Inter-Asia Cultural Studies

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Cultural clusters and cultural industries in China

Anthony Y. H. Fung & John Nguyet Erni

To cite this article: Anthony Y. H. Fung & John Nguyet Erni (2013) Cultural clusters
and cultural industries in China, Inter-Asia Cultural Studies, 14:4, 644-656, DOI:
10.1080/14649373.2013.831207

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Published online: 29 Sep 2013.

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Inter-Asia Cultural Studies, 2013
Vol. 14, No. 4, 644–656, http://dx.doi.org/10.1080/14649373.2013.831207

Cultural clusters and cultural industries in China

Anthony Y. H. FUNG and John Nguyet ERNI

ABSTRACT Through examining the development and the nature of the new cultural districts in China,
namely, “clusters of Beijing,” this paper attempts to identify the characteristics of, and critically evalu-
ate, the existing models of culture clusters in China. Obviously, these cultural clusters are seen as a
united and state effort to assist, develop and boost the so-called cultural industries, including game,
animation, comic, software, science and technology and so forth. However, with the clusters of
Beijing as a case study, in this paper we argue that in the course of development, the state interests
and the authorities’ local (e.g. district) interest are often prioritized over the culture or the local inter-
est. There are also tensions and contradictions among various interest groups on different levels of
operations of these cultural clusters. In sum, apart from enhancing the private creative industries,
developing the national cultural economy, or revitalizing the old industries as in the cluster models
of many western countries, economic interests, political powers of the districts and soft power of the
nation can be the overriding interests behind the booming cultural clusters in China.

KEYWORDS : culture clusters, cultural industries, China, model of clusters

Introduction from industry-based clusters such as film,

Under the umbrella of urban economic
development strategy, we have seen that,
for many countries, there are concrete plans
to revitalize cultural districts and brand
them as cultural or creative clusters, and in
some cases, they are also regarded as a
symbol of a second cultural economy
(Vossman 2002; Scott 2007). While, quite
often, promoting tourism is the most visible
outcome, the potential benefits in cultural
industry development, culture conservation
and other possible advantageous outcomes
are less mentioned and discussed.
Cultural clustering is of course also one
of the ongoing development policies in the
growing economy of China. As a conse-
quence, the number of cultural clusters in
China has increased at an exponential rate.
Given the existence of a state directive and
national policy under the Cultural Bureau,
these cultural clusters, namely “Cultural
Industrial Parks,” in China usually operate
under certain thematic core ideas, ranging
animation and online games districts to
more abstract concepts such as the techno-
logical base. It seems that the ongoing devel-
opment of cultural clusters in China can be
very different from the emerging cultural
clusters in Europe. The former area is not
only state-initiated, planned and subsidized,
but also heavy-handedly operated and
managed entirely by the state at various
levels, such as national, or provincial.
This paper aims to critically examine the
development of cultural clusters in China.
However, given that the theoretical frame-
work of “culture cluster” has not been estab-
lished due to the ambiguity of the meaning
and the difference of cultural background
of the case studies (Wang 2011, 36–37), this
paper will first examine the definition and
models of culture clusters, and explain the
distinctiveness of culture clusters in China
developed under the administration and
supervision of the state. Through examining
the clusters of Beijing, this paper will also
address the potential social contradictions

© 2013 Taylor & Francis

 Cultural clusters and cultural industries 645

amidst the development and implemen-
tation of a culture cluster.
Literature review
Cluster defined
The term “cluster” was perhaps first
explored in economic theory when Alfred
Marshall (1920) referred to a specific geo-
graphical region that displays the tendency
of agglomeration of different industries.
Weber (1909) further elaborated the idea of
a cluster with economic geography and
illustrated the advantage of cluster-formed
industrial districts, such as the reduction of
material transportation in production pro-
cesses and the high efficiency in input-and-
output processes. Driven by market
demand, companies within a cluster are
interconnected and they cooperate closely
with each other as well as with other
related industries (Simmie and Sennett
1999) and, in the meantime “clusters encom-
pass an array of linked industries and other
entities important to competition” (Porter
1998, 78). From a management angle, a
“cluster,” according to Porter (1990), is no
longer confined to the theoretical realm; it
is utilized by government strategists, in
both developed and developing nations, to
design policies that guide the development
of small and medium-sized enterprises
organized in clusters, with related
industries and associated institutions (e.g.
universities, standards, agencies, trade
associations) (Porter 2000). Table 1 is a
summary of some important definitions in
various disciplines.

Table 1. The summary of the definition of “cluster”.

