It was a sunny Saturday afternoon, and dozens of people sat in the grass around a backyard stage where aspiring founders of tech start-ups talked about their ideas. People in the crowd slouched over laptops, vaping and drinking strawberry Frappuccinos. A drone buzzed overhead. Inside the house, investors took pitches in the kitchen.
It looked like Silicon Valley, but it was Liangzhu, a quiet suburb of the southern Chinese city of Hangzhou, which is a hot spot for entrepreneurs and tech talent lured by low rents and proximity to tech companies like Alibaba and DeepSeek.
“People come here to explore their own possibilities,” said Felix Tao, 36, a former Facebook and Alibaba employee who hosted the event.
Virtually all of those possibilities involve artificial intelligence. As China faces off with the US over tech primacy, Hangzhou has become the centre of China’s AI frenzy.
A decade ago, the provincial and local governments started offering subsidies and tax breaks to new companies in Hangzhou, a policy that has helped incubate hundreds of start-ups. On weekends, people fly in from Beijing, Shanghai and Shenzhen to hire programmers.
Lately, many of them have ended up in Tao’s backyard. He helped found an AI research lab at Alibaba before leaving to start his own company, Mindverse, in 2022. Now Tao’s home is a hub for coders who have settled in Liangzhu, many in their 20s and 30s. They call themselves “villagers”, writing code in coffee shops during the day and gaming together at night, hoping to harness AI to create their own companies.
Hangzhou has already birthed tech powerhouses, not only Alibaba and DeepSeek but also NetEase and Hikvision.
In January, DeepSeek shook the tech world when it released an AI system that it said it had made for a small fraction of the cost that Silicon Valley companies had spent on their own.
Since then, systems made by DeepSeek and Alibaba have ranked among the top-performing open source AI models in the world, meaning they are available for anyone to build on. Graduates from Hangzhou’s Zhejiang University, where DeepSeek’s founder studied, have become sought-after employees at Chinese tech companies.
Chinese media closely followed the poaching of a core member of DeepSeek’s team by the electronics company Xiaomi. In Liangzhu, many engineers said they were killing time until they could create their own start-ups, waiting out noncompete agreements they had signed at bigger companies like ByteDance.
DeepSeek is one of six AI and robotics start-ups from the city that Chinese media calls the “six tigers of Hangzhou”.
Last year, one of the six, Game Science, released China’s first big-budget video game to become a global hit, Black Myth: Wukong.
Another firm, Unitree, grabbed public attention in January when its robots danced onstage during the Chinese state broadcaster’s televised annual spring gala.
This spring, Mingming Zhu, the founder of Rokid, a Hangzhou start-up that makes AI-enabled eyeglasses, invited the six founders to his home for dinner.
It was the first time they had all met in person, Zhu said. Like him, most of the six had studied at Zhejiang University or worked at Alibaba.
“When we started, we were small fish,” Zhu said. “But even then, the government helped out.” He said government officials had helped him connect with Rokid’s earliest investors, including Jack Ma, the founder of Alibaba.
But some said the government support for Hangzhou’s tech scene had scared off some investors. Several company founders who asked not to be named so they could discuss sensitive topics said it was
difficult for them to attract funds from foreign venture capital firms, frustrating their ambitions to grow outside China.
The nightmare situation, they said, would be to end up like ByteDance, the Chinese parent of TikTok, whose executives have been questioned before Congress about the company’s ties to the Chinese government.
Founders described choosing between two paths for their companies’ growth: Take government funding and tailor their product to the Chinese market, or raise enough money on their own to set up offices in a country like Singapore to pitch foreign investors. For most, the first was the only feasible option.
Another uncertainty is access to the advanced computer chips that power artificial intelligence systems. Washington has spent years trying to prevent Chinese companies from buying these chips, and Chinese companies like Huawei and Semiconductor Manufacturing International Corporation are racing to produce their own.
New York Times News Service