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

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 1 st wave was in the early 1980s u The 2 nd wave started in the 1990s u The 3 rd wave continues from 2000 2

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 4

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 5

III. A Rising Trend of Pioneering Business

Year 2000-2006: u u 32,000 returnees for business consultation 7,600 have chosen to stay and 3,200 firms have been started up u u number of the returnees stayed in the park is 7.6 times of 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 .

Incubator increased from 1 in year 2000 to 19 in 2006 6

Overview of Returnees in Z-Park 7

Distribution of Receiving Countries

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Educational Degree of Returnees 9

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 12

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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Talents Policy Beijing city’s residency permits will be preferentially issued to 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 distinguished sci-tech researchers and operation management.

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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 15

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 17

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

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u u Resources from the around 39 universities 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 u u China's strategy of "rejuvenating the country through human talent." "irreplaceable" and of "outstanding historic role".

overseas returnees bring back many things including advanced technology, international conception of management, connections with the outside world, foreign funds and investment 21

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 22