A city is not only a division of geographical location, but also a competitive entity for new technology. When a new technology emerges, there will be local adoption that creates new urban economic growth factors and a new perception of the city. For major cities, blockchain is a rare technical gift.
Deloitte used GitHub metadata to analyze nearly 90,000 blockchain projects around the world, tracking the technological evolution of blockchains since 2009. The study pointed out that Beijing and Shanghai are already among the top five cities in the global open source blockchain distribution.
However, even in China’s first-tier cities, each city is at a different position in blockchain integration due to their own unique features.
According to block-45, projects in Beijing are mainly based on exchanges, wallets, and mining machine production. Projects in Shanghai mainly focus on the application of digital identities, smart contracts and other technologies in financial services. The rising star, Hangzhou, showed its ambition in the development of underlying technologies. With strong electronic product manufacturing capabilities, Shenzhen has become a distribution center for the production and sales of mining machinery. Suzhou has established a research institute to change financial technology.
Everyone who wants to enter this new industry needs to carefully consider the most suitable city. Below is a multi-dimensional analysis of each city.
The most profitable companies in the blockchain industry are exchanges and manufacturers of mining machines. China’s largest exchanges and mining hardware producers are concentrated in Beijing.
A company where an individual going by the alias of Xiaonan works is one of the largest mining machine manufacturers. When Xiaonan joined the company in June of last year, there were only 300 employees. Now, that number is about to exceed 2,000. Rapid development has defined Xiaonan’s experience in this type of work. One project follows another, and neither the company nor any individual has much time for rest and adjustment. “You see it is 10 o’clock on a Friday night, I am still working overtime. Come and help me!” Xiaonan joked.
Xiaonan’s company is developing very well. Their sales director has thousands of missed calls, and overseas sales often receive thousands of orders by email. “The company is regarded as a tyrant, but we have welfare benefits. The previous single-office buildings cannot accommodate the current number of employees. We rented a whole floor in the building next door, where one seat is worth 3,000 yuan ($474).”
Xiaonan’s company is a typical representation of companies at the top of blockchain “food chain”. Most of these companies are concentrated in Beijing. While the blockchain industry is still in its early stages, they have received huge profits.
According to China-based think tank Wuzhen Institute, Beijing currently has the most blockchain technology startups of any Chinese city. More than 40 blockchain companies are located in Beijing, accounting for more than 40 percent of all blockchain companies in China.
Representative companies include Bitmain, a company engaged in R&D of chips and sales of Bitcoin mining hardware, Huobi and OKCoin. The latter two were both once ranked as the world’s top three bitcoin exchanges.
According to China’s largest job recruitment search engine Baidu Recruit, blockchain-related work in Beijing provides the highest salary. The maximum monthly salary is over $15,800 (100,000 yuan). Available job positions are mainly CTO, development engineer, CEO and senior director.
There are 1,244 blockchain-related job postings in Beijing, 11 of which offer monthly salaries of over $15,800 (100,000 yuan), accounting for less than one percent of those jobs. 48 offer monthly salaries of above $7,900 (50,000 yuan), accounting for 3.8 percent.
In Beijing, people talk of the rise and fall of cryptocurrency prices. In Shanghai, you may hear that Bitcoin is obsolete. People are talking more about how the blockchain technology can be applied.
In a joint office space at the Zhangjiangko Venture Park in Shanghai, more than a dozen people are busy at work at a blockchain startup company. The space covers less than 1,300 square feet (120 square meters). Although there are only a dozen or so employees, according to the founder of the company, almost everyone has multiple duties, and everyone, even including the public relations professional, has a technical background.
Brainstorming and international video conferencing are part of this team’s daily routine. Several founders need to fly around the world to attend various meetings. One co-founder is from Venezuela and the other has an overseas background. The company mainly provides blockchain technology solutions for financial institutions.
This is the epitome of the blockchain startups in Shanghai, who are more concerned with the application of the blockchain underlying technology than the rise and fall of coin prices.
Among well-known blockchain companies in Shanghai, most projects focus on the underlying platforms and applications, including Qtum and Neo. More than 30 percent of blockchain companies are in the financial services industry. Compared with Beijing, Shanghai has fewer jobs and lower salaries. Only one of the 594 blockchain-related job posts offers a monthly salary over $15,800 (100,000 yuan), and 40 posts offer a monthly salary over $7,900 (50,000 yuan), accounting for 6.7 percent. However, in terms of air quality and transportation options, Shanghai is better than Beijing.
Although Hangzhou started venturing into the blockchain industry later than the first two cities, it has attracted much attention in the research and development of the underlying technology. Out of the top 100 global blockchain company patents rankings in 2017, five companies are located in Hangzhou. Alibaba ranks first with 49 patents, and the other four companies are all among the top 50.