Scholar Definition of “cluster”

Morfessis (1994) The high concentration of companies in a specific region.
OCED Focus group A cluster can be interpreted as reduced-scale national innovation
(1996) systems. It is a network of industry maintaining knowledge
linkages and interdependencies between actors in networks of
production and consumption.
Roelandt and den A networks of production of strongly interdependent firms
Hertog (1999) correlating to other value-adding institutions, such as research
institutes, knowledge intensive business services and agencies
in the production chain for maximizing economic benefit and
reducing investment risk.
Simmie and Sennett Driven by the market demand, a cluster operates in economic-
(1999) based and manufacturing companies inside are well co-
operated with other relative industries like logistics and sales.
Porter (2000) Geographical concentrations of interconnected companies,
specialized suppliers, service providers, firms in related
industries and associated institutions (e.g. universities,
standards, agencies, trade associations) in a particular field that
compete but also co-operate.
UNIDO (2001) A geographical agglomeration of production companies in a
specific or relative business encountering the risk and
opportunity at the same stage.
Cooke and Huggins An/ Many enterprise(s) with standardized or vertical correlation-
(2002) based business from both upstream and downstream of a
production chain, including infrastructure for supporting the
business development.
646 Anthony Y.H. Fung and John Nguyet Erni
Cultural cluster defined
A cultural cluster then is a sub-concept of a
cluster. It branches out from the more long-
established concept of “industry cluster,”
meaning that industries such as “creative and
artistic industry, for instance craft, film, music,
publishing, interactive software, design” (empha-
sis added). Throughout its development, a
geographical concentration of these culture-
related industries may emerge (WIPO 2012).
Unlike traditional industry clusters emphasiz-
ing innovations in technology, skill and man-
agement, a cultural cluster underscores
cultural creativity (Florida 2003, n.d.). Differ-
ent from innovation in knowledge, which
can be taught in universities and in formal
education, creativity comes from the ability
to create among individual practitioners; it is
relatively more difficult to master creativity
through professional training alone. The
way of attaining creativity requires encoun-
tering the inspirational sources of artists’
shows, musicians’ performances, and pain-
ters’ creations, and to learn in practice,
sometimes through master-apprentice
relationships (Florida 2003, n.d.). A cultural
cluster comes into the picture by offering a
creative environment that fosters and nur-
tures creativity (Florida 2003, n.d.).
From the economic perspective, a cul-
tural cluster is a kind of industry with a
good economic return and potential; it is an
industry in which creativity, technique,
human resource and knowledge will be the
capital of the cultural production, combining
art, culture, technology and commerce
(HKMDS 2012). Physically, a cultural cluster
itself is a local habitat for artists or creators
to live in, gather around and work, with the
aid of different infrastructures, including
non-profit organizations, government
bodies, cultural institutions, arts venues,
science parks and media centres (Evans
2002). The special characteristic is that the
production line and consumption practice
converge in the clusters, along with the cul-
tural specificity of the background of each
cluster. As the symbol of the second cultural
economy, a cultural cluster is perceived as
the national production model in a specific
region in micro-scale. It connects to a specific
cultural background such as the countryside
or village, where it is far from the capital,
and it can provoke different types of cultural
products manufactured in the regional
cluster (Scott 2007). It also relates the nation
to the world through the export of cultural
products (Evans 2002). The cluster serves as
a tool to conserve the cultural distinctiveness
and promote the local culture to the worlds
(Florida 2003, n.d.).
Nature of cultural clusters revisited
Cultural clusters in practice exist in different
forms and nature. The most common cul-
tural cluster that exists is a geographical con-
centration of a potpourri of cultural
enterprises or institutions that produce, man-
ufacture, sell or distribute one or several
types of cultural products. These companies
function as a unit of the production chain
to maximize the competitive advantages of
the industry involved. Beijing is probably
the hub in China that gives birth to the
largest numbers of cultural clusters in the
country. Of those, Shijingshan1 is an
example that comprises three functional dis-
tricts including the eastern entertainment
district, the western recreation district, and
the middle district of high-tech innovation
for training purposes. A well-known
example also includes Beijing Cyber Recrea-
tion District (CRD), which is composed of
eight centres, including the Online Game
incubation Centre, the R&D Centre of
games for mobile phones, the Digital Indus-
try Information Centre, Experience Show
and Athletic Centre, Training Centre, Ani-
mation Centre, Digital Trading Centre and
Game Testing and Promotion Centre. This
is similar to the US Hollywood film cluster
in which filmmaking companies such as
20th Century Fox and Warner Bros, and
other auxiliary industries (i.e. editing,
effects, props, post-production and lighting
companies), actor training centres, agent
companies and other educational, financial
and commercial firms, all established their
offices in Hollywood, resulting in a self-suffi-
cient business circle.

