Features

Beijing: Upping the pace

1 Mar 2019 by Business Traveller Asia Pacific
Wangjing Soho, Beijing

Wangjing district has emerged as Beijing’s new tech hub, writes Crystal Wilde.

The first thing commuters see when they arrive in Wangjing – a northeastern subdistrict of Beijing – is a fibreglass sculpture of a mother and baby panda placidly chewing on bamboo. The gentle maternal tableau speaks to the former wholly residential nature of the area, but nowadays that homely image is somewhat misleading.

Around 20 years ago, the commuters were heading in the opposite direction. Wangjing, then nicknamed “Sleeping City”, was nothing more than a bedroom community – a place for workers to lay their heads at cheap rents after a hard day’s toil in the city. Although strategically placed between the airport and the CBD, there were few shops, hardly any restaurants and absolutely nothing in the way of big business in what was then considered a remote location.

Today, the district, which lies between the fourth and fifth ring roads that encase the city in ever-tightening loops, is a buzzing hive of established and striving tech companies. The area’s new profile, led by the likes of Sony, Panasonic, Daimler, Alibaba and Meituan-Dianping, is bringing in a full spectrum of lifestyle and entertainment outlets, in turn attracting a cosmopolitan and talented workforce.

Tech businesses first started to trickle into Wangjing in the early 1990s as the northwestern enclave of Zhongguancun, then regarded as Beijing’s Silicon Valley, became increasingly overpriced and oversaturated. Along with the newcomers came a gradual wave of international restaurants, bars and hotels.

Government attempts to smooth the path for businesses in China has seen the country rise by 32 spots (from 78 to 46) in the World Bank’s latest Ease of Doing Business report. With red tape and bureaucracy slashed considerably, setting up shop in the Middle Kingdom now takes only nine days, in theory.

According to a 2018 report by CB Insights, Beijing is on track to eclipse Silicon Valley as the world’s biggest start-up hub; the report adds that Beijing and Shanghai “lead among high-growth hubs for unicorns, mega-rounds and large exits. Company creation is accelerating.”

Hengkui Wu and his company SuperSymmetry Technologies – which uses AI and algorithms to trawl billions of web pages a day to glean real-time data on the Gross Merchandise Value and public sentiment of China’s top listed companies – is one Wangjing start-up that has benefited from the streamlining of procedures. As a Chinese national and a physics graduate from California’s UC Davis, Wu also had no trouble securing funding from domestic venture capitalists keen for foreign education and on-the-ground expertise.

From the 40-strong team’s large open-plan office in the alien egg-like towers of the Wangjing SOHO development, Wu explains why they left their first digs in the PC-centric Zhongguancun for mobile-focused Wangjing.

“Wangjing has an up-and-coming, younger, new-gen tech company atmosphere that has gone beyond Zhongguancun, which is now seen as the previous generation hardware HQ,” he says. “In terms of culture, there’s a lot of good things about sharing the environment with your peers. We share similar sentiments, vision and skills, and on a practical level we can hire people from the other companies around here.”

With what Wu claims is above-average rent for Beijing, however, SuperSymmetry Technologies could benefit from the creation of industry parks with preferential rates and policies for start-ups, like those in Zhongguancun.

In lieu of a government initiative, some of Wangjing’s biggest players have created an impromptu industrial park of their own in the eastern Wangjing area. Here, Meituan-Dianping, the world’s largest on-demand delivery platform, hosts 30,000-odd people across several buildings. In the immediate vicinity is Alibaba, brainchild of Chinese e-commerce poster boy Jack Ma; Finnish telecommunications firm Nokia; and the research division for German car maker Daimler.

Lysa Wei, strategy analyst for Meituan-Dianping’s retail department, says the clustering of similar industries here is less to do with a shared culture and more to do with economics. “It’s just a cheaper area with new, huge whole buildings ready to use,” she says. “The HQs of more new companies will be built in Wangjing going forward.”

But while the area around Wangjing SOHO is now overflowing with shops, restaurants, bars and hotels, eastern Wangjing is still somewhat of a ghost town, busy in the week with office workers but dead on the weekend. In essence, it’s the mirror of Wangjing’s bedroom community of yesteryear, with the few residential buildings here still empty or at very low occupancy rates.

These conditions are felt acutely by Raymond Xie, who runs vegan restaurant Zerogo in the shadow of Alibaba’s gleaming skyscraper, beside a four-lane road that’s yet to open. While he does a brisk trade feeding health-conscious tech execs Monday to Friday, he says Wangjing is still too far for the vegans of central Beijing to venture on the weekend.

