China's Emerging Tech Industry

Take a population of intellectuals clustered near top universities. Add local and foreign entrepreneurs looking to profit from the thirst for information. Toss in a few farmers for local color.

What you get is Zhongguancun, China's thriving, chaotic answer to Silicon Valley.

The 3-mile-long street in the Beijing suburbs that just a decade ago was lined by drab state-owned shops and dumpling joints is now full of computer outlets, Internet cafes and high-tech startups.

The area's proximity to China's best universities led to its transformation into the city's main high-tech zone. Software and computer game businesses started by professors and graduates have migrated from campus into storefronts nearby.

Adding to a "computer fair" feeling are farmers supplementing their incomes by peddling pirated CDs and software on the sidewalks.

Among the most prominent high-tech firms based in the area are Founder, a Beijing University startup that produces the most popular Chinese electronic publishing software; Legend, China's No. 1 domestic computer maker; and Stone, a major electronics firm.

Some 102,000 people work in Zhongguancun, whose high-tech businesses have revenues of more than $4.1 billion a year, officials say.

A "brain drain" of talent overseas has hampered China's quest for advanced technology, although some of those who have succeeded abroad returned to Zhongguancun to finance ventures of their own.

Besides Zhongguancun, the government has launched a $170 million "Silicon Valley project" in Hebei province. But foreign diplomats say the area lacks the sort of living conditions and infrastructure needed to lure talent and compete in the international market.

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Written by Elaine Kurtenbach
  • CBSNews.com staff CBSNews.com staff

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