China’s tech sector is rapidly becoming among the world’s largest, with 186 companies now valued at over $1 billion, according a list published earlier this year by Hurun Report. And despite the growing tech cold war with the US, Chinese cities are also gaining recognition for their ability to foster the ongoing growth of these tech unicorns, according to a survey released last week by Savills.
The five mainland cities of Shanghai, Beijing, Shenzhen, Hangzhou and Chengdu all rank among the top 30 globally as centres for tech companies and investment hotspots, according to the report by the London-based property consultancy, which was published in its third annual edition last week.
The showing, which represents the first time that a mainland Chinese city has been included in Savills’ rankings, was helped along by the access to venture capital cash in the cities, as well as by an emphasis on bike and ride sharing which the survey treated as an important tech-enabling service.
China Ranks Tops for Getting Around
The study graded locations according to their scores for business environment, tech environment, “city buzz and wellness,” talent pool, real estate costs and mobility. Overall, Shanghai finished fifteenth on the list, with Beijing in the 17th spot, and Shenzhen finishing 24th, while Hangzhou took the 25th position and Chengdu ranked 26th.
Mainland cities had some of their strongest showings in the mobility category, where Shanghai ranked fourth, Shenzhen placed 11th, and Beijing finished 13th for ease of getting around.
In evaluating transit conditions in mainland China, Savills noted that “Chinese cities have emerged as leaders in shared mobility services,” adding that, “Hangzhou is home to more shared bikes than in any other city globally. It is not clear if the study was completed before the collapse of mainland bike-sharing unicorn ofo late last year.
The survey put New York, San Francisco, London, Amsterdam and Boston in the top five position respectively. Among Asian cities, Singapore ranked tops overall in the rankings, in the sixth spot, thanks in part to a 17th place finish for mobility, while Hong Kong placed 20th overall.
VC Cash Seen Powering Tech
Mainland cities were also boosted by their generous allotment of venture capital funding, where they grabbed a bigger piece of a growing pie, according to Savills. VC investment volumes across the 30 cities included in the report rose from $37 billion in 2012 to $207.8 billion in 2018. While the scale of overall investment has risen, the US-city share of these volumes has dropped from 40 percent to 28 percent. Chinese cities, by contrast, have seen their share rise from 11 percent to 36 percent over the same period.
During the period from 2016 to 2018 Beijing averaged $34 billion in venture capital spending each year, to lead this category, more than 35 percent more than New York, which ranked second for VC investment over the same period at around $22 billion per year.
Despite the northern capital’s funding advantage, Shanghai still ranked more highly overall as a more “global” tech city for its international business environment and the better of quality of life for residents, according to the survey.
Elsewhere, Shenzhen received high marks for its strengthening links with Hong Kong and a new tech-stock exchange, ChiNext. Hangzhou stood out as a lower cost “smaller” city, followed by Chengdu’s rising tech economy.
Lower Desk Costs Help Boost Rankings
Although given a lower weighting than the availability of talent and the quality of the business environment, such as the ease of company establishment, the costs of both residential real estate for accommodating staff, and office space for running a business, also played a role in the rankings.
The survey found Bengaluru in India had the lowest overall costs for real estate, with residential rents average $160 per week in the southern India hub, while the monthly rental of a desk in a private office averaged $250 per month. Chengdu ranked as the second-most affordable city on this metric, with residential rents averaging $140 per week and that private office desk setting you back $270 per month. Hangzhou ranked as fourth most affordable at $190 per week for a home and $290 per month for the office space.
New York, despite receiving top marks overall was the most expensive place for real estate at $520 per week for a home and $950 per month for your office. Hong Kong was the second-least affordable at $450 per week for housing and $75o per month for an office desk.