There are some cultural clusters that
specialize in one particular cultural industry.
This kind of cultural cluster aims not only to
facilitate the quality production of cultural
products by garnering all expertise and
resources, but also to maximize the econom-
ies of scale and enhance partnership oppor-
tunities among companies of a similar
business nature. For instance, the China
(Huairou) Movie and TV Industry Zone in
Beijing consists of over 1560 enterprises,
and most of them focus on filmmaking and
tourism, as the filming sites can eventually
be turned into tourist spots and holiday
resorts. The keen competition in the area in
fact drives the companies to constantly
come up with strategies to improve the
quality of their products by, for example,
stepping up their hardware facilities and
technology. This situation is similar to the
film cluster of Hollywood, where it is home
to more than 600 film companies of different
scales. With the aggregation of companies of
a similar nature, it gives an additional benefit
that the more interested and focused invest-
ments are all attracted to the district, result-
ing in increasing business opportunities.
A cultural cluster also serves as a hub of
talents and companies with similar interest
in a particular field. Beijing Panjiayuan
Antic Art Exchange Park is a cluster where
stores selling cultural products concentrate
in this area, together with other services pro-
viding insurance, art appraisal and valua-
tion, exhibition, finance, consulting and so
forth. Meanwhile, artists and designers also
find the place a hub or a platform to exhibit
their works. In Taiwan, Huangshan Creative
Park in Taipei is another example in which
artists, designers and writers in the art indus-
try come to the area, interact and collaborate
through exhibitions, cultural festivals and
other activities.
From an industrial point of view, the
most apparent advantage of the clustering
effect is that such cooperation among the
companies in the same cultural cluster
enhances the economies of scale. For
example, in China, more than 180 resident
companies were located in the ZPark, includ-
ing flagship multinational companies such as
Cultural clusters and cultural industries 647
IBM, Oracle and Hanwang. The revenue of
ZPark in 2007 rose to 15 billion RMB (US
$1.5 billion), significantly higher than other
software companies in other provinces.
Such evidence can be easily found in differ-
ent clusters around the world. For the indus-
tries themselves, both the long established
cultural industries (such as film, animation
and comic industries) and the emerging cul-
tural industries (such as game industries
and other ICT companies) could easily find
favourable conditions in and under these
artificial clusterings. Beijing’s Zhongguan-
cun Science Park is a cultural cluster that is
widely recognized as a hub for public R&D
investments and has relatively easy access
to China’s national market (Wang 2001).
Because Zhongguancun is directly moni-
tored under the State Council and subordi-
nated under the municipal government of
Beijing, firms in the Science Park, Software
Park and Creative Park under the banner of
Zhongguancun are critically influential on
the state’s policymaking (Zhou and Xin
2003) and hence are beneficial to those cul-
tural industries that aim at working with
the state. In addition, “privileges” such as
taxes reduction, incentives for software and
ICT companies, and subsidies to private
firms are all attractive to private companies
in the cultural field. In terms of talent, these
companies can absorb university graduates
from Beijing, whereas other companies are
restricted by Beijing’s household registration
system, which prevents local firms from
hiring graduates who come originally from
other provinces (Zhou and Xin 2003, 134).
Three models of cultural clusters
Scholars and authors interpret the model of a
cultural cluster in several different ways.
Landry (2000) suggested a headquarter-
located model, in which clusters are based
in international cosmopolitan areas,
especially in those cities with the headquar-
ters of multinational cultural and media
giants, international centres of the trans-
mission, trade and exhibition of cultural pro-
ducts and centres with high value added
services, such as financial services, retail,
648 Anthony Y.H. Fung and John Nguyet Erni
advertising companies, and estate agents,
among others. Such surrounding institutions
can provide supply services to the cluster.
In Landry’s (2005) illustration, London
was taken as an example to illustrate this
model of clustering, which encapsulates
70% of recording studios, 90% of music
trading, 70% of video exports, 46% of adver-
tising business, and 27% of architecture
design in Britain (Landry 2005, 235).
Among the ten or more important creative
clusters, Soho is one that crystallizes film
companies and other firms specializing in
advertising, music, photography, fashion
design and recreation. Examples include
20th Century Fox, Warner Bros, and Colum-
bia Pictures. London can be regarded as a
vivid example of clusters that illustrate the
so-called “headquarter-located model.”
Such a model operates more or less in
global cosmopolitan areas. The cultural
diversity and open-mindedness of an inter-
national cosmopolitan area underpins the
formation of such cultural clusters (Florida
2003). Given a long and rich cultural
history of the city and the veracious appetite
for cultural consumption among the resi-
dents, the growth of local cultural and trans-
cultural production in such clusters is likely
to be successful. New York City is another
example of one of the most prosperous cul-
tural markets in the world. With a high
level of cultural diversity and diversity of
values of the populace, an urban culture
amenable to innovation, an integrated
system for intellectual property protection,
a long-term plan to absorb creative talents,
tolerance to avant-garde and fashion
culture, and close integration with the
global market, New York City creates its suc-
cessful case as a headquarters model of a cul-
tural cluster.
Building on the same logic of fusion
between an economy and culture, the
second model of a cultural cluster carries a
strong theme to revitalize outmoded
culture, including fading industrial cities
and obsolete fields or industrial complexes,
and also to conserve the local culture that
has been residing in the locale. Investigating
how local urban spaces can be kept,
rejuvenated and re-purposed within a com-
petitive global framework, Tay (2005, 227–
228) illustrates how Dublin, Sheffield,
Austin, Mexico City, Helsinki, and Antwerp
can be rebranded into creative cities.
Mommaas (2009) also used Manhattan in
the 1970s as a case study to explain such a
model: the public alterations allowed artists
to establish their area for working and
living in the downtown region of Manhattan.
The primary idea of this spatial use by the
artistic community would set in motion a
chain of development that would eventually
appeal to middle class residents and consu-
mers. Artists then looked for space at afford-
able prices, and so once-abandoned
industrial areas became the perfect location,
transforming the declining industrial area
into an emerging cultural cluster. The city
of Sheffield in Great Britain is another
example of this model of a cultural cluster.
As a city that developed from steel pro-
duction in the nineteenth century, Sheffield
experienced a period of decline in the
1980s. However, music bands such as “The
Human League” and “Heaven 17” gradually
settled close to the City Centre, and estab-
lished music workshops and recording
studios, transforming deserted factories into
creative bases and living quarters with a
total area of 20 hectares. By the 1990s, more
than 300 organizations and enterprises in
the cultural sector had moved in, installing
a new labour force into the economy and
leading to the revival of the old industrial
centre.
The third model of a cultural cluster
differs from the previous models as it has
the primary purpose of serving the nation
at large. This cultural cluster is initiated and
cultivated by the rising economic powers
for the purpose of strengthening the tra-
ditional industries, building up national
soft power, and/or integrating with the
global cultural economy. Countries and
cities such as Hong Kong, Taiwan, Singapore
and South Korea have been very proactive in
establishing creative parks and devising stra-
tegic plans to promote creative and cultural
industries. Setting a clear goal and having a
concrete plan, identifying priority, launching

