When the city reflects on the "missed" DeepSeek, it is not appropriate to simply apply the investment thinking to the knowledge economy.

During the Spring Festival of the Year of the Snake, the hottest topic both at home and abroad is DeepSeek, which has sparked one discussion after another not only in the AI circle but also generated endless topics in the regional economic field: why DeepSeek did not emerge in other cities.

The popularity of the domestic film ‘Nezha 2’ and the Yushu robot’s breakout at the Spring Festival Gala have further expanded the scope of ‘reflection’, turning into a question of why certain cities cannot cultivate talents like the ‘Six Little Dragons of Hangzhou’?

After the holidays, many city leaders have indeed started intensive research on industries such as artificial intelligence and robotics.

In various reflections, the discussion on the business environment is the most frequent, but is this the answer to the problem?

In 2024, multiple research institutions such as the Chinese Academy of Social Sciences, China Council for the Promotion of International Trade, Peking University, etc. respectively released different versions of business environment reports, such as the “China Government Transparency Index Report (2023)”, “China City Business Environment Development Evaluation Report”, and “China City Business Environment Research Report 2023”. In fact, there is no significant difference in the business environment scores of first-tier cities such as Beijing, Shanghai, Guangzhou, and Shenzhen, and even the scores of the main cities in most provinces in the eastern part of China are not significantly different.

This shows that after years of construction of an internationalized, market-oriented, and legal business environment, local governments have made significant progress in efficiency and policy intensity, with little difference. Cities such as Beijing, Shanghai, Guangzhou, Shenzhen, and Hangzhou have no significant “generation gap” in the completeness of their industrial policy toolbox.

We believe that attributing the birth and development of star companies like DeepSeek simply to the business environment is to simply apply the investment mindset of the industrial manufacturing industry to the knowledge economy. We also need to eliminate narratives like ‘Ignoring the facts of the enterprise itself, is there no mistake in the business environment?’ and avoid falling into self-confirmation traps.

In terms of industrial policies in the knowledge-based economy, the characteristics of leading cities may vary slightly: Beijing’s Zhongguancun is authorized for ‘pioneering legislation and trial implementation’, Shenzhen innovates in cross-border data flow regulations, Shanghai Free Trade Zone facilitates offshore finance, and Hangzhou’s Westward Science and Technology Innovation Corridor implements a ‘leader listing’ mechanism. Although the emphasis may differ, they all fundamentally provide differentiated institutional support for knowledge-intensive industries, creating greater space for differentiated competition in urban industries through ‘misaligned’ policies.

Returning to DeepSeek and the AI industry, the decision on its development layout has become an invisible factor.

According to a study by the Boston Consulting Group, in the selection of locations for leading global AI companies, the weight of policy incentives has decreased to 12%, while talent density (38%) and industrial synergy networks (29%) have become key factors.

There are reports that some well-known computer science departments at universities send a certain number of outstanding graduates to DeepSeek every year. How to improve the supply of high-quality talents, as well as the talent exchange network—this may be worth exploring and thinking about.

In addition, we also need to be aware that the business environment is an external factor for the development of enterprises and industries, while the internal factors of the success of technology companies are more important. The market is never short of topics, from digital humans, metaverse to ‘battle of a hundred models,’ the market is also never short of participants, but how to find and support persistent investment and dedicated innovators is a proposition that requires long-term thinking.

The current ‘reflection wave’ is essentially a stress response transmitted by urban competitive pressure, and we need to be vigilant about its evolution into two tendencies.

One of them is the ‘benchmarking anxiety syndrome’, typified by the leap-forward goals proposed by individual cities, such as ‘building five Deepseeks in three years’, ignoring the fundamental research and accumulation patterns required by the AI industry.

The second is the “policy inertia”, such as the robot industry planning introduced by multiple cities after the Spring Festival, all of which repeat the same formula of “humanoid robot + industrial vision” in terms of technical route.

We believe that the development of urban and regional industries has a “geographical gene”. For example, Shenzhen vigorously develops the “20+8” emerging industries and future industries. The development of the aerospace industry is rooted in the overall industrial chain and supply of Shenzhen and the Greater Bay Area, based on years of cultivation and iteration of the manufacturing industry ecosystem.

In addition, the ‘space-time threshold’ is also very important. Suzhou’s biomedical industry has been deeply cultivating for more than twenty years, continuously investing, and finally achieving its industrial status. BYD in Shenzhen also experienced its darkest moment in 2019, ‘almost couldn’t survive.’ However, with the cooperation of the government and an effective market, Shenzhen eventually became the leading city in the competition of new energy vehicles.

“Other people’s children” can stimulate their own children’s enthusiasm for learning, but simple imitation without reference to their own situation may not be effective and may also disrupt their own learning rhythm and enthusiasm.

The true modernization of industrial governance lies not in chasing hot trends, pursuing traffic, and making conditional reflexes to every trend. In the current wave of DeepSeek reflection, it is important to persist in making long-term efforts. When every city can cultivate its own untransplantable innovative “microclimate,” China’s new productive forces will present an ecosystem of prosperity with diverse flourishing.

(Source: 21st Century Business Herald)

Source: East Money

Author: 21st Century Business Herald