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Greater Bay Area: World’s Innovation Lab (3/3)

Why the Greater Bay Area Is More Than Just China’s Answer to Silicon Valley Plus Wall Street 

· smart city

{{{Matteo Pantalfini}}}

The Greater Bay Area, a megalopolis comprising nine Guangdong’s cities plus Hong Kong and Macau, epitomises Aristotle’s “the whole is greater than the sum of the parts”. The global innovation hub builds on Shenzhen’s phenomenal technology output, Hong Kong’s unique financial prowess and Guangzhou’s AI-augmented industrial capabilities. China’s long-held vision is being turned into the model innovation megaregion of the future.

In the first part of the three-parts series, we unfolded the overall potential of the Greater Bay Area, as well as analysed Shenzhen’s role as its technology nerve centre. In the second part, we described Hong Kong’s financial ecosystem as the primary platform for financing innovation within the Greater Bay Area. Finally, in this third part, we introduce the broader Guangdong province and its capital Guangzhou as the AI-driven industrial hub of the Greater Bay Area, zooming into its smart manufacturing and healthcare capabilities.

Guangzhou: AI-driven Industrialization

With Shenzhen and Hong Kong sparring for their role in the financing, design and implementation of new and high-tech technologies, Guangzhou keeps its focus on the integration of these technologies into deployable applications, often through the use of artificial intelligence.

As the political centre of the GBA, Guangzhou plays a crucial role in launching policies and initiatives aimed at guiding the AI-related developments for the whole bay area. Already in 2017, China’s State Council released the Next Generation Artificial Intelligence Plan, which sets the goal of having China become the world leader in AI by 2030.

China already achieved the Plan’s first objective, that is bringing AI up to global standards with important achievements in AI applications and theory leading to a core AI industry of at least USD 23 billion. The next target date is 2025: by then China aims at strengthening efforts in intelligent manufacturing, medicine, agriculture and urban planning for an AI industry with a total value reaching USD 60 billion. Finally, by 2030, China would have become the world’s leading AI nation, with an industry valued more than USD 150 billion and with applications being so pervasive to be deeply embedded in daily life.

Guangzhou’s role within the GBA is vital because, according to an extensive survey by EY China, AI and robotics represent the technologies of greatest impact for the GBA, followed not too closely by big data analytics. In particular, Guangzhou is accelerating the integration of AI with the larger-scale manufacturing and industrialization capabilities for which the city and its surrounding municipalities Dongguan and Foshan are renowned for.

While Dongguan and Foshan’s initiatives mostly cater for the industrialization of smart home appliances and smart living applications, Guangzhou is Guangdong’s leader in smart manufacturing processes for more high-tech industries, such as automotive and, above all, healthcare.

Guangzhou and the Future of Manufacturing

The GBA is the world’s main platform for prototyping and fast engineering. In a recent work by McKinsey it was counted that 85 percent of all phones and 50 percent of all servers worldwide are assembled in the Greater Bay Area. This should not come as a surprise if we recall that this region boasts the world’s lowest cost and timelines for prototyping, which is progressively leading to a major strategic advantage over other manufacturing hubs around the world.

In practice, such advantage translates into an unparalled chance to move beyond the current manufacturing paradigm and catalyse a new one, characterised by the deployment of more recent smart technologies to optimise a variety of manufacturing processes.

In fact, the implementation of the “Made in China” strategic plan is actually revealing itself as a “Smartly Made in China” effort. Essentially, the government identifies smart manufacturing as one of the most important enabler for achieving high-tech self-sufficiency throughout the whole value chain.

Many initiatives have proved the commitment of Guangzhou’s government in turning the provincial capital into a leading innovative manufacturing hub. Among these, the China-Singapore Guangzhou Knowledge City represents an interesting endeavour in international cooperation. Promoted to a national-level project by Beijing in 2018, the knowledge city attracted USD 30 billion worth of investments and mostly focuses on the vehicle industry. Baidu’s Apollo R&D Centre, a smart vehicle research and testing centre, was recently opened and made to collaborate with the forthcoming Xpeng’s smart production site, which would boast an annual production capacity of 100000 vehicles once completed.