industrial parks, and encouraging the export
of cultural products are the essential ingredi-
ents of success in this model of a cultural
cluster. Landry (2000) suggested both “soft-
ware” and “hardware” would be the prere-
quisites for such a cultural cluster. What
differentiates “hardware” from “software”
is that the former one covers events,
studios, organizations, institutions and facili-
ties while the latter one includes a dynamic
social network and system that cultivates
creativity and encourages innovation.
This model is largely defined by the
organizational structure of the cluster. Clus-
ters are led by large-scale cultural insti-
tutions, including both for-profit and non-
profit organizations. Rotterdam’s CBD and
Queensland University of Technology’s
Creative Industry Precinct are examples of
the more commercial clusters under the phil-
osophy of this model. Some clusters, for
instance, are controlled by the government
and developed for the purpose of increasing
the state’s economic powers. Korea’s auth-
orities established its Korea Creative
Content Agency (KOCCA) and, with the par-
ticipation of different creative and media
industries, it oversees the policy, regulation,
management and promotion of such a kind
of cluster in the country. Still, there are
other clusters that consist of small and mid-
sized companies coming together with the
aid of the government. The film industry
cluster in Bristol is an example.
State’s control over cluster: strong state,
weak culture
With reference to the three common models
of cultural clusters mentioned above, we
would like to critically evaluate the cultural
clusters in Beijing. It seems that Beijing’s
cluster does not fit into one of these
models. It is more of a hybrid type. On the
one hand, Beijing, as the capital of China,
naturally follows a headquarters model, in
which a diversity of cultural industries
settles in Beijing. On the other hand, clusters
are also seen as being established to enhance
the economic advantage of the nation and to
revitalize ruined factory areas. Yet, all these
Cultural clusters and cultural industries 649
clusters follow the model of many Asian
countries, such as Korea and Singapore:
they are state-initiated and manipulated.
Cultural clusters in Beijing might illustrate
a kind of state-driven hybrid model of cul-
tural clusters that prioritizes profit over
culture and one that demonstrates the inse-
parability between the state interest and
interest of private capitals.
In Beijing, the municipal government
plays an important role in implementing a
series of measures to promote the develop-
ment of cultural clusters. For instance, the
government has issued the “Beijing 11th
Five Year Plan for the Development of Crea-
tive and Cultural Industries”, at the policy
level. The Beijing Cultural Creative Industry
Promotion Centre was established to
manage and stabilize the cultural clusters at
institutional level. In addition, the issuance
policies addressed by the Beijing Cultural
and Creative Industry Promotion Centre bol-
stered financial investment, tax relief and
protection of intellectual property rights,
creating a more favourable environment for
developing cultural industries in Beijing.
Specific benefits provided by the state also
include a tax reduction of 15 to 20%, resi-
dence subsidies for talents up to 20%, and
free publicity for the industries involved.
The central government remains in a privi-
leged position in controlling the develop-
ment and the production of cultural clusters.
Under such a mode of operation, all cul-
tural clusters and companies working within
the clusters are under the strong influence of
the state. Basically, cultural companies are
organized, authorized and monitored to
operate in the orbit of the state in these clus-
tering locales in order to serve the state or
municipal agendas. One would simply ques-
tion if the private capitals working on the
cultural business are just puppets of the
state. An alternative but more sophisticated
argument is suggested here: these cultural
private capitals or companies that are
closely affiliated with the state in fact work
in tandem with the state for the maximiza-
tion of economic interests—rather than cul-
tural development—and in the course of
collaboration, cultural clusters have become
650 Anthony Y.H. Fung and John Nguyet Erni
an easy platform to legalize such a kind of
