Z-Park: China's Silicon Valley

Beijing's high-tech park is an incubator for innovation in technology, business, and financing, as well as a testing area for liberalized government policies

by Claire-Juliette Beale

The new Chinese line of "Regenerist" packaging for Olay, developed at Procter & Gamble's R&D Center in Z-Park in the northwest of Beijing.

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Just before the Chinese New Year in February, Olay launched a new look for its popular Regenerist line of premium anti-aging skin-care products. Featuring an elongated bottle reminiscent of those of upscale rivals, with a minimal but powerful use of color, the idea was to offer a posh look—at an affordable price.

The packaging has apparently been a hit. Olay would not release figures, but James Kaw, director of Procter & Gamble's (PG) research and development center in Z-Park (short for Zhongguancun Science Park), China, which created the new packaging, is happy. "The upgraded line delivered superior experience and 'first moment of truth' advantages for the Olay counters," he says—in other words, the designs made a visual impact on the shop floor and then sold. "The products are the most elegant designs within the global franchise."

A Local Center for Ideas

But perhaps more interesting is the story of where the designs came from. As is happening more frequently, they were the result of collaboration between P&G's local Chinese team and its unidentified local packaging supplier. And while the new packaging was intended specifically for the Chinese market, local R&D is also being applied to creating technologies and products that will serve global markets. No mere basic research or "indigenization," this research is designed to affect the world.

P&G's strategy conforms nicely with Chinese President Hu Jintao's plan, announced in 2006, to turn China into an "innovation-oriented" country by 2021. And Z-Park, China's homegrown Silicon Valley, is the jewel in his innovation crown. The biggest and oldest of the 53 national high-tech zones in China, Z-Park has become an important port of call for global corporations looking both to develop R&D for all sectors and to get a foothold in the Chinese market. For China watchers, it also serves as a window into how the evolving giant interacts with global market and social forces—and how it is turning to private resources to build its vaunted innovation economy.

Z-Park is made up of a group of seven parks, covering an area of about 100 square kilometers at the northwest edge of Beijing, close to the city's internationally esteemed educational institutions such as Tsinghua University, the University of Beijing, and the Chinese Academy of Science (CAS). It was founded in 1980, when Chen Chuxian, a researcher at CAS, returned from a trip to Silicon Valley. He opened the Advanced Technology Service Assn., the first privately funded, civilian-run, scientific and technological consulting firm in China. Soon after, other scientists came to the district, attracted by the support afforded by both CAS and the central government. A virtuous circle began, with new ventures spinning off from Chinese universities. Foreign companies also set up shop.

Building an International Presence

In 1988, the area was officially recognized by the municipal government as the Beijing Experimental Zone for the Development of New Technology Industries, a place where new measures and new institutions could be tested. This catalyzed growth, and by 1996, global corporations such as IBM (IBM), Sun (SUNW), Nokia (NOK), and Microsoft (MSFT) had all established R&D centers there. Non-tech companies such as P&G were also lured, while homegrown (often university-grown) companies such as Lenovo (originally known as Legend), Founder, and UFSoft all had their start in Z-Park.