DeepSeek’s Hometown Emerges as Center of China’s AI Universe
The emergence of China’s DeepSeek artificial intelligence chatbot has turned the spotlight on its hometown, Hangzhou.
A pedestrian bridge across the Sanbao ship lock on the Grand Canal in Hangzhou, China.
Bloomberg
By Lauren Faith Lau
Feb 13, 2025 | 603 words | ★★☆☆☆
For decades, the coveted title of “China’s Silicon Valley” has fallen to a small handful of megacities. There’s Shenzhen, whose designation as a special economic zone helped transform the former fishing village north of Hong Kong into a metropolis of 17 million and a hub for foreign capital and know-how. There’s Shanghai, with its thriving semiconductor industry and access to international money. And of course there’s Beijing, where proximity to political power has helped foster piles of internet and mobile startups.
But ever since DeepSeek, China’s latest artificial intelligence phenom, burst into the global limelight a few weeks ago, increased attention has turned toward its hometown, Hangzhou. The city of 8 million has all the hallmarks of a rising tech hot spot: a vigorous startup culture, loads of private and public cash, and a strong pipeline of talent from local universities.
Hangzhou is no newcomer. It’s the home of Alibaba Group Holding Ltd., the behemoth that does everything from online shopping and digital payments to logistics and cloud computing. And crosstown rival NetEase Inc. is a major player in games, music, email and more. But the city is now emerging as China’s leader in a slew of nascent AI-related technologies. “In the wake of DeepSeek, local and foreign investors have been trying to contact companies in Hangzhou, showing renewed interest in Chinese AI,” says Esther Wong, founder of 3Cap Investment, a Hong Kong venture capital firm.
Alibaba headquarters in Hangzhou.
Local media have identified what they call the “Six Dragons of Hangzhou.” There’s DeepSeek, of course, which has developed a top-tier chatbot akin to ChatGPT at what it says is a fraction of the cost. A pair of robot makers—Unitree and Deep Robotics—build agile machines that can take on grueling tasks such as inspecting sewage systems, helping with search and rescue operations, and occasionally even dancing with humans on TV. Game producer GameScience, design software house Manycore Technology and BrainCo, which is seeking to link computing power directly into the human brain, round out the group.
Those companies and a slew of lesser-known up-and-comers are staffed by grads from Zhejiang University, considered the country’s No. 3 school by the Shanghai Ranking university survey. DeepSeek’s founder, Liang Wenfeng, graduated from Zhejiang in 2010, and the founders of Baidu (China’s answer to Google), online retailing giant PinDuoDuo and Alibaba’s cloud business are also alums. “It's wise to pay close attention to Zhejiang University graduates,” says Edith Yeung, a partner at Race Capital, a Silicon Valley VC fund that invests in AI.
Hangzhou’s proximity to Shanghai—it’s just about 30 minutes on the bullet train—gives the city’s startups access to ample capital. Researchers at the Milken Institute say Hangzhou is China’s most competitive city based on factors such as wage growth, loans issued to its businesses, and government support for science and technology. The government of Zhejiang province (Hangzhou is its capital) has earmarked 100 billion yuan ($13.7 billion) to fund tech startups, particularly those in AI.
But for all its recent buzz, many in the Chinese tech community note that the other claimants to Silicon Valley status remain as strong as ever. So Yeung says a more apt comparison would be with Seattle. Hangzhou is, after all, home to Alibaba, which dominates retail much like Amazon.com Inc. does in the US. It and its peers have been instrumental in the launch of multiple newcomers, frequently funded and staffed by veterans of the local tech scene. “Both cities anchor their respective tech ecosystems,” Yeung says. “Hangzhou has become a rising hub, attracting AI startups, fintech innovation and deep-tech research, much as Seattle evolved beyond Microsoft and Amazon.”
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