Science and Technology City: Formation Mechanism of National Advanced Manufacturing Clusters and How to Enhance International Competitiveness

Since 2019, the Ministry of Industry and Information Technology has selected and determined 25 winning clusters in the finals through cluster competitions as key cultivation targets for national-level clusters. A study by the CCID Research Institute on the formation and development mechanisms of 25 national-level clusters found that most of these clusters have achieved self-renewal and derivative development through significant events, specialized division of labor and cooperative competition, knowledge learning and technology diffusion, supplemented by policy guidance and institutional culture nourishment. In the current crisis where the global pandemic continues to spread and the industrial chain is accelerating its reconstruction, we should follow the trend of localization, regionalization and clustering of industries, concentrate our efforts and integrate resources to accelerate the cultivation of a number of advanced manufacturing clusters with international competitiveness, and effectively enhance the core competitiveness of the manufacturing industry.

I. Formation and Development Mechanism of National Advanced Manufacturing Clusters

(1) The superimposition of resource endowment effects and the triggering of significant events serve as an important starting point for the formation and development of clusters. At the beginning of the formation of national-level clusters, it is mostly a region that makes full use of its natural resources or non-natural resource advantages such as labor, technology and capital to develop industrial economy. At the same time, it is driven by important historical events, prominent figures or typical enterprises and research institutes, thereby continuously accumulating and strengthening its own first-mover advantages, and eventually becoming the "original explosion point" of the cluster. This is also the reason why clusters not only emerge in the developed eastern coastal areas of China, but also in the less developed central and western regions.

At present, Changsha has become the region with the most complete variety of construction machinery products and the largest number of well-known enterprises in the world, and its reputation as the "Capital of Construction Machinery" is far and wide. A reference photo from Changsha Evening News

For instance, the origin of the Changsha Construction Machinery cluster can be attributed to the historical factor that the Puyuan Machinery Factory and the Construction Machinery Research Institute of the First Ministry of Machinery Industry successively moved to Changsha after the 1960s. Later, taking advantage of Hunan's superior geographical location and abundant labor resources, the Construction Machinery Research Institute, riding on the momentum of urban construction, continuously gave rise to leading enterprises such as Sany and Zoomlion, thereby driving the continuous growth and expansion of the cluster. The development of the Internet of Things (iot) cluster in Wuxi is inseparable from the "trigger" of the event in 2009 when The State Council approved Wuxi to build a national sensor network innovation demonstration zone. By leveraging the advantages of Wuxi's developed private economy and the development opportunities brought by new technologies and new elements, Wuxi has taken the lead in "taking root and sprouting" in the iot industry field. Eventually, it has formed a leading iot "ecological community" in the country with its first-mover advantage.

(2) Specialized division of labor and cooperative competition are important features of the formation and development of clusters. A large number of interrelated large, medium and small enterprises gather in a certain geographical space in pursuit of economies of scale and agglomeration. Each enterprise focuses on a certain process to complete the production of the final product, and eventually builds an integrated division of labor and cooperation network, forming a cluster form. Relying on the support of various specialized markets, specialized service institutions and regional logistics, the transportation costs, interaction costs and trust costs of cluster enterprises have been significantly reduced. Moreover, the competition and cooperation brought about by specialized division of labor have promoted complementary advantages among enterprises, thereby greatly improving the overall production efficiency of the cluster and promoting its sustainable development.

For instance, the formation and development of the new generation of information and communication clusters in Shenzhen cannot be separated from the support of the SEG Electronic Equipment supporting Market and Huaqiangbei. It is the result of the specialized division of labor and cooperation among over 50,000 enterprises that focus on the design, development, manufacturing, service and application of various electronic components and intelligent terminals. The Nanjing New Power (Smart Grid) Equipment Cluster is a collection of over 600 large-scale industrial enterprises, 17 single-champion enterprises and 10 specialized, refined, distinctive and innovative "little giant" enterprises. These enterprises are distributed across nine major links of the power equipment industry chain, namely "generation, transmission, transformation, distribution, consumption, dispatching, communication, comprehensive energy services and power network security". It has provided over 80% of local supporting services for a number of leading enterprises such as State Grid NARI, State Grid Nanjing Automation, and Nanjing High Gear.

(3) The derivative expansion and self-renewal of industrial organizations are important sources for the formation and development of clusters. Most national-level clusters have gone through a life cycle of attracting more enterprises to gather by relying on their industrial ecosystem advantages, then promoting the explosive growth of numerous enterprises, and finally forcing the cluster to upgrade through fierce competition among enterprises. With the development and expansion of the original industries, the upstream and downstream of the industrial chain not only extend and expand, but also the related industries develop in a coupled manner, and new industries "take over" or "replace" the original industries, ultimately achieving the continuous expansion of the cluster scale and the overall improvement of the development level.

