An analysis of new-tech agglomeration in Beijing: a new industrial district in the making?

Abstract

Industrial districts are usually referred to as spatially concentrated networks of small and medium-sized firms. These have been seen in Europe and North America, but, so far, have been almost undiscovered in developing countries. Based on the assumption of the strong embedding of the stable and 'pure' district model, in this paper we examine a new-tech agglomeration in Beijing, as a variant of such districts in the making, and explain it with the use of concepts adopted from the industrial districts school. The Beijing case represents an experiment in the conscious public creation of new industrial spaces founded on the spontaneous action of key individuals. Initially it progressed as an embryonic industrial district that, in its early development, appeared to contain all three elements of entrepreneurship: small firms, new firm formation, and innovativeness. However, it has eventually been stranded by a unique combination of weaknesses. These include strong hierarchical restraints from the state-owned institutions or firms on local networking, and direct global linkages with the multinationals, which expose local economies to volatile world competition. We pinpoint the necessity for a developing country to rest its development of industrial districts on self-sustained innovativeness, and highlights the difficulties encountered in such a process.