Beijing has unseated Silicon Valley as the top technology hub in the world -- at least according to one report. Expert Market, a business resource company, released its second annual Top Tech Cities in the World 2017 ranking this week and named Beijing number one. Berlin came in second, down from the top spot, which it held last year. San Francisco ranked third. Shanghai, Bangalore, Singapore and Sydney also made the list of 20 cities.
Expert Market gave Beijing's Zhongguancun tech community the number one spot due to its favorable climate for early stage funding and the city's affordable cost of living (though costs for home buyers in Beijing are even higher than in San Francisco). Researchers used 10 data points to determine the rankings, including software engineer salaries, how long it takes to get a business up and running, cost of living and monthly rent prices, growth index, startup output and other factors.
“Our report shows just how fast moving and internationally competitive the tech industry is, especially when it comes to attracting the brightest new tech talent," Expert Market editor Jared Keleher said in a press release. "Though Silicon Valley still excels in a number of key areas, international competitors have overtaken the original tech hub city by far, offering a much lower cost of living and rapidly increasing funding."
Beijing has increasingly been compared to Silicon Valley in recent years. One entrepreneur wrote for Recode that the Chinese capital is the "only true competitor" to Silicon Valley, thanks to its massive market, fast consumer adoption rate, rapid business development timelines and appetite for innovation. In 2016, the government announced that it would invest $1.5 billion to renovate and develop the area, which is home to major Chinese companies such as Xiaomi as well as American corporations such as Google and Intel.
China has boasted a number of tech success stories, most notably Alibaba, which is headquartered in Hangzhou and saw a 132% earnings increase last quarter, and Shenzhen-based Tencent, whose stock prices have risen 2,636% during the past 10 years. "Over the last few years, China has made a concerted effort to put itself on the tech map and Beijing now plays host to some of the world’s biggest tech giants," Sophia Patsikas, lead researcher at Expert Market, said via email. "The fact that their internet is heavily censored in China and many of the dominating Western sites like YouTube, Google and Facebook are currently blocked may actually have worked in the favor of Chinese tech entrepreneurs, who can create Chinese equivalents, without having to compete with titans like Amazon."
Alibaba in particular has leveraged that freedom to become a global tech powerhouse. It's preparing to go toe-to-toe with Amazon in Southeast Asia. Alibaba already has a presence there, and it holds an 83% stake in the Singaporean e-commerce company Lazada. CEO Daniel Zhang reportedly said in a recent earnings call that the company will continue to focus on the region, even as Amazon launches Prime in Singapore, marking its entry into the market. Given that the consulting firm Frost & Sullivan expects the Southeast Asian e-commerce market to surpass $25 billion in 2020, it's safe to assume that both companies will invest heavily there for the foreseeable future.
China's tech companies are becoming globally dominant, or at least significant, across a number of industries. The country now leads the world in supercomputers, and Chinese companies hold significant market influence in security products, messaging apps, ride-sharing services and electric cars, and, of course, e-commerce.
Patsikas said that although China's size and market conditions give it a unique advantage for establishing tech dominance, the rapid growth of its startups and growing global presence point to big potential for other Asian economies as well. "The situation in China is a unique case, but for emerging hubs in Asia, it suggests that having power in numbers presents a huge opportunity for homegrown tech startup," she said.
