Shenzhen passed Hong Kong to become China's most competitive city in the Chinese Academy of Social Sciences 2014 rankings. Hong Kong had held the top spot ever since its first inclusion in the survey a decade ago. Shenzhen, which borders Hong Kong, switched places, rising from No. 2 last year.
The survey of 294 cities, contained in CASS's Blue Book on Urban Competitiveness, was released Thursday in Beijing.
The Pearl River Delta dominated the rankings with, in addition to Shenzhen and Hong Kong, Guangzhou at No. 5 and Macau at No. 9.
Shanghai remained third from the 2013 survey. Beijing fell two notches, landing in eighth place.
Hong Kong lost its leader-of-the-pack position largely because it did not support innovation. Its Census and Statistics Department reported that in 2013, the last year for which figures are available, the city's public and private sectors and its educational institutions spent an amount equal to 0.73% of its gross domestic product on research and development for innovation and technology. Shenzhen, on the other hand, devoted 4.05% of its GDP last year to such areas.
Why the heavy emphasis on innovation? Perhaps because Chinese Premier Li Keqiang, with his much-publicized “Internet Plus” plan unveiled in early March, has placed his hopes on new businesses to revive the country's economy. His concept is that Beijing can invest in innovation, and CASS has evidently adopted the theme.
Hong Kong, on the other hand, has its noninterventionist philosophy and refrained, for the most part, from picking winners and losers. In any survey conducted by a Beijing-based organization, Hong Kong is bound to lose out to cities implementing activist policies favored by the country's leaders.
For decades, Hong Kong has worried about losing out to Singapore, run by world-class interventionists. Now, its concern focuses on next-door Shenzhen. After all, Hong Kong could have been the home of DJI Technology.
DJI—the initials stand for Dajiang Innovations—was founded by mainland-born Frank Wang, who graduated from Hong Kong's University of Science and Technology in 2006. He had wanted to start his business in Hong Kong but left the city for Shenzhen after not getting support. That year he founded DJI, which now has 70% of the global market for civilian drones.
Fast Company magazine ranked DJI 22nd on its 2015 list of the world's most innovative companies. Frank Wang's business is estimated to be worth about $8 billion, and many see it going to $10 billion after further rounds of funding.
Now, it seems every Chinese drone-maker has flocked to Shenzhen. There are about a hundred companies chasing DJI, and around 80% of them are located in that city.
Like the tiny one started by John Ma and two friends. They pooled savings; moved to Shenzhen in July; and built 70 drones, which they offered for sale on Alibaba Group's Taobao platform for 468 yuan apiece.