Outline of Beijing Business Development Incubator System Establishment

Beijing Municipal Commission on Science & Technology
　　March 16,2000

　　To establish a business development Incubator system in Beijing constitutes a strategic move on the part of Beijing in its development of hi-tech industries, and means a great deal to its economy growth. The availability of such a system in Beijing would create an optimal local environment for a great number of scientists and technical personnel to start their own business, enable the sound development of SMEs engaged in science & technology and give birth to a cluster of hi-tech enterprises with innovative capacity and high-speed growth.

　　I. Rationale for the establishment of the incubator system in Beijing and the development goal of the system

　　The system establishment is governed by the following conceptions: In conformity with the spirit of the Decision of the Central Committee of the Chinese Communist Party and the State Council on the need to speed up technology innovation, develop hi-tech and realize the commercialization of scientific research results, and the Opinion of the Beijing Party Committee of the CPC regarding technology innovation, hi-tech development and the realization of commercialization and other documents, the incubator services, the start-up capital market, the intermediary service and other resources should be organically combined to form a comprehensive system with the government guidance and support through the use of market economy laws and the available resources.

　　In developing incubators, we should not only pay attention to the increase in number, but also their high quality, We must focus on the building of a number of incubators that make a great difference, namely, specialized incubators that are built in accordance with the goals of restructuring of Beijing industries; SOE incubators that could economize on reform of SOE and scientific research institutes; overseas returned student business development parks that appeal to the Chinese students overseas and university science parks that enjoy the support of universities and colleges. We should upgrade the incubation capacity by way of improving the operation and management mechanism, re-invigorating the incubators and their won growth capacity as well as all-round diversification of the incubation services rendered to enterprises.

　　Development goals: The number of business incubators increased to 100 in 2005,will be built having a total floor space of 500 thousand square meters. Information networking among those key incubators will be completed. The seed money pooled by incubators will total 1000 million yuan. The tenants inside the incubators will attract investments amounting to 5000 million yuan. The number of tenants and projects incubated each year will not be less than 5000 of which at least 800 hi-tech firms featuring Beijing's originality are in a position to compete with their foreign counterparts. In addition, a group of innovative entrepreneurs will be groomed.

　　II. Primary tasks in the incubation system building in Beijing

　　1.To speed up the development of specialized incubators, university science parks, overseas returned student business development parks, SOE incubators and other types of incubators.

　　2.To actively carry out the reform of operative and management mechanism. Efforts should be made to explore the possibility of having such a management that fits in with the economic development of socialist market economy, and the development trend of business incubation service and form an in-house motivation mechanism so that incubation efficiency and service quality will be bettered. In government-oriented incubators, a system of director responsibility under the supervision of the governing council should gradually be set up to standardize the management.

　　3.To perfect the incubational service. In terms of start-up training, fund-raising, market exploration, and international cooperation, effective steps should be taken to have more diversified service available to incubators when it comes to business management, marketing, technology, information, human resources, fiscal affairs, financial and legal service.

　　4.To improve the fund-raising function. Efforts should also be invested to intensify the funding service to firms by assisting them in soliciting various types of funding channels. Seed money and loan guarantee fund as well as other types of funding service should be rendered steadily. Firms will be assisted to obtain financial support from the specialized government funds. Active measures should also be envisaged to attract to the incubators private investment and various funds that support innovation. No effort should be spared to solicit joint investments for certain projects and partners with a view to drawing more venture capital to incubators.

　　5.To move the incubators in a pluralistic direction. Encouragement should be given to pluralistic investors to set up incubators of various economic nature. SOEs, investment agencies, non-state capital and foreign capital are all welcome to invest in incubators.

　　6.To build a strong force of personnel servicing the start-ups. Those versatile, high-quality young and bright personnel should be incorporated into the management as reinforcement. The existing management personnel should be trained so that they will measure up to the job requirements.

　　7.To further create conditions favorable to the growth of incubators, including policy framework, investment and financing system, intermediary service.

　　III. Measures guaranteeing the business incubator system building in Beijing

　　1.Incentives and support to the reconstruction and construction of a number of incubators. Various social forces are to be encouraged to establish science-based business incubators of different types. Specialized technology incubators including software, Internet, integrated circuit design, biomedicine, new material and other fields will be given first priority. SOEs and research institutes will be given support to have science-based business incubators so that their idle resources will be activated, new science-based firms can be brought up at a relatively low cost, and the marriage between hi-tech industry and the traditional one can become a reality. Universities and colleges should be given impetus to form science-based business incubators and university science parks. The establishment of overseas returned student pioneering parks is encouraged too.

　　2.New style of incubator management. The internal management mechanism in the incubators need to be reformed in such a way as to be able to follow the market economy laws and build an incentive mechanism with a view to upgrading the incubators vitality and sustainability. The competent authorities must not slacken its effort to monitor, guide and diagnose the incubators. Applicable evaluation indicators have to be in place so that incubators could be geared along a correct path through qualification certification.

　　3.Intensive training with emphasis on incubator management personnel. The incubator management personnel, those crucial to a better management in particular, should be trained in business management, incubator operation, capital application, etc. through participation in international conferences, organizing various types of training courses overseas, exchange program with counterparts in China and abroad, on-the-job training in a firm other than their won units. In the meantime, training of entrepreneurs should be further strengthened. New forms of training should be explored, namely, besides training courses and lectures, business development assistance and individual guidance need to be envisaged.

　　4.Strong funding support to tenants. probes should be made as to the possibility of pooling other resources in forming a government-sponsored investment fund intended for tenants. Wherever possible, incubators should set up seed money. All incubators need to make the most of the existing channels, such s funding guarantee system, venture capital fund, bank loans, science-based SMEs innovation fund and specialized funds of the State and Beijing so as so to lend support to firms in their effort to raise fund. Incubators have to make active effort to integrate with venture capital.

　　5.A strong network including job-related and information network. Work entities should be formed to take on the responsibility of the coordination of networks run by science based business incubators and the information service. Beijing Business Incubation Association should be inaugurated.

　　6.International exchange and cooperation. Existing science-based business incubators should be pushed to go global through exchange of visits, hosting of international incubator forums, attracting venture capital from overseas, setting up joint venture incubators with foreign partners. Efforts should be made to successfully organize the international incubator forum in the framework of the international Week this year.

　　7.A better external environment. The existing policy is under consideration. Various intermediary services should be encouraged to target on incubators and tenants as customers of their preferential and quick service. Special support is needed for the tenants in terms of property rights trade-off, transfer of technology, common equipment and facilities, SME e-commerce service, IPR, human resources, firm evaluation etc.

　　8.More returned students to start business in China. We must do a good job of managing the returned students network by turning it into a navigator for guiding a great number of returned students to go into business. Returned students pioneering parks and other science0based business incubators equipped with necessary conditions should provide targeted services that could attract student-entrepreneurs returned from overseas.

　　9.in-depth theoretical study. Study should be made as to the operation mechanism, venture capital, networking and globalization of incubators.