For instance, the Dongguan Smart Terminal cluster established a complete mobile phone hardware supply system by introducing Nokia. After Nokia's decline, it quickly seized the "race track" of smart phones by relying on the two sub-brands of Oppo and Vivo under BBK and introducing Huawei's R&D and manufacturing base. It has continuously extended into multiple fields such as smart wearable devices, virtual and augmented reality devices, and intelligent service robots, eventually forming an integrated cluster mainly engaged in the production and manufacturing of complete machines, covering all links from solution design, components and modules, batteries, complete machine manufacturing to application services. The development of the Shenzhen-Guangzhou high-end medical device cluster cannot be separated from the cross-integration of life sciences and electronic information technology. The highly developed mechatronics has led to the emergence and rapid development of high-end medical device products such as new digital imaging technologies for clinical diagnosis, implantable electronic therapy devices, and digital surgical equipment within the cluster, promoting the transformation and upgrading of enterprises such as Mindray, Klarity, and Ruibang. Ultimately, an integrated cluster featuring medical imaging diagnosis and medical electronic instruments was formed.

(4) The diffusion effect and incentive role of technological innovation provide a powerful impetus for the formation and development of clusters. National-level clusters have all formed regional knowledge networks and innovation ecosystems. Enterprises learn from each other, imitate and draw on each other, accelerating the spillover of knowledge and the diffusion of technology. This, in turn, encourages enterprises to invest more efforts and energy in developing new technologies and products. It is also more conducive to reducing innovation risks and costs through efficient cooperation between enterprises and research institutions, and accelerating the spiral accumulation of technological innovation capabilities.

For instance, the Hangzhou Digital Security Cluster has been deeply implementing the "Three Names" project of prestigious universities, research institutes and research institutions. Relying on over 40 national-level innovation carriers and more than 180 provincial-level technological innovation carriers, it has established two national artificial intelligence open innovation platforms, namely Hikvision Video Perception and Alibaba Cloud City Brain, which have promoted related enterprises to carry out "chain innovation" in areas such as machine vision. The Wenzhou Yueqing Electrical Cluster, relying on the mutual promotion of leading enterprises such as Chint and Delixi, and by optimizing and integrating the supply chain and building a public technical service platform, has driven the innovative development of over 800 specialized, distinctive, distinctive and innovative small and medium-sized enterprises including Jinka Intelligent and Hongfeng Electrician.

(5) Government guidance and special policies provide important guarantees for the formation and development of clusters. In the formation and development of national-level clusters, the proactive actions of the government have run through the entire process. Positive and effective regional industrial policies have pushed the development of clusters onto the "fast lane", establishing a regional resource allocation system and infrastructure supply system that suit their own development, and helping to create a fair competitive market environment within the clusters.

For instance, Jiangsu Province issued the "Opinions on Cultivating Clusters to Promote Regional Economic Development" as early as 2003, and took the lead in releasing the "Guiding Opinions on Accelerating the Cultivation of Advanced Manufacturing Clusters" in 2018. It selected 13 advanced manufacturing clusters with a relatively solid foundation, such as new power (new energy) equipment and the Internet of Things, as key cultivation targets. And classified cultivation policies and measures were formulated, which laid a solid foundation for promoting the competitive development and level improvement of the clusters. In 2012 and 2018, Anhui Province signed cooperation agreements with the Ministry of Industry and Information Technology respectively to jointly promote the development of the intelligent voice industry in Hefei. Focusing on "precise irrigation" and "ecological construction", it has formulated and issued a series of policies and measures, allocating nearly 2 billion yuan in support funds in total. It has successively established an intelligent voice and artificial intelligence industry development fund with a total scale of 5 billion yuan. With the concerted efforts of the entire city, the "China Voice Valley" brand has been created, promoting the rapid growth of the intelligent voice cluster in Hefei.

(6) The industrial roots attached to institutional culture provide strong support for the formation and development of clusters. National-level clusters, based on regional institutional culture, have formed a deep-rooted connection with specific regional environments (including social, historical and cultural, economic and social relationship networks, etc.), and have strengthened the high recognition of regional brands and geographical indications among cluster members. Third-party organizations such as regional industry associations, industrial alliances, and research institutions are actively optimizing the cooperative ecosystem and gradually becoming the organizers of collective actions and advocates of group regulations and norms. Under the leadership of a group of bold and enterprising entrepreneurs, a cluster culture has been formed that is pioneering and enterprising, encourages innovation, pursues excellence, and is open and inclusive. For instance, the Guangzhou-Foshan-Huizhou ultra-high-definition video and smart home appliance cluster, characterized by privatization, original ecology and business-oriented culture, and the Wenzhou-Yueqing electrical cluster originated from the rural economy during the reform and opening up. They have enriched the soil for the development of agglomeration economy and innovative economy. Relying on the industry associations and chambers of commerce spontaneously formed by the people and the cluster development promotion centers guided by the government, Effectively establish the concepts of "competitor cooperation" and "group development" among clusters, form common norms that cluster members should abide by, and promote enterprises to jointly respond to various risks and share market opportunities.