interest maximization. In the eyes of the
public, these cultural clusters are the least
questionable platforms for the state to legiti-
mately sponsor and subsidize the industries
and the capitals. The clusters involved actu-
ally deliver their functions to serve the
economy, even though the interests of the
state and private capitals are not the same.
In Beijing, for example, after the state’s
subsidy, tax reduction and other supports,
many cultural industries have generated
huge profits and achieved considerable
growth, with these clusters accounting for
10% of the capital’s GDP in 2008. Over the
years, cultural clusters in Beijing further
flourished through a gradual optimization
in structure, rationalization of layout,
absorption of talents, as well as policy and
financial support from the government.
Few public voices actually question the inter-
ests behind the clusters.
A concrete example is the formation of
798 Art District, which can be regarded as a
locale that attracts artists and art-related
institutions to revitalize the suburb and the
outdated factory buildings. However, as we
can see, when the authorities took over the
management, it also dictated the content of
the creative cluster. 798 Art District was
developed from a base of the Sculpture
Department of the Central Academy of Fine
Arts. In 1995, factory warehouse No. 4718
of the Jiuxianqiao area in a suburb of
Beijing was transformed into a sculpture
workshop. The outcome of the workshop
was the Marco Polo Bridge War Memorial
statue. At that time, 798 Art District was
initiated by individual artists who resided
there with affordable space for creation.
With its initial popularity, the Chinese auth-
orities soon realized the economic value of
the place. From 2002 the state started to get
involved in the management of 798 and
brought in a large number of galleries,
artists, pubs and other cultural institutions.
The once indie-like shabby artist district
was then occupied by art studios and gal-
leries with international appeal and, inevita-
bly, many individual artists were driven out.
With the strong manipulation of the content
of the cluster, it now tilts toward a more com-
mercial goal rather than a district with a
unique artistic atmosphere.
The second example of the creative
cluster in Beijing as a hybrid model is Zhong-
guancun Science Park, which was mentioned
earlier. Because of the ideal location in terms
of its proximity to the higher education insti-
tutions, the target customers, trading market
of high-tech products and other value added
services, Zhongguancun seems to be a
success. This success story may be very
similar to those described in the first head-
quarters model of a cultural cluster, as
suggested by Landry (2005). The geographi-
cal concentration results from the Beijing
municipal policy having sped up the
process. The Zhongguancun clusters, pio-
neered by Haidian Book City, have become
a central base of companies specializing in
software, gaming, comics, animation, music
and publishing. In 2007, the area attracted
more than 200 creative-oriented companies,
generating an annual profit of 5 billion
RMB. The side-effect, perhaps the intended
effect of the authorities, was the exorbitantly
rising land value of the cluster. The latter was
illustrated by a record-breaking residential
land bid in Zhongguancun Technology
Business Zone at 2.63 billion RMB for a
38,900-square-metre land (around RMB
67,000 per square meter), much higher than
the bid in a northern suburb, where only
428 million RMB revenue was generated in
selling a 113,816 square metre plot (around
RMB $3800 per square meter) (Xin 2012).
Even without questioning the intent of the
state to construct a cultural cluster like this,
one would see that the district itself has a
strong lucrative motive: pushing up land
values and bringing more tax to the district.
In both cases, 798 Art District and
Zhongguancun, reflected a hidden agenda
behind the formation of clusters in China:
the designated cultural enterprises that
could be picked and placed in the cluster
and the Chinese authorities have a very
close and non-transparent relationship.
Since the formation of the legitimate clusters
means receiving support and resources from
the state, companies have to maintain a close
 Table 2. The summary of the major cultural clusters in Beijing (BCCIPC n.d.).

