China Crypto Valley 101 part 2: Shenzhen
The Paradise of IT and Tech company in China- “Shenzhen”
Let’s keep on the track.
Followed by China Crypto Valley Part1- Shanghai, There are more several emerging city in China, where we have zoned in on one particular upcoming blockchain hub.
The second targeted city on our journey is the paradise of IT start-ups- “Shenzhen”.
Shenzhen: Mining City? City of Imitations? Now, Call Shenzhen as an emerging blockchain hub city.
Shenzhen is located on the border of HongKong, with some arguing Shenzhen is the twin city of HK.
This small city is also well known as a paradise of IT and tech companies, with a lot of foreign startup companies are considering the city as its “Square One”.
If there is a Silicon Valley in the United States, China has started to adopt its own,“ Shenzhen Valley”.
But if there are always pros then always cons as to accompany.
I still have a fond recollection about the first imitation iPhone that was produced in the IT market of Shenzhen, exactly the same features, however, 70% much cheaper.
In this chaotic situation of imitations, big lawsuits, and conflicts plagiarism, a lot of creative SMB startups were born and grew very fast.
The ‘Blockchain wind’ hit this once unknown city very hard in 2017 & 2018.
Those existing large companies are showing much interest in the blockchain technology, and they are searching for partners directly who have a huge amount of capital and valuable resources.
With this, Shenzhen has stepped into the blockchain and crypto world officially.
- Shenzhen has enormous competitiveness not only in the global economy but also in blockchain industry.
Comparing to Shanghai or other top tier cities in China, the average income and the population of highly educated talents are are in no way inferior.
Rather, according to the graph above the number of well-educated talents is much higher than in Shanghai.
Let’s look at the global competitiveness ranking of the world cities from 2017 to 2018. Shenzhen officially was ranked in 35th out of 200 other countries, with Shanghai or Beijing nowhere to be seen.
The most famous IT company, Tencent, who is now regarded the same status as giants Alibaba and NetEase, Ping An Insurance, China’s leading insurance company, Huawei, who is competing with Samsung and iPhone in the global market, which are born and grown up in Shenzhen and now labelled as trailblazers of each industry.
What else do these companies have in common now?
They are also paying great attention to the most innovative technology blockchain.
Naturally, these leading key players are going to start from their comfort zone, Shenzhen, and will keep expanding their territory, finally taking the lead in the blockchain industry.
2. Shenzhen government is backing blockchain! One of the chosen projects can be the winner of the subsidy worth 6 million CNY(about 890K USD)!
There are some policies related to blockchain industry implemented within Shenzhen city, but the most notable one is the establishment of funds for the blockchain.
In 2018, April, the first block-chain fund was founded.
This fund has raised about 500 million CNY (about 7.3 million USD), and the Shenzhen city government supported 40% of the fund.
This fund is the very first government-backed fund which will be used primarily block-chain and traditional finance industry fund-raising in blockchain industry, 100% of funds will be used in block-chain projects for investment.
So far, funds have been used in the financial, public welfare, IoT, supply chain fields.
Shenzhen city government published several blockchain policies.
In 2016, The Central government announced “China’s 13th Five Year plan 2016–2020(aka. 13th five-year plan)”, Shenzhen also announced its 13th five-year plan alongside this and outlined some detail policies regarding the blockchain industry. (Refer to PIC1)
Among them, the most eye-catching policy is the official announcement by Economic and Trade and Information Technology Commission of Shenzhen,
<Notice of the Shenzhen Economic and Trade Information Commission on Organizing and Implementing the Second Batch of Supporting Funds for Strategic Emerging and Future Industrial Development in 2018>.
The main take away from this policy was to maximize the incentive of 2 million CNY (about 295K USD), and pilot programs run by Shenzhen government to develop and realize core technologies in new applications such as Big Data, Cloud Computing, Mobile, IoT, and Blockchain.
Until these days, there are some remarkable projects utilizing blockchain technology in overseas remittance and settlement of accounts with China Merchants Bank, one of the major banks in China.
It has been steadily showing the very active move from the government since 2016.