Ii. Development Implications

Based on the above analysis, it can be concluded that the formation and development of national-level clusters is a process that, triggered by significant events, continuously strengthens specialized division of labor and cooperative competition, knowledge learning and technology diffusion, and is supplemented by policy guidance and institutional cultural nourishment, ultimately achieving self-renewal and derivative development. This enlightens us:

(1) The formation and development of clusters are the result of the influence of multiple factors. When cultivating clusters, it is necessary to respect the laws of industrial development and local carrying capacity. It is necessary to adopt systematic thinking, comprehensively consider factors such as culture, location, policy and industry, and propose scientific measures for cluster cultivation from the perspectives of top-level design, policy system, development ideas and specific paths. Cluster cultivation should not be equated with the development of leading industries, nor should we blindly pursue the entire industrial chain based solely on scale.

(2) A cluster is an organic unity of geographical proximity, industrial connection and interactive cooperation among the actors. The absence of any one of these elements cannot be regarded as a true cluster. The cultivation and development of clusters should not be a mere formality. Emphasis should be placed on the integration with industrial chains and industrial parks. Industrial parks should be regarded as the high-quality core of cluster development, and industrial chains as the connecting link. Through fostering leading enterprises, building advantageous industrial chains, strengthening platform economies, promoting chain integration, and establishing intermediary organizations for clusters, the "networking and interaction" of clusters can be facilitated.

(3) Clusters are an inevitable outcome of the development of the market economy, but national-level clusters cannot do without strong guidance and policy support from the government. When cultivating and developing clusters, it is necessary to handle the relationship between cultivation and development properly. One should always be vigilant against the potential risk that the cluster may lose its competitiveness due to external threats or internal rigidity. Cluster policies, as a new type of policy tool distinct from industrial policies and regional policies, are used to address issues such as market failure in clusters, insufficient industrial governance capabilities, and an incomplete ecosystem of industrial technology, finance, and talent circulation, guiding the sustainable development of clusters.

Iii. Countermeasures and Suggestions

At present, the century-old transformation and the pandemic are intertwined, and the global industrial chain and supply chain are accelerating their reconstruction. China's manufacturing industry is facing severe challenges. We should aim at enhancing the core competitiveness of the manufacturing industry, leverage the advantages of China's large manufacturing scale, complete industrial chain support and broad development space, integrate resources and concentrate efforts to accelerate the cultivation and development of a number of advanced manufacturing clusters with strong competitiveness, and provide strong support for the construction of a manufacturing power. For this purpose, the following suggestions are put forward:

At the national level Accelerate the formulation and release of policy documents for fostering advanced manufacturing clusters, and coordinate and optimize the national cluster layout. Give full play to the role of the competition mechanism, continuously carry out the competition of advanced manufacturing clusters, and select a number of competitive clusters to carry out pilot demonstrations. Actively explore a multi-level cluster cultivation and development system, carry out quality and efficiency evaluations of cluster development, and continuously enhance the competitiveness of clusters.

Local level. Adapt measures to local conditions, focus on the clustered development of characteristic industries, scientifically formulate cluster cultivation plans, and form the overall thinking, goals and development paths for cluster cultivation and development. Establish a collaborative promotion mechanism, innovate a cluster policy toolkit covering industries, innovation, finance, and regions, and enhance the synergy of policies.

Cluster level. Following the three-dimensional development path of "point - line - surface - network", we will build a platform and carrier for the integrated development of large, medium and small enterprises, deploy the innovation chain with the industrial chain, and support the capital chain and talent chain to jointly create a cluster network collaboration ecosystem. Promote the development of clusters, facilitate the refinement and strengthening of organizations, and focus on serving as the spokespersons for clusters, compiling cluster collaboration networks, building cluster observation platforms, and acting as self-discipline officers for clusters.

(Hou Yanquan, the author, is the director of the Regional Development Research Office at the Planning Institute of the China Center for Information Industry Development. Zhang Zhaoze is a researcher at the Planning Institute of the China Center for Information Industry Development.)