Xpeng is an exemplary Guangzhou’s success story. As a major competitor to Tesla in China, the electric vehicles-producing company is backed by Alibaba Group Holding and was the first carmaker to install lidar technology in a production model. Xpeng has recently completed China’s longest autonomous driving test, whose route of 3675 km started in Guangzhou, ended in Beijing and included some of the most complex highways in China’s eastern costal region. The carmaker reported that the fleet of cars passed the test with flying colors and broke numerous autonomous driving tests’ records.

To foster the manufacturing of some of the world’s most innovative products, Guangzhou must be, and it has been, at the forefront of the latest smart manufacturing capabilities. As artificial intelligence is set to become an ubiquitous reality across all China, AI-augmented manufacturing will be nothing less than the new normal in mass production.

As far as AI-augmented manufacturing is concerned, Guangzhou has the most complete robotics industrial chain and technology expertise of the GBA. Already in 2017, Guangzhou and surrounding cities had 156 key robot manufacturers producing more than 20’000 industrial robots. These robots are being deployed for manufacturing automotive and electronic components, packaging and printing, logistics and warehousing.

Guangzhou’s Pivotal Role in the Healthcare Industry

The Greater Bay Area counts over 200 universities and Guangzhou alone graduates over 570000 college students a year. While the broader healthcare ecosystem is healthy and vibrant across the whole region, it is Guangzhou that particularly shines.

Among all the cities comprising the Greater Bay Area, Guangzhou is the only one in which are located leading hospitals, and academic institutions and health parks, testifying for the city well-balanced and diversified mix of those complementary resources needed to identify a fertile healthcare hub.

Sun Yat-sen University Zhongshan School of Medicine was founded in 1866, hosts 9 departments, hires 500 professors and enrolls more than 4000 students. It specialises in pharmacology and pathogenic biology.

Associated to Sun Yat-sen University is also the First Affiliated Hospital, one of the largest and a leading hospital in the GBA, as it is categorised as a Class III A hospital and includes about 3000 beds. Its areas of expertise are nephrology, general surgery and neurology. An even larger hospital in Guangzhou is the Nanfang Hospital, which is also a Class III A hospital and counts more than 3500 beds. It’s very well-known for its oncology department.

Last but not least, the Guangzhou International Biotech Island is a prime health park focusing on advanced bioscience, a nascent and exciting research field which includes biomedicine, stem cell, and tissue engineering.

World leaders in translational medicine are based in Guangzhou, such as Professor Yi-Long Wu, a director of Guangdong Lung Cancer Institute and vice-president of the Guangdong General Hospital and the Guangdong Academy of Medical Sciences.

Xie Xiaoliang, an academician of the Chinese Academy of Sciences, is collaborating with a new biotechnology company backed by the Guangzhou Development (Huangpu) District Financial Holdings Group and headquartered in Guangzhou International Biotech Island, already mentioned above. The company is working on the research and production of gene sequences through extensive use of big data collection and analysis.

An innovation and production plant for high-end medical equipment is being built as a result of a collaboration (between the Huangpu District government and South China University of Technology) mediated by Wang Yingjun, an academician of the Chinese Academy of Engineering.

Many other efforts display the pivotal role of Guangzhou Development (Huangpu) District in supporting the establishment of a leading healthcare center in the Greater Bay Area.

Huangpu is home to AstraZeneca China’s hub for aspiration products and a USD 330 million-worth large molecules manufacturing site for BeiGene Biologics. Also in Huangpu is a USD 100 million-worth and Lonza Group-led contract development and manufacturing organization site for biological drugs in pre-clinical commercialization phase. Finally, a R&D and production laboratory was built in Huangpu through the investment of USD 300 million by Innocare.

Even large multinationals are setting their sight on Huangpu District. GE LifeSciences established its BioCampus in the area and just opened a bioprocessing academy, while Zeiss maintains a manufacturing site there. Thermo Fisher opened a precision medicine customer experience center. Merck KGaA built Innovation Hub Guangzhou to foster connections with the local startup community, academia and government.

Moreover, Guangzhou can leverage its favorable living conditions to easily attract investments for new care delivery models, such as nursing homes, retirement homes and the more upcoming medical tourism. Not only the city has more affordable real estate than other major cities like Shenzhen and Hong Kong, but it also has a warm climate, efficient transportation and, as indicated above, top-notch medical institutions. 

