A World Top-Class Science Park to Attract World Top-Class Human Resources

-----How Zhongguancun Science Park Becomes a Magnet for Overseas Returnees

Zhang Qian

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I. Chinese Overseas Returnees

3 waves of fever to study abroad and the number of people going broad to study has reached 802,000. u The 1st wave was in the early 1980s u The 2nd wave started in the 1990su The 3rd wave continues from 2000

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u Wave of returning

By 2005, 190,000 of the oversea Chinese has returned with an annual increase of 13%

u Hai Gui -Sea Turtles returning to the shores they left to grow up in the sea.

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II. Zhongguancun Science Park

u University-based Science Park

u Hi-tech Experimental Zone

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1988-2006 u the number of hi-tech ventures

grew from 527 to over 18,000

u employees increased from less than 10,000 to 600,000.

u overall income that grew from RMB1.4 billion to RMB600 billion,

u tax collected increased from RMB51 million to RMB21billion

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III. A Rising Trend of Pioneering Business

Year 2000-2006: u 32,000 returnees for business consultationu 7,600 have chosen to stay and 3,200 firms have been st

arted up u number of the returnees stayed in the park is 7.6 times o

f that in 1999, and number of the firms they operate is 12.7 times. 91% of the firms are in the hi-tech industry. The original registered funds of these firms has totaled 3.95 billion yuan .

u Incubator increased from 1 in year 2000 to 19 in 2006

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Overview of Returnees in Z-Park

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Distribution of Receiving Countries

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Educational Degree of Returnees

PhD, 38%

Master, 42%

Other, 20%

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By the end of 2006, there are 7 firms listed in US Nasdaq, accounting for 50% of the total firms listed in Nasdaq from Zhongguancun Science Park.

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IV. Reasons Behind the Back Flow

1.Steadily growing and secured Chinese economy with a growth of 7% since year 2000

2. China's policy towards overseas students

Ø "supports students to study abroad, encourages them to come back" and guarantee their "freedom of coming back and leaving".

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V. Attraction of Z-Park

Local preferential policies to make Zhongguancun Science Park the preferred destination of overseas returnees

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Tax Incentives

The income tax rate is 15% for the hi-tech

companies in the park.

1-3yrs, tax rate 0;

4-6yrs, tax rate 7.5%.

For the certified software and IC companies, VAT

rate is 17% before year 2010.

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Beijing city’s residency permits will be preferentially issued t

o overseas returnees as well as technology & management

talents from other provinces in spite of the limited quota.

Stock equity and stock option are rewarded to the distinguis

hed sci-tech researchers and operation management.

Talents Policy

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Financial Policy

Developing Funds for Hi-tech Companies

Developing Funds for Software Industry

Supporting Funds for Overseas Returnees

Loan Guarantee Green Channel

VC Matching Fund

Risk Subsidies for VC Companies

China's OTCBB

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5 Overseas Liaison Offices

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Incubators

19 incubators has set up especially for the returnees and 1,600 firms has been incubated within the 420,000 square meters' offices

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Supporting Funds System

u For the new start-ups by the overseas returnees, a free supporting fund of 60,000 to 100,000 RMB is offered as a token gift by the government.

u Among the 711 start-ups who have received 58.3 million RMB totally since 2002, 96% of them have operated their business successfully longer than 3 years.

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Green Passage for Bank Loans

Zhongguancun Guaranty Cooperation has guara

nteed 115.55 million RMB's bank loan for 156 firms of overseas returnees.

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u Resources from the around 39 universities u The culture of "Bold in Innovation and Afraid of

No Failure" is popularized in the Park.

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VI. Social and Economical Effect of the Returnees

u China's strategy of "rejuvenating the country through human talent."

u "irreplaceable" and of "outstanding historic role".u overseas returnees bring back many things

including advanced technology, international conception of management, connections with the outside world, foreign funds and investment

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VII. Policy Suggestions

1.To create a pleasant environment;

2.To popularize English as the working language especially in the non-English spoken country;

3.To intensify the education and propaganda of moral and belief for the purpose of attracting its foreign educated talents back to their homeland