Silicon Valley's embrace with China gets tighter

While President Barack Obama and his Republican presidential rival Mitt Romney take turns bashing China, Silicon Valley’s relationship with the world’s second-largest economy is blooming like never before.

 Virtually every day, a Chinese government delegation arrives in the region with offers of business deals, partnerships and cash for investments. On Saturday, officials from Peking University’s Science Park came to San Jose to officially open an office at the new incubator operated by Beijing-based Hanhai Investment, which oversees tech parks across China, and Zhongguancun Science Park

 Beijing-based TusPark is one of many tech parks in China — also known as Z-Park — China’s largest tech park that is run by the government. The Hanhai Z-Park incubator — whose mission is to encourage cross-Pacific business opportunities — was launched during a ceremony in Washington D.C. in February attended by Vice President Joe Biden and China’s Vice President Xi Jinping, the presumptive heir to President Hu Jintao.

“The two great countries — the United States and China — may have their differences, but they also have a lot of similarities,” said Geng Chen, president of the Peking University Science Park. “That is why our relationship is getting closer and closer. Politicians may use this relationship for their own benefit during campaigns. But that won’t stop the relationship from becoming closer and closer.”

That relationship has great economic benefits for Silicon Valley and California.

A report published earlier this month by the Asia Society noted that California has the potential to attract between $10 billion and $60 billion of Chinese direct investment by 2020. “Those flows would bolster employment, feed the tax base, generate exports,” the report said.

Nationwide, Chinese-based companies have invested $6.3 billion in the United States during the first three quarters of 2012, according to New York-based Rhodium Group, which monitors Chinese investments. Despite the anti-China political rhetoric on the presidential campaign trail, investments from Chinese companies are bigger than ever, Thilo Hanemann, Rhodium Group’s research director, wrote in a report.

Among California’s — and Silicon Valley’s — strengths is an abundance of Chinese-born entrepreneurs and technologists who act as bridges between the two countries.

Chen said the impetus to set up shop in San Jose was the high number of Chinese in the area, whom he hopes to encourage to set up startups in his Beijing science park, and Silicon Valley’s role as a global innovation center. Conversely, Peking University and Hanhai Z-Park hope to play the role of sherpa for many companies in China flush with cash and looking to expand overseas — just as countlessU.S. companies have done.

“This is an historic moment,” said Victor Wang, president of Hanhai Investment in the United States. “The Chinese in China — not only the government, but also entrepreneurs and individuals — have accumulated a lot of savings.”

And they’d love to pour some of those savings into America, he added.

Wang, who heads the 80,000-square-foot San Jose incubator, expects to open up two more Bay Area facilities in the next two years — operations that are three times the size of the San Jose operation located on Brokaw Road near North First Street. The other two facilities will focus on biotech and clean tech, he said.

Wang sees his role as providing a “window” into Silicon Valley for Chinese investors, both government and private, desperate to create more innovative companies.

Wang said Hanhai also wants to work with U.S.-based companies hoping to crack China’s market.

John Boudreau John Boudreau (79 Posts)

I cover the intersection of Silicon Valley and Asia.