Excellent%20IT%20City%20Models

1
Excellent IT City Models

• Yasuharu Tanaka
• Japan Desk
• Saudi Arabian General Investment Authority
  (SAGIA)
• March 17,2002

2
Agenda

• 1. Most excellent model Austin in USA
• 2. IT Parks in Asia (Singapore, HK, Taiwan,
  Malaysia, India and China)
• 3. First Science Park in Japan
• 4. Common success factors Presence or absence
  of each factor in Riyadh
• 5. Conclusion

3
Evaluation to Austin

• Magazine(y/m) Ranking
  Category
• Forbes (00/5) 1 Best
  City for Business
• Dun Bradstreet/Business 1 The Top City
  for High-
• Startups Magazine (99/10) Tech
  Startup
• Money Magazine (99/10) 2 Best Place
  to Live
• Yahoo (99/2) 2 Most
  Wired City
• Inc. Magazine(99/12) 2 Best
  Small Metro for Startup
• 
  Growing a Business
• Fortune (99/12) 3 Best
  City For Business
• Entrepreneur Magazine 5 Top City
  for Entrepreneur
• 
  Activities
• 
  

4
Outline of Austin

• 1. 20 years ago, Austin was an university town
  only State Government and UT
• 2. Today, Austin is called as Silicon Hills !
• (Others)
• Silicon Forest (Portland, Seattle) Silicon
  Mountain (Colorado)
• Silicon Alley (NY), Silicon Dominion
  (Washington D.C.) etc.
• Why? IT Clustering
  

5
High-tech industries in Austin

• Category No. of companies
  No. of employee
• Computer 680
  40,000 (32)
• Mfg
  95 34,000
  (27)
• Sales/Services 585
  6,000
  (5)
• Semiconductor 50
  21,500 (17)
• Other electronics 140
  19,500 (16)
• Software/Internet 750
  27,500 (22)
• Telecommunication 300
  12,000 (10)
• Mfg
  60 3,500
  (3)
• Sales/Service
  240 8,500
  (7)
• Bio Medical 80
  4,500 (4)
• TOTAL 2,000
  125,000 (100)

6
High-tech industries in Austin

• 1. No. of High-tech companies ? Approx. 2000
• 2. No. of employees in High-tech industry
• 125,000 ? 20 of total employees in
  Austin
• 3. Prominent companies(No. of employees)
• Dell Computer (23,000) ---
  Mr.Michel Dell (UT)
• Motorola (10,500)
• Applied Materials (3,200)
• Samsung (1,000) etc.

7
No. of Patent Pending in USA

• City Population No. of Patent Pending
  B/A
• in 1998 A in
  1998 B
• San Jose 1,639 3,571
  2.2
• Austin 1,100 1,740
  1.6
• Denver 2,369 1,369
  0.6
• Seattle 2,312 1,076
  0.5
• Portland 1,822 897
  0.5
• Salt Lake 1,272 503
  0.4
• It is noteworthy that Austin with relatively
• smaller population ranks No. 2 followed by
• San Jose in Silicon Valley.

8
History of Regional Development (1/3)

• The 1970s ? Town of S.Gov. and Univ.
• IC2 Institute in 1976 by Dr.Kozmetsky
  (BS-UT)
• Objective Think and Do tank
• ? Combination of Technology and
  Entrepreneurship
• Driving force for regional
  development

• What is IC2 Institute at present ?
• a globally interactive organization that
  uses modern
• telecommunication and multimedia to link
  research
• universities,businesses, other institutional
  and individual
• resources in developed regions.

9
History of Regional Development (2/3)

• The 1980s ? Expansion stage by inviting
  institutes
• gt Stimulated by Japans public-private
  consortium in Computer Ind.
• gt US Comp. Ind. plans to establish MMC
• gt Success to invite MMC by UT and GACC in 1982
  ( Free building etc.)
• gt Success to invite SEMATECH in 1988
• gt High reputation as Technology Center ?
  Driving force to invite other high-tech companies
  

• Industrial diversification Oil ? High-tech
• Advantage Austin Project by GACC
  1989
• 1. Image-up campaign by a prominent
  PR company in NY
• 2. Target at IT companies in Silicon
  Valley (comparative marketing)
• ? Success to invite AMD
  (Advanced Micro Devices), Applied
• Materials, Cypress
  Semiconductor etc.