3. Tencent and Huawei, 2 big players in blockchain industry, will lead the way. No more Mining, Here is the real blockchain.
As I mentioned before, there are many IT global companies in Shenzhen.
Tencent and Huawei, both being founded and grown in this city are also jumping into the new emerging industry, blockchain.
Tencent.
Tencent has been moving very fast.
By the end of 2015, Tencent has already built up a dedicated team for the blockchain and started to delve deeper into blockchain technology. A long time before the 2016–2017 Crypto “boom”.
In September 2016, Wanxiang and Tencent, the two top blockchain key players, have officially announced a joint venture at the Shanghai Blockchain Week in that year.
Wanxiang Lab, which has already cooperated with well-known multinational companies such as IBM, Microsoft, ConsenSys, Ethereum Foundation, and HyperLedger. There, you can see the pattern, None of these companies were founded in China. It was pretty surprising that Tencent, the traditional Chinese company entered into a partnership with a blockchain company.
Following on from this, in April 2017, Tencent released its first white paper. (a year earlier than Huawei).
The overall documentation covers the current state of the blockchain, its future, and the current regulation of each country. Full-Fledged Tencent’s scheme starts on page 34.
Under the motto of “Independent innovation, safe and efficient, open sharing(自主创新、安全高效、开放共享)”, the company intends to create a total three-tiered blockchain structure. Tencent announced that this blockchain will be built on the basis of their own Trust SQl technology, in which they emphasize the ambition and confidence to apply their exclusive technology and API in many other areas.
And Tencent was not an all-talk.
Exactly seven months later, Its subsidiary company, Tencent Cloud has developed and released BaaS(Blockchain As a Service) platform available in the financial industry.
According to their announcement, This platform can eliminate unnecessary transaction costs, replace the middle man, and manage the whole financial system transparently.
They have also developed a platform for the supply chain system using blockchain technology which can extend solve the general financing problem of SMB companies.
August 10, 2018, Shenzhen Municipal Bureau of Taxation cooperated with Wechat (A messenger application developed by Tencent, with a user base of over 1billion) to launch the first digital invoice on blockchain with Shenzhen city announcing that they would become the very first pilot city of this new feature.
Shenzhen Municipal Bureau of Taxation, Tencent, and Jindie(金蝶) software corporate, this three jointly developed the process of “Wechat Payment — Applying for Digital invoice— Issuance of Digital invoice on blockchain”. The results were quite remarkable.
A considerable amount of Chinese is now using mobile payment and mobile invoice issuance. Wechat messenger and Payment which is integrated into the app, is one of the essential applications for whoever lives in China. This step by Tencent to use the blockchain in the real world let us know how much it will truly influence and help the public.
And, Huawei,
is one of the key IT companies in the smartphone industry, of China. Samsung and Apple both cannot ignore anymore,
likewise Tencent, Huawei also released its first blockchain white paper in April 2018.
Huawei primarily mentioned that the use case of the blockchain for the next 35 years will dramatically increase.
A summary of the white paper is;
Huawei will develop the three-in-one project which includes blockchain application, platform, and hardware which will create a solution that will provide 8 application plans mainly for these four areas: Big Data, IoT, Telecom, and Finance.
Based on the plans outlined in the white paper, Huawei has moved into action to make consumers easier to use their BCS(Blockchain Service).
On February 1, 2018, Huawei Cloud created an open source service platform for enterprise and created blockchain cloud services based on key technologies such as distributed ledger technology, data management, and encryption that Huawei has been building for years.
Huawei was the first corporate member who joined Hyperledger and proactively built communities in China and operated a Dev technology team.
So it may be natural to make a professional blockchain service in such a complete way.
The emerging blockchain hub city, Shenzhen.
Those two main reasons why Shenzhen will be one of the China Crypto valleys are very solid;
the promising back up from the local government and The leadership of those highly recognized large corporations.
It’s not a matter of “if”, it’s a matter of “when” Shenzhen City becomes one of the leading blockchain hub cities in China.
“China Crypto Valley” series will continue!
Which city will be next?
