Revitalizing the City of Innovation: Hangzhou Strives to Nurture More DeepSeeks

02/19 2025 418

Preface:

The interplay between cities and innovation ecosystems resembles a complex chemical reaction, merging hard environments with soft networks.

When cities evolve akin to living organisms and enterprises discover unique value within their ecological niches, legendary pairings like Silicon Valley and Apple, or Shenzhen and Huawei, emerge.

Author | Fang Wensan

Image Source | Network

Hangzhou has forged a new triangular model centered around computing power.

With the rise of DeepSeek in the realm of general large models and the debut of Unitree Robotics' humanoid robots on the CCTV stage, it has become evident that Hangzhou's innovation landscape has quietly transcended its traditional identity as the 'City of E-commerce'.

The growth of the Alibaba ecosystem has not only bolstered advancements in e-commerce, payment, logistics, and other infrastructures but also nurtured a plethora of digital economy talents, fostering the so-called 'Alibaba-affiliated' entrepreneurial community.

As the dividends of the mobile internet gradually diminish, Hangzhou has pioneered the transition from 'soft innovation' to 'hardcore innovation'.

From the establishment of the Zhejiang Lab in 2017, to the unveiling of the Chinese large model by Alibaba DAMO Academy in 2020, to the planning of a thousand-acre AI industrial park in Yuhang District in 2022, Hangzhou has developed a new triangular model encompassing 'computing power infrastructure - algorithm development - application scenario implementation'.

DeepSeek's ascendancy benefits from this industrial milieu: its founding team hails from the CAD Lab of Zhejiang University, leveraging the computing power provided by Alibaba Cloud. In the era of large models, Hangzhou's industrial environment has fostered new levels of growth.

The foundation is laid by Alibaba Cloud's computing power infrastructure, supported by visual recognition and edge computing technologies accumulated by companies like Hikvision and H3C, with the application layer encompassing platforms with hundreds of millions of users like DingTalk.

DeepSeek embodies this comprehensive industrial chain spanning 'chip design - computing power cluster - application scenario implementation'.

Similarly, Unitree Robotics chose to establish a servo motor R&D center in Hangzhou, valuing both the connectivity to chip resources in Zhangjiang, Shanghai, and access to the supply chain network in Yiwu.

In contrast to Beijing's 'national team' and Shenzhen's 'venture capital system', Hangzhou's capital ecosystem exhibits more symbiotic traits: it encompasses industrial capital such as Alibaba's strategic investment and Ant Financial, funds focused on hard technology like Yinxing Valley and Yuanjing Capital, and substantial private capital spilling over from traditional manufacturing.

This diversified capital structure not only provides patient capital support for hardware innovations like Unitree Robotics but also reserves room for experimentation in basic research like DeepSeek.

Hangzhou's case embodies the three cornerstones of future innovation, revealing the golden triangle of innovation ecosystem construction:

The iterative capacity of digital infrastructure (from 4G to computing power networks), the agility of factor allocation (free flow of talent, capital, and data), and the adaptability of cultural genes (technological transformation of traditional business wisdom).

Cultivating such an ecosystem necessitates three pillars: institutional design that tolerates failure (entrepreneurs who fail in Hangzhou can apply for 18 months of unemployment insurance), intergenerational knowledge transfer (Alibaba's technology mid-platform opens to startups), and virtual-real integrated innovation scenarios (the city brain serves as a testbed for AI).

Hangzhou Issues New Policies to Nurture More DeepSeeks

Recently, the Hangzhou Municipal Government issued the 'Several Policies of the Hangzhou Municipal People's Government on Promoting High-Quality Economic Development (2025 Edition)', outlining a series of measures aimed at bolstering local technological innovation, industrial upgrading, and improving people's livelihoods.

The policy explicitly states that it will prioritize future industries such as AI and robotics to cultivate more leading enterprises.

The Hangzhou Municipal Government has launched eight policy packages, collectively known as the new round of '8+4' economic policies.

Notably, it is emphasized that municipal fiscal funds will increase from 49 billion yuan last year to 50.2 billion yuan, with 15% of industrial policy funds specifically allocated to focus on high-quality emerging industries, particularly future industries like general AI and humanoid robots.

The 'Science and Education Talent Policy Package' proposes to establish a tiered cultivation system for scientific and technological innovation enterprises, ensuring that 80% of major scientific and technological projects in the city are led and participated in by enterprises; promote the transfer and transformation of scientific and technological achievements; and vigorously construct scientific and technological innovation platforms and large scientific devices.

The 'Advanced Manufacturing Policy Package' suggests making forward-looking layouts for emerging industries, enhancing the high-quality development of traditional industrial policies and classic industries, increasing financial support, industrial land support, and promoting digital transformation.

The 'Transportation Investment Policy Package' proposes supporting the development of general aviation and the low-altitude economy, planning to build 10 unmanned aerial vehicle public take-off and landing sites, adding 100 low-altitude air routes, and establishing a low-altitude industrial fund with a scale of 3 billion yuan.

The 'Policy Package for Expanding Effective Investment' aims to stimulate private investment, encourage the allocation of industrial funds, land, energy, and other factors towards private investment projects, and strive to increase the relevant proportion to 'three 80%' based on 2024 figures.

Building on Hangzhou's technological and industrial foundation, the city will focus on five potential industries: general AI, low-altitude economy, humanoid robots, brain-like intelligence, and synthetic biology, along with several cutting-edge fields such as the metaverse, future networks, quantum technology, advanced energy, cutting-edge new materials, commercial aerospace, and autonomous driving, to establish a '5+X' future industry cultivation system.

Previously, Hangzhou formulated the 'Hangzhou Future Industry Cultivation Action Plan (2025-2026)', striving to build an innovation hub for the source supply of core technologies by the end of 2026, strengthen the key engine of future industrial clusters, form a pattern of deep integration and application across multiple fields, and create an industrial ecosystem with concentrated factors and dynamic activities.

Conclusion: The City Gene of 'Activating the Private Economy' and Investment Support

In the 'Top 500 Chinese Private Enterprises in 2023' list released by the All-China Federation of Industry and Commerce, a total of 42 enterprises from Hangzhou made the cut, maintaining the city's top position nationwide for 21 consecutive years.

The city boasts 15 more listed enterprises than Shenzhen (27), which ranks second, and 16 more than Suzhou (26), which ranks third.

The private economy accounts for 51% of Hangzhou's investment, contributes 61% of the city's GDP, 65% of taxes, 72% of exports, and constitutes 95% of market entities (2022 data).

It is evident that private enterprises form the bedrock of Hangzhou's economy and a potent driving force for the city's development.

In light of this, LPs in Hangzhou tend not to directly participate in investments.

The state-owned asset management department in Hangzhou prefers to trust the professional acumen of market entities, believing that the sensitivity of VC-focused areas far surpasses that of government decisions.

While direct investment is relatively low, LPs in Hangzhou are generous with capital investment.

Taking Hangzhou Capital, which manages a 200 billion yuan industrial investment fund, as an example, in two and a half years, Hangzhou Capital has approved a total scale of over 185 billion yuan, successfully leveraged about 135 billion yuan of social capital, and achieved a cumulative investment amount of 72.5 billion yuan.

This underscores that LPs in Hangzhou have a clear positioning, committed to acting as talent scouts to bolster market confidence rather than replacing the market's own decisions.

The positioning of state-owned LPs naturally mirrors Hangzhou's city ethos: if greatness is unpredictable, let it develop freely.

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