China's Chengdu aims to be next Silicon Valley

Small startups as well as big-name western companies have flocked to the metropolis of 14 million people, attracted by cheap labor costs and favorable government investment policies and hoping to tap into China's rapidly expanding consumer market.

And the Silicon Valley dream is becoming reality as the city, already a hi-tech manufacturing hub, seeks increasingly to become a magnet for software development and innovation.

Between one-third to one-half of the iPads sold worldwide are assembled in Chengdu, while computer giant Intel makes up to half of its chips in the city.

Far from the booming coastal regions, Chengdu can offer perks through the government's “Go West” development program, with incentives for startups such as one-year interest-free loans.

So far it has attracted about 29,000 companies to its 130-square-kilometer (50-square-mile) “high-tech development zone,” including about 1,000 foreign enterprises.

Chengdu is also developing a nearby “Software Park” as the city aims to go beyond manufacturing and become a center of innovation.

At Chinese startup GoodTeam, a software engineer shows off his latest creation: a game in which players try to place a bottle into the mouth of a baby.

The application is being developed for preschoolers between one and three years old, the age at which children in Chengdu begin to toy with computer technology.

Founded in 2009, the startup employs 32 people and has seen strong growth in the gaming market, with most of its applications used on mobile telephones.

“In July 2009 we had about five downloads a day, today we have more than 100,000 a day for each game. We are confident in the market,” Liu Jia, a GoodTeam manager, told AFP.

“Since we started we have survived three crises but it has been the hi-tech zone that has sustained us by allowing us to borrow money.”

With five nearby universities focusing on science and technology, cafes and restaurants around the development zone have become networking hotspots for software programmers.

“The best reason (to come to Chengdu) is the education environment. The region has great universities,” Xiong Jie, the director of Thoughtworks, which runs an Internet site for a group of Australian insurance companies, told AFP.

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