Name of clusters in Beijing Nature of the cluster “Support” by the Chinese government

Zhongguancun Science A modern science and technology park with software R&D,
Park information service, enterprise incubation for Technology
(Software) development. Over 180 resident companies
with nearly 15,000 professionals, such as IBM, Oracle and
Hanwang are located in the park. Funded by China’s
National Development and Reform Bureau.
Beijing 798 Art Zone Art development, provide space for exhibition and seminars
in the 50-year old decommissioned military factory
buildings. Initially it was a place providing public space
for artists. Now places are developing into galleries, art
centres, artists’ studios, design companies, restaurants,
and bars.
Beijing Cyber Recreation A base for diversified digital content production. Several
District (CRD) world-famous firms including Sun Chime Cartoon Group
and Digital-Red Technology have established businesses
there. Set up eight feature centres to support the
development: Online Game incubation Centre, R&D
Heavy promotion of the Chinese state in ICT market.
Providing subsidies such as housing, rent, simplifying
trading procedures and so on (Zhou and Xin 2003).
The Beijing municipal government has converged the art
galleries and artists by providing benefits such as lower
rent, subsidies and so on.
The district is established as integrated cultural clusters
with slightly different specialisms, authorized and
monitored by the Beijing Municipal People’s
Government. Implemented district policy to set up the
eight centres.

Cultural clusters and cultural industries

Centre of games for mobile phones, Digital Industry
Information Centre, Experience show and Athletic Centre,
Training Centre, Animation Centre, Digital Trading
Centre and Game Testing and promotion Centre.
China New Media New media development, ratified by the China Ministry of It’s ratified and established by the China Ministry of Science
Development Zone Science Technology. Technology. Built in excellent geographic locationa
China (HuaiRou) Movie Digital film production, covers a total area of 5.6 square Implemented attractive policies such as approving any
and TV Industry Zone kilometres for establishing the core base of China Film projects that contain more than US$30 million.
Group, its periphery area contains the Movie and TV
expansion and extension districts.
Beijing DRC Industrial Industrial design based in China, which contains a Create a market-oriented model of resource sharing, helps
Design Innovation Base technological platform of design and a professional enterprises achieve self-innovation and design firms
incubator of design firms. realize sustainable development, and promote the
development of the design industry.
a
China New Media Development Zone (n.d.).

651
652 Anthony Y.H. Fung and John Nguyet Erni
relationship with the state in order to enjoy
the “privilege.” Despite regulations and pol-
icies going public, the state still plays an
influential role in deciding which companies
could get involved in China’s cultural clus-
ters and which ones are excluded. In Decem-
ber 2006, the Beijing Cultural Creative
Industry Promotion Centre started to
announced the first legitimate cohort of Beij-
ing’s cultural clusters.2 More importantly,
operating side by side with its policy arms,
the state also controlled, regulated and
indexed the popularity of the “content” pro-
duced by the clusters, and hence it affected
the profit of the companies that the state
“recommended”. In the past 10 years,
research has suggested that while the state
encouraged market competition, the role of
the state has shifted to market monitoring
and promotion, in particular within the par-
ameters of control of the clusters (Baark
2001). Various state programmes were set
up to promote the use of information tech-
nology. As scholars Zhou and Xin (2003,
134) put it, the state has led the rapid
growth in demand for ICT products in the
Chinese marketplace, and hence has driven
a considerable amount of turnover to the
enterprises that are involved in the ICT
business. Now, with the cultural clusters at
work, the state is able to “recruit” those cul-
tural industries that could more or less pitch
in with the state agenda in the course of
development and marketization. Table 2
summarizes the clusters and illustrates the
state’s support of these clusters.
Having mentioned the potential conflict
of interests in state-subsidized clusters, we
have to say that there are indeed some
arrangements of clusters that appear logical
and natural. Take Zhongguancun Science
Park for example: it is located in Haidian dis-
trict, and takes advantage of the “brain” of
Beijing because of its proximity to the top
universities in China—Peking University
and Tsinghua University—and more than
100 research centres of the Chinese
Academy of Sciences (CAS). Inspired by
Silicon Valley in the United States, scientists
from research institutions in Zhongguancun
set up high-technology enterprises in the
area. By the end of the 1986, over 100 non-
state-owned Scientific and Technology
firms had been located in Zhongguancun,
which together formed the preliminary
shape of the cultural cluster. With the
state’s further approval, the aggregation of
scientific companies was ratified and Zhong-
guancun Science Park was established in
1988 (Wang 2010). It has been developed as
a nation-scale scientific base. With the
state’s invitation, many transnational high-
tech companies were agglomerated with
centres and branches in the cluster, including
Microsoft, IBM, HP, BELL, NEC, to name a
few. The cluster is also where many repu-
table China-based companies are based,
including Lenovo, Fonder, Sina, Sohu and
Netease.
Soft power, national interest and culture
In conclusion, our analysis suggests that
China has started to devise a mature model
of cultural clusters with centralized control
over the formation and operation of the cul-
tural clusters, as well as the content produced.
As demonstrated by various evidence and
figures, the cultural clusters do bring in econ-
omic revenues for the state and the districts
concerned. What is intriguing to ask,
however, is not whether these clusters can
be conducive to the economic interest, but
the potential social problems that come
along with the formation of such clusters.
The formation of cultural clusters is a
double-edged sword; it brings wealth to the
nation but the nation also bears a certain
degree of risk. Now, China places almost all
important cultural industries inside these
clusters, where the interests of the industrial
community are maintained mainly by effi-
ciency, profit-optimization and economies
of scale. The over-reliance on clusters to
push up the GDP can be a risky strategy.
Should there be a negative economic down-
turn, it is not only the industries that are vul-
nerable. The entire community, districts or
ecology that depend on the cluster’s
revenue and productivity would signifi-
cantly be dragged down by the stalling of
the industry.