10
History of Regional Development (3/3)

• The 1990s ? Vital venture businesses
• Many engineers were laid off under recession in
  the late 1980s.
• Need to keep them living in Austin ? Business
  Incubator
• ATI (Austin Technology Incubator) by
  UT,GACC,City, Lawyers etc. in 1990 --- Under
  leadership of Dr.Kozmetsky (UT)
• TCN (The Capital Network) to link VB and VC in
  1991
• ASC (Austin S/W Council) in 1999 for networking

• In 1999 ? Over 200 venture businesses start-up
• Many IPOs and success stories

11
What made Austin developed?

• 1. Success to invite prominent institutes, MCC
  and
• SEMATECH ? Clustering
• 2. Presence of MCC and SEMATECH
• ? Higher reputation of Austin as
  Techno-region
• ? Many IT companies moved from Silicon Valley
• 3. Many engineers and/or researchers became
• techno-seeds of venture businesses, and
• established many venture business in the
  1990s.
• 4. Very strong leadership of Univ. of Texas

12
Other factors for success

• 1. Low living cost
• - No income tax of the state and city
• - Low housing cost (60 of Silicon Valley)
• - Low electricity cost and gas etc.
• 2. High educational level
• of students going on higher education in
  Austin 34
• (Ref) San Nose 25, NY 23, Boston 30,
  Portland 26
• 3. Moderate climate and good nature
• 4. Low population density and short commuting
  time
• - Austin 2,260/mile2, San Nose 4,678, NY
  23,621,
• - Austin 19.1 minutes for one way, San
  Nose 25.5 m.

13
Most importantly (1/3)

• 1. What did Austin do first ?
• gt They (IC2) made comprehensive case studies
• on Silicon Valley and Japans technology
  
• management.
• gt They made extremely attractive offer to
  invite
• high-tech institutes for IT clustering.

14
Most importantly (2/3)

• 2. How did Austin succeed to have IT clusters
  relocate from Silicon Valley ?
• gt They created the best circumstance to
• attract high-tech human resources.
• gt Then, they established high reputation
• as a high-tech region.
• gt They targeted at Silicon Valley clusters.

15
Most importantly (3/3)

• What is Creating a Techno-region ?

• It is, how ARTIFICIALLY you create High-Tech
  Clustering regionally.

16
Excellent IT Parks in Asia (1/2)

• Singapore Science Park
• gt IT related RD Strategy since the 1990s
• gt Over 200 multinational IT institutes
• gt Vital promotion for techno-entrepreneurship
• Hong Kong Cyber Port
• gt Joint project with PCCW and HK Special Adm.
  Gov.
• gt Multi-media oriented
• gt Planning to invite the worlds cut-edging IT
  companies
• Taiwan Green Silicon Island
• gt The worlds 4th largest producer of
  semiconductors
• gt Over 270 IT-related companies
• gt Entrepreneurship

17
Excellent IT Parks in Asia (2/2)

• Malaysia Multimedia Super Corridor
• gt National big project in line with Vision
  2020
• gt Multi-media clustering by inviting
  international IT companies
• gt Excellent planning as an integrated package
• India Bangalore
• gt the World 2nd largest supplier of soft-wares
• gt Historical background in industry-university
  collaboration
• gt Abundant human resources in IT field
• China Zhongguancun Science Park
• gt National project to innovate to Chinas
  Silicon Valley
• gt Abundant science technology human resources
• gt Strategic plan to invite multinational IT
  companies

18
Singapore Science Park (1/2)

• Strategy
• gt RD oriented since early the 1990s as a
  national strategy
• gt National Science and Technology Bureau
  (NSTB) in 1991 for RD
• gt US 6 billion invested for RD promotion
  since 1991
• RD Infrastructure 13 institutes
  established
• Technopreneur program US 1 bil.
  Fund to support in 1999
• Subsidies US1.36 bil. To RD
  project in private sector
• HR HR development program to
  Singaporean
• Recruitment of scientists from
  overseas

• Economic effects
• 1990
  ? 1999
• RD investment (PP) US 570 mil
  US 2,800 mil
• RD persons 4,300
  13,600
• High-tech product ratio NA
  65.3

19
Singapore Science Park (2/2)

• How did Singapore succeed in raising awareness of
  
• entrepreneurship ?
• gt NSTB (1991) ? Over 500 techno-venture
  businesses in 1999
• 
  ( only 88
  in 1996)
• gt Kent Ridge Digital Laboratory (KRDL) in
  1998
• Objective Cut-edging IT
  technology and its VB
• RD staff 319 (250 are from 25
  foreign countries)
• Spun-off VB 18 VBs since 1998
  Media Ring. (IPO)

• What can we learn from Singapores RD strategy ?
• gt Setting-up Implementation of Clear RD
  Strategy
• two times of 5-year Plan in 1991 and
  1996
• gt Practical use of HR from overseas

20
Hong Kong Cyber Port

• Joint Project led by Public/Private Sectors(PCCW)
• Started 2000 Summer - Completion 2007
• Total investment cost US 2,000 million
• Bldg. Cyber Port Intelligent Office(93,000 ?)
  etc.
• Housing skyrocketing flat bldg.
  (375,000 ?
• Tenant Plan mid to large IT companies - 30
• small business
  - 100
• Target International and/or cut-edging IT
  companies
• (e-Learning, e-Trading,
  soft-wares, multimedia)
• Anchor tenant IBM, Microsoft,Oracle, HP,
  Cisco, etc.

