In 1987, China’s first technology business incubator was established at the Wuhan East Lake New Technology Entrepreneurship Center.

Today, the incubator has been in operation for 35 years. Over these 35 years, the mass entrepreneurship and incubation model has gone through a period of joyful growth, pampered by both “Grandpa’s affection and Grandma’s care,” as well as the low point of “startup failure” after reaching maturity.

Local investment promotion has moved beyond the stage of “always looking to outsiders for solutions.” Today, only by focusing on both domestic and foreign markets can we forge a path of differentiated industrial development.

The mass entrepreneurship and incubation model has entered its golden age.

Setbacks always make one stronger. At 35, the mass entrepreneurship and incubation model stands between the age of “coming of age” and “freeing oneself from confusion.” Its future trajectory will test the “governance capabilities” of local governments.

At 35, it embodies the “standing firm” of maturity

China’s industries are currently at a critical juncture of transition from old to new. The call for “domestic substitution” in manufacturing rings loud and clear; smart manufacturing technologies are on the rise; digital-driven transformation is in full swing; and various resources are rapidly converging toward technological innovation and entrepreneurship.

Supporting today’s startups means nurturing and shaping tomorrow’s “Huaweis” and “Alibabas”…

There is no doubt that startups are a valuable asset to local economic development.

However, startups are often too far removed from the government. As soon as they enter the market, they face an uncertain future with high failure rates, while established resources often look down on them as clients, making their situation even more difficult.

Consequently, local governments have begun devising strategies to bridge the “last mile” between government resources and startups. Mass entrepreneurship and incubation spaces have emerged as the key vehicles for bridging this “last mile.”

Looking to the future, the co-working and incubation model serves as the “cradle” for unicorns and publicly listed companies; in the present, although its scale is not large, its contribution to the socio-economy is immense.

According to statistics, by the end of 2021, there were over 15,000 science and technology startup incubation institutions nationwide. The annual total revenue of incubated enterprises reached 1.24 trillion yuan, driving 4.98 million jobs in entrepreneurship and employment, and holding over 1.4 million valid intellectual property rights.

With a workforce of around 200,000, it has generated approximately 5 million jobs and over 50 billion yuan in annual revenue, driving annual revenue for incubated enterprises to exceed 1 trillion yuan. The mass entrepreneurship and incubation model is like an “ant” lifting an object more than 20 times its own weight.

After nearly three years of the pandemic, the "mass entrepreneurship and innovation" trend has gradually become more rational. Coupled with the fact that startups appear too "petty" in terms of addressing immediate employment and tax contributions, the mass entrepreneurship and incubation model has begun to face an awkward predicament.

At 35, the "Confusion" of "No Confusion"

In fact, even in its early days, the co-working and incubation model experienced its share of ups and downs.

In 2016, a Beijing-based co-working space announced its closure. Prior to closing, its occupancy rate had remained around 60%—a figure that most co-working spaces would have envied. At that time, the co-working and incubation sector had not yet identified the most suitable development model.

Success stories may look alike, but each failure has its own unique causes.

Short-sightedness and a focus on quick gains; reliance on government subsidies, like a child not yet weaned, leaving them helpless without that support; and remaining stuck in the role of a landlord without transitioning...

In January of this year, Zhejiang Province revoked the qualifications of 88 co-working spaces and incubators. As soon as regulatory scrutiny tightened slightly, a batch of incubators fell victim to the crackdown.

Perhaps many blame the current lack of sustained policy support, the increasing difficulty in securing subsidies, and the growing number of government requirements.

But government support has always been icing on the cake, not a lifeline in times of need. For incubators lacking core competencies, when the times cast them aside, they won’t even bother to say goodbye.

To survive and thrive, transformation is essential. As platforms for nurturing the “rising stars” of future industries, they must align with the laws of industrial development. Formerly independent incubators are now transitioning into “industrial incubators.”

At 35, it’s time to step up

The core objective of the mass entrepreneurship and innovation incubation model, in the short term, is to continuously incubate new enterprises and foster new industries; in the long term, it is to drive the transformation and upgrading of the regional real economy. Since the ultimate goal is to serve regional industries, this incubation model cannot be separated from the local industrial ecosystem.

The shift from independent to industry-focused incubation is inevitable, yet challenging. Innovation and entrepreneurship within an industry differ from single-technology ventures; they require not only technological breakthroughs but also the combined support of industrial policies, capital, markets, and other key factors.

Successful incubators generally have a clear industrial and professional focus. Only by establishing a specific industrial direction can an incubator use this as a foundation to align with vertical industrial chains, supply chains, and ecosystems.

Industrial and supply chains, needless to say, are standard components of industrial cluster development, while the ecosystem is the key element. The ecosystem encompasses marketing consulting, capital and finance, legal and intellectual property services, business matching, and all other relevant resources required by enterprises.

It may take a small business a long time to secure the necessary support on its own, but if it enters an incubator with a complete ecosystem, it may take only about 10 days from moving in to becoming operational.

Moreover, incubators can provide enterprises with sufficient support—serving as a catalyst—to rapidly embark on a focused, goal-oriented vertical trajectory, steering them onto the right track for business operations and technological innovation.

Shanghai’s industrial incubation efforts boast numerous success stories, from which two key points can be summarized: First, they identify segments within local industrial clusters that can effectively strengthen or fill gaps in the industrial chain, integrating technological innovation with the iterative development of industrial clusters; second, they integrate corporate and technological resources to facilitate cross-scenario applications and incubation across different industrial clusters.

What is the ideal relationship between incubators and entrepreneurs?

In fact, just as with industrial parks and enterprises during investment promotion, the interests and visions of both parties should be firmly aligned. For startups lacking resources and capital, investment is an effective way to achieve this strong alignment.

This shift in focus is evident not only in incubation spaces but also in the investment sector. Whereas investors once sought only projects capable of rapid, high-speed growth—requiring relatively mature and well-established companies—they are now beginning to embrace earlier-stage enterprises.

“Investment + Services + Expertise” has become the mainstream model for future incubators. However, behind the effort to help companies solve funding challenges lies a test of the incubator’s own ability to connect resources.

Of course, the government’s role is indispensable in this process; it typically serves as the powerful driving force behind the mass entrepreneurship and incubation model.

The government can serve as a promoter of the incubation market, as well as a service provider and investor. However, the long-term nature and inherent uncertainty of incubating startups are unavoidable.

Therefore, a mindset focused on quick gains and political achievements must be avoided; otherwise, incubators may end up revolving around government demands while neglecting the true needs and development of the startups.

To achieve a genuine integration of incubation and investment promotion, some regions have already charted successful paths.

In Quzhou, Zhejiang, the incubator model has been combined with the “reverse enclave” model, establishing reverse enclave incubators focused on different industrial sectors in multiple cities, including Hangzhou, Beijing, Shanghai, and Shenzhen.

In economically vibrant regions, they leverage local resources, infrastructure, and talent to establish local bases for R&D pilot testing and industrial production for incubated enterprises, thereby forming a complete “incubation-acceleration-R&D-pilot testing-industrialization” chain for technological innovation.

In Conclusion

Incubation supports enterprises in their growth from 0 to 1; setbacks are inevitable, and a step-by-step approach is best. Moreover, since the incubation model is relatively mature, it can be combined with various methods such as "enclave" investment promotion, fund-based investment promotion, and technology-driven investment promotion.

In the future, mass entrepreneurship and incubation-based investment promotion will undoubtedly have even broader development prospects; it simply requires time for this initiative to take root.

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