The business-oriented approach of
China’s national policy precipitates the for-
mation of cultural clusters that are more
commercial, ignoring the importance of pro-
tecting or developing the local and regional
culture. The development of the Art District
798 for example resulted from conflicts
between the artists and the land owners.
The booming cultural business in the region
has pushed up the rent, forcing the artists
to move out the area and seek affordable
alternatives (Caves 2000, 30). Local cultural
production gradually vanished as a conse-
quence and was replaced by international
players. This example shows that the state’s
intention to develop culture clusters is not
for the culture itself, but as a tool to attract
investment (de Muynck 2007).
It is true that by vertically and horizon-
tally integrating the production of a certain
cultural business—thereby creating supply
or value chains in which different units are
mutually beneficial to each other—the
cluster is likely to grow and expand, and
bring in economic revenues for the nation.
However, it is equally likely that the cluster
will fail to function if cultural enterprises
fail to collaborate and compete on the same
supply or value chain. It seems that the
immediate solution for the state to avoid
cut-throat competition is to invite one or a
few flagship industries or companies to pre-
scribe a model for the clustering effect,
which other companies are compelled to
follow. Illustrating the interaction between
multinational corporations and local firms,
Zhou and Xin (2003) found that the collabor-
ation model mainly underscores the flagship
role of the multinational companies, which
provide the local firms with vital technologi-
cal and organizational training. The local
firms then can develop their network and
innovative capacity in the domestic market
(Zhou and Xin 2003). In China, Beijing delib-
erately turned Chaoyang District into the
largest media cluster, with 4470 media-
related businesses, including 174 multina-
tional media companies, CCTV (Chinese
Central Television) and BTV (Beijing Televi-
sion). Flagship companies are supposed to
take the lead in the development of
Cultural clusters and cultural industries 653
industries with benefits and incentives
given by the government.
The ensuing consequence of this mode of
operation results in an oligopoly in some cul-
tural industries. Within the extremely com-
petitive environment in a cluster with
similar businesses, when the larger slice of
the market is in the hands of the flagship com-
panies, it is difficult for local small firms to
sustain themselves. The flagship companies
with sufficient support from the government
might eventually drive out or absorb the
local small companies, resulting in an oligo-
poly. Tan (2006) illustrated how the compo-
sition of enterprises in a cultural cluster
changes as the cluster develops over time in
the development of the cluster in Beijing. He
demonstrated that in the early stage of
growth, the commercial parties in Beijing
Zhongguancun Science Park displayed an
“olive-shaped structure,” meaning that the
local firms and local business sectors occupied
the largest share of the market. And yet after
20 years, the structure has been transformed
into an “inverted pyramid shaped structure,”
with 70% of the market share taken by multi-
national companies. As such, the government
tends to maintain this oligopoly structure to
secure the export potential and hence the
economic revenues from the cluster (Tan
2006).
It seems that the cultural cluster for-
mation in China naturally leads to some
paths that are the opposite of the counterparts
in the west. The structure of the oligopoly
continues to oppress small-scale independent
production and hence significantly reduce the
diversity of the cultural products produced. A
cultural cluster in the west contributes to the
crystallization of creative talent in a geo-
graphical area. Human creativity in the
western context can be a real asset for
society to generate a decent profit and
business opportunities. This is a unique
characteristic of the cultural industry: nurtur-
ing human creativity supersedes concepts of
efficiency and effectiveness in traditional
industries. However, in China, the importance
of talent is often downplayed compared with
the value of land, investment, infrastructure,
equipment and even skills. Observations by
654 Anthony Y.H. Fung and John Nguyet Erni
researchers have found that the clusters
operate with no difference from large fac-
tories, where thousands of workers are
cramped in an enclosed space. In the games
clusters we observed, the so-called “creative
workers” are simply producing their own
line or elements of the products in front of
their computers, in those far-away buildings;
few interactions can be seen and little space
is created for communicative purposes. In
the end, cultural clusters in China are just
hammered out for productivity rather than
creativity. The latter, which potentially leads
to a critical ability and independent-thinking
talented workers, would never be high-
lighted, at least, among frontline workers.
Politically, cultural clusters in China also