Guangzhou and China’s Digital Healthcare Services

Guangzhou leads in the AI-driven integration of industries and services. At the crossroads of industrial manufacturing and services designed for people, service robots are rapidly growing. Smarter-than-ever robots are being introduced to provide complementary or full support for specific services in education, entertainment, healthcare, rehabilitation and elderly care.

Guangzhou also sits in the driver’s seat for developing smart services in the healthcare industry. For example, Guangzhou Pharmaceutical Holdings Limited signed a strategic cooperation with iFLYTEK to explore potential synergies between intelligence and pharma. Another example is to be found in the Baiyun District. The district’s government, Guangzhou and Huawei agreed on cooperating for the building of a cloud computing and smart industrial cluster in Baiyun.

Interestingly, the developments happening in Guangzhou mirror a broader healthcare evolution affecting the whole country and accelerated by the pandemic outbreak. Severe lockdown measures imposed by the Chinese national and provincial governments have forced the citizens to rely increasingly more on digital healthcare services.

To grasp the impact of Covid-19 and its catalyzing role in this healthcare evolution, just observe the mind-blowing growth of China’s main online medical platforms from December 2019 to January 2020, when the coronavirus outbreak was officially reported across the whole country.

In this short time span, Ping An Good Doctor registered an increase of 900% in the number of new users and an increase of 800% in the number of visits by new users. To a lesser extent also other platforms such as Ding Xiang Yuan (an online community for healthcare professionals) and Chunyu Doctor (a telemedicine platform) witnessed remarkable growth in adoption.

The prompt reliance on Internet-based healthcare services initiated out of necessity, but surveys and experts’ findings show that it is here to stay. Chinese patients are already grown astonishingly comfortable in egaging with digital platforms and in benefiting from digital healthcare services.

 

Most importantly, this welcoming attitude towards innovation seems to have even preceded the pandemic outbreak. According to a survey by Bain & Company’s healthcare research team, Chinese patients already expected, in 2019, to use more digital services within the following five years.  

When asked if they were willing to use insurance-covered digital health services, 97% of respondents answered positively and many of them reported to have used or to be willing to use a wide range of digital systems.

Telemedicine, long-term illness management and digital records emerged as the three areas with the highest expected growth in the adoption of digital tools. On the other hand, self-diagnosis apps, on-demand services, health/life insurance apps and lifestyle/wellness monitors were already quite widespread back in 2019.

The Greater Bay Area is the central government’s top-down master plan to integrate the two SARs of Macau and Hong Kong with nine cities in southern Guangdong, the richest province of China.

In this last part of the three-parts series, we introduced the potential of Guangzhou in boosting the development of the Greater Bay Area, with a special focus on the efforts and initiatives within the smart manufacturing and healthcare services sectors.

While a fertile industrial ecosystem is unquestionably pulsing with innovation, some challenges still remain, especially if the region holds on its ambition of becoming competitive on a global scale.

First of all, Guangzhou and its surrounding cities within Guangdong should formulate a more consistent action plan in recruiting the best talents of the megaregion and from all China. While the hubs centered in Beijing and Shanghai are obviously competitive attractors of talents, Guangzhou and (even more) Dongguan and Foshan still fall short of expectations when compared to the richer cities of Shenzhen and Hong Kong.

Moreover, even if the talents shortfall is overcame, challenges specific to the smart manufacturing and healthcare industries include a relatively small number of international cooperations and a limited presence of large multinationals.

Within healthcare, impressive growth is to be expected in the usage of increasingly sophisticated tools for telemedicine and long-term illness management. However, the lack of a widespread adoption of electronic medical records hindered a cohesive response by the different provinces of China in dealing with the coronavirus outbreak, more so in the early stage of the epidemic.

To conclude, while Chinese patients have shown a peerless preparedness in engaging with the healthcare tools of the future, a focused and committed national government did not shy away from showing the world how to tackle a global health crisis both efficiently and effectively.

In reality, China went far beyond the quick deployment of AI-enabled fever-detection devices and is clearly demonstrating a strategic vision in building a competitive and global healthcare hub within the Greater Bay Area and, primarily, in Guangzhou.

All opinions expressed in this essay represent my personal views only.

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