Xie looked for months to find premises to suit his budget and ambitions and says his options were limited. When the government started pushing residents and businesses out of the historic hutong lanes of central Beijing in 2017 in the name of “urban regeneration”, affordable commercial space became scarce, and competition for it was fierce.

“Now it’s even harder to find a good space so the price is going up. A lot of migrant workers cannot afford the living costs of Beijing either so are going elsewhere. Now is not a good time to run a restaurant,” says Xie.

Whether Xie chose the wrong place at the wrong time or not, businesses looking to set up in the Chinese capital today enjoy better support and resources than ten years ago. The Ministry of Commerce provides guidelines, tips and timelines to prospective business owners; qualified liaison companies that help non-Mandarin speakers; and ever more information online.

When Mary Peng, founder and CEO of Wangjing’s International Center for Veterinary Services (ICVS) was first setting up in 2006, things were not so simple. Before Beijing’s Animal Husbandry Bureau would consider giving her a licence, Peng was told she must build a facility, stock it with expensive equipment, train a team of vets and operate for six months on a soft opening basis. “And then they would decide whether or not they’re going to give me a licence. How many people do you know who would roll the dice?” she asks.

At this time, Wangjing was enjoying its first unofficial title, not as Beijing’s tech hub, but as its “Little Korea”. Migrant workers from South Korea, pushed out by rising rents in their former Beijing strongholds of Wudaokou and Haidian, spilled into Wangjing in their droves, setting up barbecue restaurants, grocers, fried chicken shops and beauty salons.

Despite being ethnically Chinese, Liu Fang opened Korean restaurant Da Ming Jia in 2011 when Beijing and Seoul were enjoying a robust relationship. South Korea’s Ministry of Foreign Affairs had set up action groups to strengthen diplomacy between the two nations and a Free Trade Agreement was in the making. Wangjing was aflame with Korean life as a result. But eight years later, that same community is little more than smouldering embers.

South Korea’s 2016 decision to allow the US to host the Terminal High Altitude Area Defense (THAAD) system on its soil rattled China, which saw the move as a threat to its security rather than a genuine defence against North Korean rockets, as then-US President Barack Obama claimed it was. Korean businesses in China suffered under the government-sanctioned boycotting of Korean goods, and South Korea’s economy was hit as Chinese tour companies cancelled trips to China’s easterly neighbour.

Liu Fang of Da Ming Jia is still keeping her head above water thanks to a loyal band of barbecue-loving regulars, but business is not booming as it was. “Relations between China and South Korea since the THAAD incident have been strained,” she explains. “The economy is declining, and small- and medium-sized Korean companies are returning home.”

Peng, a New Yorker and former McKinsey consultant, first founded her veterinary centre in Chaoyang, a core district of Beijing, in 2006 after a decade of frustrating experiences trying to get treatment for her cat. Six years later, as the only international-standard vets in the city, ICVS had outgrown what would soon become unsustainably expensive real estate in increasingly trendy Chaoyang.

On arriving in Wangjing, Peng likened the neighbourhood to the Dakota Apartments – John Lennon’s former residence and murder site in New York’s Upper West Side – which, at the time of its construction in 1884, was considered so remote, it might as well be on the other side of the country in the Dakotas. She also noted that there were almost no non-Korean expats in the area.

Once rents started to rise on the back of massive redevelopment in central Beijing, however, Wangjing caught the eyes and pockets of young graduates, entrepreneurs and foreigners living without the luxury of lucrative expat packages. These days the ICVS team treats the pets of Wangjing’s numerous urban residents, who hail from places as disparate as Africa and Russia. “Basically, whichever countries have diplomatic relations with China, you’ll find their people here now,” says Peng.

Whether it’s industries emerging or pockets of a city opening up, thriving and then becoming overrun, things just seem to move faster in China. Wu says that although the US has been employing fintech for years, product development is happening at a much quicker rate here, especially in Wangjing.

“China is catching up and everybody is talking about the use of data and algorithms in finance,” he says. “I think the Chinese start-ups here want to grow three to five times faster than those in the US, and we certainly have the confidence and vision to be number one.”

While FocusEconomics predicts China’s economic growth this year will be 6.2 per cent – a drop of 0.1 per cent from 2018 but more than double that of rival superpower the United States – plenty of obscurity still exists for business owners, and wild cards can be thrown into the mix at any turn.

“Is there a degree of ambiguity? Of course there is,” says Peng. “It’s very much up to the person in charge on that day and his or her interpretation of the laws and regulations. That’s probably the most frustrating thing about running a business here, but I think if you’re here long enough, you start to get a good sense of it.”

She adds: “What I really love is how exciting doing business here is. China moves at a much faster pace. I call it living in dog years.”

Crystal Wilde

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