The Underdog Province Catching Up With China’s Tech Boom

It’s Fuyao season as usual for the residents of Fuqing, a county-level city in China’s Fujian province. The infamous glass producer from the Obama-backed documentary American Factory is an indispensable presence in the city, which owes 3.4% of its GDP to glass production. The bigger chunk of Fuqing’s GDP is attributed to IT manufacturing, similar to the rest of the province. But as the number of urban factory workers in Fujian is dwindling, having fallen 22% between 2012 and 2016, the region is faced by the daunting challenge of repositioning itself on the industry specialization spectrum.

Labor shortages and rising costs are both a curse and a blessing for the Southeastern Chinese province known for its entrepreneurial population and a vibrant electronics industry. Fujian’s factories are going through a robotic revolution that mirrors the trends sweeping over the country as a whole. Keen to keep pace with times, most Chinese regions have arbitrarily put a leash on their GDP growth targets, emphasizing long-term goals over short term benefits. The zeitgeist now is the development of new industries and comprehensive infrastructure overhauls.

In the first 10 months of 2018 alone, Fujian saw a 16-fold rise in the number of imported industrial robots, according to China Daily. Fuzhou, the provincial capital, is one of the cities that benefited the most from the reform and opening initiated by Deng Xiaoping in the late 1970s. However, as the years passed and cities like Beijing and Shenzhen sprung up as global hi-tech leaders, Fuzhou, with its roots in manufacturing, trailed behind. Luckily the Chinese leadership seems to be waking up to the problems faced by the region, a dynamic possibly prompted by President Xi’s past tenure as the province’s governor.

The two largest cities of the province, Fuzhou and Xiamen, have emerged as major foreign investment hubs. Since the launch of thePilot Free Trade Zone in April 2015, both localities reaped considerable benefits allowing them to import goods without paying customs duties. Positioned on the coast of the South China Sea, across a strait from Taiwan, Fujian is a perfect trade harbor. It was one of China’s first four Special Economic Zones designed to trade with the outside world. Fujian is also home to Xiamen University, one of China’s top schools. Not to mention the province is central to China’s global ambitions as part of the 21st Century Maritime Silk Road project. 

Another important factor that put the province on the map of China’s regions to watch for is “Digital Fujian”, an initiative instigated by Xi Jinping during his years as China’s Vice President. Fujian has essentially become the face of China 2.0, an embodiment of the vision for the new China with few heavy industrial zones, hi-tech ambitions, a clean environment and an attractive climate for foreign investments. 

Thanks to the special attention this coastal region has been receiving, Fujian now ranks 10th among China’s provinces in terms of GDP and considering the growth rate of 8.4% per year it could rise in the ranks in no time. Fujian is also China’s 6th most digitized region, home to a slew of successful companies like the local gaming titan NetDragon, popular image editing app Meitu, and even the recent coffee industry disruptor Luckin Coffee, all of whom are capitalizing on China’s mobile internet obsession. 

A year ago, the local government made an important step forward towards reinventing Fujian as a hi-tech province, announcing a new regional policy that promotes the adoption of blockchain technology among local tech start-ups. The policy is akin to similar measures implemented in better-known tech hubs like Shenzhen or Hangzhou. Other technologies that received government backing in the province were computer vision, AI, virtual reality, and edge computing. 

On the academic side, Fujian is launching a vast array of institutions aiming to nurture a new generation of highly-skilled professionals and supply the province with cutting-edge innovations. Some of the province’s key initiatives include the Haixi Research Institute of the Chinese Academy of Sciences, the Graphene Engineering and Industrial Research Institute of Xiamen University and the Digital China Research Institute. Additionally, the province seeks to launch research and development facilities dealing with areas such as the Internet of Things, big data, integrated circuits, artificial intelligence, new materials, new energy, and biomedicine.

Last year roughly 111 national and provincial science and technology research and development innovation platforms received a subsidy of 54.12 million yuan. There are currently 204 major laboratories operating on the provincial level in Fujian, including 10 national key laboratories that have won 197 various scientific and technological awards and authored a total of 1,602 patents, according to Xinhua. For years, Fujian has been an underdog in China’s tech frenzy, but it seems like the lucky province (character Fu, 福, means luck) has finally caught a tailwind pushing it forward.