1. Shenzhen: China’s City of Innovation Shenzhen: China’s City of Innovation - Overview and Incentives for R&D Andrew Pan & Grace Chen For Zebra Technologies September 25, 2009  California

2. Outline What’s Shenzhen? Why Shenzhen? What Does Shenzhen Offer?

3. Shenzhen is in the seaboard area of South China neighboring Hong Kong, and in the Pearl River Delta What’s Shenzhen?

4. Shenzhen in Greater China Shenzhen

5. Shenzhen in 1985

6. Shenzhen Today

7. Shenzhen: Shenzhen: Facts and Figures China’s 1 st and most successful Special Economic Zone Population: 12 million; Area: 1,953 square kilometers China’s 4th largest city economy; China’s manufacturing, technology, trade and port city New city, high priority for international trade and foreign direct investment A clean, safe, recreational city with mild weather and the best living quality in China

8. Consumer products manufacturing High-tech products manufacturing and R&D –IT –Biotech –Clean-tech Logistics center in South China –Port of Shenzhen is world 4 th largest container seaport –Shenzhen Airport is China’s 4 th busiest airport –Shenzhen has an advanced and extensive highway and railway system Regional financial center –Shenzhen Stock Exchange is one of two stock markets in mainland China Shenzhen: Major Industries

9. Why Shenzhen? Why Shenzhen? Element 1: Proximity to Hong Kong Proximity to HK Immigration & Migration Cultural Adaptability Multicultural Legal Services Center Talent Inflow Open Economy Multilingual Financial Services Center Shenzhen was established due to its proximity to Hong Kong. This historically led to a great deal of cross- fertilization due to a constant exchange of people, ideas, culture, business practices and norms

10. Why Shenzhen? Why Shenzhen? Element 2: China’s 1 st SEZ China’s 1 st SEZ Investor friendly environment Benefits & SOPs Infrastructure Domain Skills Industry knowledge Mix of Industry Verticals Talent variety & depth Mix of Manufac &Services Industries Shenzhen was granted SEZ status in 1980 established by leader Deng Xiaoping to boost the country's reform process, open up the economy and commence China’s modernization drive. This resulted in the creation of a liberalized and planned environment long before it happened anywhere else in China

11. Combining these 3 elements gives Shenzhen unique location advantages for the ITO/BPO Industry ElementsShenzhenBeijingShanghai GDP Growth Rate (2003-2008)12.30%9.20%10.60% Population Growth Rate (2000- 2007)28.60%9.38%10.07% % of Employed Population76%49%48% Growth in Employed Population (2003-2008)7.95%3.16%2.88% Pay Difference Index100134122 China’s 1 st SEZ Investor friendly environment Benefits & SOPs Infrastructure Domain Skills Industry knowledge Mix of Industry Verticals Talent variety & depth Mix of Manufac &Services Industries Demographic Advantage Element 2: China’s 1st SEZ Element 1: Proximity to Hong Kong Proximity to HK Immigration & Migration Cultural Adaptability Multicultural Legal Services Center Talent Inflow Open Economy Multilingual Financial Services Center

12. Human Capital Shenzhen population has an average age of 28 years Shenzhen area has 121 full time colleges and universities with 220,000 graduates every year Shenzhen also draws graduates from China and overseas because of the dynamic economy and abundant opportunities Shenzhen has 791,000 skillful technical and engineering personnel, mainly IT engineers The English level is higher than the average level of the country Labor cost is highly competitive

13. Infrastructure Telecom –Shenzhen has 24.3 million phone lines, 5.8 million are land lines and 18.4 million are mobile Internet Access –Dial-up networks, broadband networks, IP metropolitan area networks, wireless data networks –10 GB/s backbone bandwidth and 2.5 GB/s transmission bandwidth Power Supply –Shenzhen’s Municipal Power Authority provides an uninterrupted source of electrical power to 4.16 million users

14. 0 SEAPORT 177.7 Million (passenger) 1st in China 20.62 Million ( passenger) 4th in China 21.10 Million (TEU) 4th in the world LAND PORTAIRPORT Infrastructure 2007 Figures Hong Kong International Airport is 45 minutes from Shenzhen with non- stop flights to all major North American cities

15. What Does Shenzhen Offer? City Policies –Shenzhen Municipal Government’s Provisions on Development of High-tech Industries –Shenzhen Municipal Government’s Provisions on Expediting the Development of R&D and High-end Service Industries

16. City Incentives Exemption and/or rebate of corporate income tax Exemption of tariffs and import value-added taxes for self-use imported equipment Financial support for enterprises applying for international certification, e.g. ISO, CMMI/CMM, etc. R&D expenditure subsidies and tax deduction Financial support for enterprises developing products with independent intellectual property Loan interest subsidies Office space rental subsidies What Does Shenzhen Offer?

17. Shenzhen City Government attaches great importance to IPR protection, with a strategic position to build the city as an innovation-oriented city China’s State Intellectual Property Bureau and Shenzhen City Government signed the "Protocol for Jointly Building a Strong IPR City," making Shenzhen the first city in China to position IPR as a priority (December 13, 2007) What Does Shenzhen Offer?

18. Shenzhen Software Park

19. About Our Office Based in Los Angeles, CA Shenzhen’s only investment and trade promotion office in North America Our FREE services: –Provide China/Shenzhen general/business information –Consult on China/Shenzhen business policies and incentives –Facilitate business setup and transaction –Chinese government relations –Support daily operation

20. Contact Please contact us for more information: Andrew Pan, Chief Representative Grace Chen, Operations Manager Tel: 213-628-9888 Fax: 213-628-8383 E-mail: andrewpan@shenzhenoffice.org or gracechen@shenzhenoffice.organdrewpan@shenzhenoffice.org gracechen@shenzhenoffice.org Web: www.shenzhenoffice.orgwww.shenzhenoffice.org