Dialogue among global bay areas: How to collaborate in a new era?

Source:GDToday

In the journey to becoming a world-class Bay Area, what lessons can the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) draw from other global Bay Areas' development paths, paradigms, and innovation trends? To facilitate a comparative study among the four major Bay Areas, Nanfang Daily and the Southern City Think Tank interviewed Dr. Weisheng Zhou, a foreign member of the Engineering Academy of Japan and a professor at Ritsumeikan University, as well as Laurent Arribe, Senior Manager of Global Business Development at the Bay Area Council in San Francisco, U.S. The aim was to derive actionable ideas from the successes of the Tokyo and San Francisco Bay Areas and to assist the GBA in achieving high-quality development and building a world-class Bay Area and urban cluster.

What kind of environment is conducive to unicorn growth?

Modern nations primarily compete in technological strength. The assessments run by the Southern City Think Tank indicated that the Tokyo and San Francisco Bay Areas rank among the top in the technology field. However, if we look at the number of unicorn companies, which are usually at the forefront of global industries and represent the direction of the future of science and technology, we will find big differences. As indicated, in 2024, San Francisco ranked first among the four major bay areas with 190 unicorns, while the Tokyo Bay Area had only 8, ranking last. They are both world-class scientific and technological innovation centers, so why is there such a significant disparity?

Laurent Arribe (the Senior Global Business Development Manager at the Bay Area Council) believes that three factors have significantly contributed to the San Francisco Bay Area's becoming a tech hub. The first is the advanced education and research system; the San Francisco Bay Area is home to world-class universities that continuously supply talented individuals.

The second factor is the concentration of venture capital and financing resources. For decades, 35% to 45% of global venture capital has flowed to the San Francisco Bay Area. In 2021, more than half of the global capital in the artificial intelligence sector was directed to the San Francisco Bay Area, making its capital density unparalleled.

The third factor is the diverse and open culture of the San Francisco Bay Area, where over 30% of the population is born abroad. Open-mindedness, an embrace of risk, and the influx of worldwide talent greatly drive technological development.

And this kind of environment is very conducive to the growth of unicorns.

Professor Weisheng Zhou, however, points out that Tokyo lags behind in unicorn development due to constraints in innovation culture, venture capital, talent acquisition, and industrial policies. Japan's corporate culture and social structure are relatively conservative, especially within large enterprises, where risk-averse tendencies dominate. This cultural inclination makes Japanese companies focus more on stability and incremental development while showing caution in investing in and supporting high-risk, high-return innovation projects. This contrasts sharply with the culture of other Bay areas, like Silicon Valley, which encourages risk-taking and tolerates failure.

The venture capital market in Japan is relatively conservative and primarily concentrated in traditional industries and mature enterprises. It offers limited support for early-stage, high-risk, innovative companies. Furthermore, Japan's ability to cultivate and attract top talent in science and entrepreneurship lags behind other global bay areas. The lack of diverse talent and an open innovation atmosphere are significant barriers.

The Tokyo and San Francisco Bay Area reflections offer valuable insights for the GBA. An open and inclusive entrepreneurial environment, financial support for technology, and the ability to attract top talent are essential for the growth of unicorns. In 2023, the GBA had 70 unicorn companies, still showing a notable gap compared to San Francisco. Learning from San Francisco's practices may help create an environment conducive to unicorn growth.

How do Tokyo and San Francisco view the GBA?

Since implementing the "Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area" five years ago, the GBA has achieved remarkable economic and social progress. During the interview, Southern City Think Tank learned that the GBA is attracting increasing attention from the Tokyo and San Francisco Bay Areas.

Professor Weisheng Zhou believes that companies in the Tokyo Bay Area generally see the GBA as a huge market, especially in manufacturing, consumer markets, technological innovation, and services. The economic integration and rapid development of the GBA provide Japanese companies with more business opportunities, particularly in market expansion and regional cooperation in China. Japan's manufacturing and high-tech companies have noted the GBA's enormous potential in industrial upgrading and innovative technologies. As a result, they show great interest in investing, collaborating, and expanding their businesses there. The GBA is becoming a global platform for competition and cooperation in industries such as automobiles, electronics, and robotics, attracting significant attention from Japan.

Laurent Arribe points out that mainstream American media marvel at the GBA's extensive policy design and deep regional collaboration. Such large-scale planning, interaction among regions and a massive population are unique worldwide. American media are curious about how the GBA organizes and executes its strategies and what outcomes it will achieve.

