According to Time Magazine, when it comes to China, it is in China’s second-tier cities that the money is. Indeed, recent trends in the Chinese economy has shifted from relying on exports to developing the Chinese economy to relying on meeting domestic demand in lower-tier cities, with the added bonus of economic development in such cities. Hence second-tier cities are receiving a lot of attention and investment, from both Chinese and foreign firms. According to Daxue recent research costs in major cities such as Beijing and Shanghai, together with improved internet infrastructure in second-tier cities, has contributed to a mass migration of start-ups to second-tier cities. China virtual reality, which just this year has experienced tremendous growth, has its capital in Xi´an, the capital of Shaanxi province, which is in north-western China. According to Bloomberg, at least 200 start-ups in China are working on VR, and China virtual reality market is expected to grow to 55 billion yuan ($8.5 billion) during the next four years.
Xi’an – The Capital of China Virtual Reality and Augmented Reality
In recent years, China has been making efforts to establish a VR business ecosystem to attract more foreign VR enterprises. One of the ways this is sought achieved is by putting all the eggs in one basket – placing most of China’s VR industry in one city – Xi’an. The goal is to establish a research and development platform there, as well as marketing platforms, which will serve as the base for penetrating the Asian-Pacific VR market. This can be seen by the Augmented Reality Innovation Contest 2016 being held June 2016 in Xi’an. The contest attracted more than 100 ARI products and 16 entered the final contest. The best AR application award, the best AR device award, and the best VR technology were issued to the winning teams. These teams will go to to the United States to participate in the Augmented World Expo later this year. The competition that lasted for two months, which aimed at promoting AR technology into the markets of electronics, education, animation, and tourism industries was sponsored by Xi’an’s municipal bureau of commerce, Xi’an high-tech industry, and development zone, China augmented reality industry alliance, International augmented reality association (AR) and the Ginwa investment group.
According to Ori Inbar, founder and CEO of AR, the Chinese AR industry has tremendous market potential. “The contest will help land the frontier techniques of the AR/VR industry in Xi’an and enhance China’s and Xi’an’s status on influencing the global AR/VR industry.” Zhao Hongzhuan, who is the party secretary of Xi’an high-tech industry and development zone, claimed that the contest held in his zone both impressed the confidence in his zone to make great efforts in promoting the development of China’s AR industry, and manifested the actual strength of the industry within the zone while gathering in the field of AR. “Our zone will fully support the construction and development of the AR industry,” Zhao said. Wu Yijian, chairman of the Ginwa investment group, said that his alliance will hold the second Augmented World Expo in September, once again in Xi’an. Wu announced at the contest’s closing ceremony the establishment of a Chinese AR/VR industry investment fund, which was jointly sponsored by Wu’s alliance and the Super Ventures of the United states. According to statements made by Wu, the fund will support in large scale the early VR/AR companies and other prospective technology companies in the region.
Future developments of AR/VR in China
Although Beijing still retains its position as the start-up capital of China, there has been a shift towards start-ups being established in other cities. For instance, programs such as Chinaccelerator in Dalian, Haxlr8r in Shenzhen, and AcceleratorHK in Hong Kong, reflects China’s increased commitment to embark on innovation from a plethora of ports. In this regard, second-tier cities are likely to enjoy a prominent role, as we have seen with the VR industry in Xi’an. It is important to note that innovation spreading to second-tier cities is not an anomaly in China, but a part of an overall economic policy which is being applied on a consistent basis throughout China. Indeed, leveraging second-tier cities and using them as the basis of developing high-tech products is at the very heart of China’s economic policy. The Chinese government wishes to leverage domestic demand in order to develop its economy, whilst also transitioning the Chinese economy to one that is more information and high-tech driven. For this reason, we can expect second-tier cities to grow in importance with respect to China virtual reality industry.
In conclusion, the tide of innovation is hitting several second-tier cities in China. In an effort to develop Xi’an’s economy, and contribute to transitioning the Chinese economy to an information – and high-tech driven economy, the Chinese government, alongside Chinese and foreign investors, have transitioned Xi’an into the capital of China virtual reality industry. Hence if you wish to penetrate China virtual reality market, or simply understand it better, Xi’an is the place to be.
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