21
Taiwan Green Silicon Island

• Hsinchu Science-based Industrial Park
• Mfg. 15 of Compaqs desktop computer
• 40 of IBMs
• 60 of Dell Computers
• Mfg. In products wise
• 91 of scanner
• 68 of key boards
• 66 of LAN cards
• 58 of monitor etc.

22
Taiwan Techno-development

• High-tech oriented strategy initiated by
  Government
• ? Started in the 1980s

• 
  1986 ? 1995
• R D Investment US 800 Mil. US
  4,600 Mil.
• - Ratio to GDP 1.0
  1.8
• Ratio of High-tech in
• Industrial Production 24
  37.5
• No. of Researcher gtB.S. 22,000
  45,000
• RD Academic Report 26th
  11th
• Ranking in the world

23
Outline of Hsinchu Science Industrial Park

• Foundation 1980
• Location Hsinchu City - 70km from Taipei
• Area 580 ha
• No. of companies Approx. 300
• No. of employees 72,000
• Total sales US 13,700
  Mil
• Cumulative amount US 15,300 Mil
• For investment by the companies

24
Taiwan Strategic IT Planning

• Infra Hsinchu Science Industrial Park started
  in 1980
• Promotion for RD
• - Science Technology Institute (1973)
• HR Development
• - University-Industry Collaboration
• - Entrepreneur supporting programs
• - Relocation of Taiwanese brains from
  overseas
• Incentive to High-tech companies
• - Free Income Tax for 5 years
• - Low cost infrastructures (office etc.)
• - Private VCs with incentives in taxation

25
Malaysia Multimedia Super Corridor(1/3)

• Phase I (1996 2003 )
• gt To attract a core group of world-class
• companies (50 companies)
• gt To launch seven Flagship Application
• gt To put in place a world-leading
• framework of cyberlaws
• gt To establish CYBERJAYA and PUTRAJAYA

26
Malaysia Multimedia Super Corridor(2/3)

• Phase II (2004 2010)
• gt To link MSC to other cybercities in the world
• gt To establish a second cluster of world-class
• companies (250 companies)
• gt To set global standards in flagship
  applications
• gt To champion cyberlaws with global society

27
Malaysia Multimedia Super Corridor(3/3)

• Phase III (2011 2020)
• gt Malaysia will be transformed into a
  knowledge-
• based society being a global test bed for
  new
• multimedia and IT applications
• gt To establish a third cluster of world-class
• companies (500 companies)
• gt To achieve a luster of intelligent cities (12
  cities) linked to the global information super
  highway
• gt To become the platform for the international
• Cybercourt of Justice

28
Malaysia Outline of MSC

• Length of corridor 15 km wide 50 km long
• from
  KLCC to KLIA
• Total area - 750 k? Ref. Singapore 650 k?
• Perfect Global Multimedia Climate
• Fibre-optic backbone with 2.5-10 gigabits per
  second capacity to support virtual boardrooms,
  remote CAD/CAM operation, live multimedia
  internet broadcasting etc.
• Linking the new MSC cities of Putrajaya and
  Cyberjaya with KL and KLIA

29
Worlds First Smart Cities in MSC

• Cyberjaya
• gt Intelligent city with multimedia industries
• gt Area 2,820 ha (Phase I 1,460 ha, Phase
  II 1,360 ha)
• gt Planned population 240,000
• gt RD centers, Multimedia Univ. HQT of MDC
  etc,

• Putrajaya
• gt New seat of gov. and administrative capital
  
• gt e-Government
• gt planned population 250,000
• gt By 2005, all ministries will move

30
Multimedia Development Flagship Applications

1. Multi-Purpose Card
2. Smart Schools
3. Electronic Government
4. Telemedicine
5. RD Cluster
6. Worldwide Manufacturing Webs
7. Borderless Marketing

31
India Bangalore

• Historical background
• Accumulation of defense industries and
  academic institutes
• - National Aerospace Laboratories, Indian
  Space Research etc.
• - Indian Institute of Science (IISc) 1909
  by TATA
• - other science technology universities
  (26)
• Historical process for IT clustering
• - TI for RD of software(SW) in 1986
• - Then, Motorola, IBM, Intel, HP, Siemens
  through the 1990s
• - Infosys Technologies in 1981 ? NASDAQ
  1993
• - International Technology Park in 1994 w/
  Singapore
• - National Task Force on IT and SW
  Development
• - At present, SW RD related persons ?
  over 130,000

32
India S/W Clustering Policy

• Software Technology Parks of India (STPI)
• gt 7 parks over India
• gt Telecommunication infra to foreign IT
  companies
• gt Incubators to local VBs
• gt Incentives