Both experts suggest that the GBA should continue to enhance its international visibility. Professor Zhou advises the GBA to conduct a large-scale promotional event in Japan to advance China-Japanese cooperation further. Laurent Arribe recommends strengthening academic, business, and government exchanges between the GBA and the San Francisco Bay Area, helping U.S. mainstream media deepen their understanding of the GBA and conveying the region's developmental progress to the American public.

Suggestions for the development of the GBA

The two experts also offered suggestions for the future development of the GBA.

Professor Weisheng Zhou notes that the GBA's innovation ecosystem is still developing in terms of technological innovation, and breakthroughs in high-tech industries remain crucial. He suggests that the GBA increase its investment in basic research to improve its ability to independently develop core technologies, particularly in frontier fields like quantum computing, artificial intelligence, and semiconductors.

Innovation and development in the GBA require substantial support from high-level talent. The GBA should further optimize its talent recruitment policies, relax restrictions on talent mobility, and promote the "free flow of talent" across the three regions. Additionally, the GBA should strengthen cooperation with universities and research institutions worldwide to attract outstanding overseas talent. Providing a convenient living and working environment can create an internationally competitive talent hub.

Professor Weisheng Zhou notes that the GBA faces significant differences in laws and social systems among its three regions. Balancing these differences while enhancing regional integration is an important future challenge. He indicated that the GBA should push for further policy coordination and standardization to improve governance efficiency and integration.

Although the GBA's level of internationalization has improved, it still has room to grow. Strengthening deep cooperation with other economies, particularly in finance, technology, and culture, can promote the global flow of talent, capital, and information. Simultaneously, improving regional legal and institutional frameworks can enhance foreign investment attractiveness and openness.

Laurent said if there is any specific experience or practice from the San Francisco Bay Area that other regions can learn from, it would be to be prepared for the influx of new talent and ideas, welcome new concepts, and be willing to take risks to create unprecedented new solutions, even in the face of potential failure.

He cites the example of ChatGPT's launch. Despite its inherent risks, it was released because of its potential to open new markets and opportunities. Even though significant adjustments were needed, people hoped the benefits would outweigh the costs. He believes an open attitude toward risk effectively promotes regional development, and he hopes other regions can also benefit from this approach.

Potential areas of cooperation among global Bay Areas

As world-class bay areas, the GBA, Tokyo Bay Area, and San Francisco Bay Area share many opportunities for collaboration.

Professor Weisheng Zhou notes that Japan pays particular attention to the GBA's innovation-driven development model, especially the technology and innovation performance of cities like Guangzhou, Shenzhen, and Hong Kong. The GBA is actively developing emerging industries such as artificial intelligence, 5G, semiconductors, new energy vehicles, and biomedicine. Japan has strong technical foundations in these fields, which offer more opportunities for cooperation in technological innovation and ecosystem building.

Laurent Arribe highlights that the Bay Area Council's Economic Institute has studied the GBA and even published a dedicated report. He sees many collaborative opportunities between the GBA and the San Francisco Bay Area in advanced manufacturing, infrastructure, and financial services. The two regions can combine San Francisco's technological innovation capabilities with the GBA's manufacturing strength to develop advanced electric vehicle batteries, sensors, and autonomous driving algorithms. Collaboration can be particularly fruitful in areas like battery energy density improvement, range optimization, and fast-charging technology.

In the biomedical and pharmaceutical industries, combining the San Francisco Bay Area's biotech innovation with the GBA's large-scale production capabilities can drive the development of personalized medicine and next-generation medical devices. For instance, both regions can collaborate to develop remote surgery robots and health monitoring sensors. By integrating artificial intelligence and the Internet of Things, they can enhance device performance and user experience.

In addressing climate change, California passed stricter legislation last year, requiring the monitoring and reporting of carbon emissions at the overall supply chain level for all companies. This would require collaborating with suppliers and manufacturers, many of whom are from the Greater Bay Area. This could be another opportunity for these two regions to tackle challenges jointly and work towards a global shared future.

Laurent Arribe believes the GBA has significant potential to become a global leader. The mutual connections between the GBA and the San Francisco Bay Area are a driving force for shared development. In tackling economic challenges, climate change, and global health issues, the two Bay Areas can accelerate the creation of solutions and jointly lead the Fourth Industrial Revolution.

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