December 5, 2023 - The municipal government of Shanghai, which is trying to model the city into China’s pre-eminent tech hub, has named 40 businesses in its first batch of tech champions, including US-sanctioned artificial intelligence (AI) firm SenseTime and video gaming studio miHoYo.
US-sanctioned Shanghai Micro Electronics Equipment (SMEE), China’s best hope of producing advanced semiconductor machine tools, along with Jaka Robotics, Xiaodu Technology and Bilibili are also on the list, which means they are eligible for a wide array of incentives from rent refunds to research subsidies.
The 40 nominated “innovation companies headquartered in Shanghai” come from four sectors, namely semiconductors, biotech, AI and the digital economy – all areas that Shanghai is trying to develop. Gong Zheng, Shanghai’s mayor, awarded certificates to the named companies in a ceremony on Tuesday, according to local media outlet The Paper.
The city’s move indicates that local governments are still keen to use central government incentives to grow particular industries favoured by Beijing. Projects involving semiconductors – a strategic tech sector that Beijing has targeted for greater self-sufficiency – have various subsidies and support.
However, it remains an open question whether hand-picked tech champions can live up to expectations. SMEE has yet to deliver China’s first home-grown 28-nanometre lithography machine despite decades of support. Its 90-nm grade product is well behind those from ASML Holdings, the Dutch lithography equipment maker that can make machines for chips below 7-nm.
Hong Kong-listed SenseTime, once seen as Asia’s leading AI company, is also struggling to turn a profit. Its stock in Hong Kong has lost two thirds of its value since an IPO at the end of 2021.
Video-sharing platform Bilibili and miHoYo, the creator of global hit Genshin Impact, one of the most successful China-developed video games ever, are among the 10 companies under the digital economy category.
Meanwhile, PDD Holdings, which briefly overtook Alibaba Group Holding as the most valued Chinese tech company listed in the US last month, is not on the list. PDD Holdings, which runs discount shopping apps Pinduoduo and Temu, said in May this year that it had moved some of its operations from Shanghai to Dublin, Ireland. Alibaba owns the South China Morning Post.
Shanghai is hoping that its first batch of tech champions can boost the city’s profile in China’s tech landscape.
Shanghai published a policy document in February this year asking businesses to apply for the list, with successful firms entitled to subsidies of up to 5 million yuan (US$700,000) for those with registered capital of over 100 million yuan and who set up offices in the city after 2022, as well as subsidies of up to 30 per cent towards the cost of office rents.
China is ramping up its efforts in AI and other hi-tech areas, with plans to establish a raft of regional AI “highlands” across the country, as the world’s second-largest economy continues to battle the US for tech supremacy.
Shanghai, traditionally seen as the nation’s financial hub, is doubling down on efforts to become the country’s engine of digital growth, as laid out in the local government’s August 2023-2025 digital economy master plan.