have a mission regarding local interest and
culture. Cultural clusters are often seen as
serving the state’s political agenda. In the
era of economic globalization, the power of
a country is partly defined by its export
capacity and “soft power” to attract global
partners for cooperation (Nye 2004). As
Joseph Nye puts it, soft power is the national
tactic for increasing the level of propensity for
international collaboration and thus improv-
ing the state’s relation to other key players
in global politics. In addition, in the epoch of
changing and competitive geopolitics,
culture as the main currency of soft power
seems to have a higher level of acceptance in
the world than concrete products, military
and other means. A cultural cluster can thus
be defined as a tool for exercising and assem-
bling the cultural goods for the soft power
needed, and the cultural products manufac-
tured by the vertical production of the cul-
tural industries can conserve a cultural
specificity that represents the nation. Holly-
wood films in this regard might be regarded
as the less confrontational American culture
that penetrates into the different local cultures
through entertainment and consumption
(Khondker 2004). The soft power of Holly-
wood lies in its fantasy to project the “Amer-
ican way of life” to the world (Zoysa and
Newman 2002, 187). China is on the same
wavelength in terms of the use of soft power
to enhance its position in global politics
(Huang and Sheng 2006).
In a nutshell, the cultural clusters in
Beijing are created as a state effort to
develop and boost the various cultural indus-
tries. However, amidst the development
project of cultural clusters in China, state inter-
ests such as business and national investment
and the authorities’ local (e.g. district) interest
are overwhelmingly important. Quite often,
development of cultural clusters results in ten-
sions and contradictions among various inter-
est groups—the struggle between the
multinational companies and the local compa-
nies, giant corporations and the small and
medium enterprises, and state-run corpor-
ations and private capitals—all of which
want to share a larger slice of the market.
Thus, apart from enhancing the private crea-
tive industries, developing the national cul-
tural economy, or revitalizing the old
industries as in the cluster models of many
western countries, the economic interests, pol-
itical powers of the districts and soft power of
the nation could be the overriding interests
behind the booming cultural clusters in China.
Acknowledgement
This work was fully supported by a grant
from the Research Grant Council of Hong
Kong Special Administrative Region.
[Project no. 4001-SPPR-09]
Notes
1. Shijingshan District is an urban region located in
the west of the urban core of Beijing, and it is a
part of the Western Hills area.
2. A total of ten cultural clusters are listed here. Some
other clusters are Zhongguancun High Tech Park
—Yonghe Park, Beijing Panjiayuan Curio and
Artwork Trade Park, Zhongguancun Creative
Industry Pioneer Base, and Songzhuang Original
Art and Cartoon Industry Cluster. These clusters
are also under the supervision of the Chinese
government.
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Author’s biographies
Anthony Y. H. Fung is Director and Professor in the
School of Journalism and Communication at the
Chinese University of Hong Kong. His research inter-
ests focus on popular culture and cultural studies,
gender and youth identity, cultural industries and
policy, and new media studies. He is currently
working on a project on Asian creative and game
Industries and cultural policy with a focus on China
and Hong Kong. His recent books include Global
Capital, Local Culture: Transnational Media Corporations
in China (Peter Lang, 2008) and Asian Popular Culture:
the Global (Dis)continuity (Routledge, 2013). Email:
b763704@mailserv.cuhk.edu.hk.
Contact Address: School of Journalism and Com-
munication, The Chinese University of Hong Kong.
2/F Humanities Bldg, New Asia College, Shatin,
NT, Hong Kong
John Nguyet Erni is Professor in the Department of
Humanities & Creative Writing at Hong Kong
Baptist University, after having served as Chair of
the Department of Cultural Studies at Lingnan Uni-
versity in Hong Kong (2010–13). He has published
widely on critical public health, Chinese consumption
of transnational culture, queer media, youth popular
consumption in Hong Kong and Asia, and human
rights criticism. His books include Understanding
South Asian Minorities in Hong Kong: A Critical Multi-
cultural Approach (with Lisa Leung, HKUP, 2014), Cul-
tural Studies of Rights: Critical Articulations (Routledge,
2011), Internationalizing Cultural Studies: An Anthology
(with Ackbar Abbas, Blackwell, 2005), Asian Media
Studies: The Politics of Subjectivities (with Siew Keng
Chua, Blackwell, 2005), and Unstable Frontiers: Techno-
medicine and the Cultural Politics of “Curing” AIDS
(University of Minnesota Press, 1994). Currently, he
is completing a book project on the legal modernity
of rights (forthcoming; Ashgate UK).
Contact Address: Department of Humanities & Hong
Kong Baptist University, Kowloon Tong, Hong Kong