If innovation, capital resources and technical know-how are essential ingredients for fostering hi-tech development, Shenzhen has an edge over other mainland cities.
As a relative newcomer, the purpose-built Special Economic Zone (SEZ) is free of the crippling legacy of inefficient state-owned enterprises (SOEs) that hamstring the economies of longer-established industrial cities.
This yields a number of advantages. To begin with, hi-tech (especially information technology) businesses in Shenzhen are run mainly by private or foreign investors, which compares with Shanghai, for example, where they are run mainly by SOEs.
In 1997, 89.54 per cent of a total investment of 16.8 billion yuan (about HK$15.7 billion) in new hi-tech in the SEZ was raised by the enterprises themselves. The rest was government funding and domestic bank loans. Of the private capital, more than half came from foreign sources, including Hong Kong and Taiwan.
In addition, the predominantly private ownership of the SEZ encourages technological innovation and allows hi-tech businesses to develop in a free-wheeling style.
Last year, the output value of hi-tech products in the SEZ accounted for 43.8 per cent of the mainland's hi-tech output. At about 65.5 billion yuan, this represented 35.44 per cent of the city's industrial output, a proportion which increased to 40 per cent in the first eight months this year.
The more than 20 billion yuan output value of the computer industry in Shenzhen dwarfs the five billion yuan industry in Shanghai.