Mr. Li thought it was difficult to judge who has been reliable. An automobile culture – and all sorts of the help that include it – is relatively new in China.
Looking to fill the details void, he and three friends put in place Chemayi in 2013 with 5 million renminbi (currently $750,000) of their own money. For an annual fee, Chemayi sends out personnel to help fix flat tires, paint scratches or repair broken-down engines.
“Henry Ford has disappeared for so many years, but we are still driving his cars,” Mr. Li said. “I felt i also must pursue a cause that can persist after I’m gone.”
Chemayi beat out over two dozen other start-ups for any coveted space in Dream Town in the 2014 competition. Another co-founder, Ouyang Feng, delivered a 40-minute presentation to your panel of judges who peppered him with questions regarding Chemayi’s business structure and future prospects. The provincial governor watched within the grilling.
Ultimately, the committee awarded Chemayi a 3-foot golden key that symbolically opened the doors to Dream Town.
Chemayi now has 284 employees in four cities, with plans to reach 1,000 by the end of the season. Mr. Li said his company had raised $22 million in private money and turned a nice gain of around 10 million renminbi just last year.
Cai Liangen, left, and Mao Jinmei cook for Mishi, a food delivery start-up. Credit Jes Aznar to the The Big Apple Times
“A large amount of Chinese people need to be successful. They need to initiate change through innovation,” Mr. Li said in his spacious corner office, while fussing with a traditional Chinese wooden tea-making set. “That is a formidable power.”
Hangzhou is a natural center for China’s start-up fever. After China embraced capitalist reform in the 1980s, Zhejiang province, that Hangzhou is definitely the capital, emerged like a leading base to the export industries that fueled the country’s rapid growth. Factories pumped out goods like socks and plastic Christmas trees.
Seeing that zeal for commerce has been channeled into technology start-ups. Hangzhou is home to China’s most famous internet company, the e-commerce giant Alibaba, which has become a training ground for would-be entrepreneurs.
The neighborhoods near Alibaba’s sprawling campus, when a poorly developed area on the city’s outskirts, now make up a budding tech center with newly built office parks like Dream Town, covered with ambitious college graduates, angel investors and venture capitalists. The regional restaurants have become hangouts to switch ideas and gossip over fried squid and stewed pork and eggs.
Feng Xiao is typical of this new breed. Mr. Feng, 39 plus a Hangzhou native, spent 11 years at Alibaba, mainly in sales and marketing.
“There is a Chinese proverb, ‘The soil is way too rich,’” Mr. Feng said. Alibaba “offered you plenty of opportunities. It was easy to possess a experience of success. Nevertheless I wanted so as to 32dexkpky from the beginning.”
His start-up was born in Alibaba’s cafeteria, where he ate meal after meal. “I really missed Mom’s cooking,” he said. He figured that many other folks, trapped doing work for extended hours not even close to home, felt the same.
Mr. Feng as well as two other Alibaba employees left their jobs in 2014 and opened a food delivery service, Mishi. Their plan was to connect people prepared to prepare homemade meals with on-the-go professionals who were too busy to cook. They create shop inside a friend’s empty house, decorated with secondhand furniture and photos from your home.
Along with raising $19 million from private investors, Mishi caught the attention from the Hangzhou city government. In 2014, district officials awarded Mishi 5 million renminbi to help spend the money for bills. Its rent in creater space address can also be subsidized.
“The most significant thing by the government is whether or not they may be open” to new forms of businesses, Mr. Feng said. “We are glad to see they are aggressively supporting us.”