In April 2017, Hangzhou Municipal People’s Government hosted the Global Blockchain Finance Summit, which is the highest-profile blockchain conference hosted by the government that year. Xinhua Chen, deputy mayor of Hangzhou, said at the meeting that the planning and construction of the Qiantang River Financial Harbor will provide a rich foundation for developing the blockchain industry.
It is rare to express commitment to the blockchain in the form of government work report, as Hangzhou has done.
In 2018, Hangzhou is expected to intensively introduce policies to create a “blockchain town”. Another advantage of Hangzhou is its large capital. At Hangzhou’s Capital Matchmaking Meeting held last summer, seven blockchain venture projects attracted 14 local investment institutions. Some media reports described the scene as “too little meat for so many wolves”.
In addition, a major feature of Hangzhou’s development of the blockchain is the large number of companies. There are over 30 blockchain companies in Hangzhou, involving each link of the blockchain to form a complete ecological circle. There are state-owned companies, such as ZCBlockchain; bottom platforms, such as GXS and Cryptape Inc.; mining machine manufacturers, such as Canaan; and 8BTC.
Another advantage Hangzhou has is its large number of talents. Zhejiang University has stood at the forefront of Chinese blockchain technology research and cultivates a large number of entrepreneurial talents for Hangzhou, including the founders of Hyperchain, Yunphant Blockchain, and Fuzamei. With Alibaba also creating an entrepreneurial atmosphere, Hangzhou has a blockchain entrepreneurial environment. Hangzhou also has a more pleasant climate compared to Beijing, and a slower pace of life compared to Shanghai. It is a good choice for people interested in technology startups.
Known as China’s Silicon Valley, Shenzhen is one of the birthplaces of China’s computer industry. According to British Financial Times, Shenzhen has become a “new world center” for mining machine production. Miners from the United States, Japan, South Korea, Russia and India gathered to Shenzhen to purchase mining equipment, where the marketing pricing is most attractive.
Upon entering SEG Square at Shenzhen Huaqiang North, the eye-catching “mining machine” words guide customers to the fourth and fifth floors, where mining machine sellers gather.
A merchant by the pseudonym of Li Hua opened one of the earliest mining machine businesses there. He used to sell video cards and chassis. Merchants who once sold computers and mobile phones have changed their businesses to selling mining machines. Some shops have not even changed their original signs.
For them, mining machines are no different from previous computer hardware, but the business is better. When the mining machine business became popular, SEG Square rental rates doubled. Still, numerous merchants crowded in. Shenzhen became the world’s largest mining machine sales center largely due to strong electronics design and manufacturing capabilities in nearby areas.
When people gain more interest in blockchain in the future, Shenzhen’s internet giant Tencent may become a hotbed for blockchain entrepreneurs, thus altering the industrial structure of Shenzhen’s blockchain.
“Blockchain Valley” is Suzhou’s position in the blockchain era, gaining its title after gradually losing its industrial height.
Bordering Shanghai, Suzhou is a large city with a predominant immigrant population. Suzhou’s 2016 population survey report showed that immigrants made up more than 67 percent of the total population. However, unlike Shanghai’s foreign population, the migrant workers in Suzhou are mostly young temporary workers, 70 percent of whom only have high school education, and less than 10 percent have bachelors or higher degrees. These people have created an impressive GDP for Suzhou in the past five to 10 years.
Since 2012, with the gradual increase in labor costs, many factories in Suzhou faced problems with technology upgrade and labor retention. In the “Industry 4.0” era, labor-intensive industries are no longer the mainstream. The withdrawal of foreign capital was a clear signal compelling Suzhou to restructure and upgrade industrially. Suzhou has faced unprecedented difficulties in recent years. The emergence of hot blockchain technologies seems to bring hope to the city.
The plan begins with building a blockchain talent training base. On June 18, 2017, Tongji University and the Suzhou Government jointly created the Suzhou Tongji Institute of Financial Science and Technology. This year, it plans to train more than 500 blockchain technicians.
Then, there are corporate services. Suzhou High-Speed New City Management Committee will coordinate with the “blockchain valley” to build China’s first “Digital Economic Application Demonstration City”. People’s livelihood, government affairs and commercial sectors in the region will be the best applications of blockchain technology. Following application, the experience is not easy to replicate due to the lack of promotional channels. To this end, with the help of Tongji University and Suzhou government, “blockchain valley” will build an international community. Suzhou High-Speed New City Management Committee said it would set aside a special pilot fund of one billion yuan ($158 million).
The blockchain may be an opportunity for Suzhou to increase economic growth. So, to those who are interested in joining the blockchain field, have you decided which city is best for you?