• International Technology Park
• gt Intelligent buildings for foreign IT RD
• gt 20 minutes by car from Bangalore City
• gt High-level living infra for foreign residents
• gt Developer ITPL (JV with TATA, State of
  Karnataka, Spore)

33
India - IT Ind. Development Target

• IT Super Power National Policy to 2008

• Currency USD 1999 2008
  200/1999
• HW Production 6,100 mil 10,000 mil
  1.6 times
• SW Production 5,300 mil 87,000 mil
  16
• SW Export 3,700 mil 50,000
  mil 14

34
China Zhongguancun Science Park

• Abundant scientistsengineers
• - Tsinghua Univ. (40,000 students)
• - Peking Univ. (30,000 students)
• - 66 other universities
• - 230 Governmental RD institutes
• - No. of scientists gt 300,000
• ( Japan
  Approx. 200,000 )
• No. of IT related companies gt 4,500

35
China Historical Background

• Historically academic center
• Electronics/electrical parts shopping center
• since the 1980s
• Designated by Gov. as High-tech Region
• in 1988
• Since 1999, IT infrastructure in progress
• Gov. goal
• 50 RD institutes of multinational firms by
  2005
• Total sales of high-tech US78 billion by
  2010
• 
  

36
First Science Park in Japan

• Name - Kanagawa Science Park (KSP)
• Foundation - 1989
• Total Investment Amount Approx. US 650 mil
• Initiators - Kanagawa Pref. Kawasaki City
• Cooperators - Government Private Sec.
• No. of companies - 122 (as of Jan.2001)
• No. of Scientists Engineers - Approx. 4,000
• Area - 5.6 ha (Intelligent Buildings)
• Total floor area 14.5
  ha

37
Japan Outline of KSP

• Kanagawa Academy of Science Technology (KAST)
• Supply of RD Needs RD
  Reports
• 
  Techno-seeds Inf.
• Kanagawa Science Park Company Limited
• SME technology
  Supply of Corporate Needs
• Laboratory service
• Kanagawa High Technology Foundation (KTF)
  

38
Coordinator of KSP

• Kanagawa Science Park Company Ltd.
• Capital US 45 mil
• Municipality US
  10 mil
• Development Bank US
  5 mil
• Private companies US
  30 mil
• Function Coordination of KSP
• Business incubator for start-up
  business
• Linking VB with VC etc.
• Occupancy Tenant Bldg and Incubation Bldg ?
  Both full
• Job creation by KSP 4,000 as a whole of KSP
• Fostering of venture business 146 graduated
  (max. 7 y)

39
Japan-US Comparison on Venture Businesses

• Generally speaking
• In USA Approx. 800,000 start-up annually.
• Approx. 700,000 discontinue
  annually.
• As 100,000 companies survives,
  jobs
• opportunities have been
  increasing.
• In Japan Approx. 140,000 start-up annually.
• Approx. 170,000 discontinue
  annually.
• As 30,000 companies decrease
  annually,
• job opportunities have been
  decreasing.

40
Common Success Factors 1/3 (Riyadh?)

• Strong leadership Competitive Strategy
• Yes. But, strong financial supports are
  essential.
• In addition, strategic planning for Cyber
  Riyadh City
• in cooperation with Riyadh State,
  authorities
• concerned, academic institutes etc. are
  essential.
• Excellent IT infrastructure
• Unknown. Intensive IT infrastructure is
  required
• urgently to attract multinational IT
  companies.
• More importantly, attractive information
  service
• at low cost is must.

41
Common Success Factors 2/3 (Riyadh?)

• Incentives to IT clusters
• Not yet. Special incentives, among all,
  to multi-
• national IT institutes are must to
  invite.
• For example, free intelligent office,
  free corporate
• tax, free duty on IT hardware, excellent
  living
• compound,government/municipality
  sponsored RD,
• IT Human Resources for RD
• Unclear. IT university or RD institutes
  might
• be necessary to foster Saudi IT clusters
  for economic
• development. Strategic alliances with
  overseas
• institute/universities with incentives
  are essential.

42
Common Success Factors 3/3 (Riyadh?)

• Venture Business Promotion
• In progress, but not enough.
• Not only VC but also intensive services
  such as
• marketing supports, financial
  consultation,
• management advises/consultation,
  networking with
• institutional investors/angels in KSA and
  overseas etc.
• are essential.
• University - Industry Collaboration
• Unclear in Riyadh.

43
Conclusion

• Excellent IT City in Riyadh can be created
• artificially through IT clustering.
• Excellent IT City in Riyadh should be ORIGINAL,
  not be the same models of others.
• Nothing ventured, nothing gained !!!

44
Thank you very much.

• Yasuharu Tanaka
• Japan Desk
• Saudi Arabian General Investment Authority