China fast growing in incubators for innovative start-ups
DATELINE: BEIJING
The Ministry of Science and Technology (MOST) said here on Tuesday that China has 548 incubators, the second most in the world next to the United States. They are considered powerful in breeding innovative start-ups.
On its website, www.most.gov.cn, the ministry reported the incubators had helped to raise 19,896 high technology companies, with 569 having annual revenues of more than 100 million yuan (13.7 million U.S. dollars). In addition, 53 were listed on either domestic or overseas stock exchanges.
China originally borrowed the idea of incubators from the United States. They were expected to create convenient and efficient environments for start-up companies, as well as in providing financing, taxation and land-lease incentives.
The country's first incubator started in 1987 in Wuhan, capital of central China's Hubei Province.
Such intermediate agencies, mostly funded by the government, were now spreading throughout the country. They currently incubated 41,434 fledgling companies, providing 460,000 jobs in high technologies, such as sophisticated home electronic appliances or computer hardware and software.
Companies selected into the incubators were usually asked to become more independent and competitive in three years. Unsuccessful companies in the risky hi-tech industry would be left bankrupt. However, the ministry didn't mention the percentage of business failures in those incubators.
China has been trying to combine homegrown venture capital funds and hi-tech business incubators in a drive to forge a knowledge- driven and energy-efficient economy.
The government and state-funded policy banks were now active in setting up funds that aimed at financing smaller venture capital funds. These were primarily for high-tech research and development and seed funds that were provided to help a business develop an idea, create the first product and market the product for the first time.
In August, the Ministry of Finance and the State Administration of Taxation adopted more favorable financing and taxation terms for companies in incubators. The government promised that 150 percent of research and development expenditure could be deducted from the taxable income of companies in the following fiscal year.
Liang Gui, a senior MOST official, said his ministry planned to have 1,000 incubators by 2010, harboring more than 50,000 companies and helping create over one million job opportunities. Enditem (?)