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Why technology parks are not always commercially successful

Last week, the Association for the Development of Clusters and Technology Parks of Russia released an investment appeal ranking of Russian special economic zones with SEZ Technopolis Moscow among the top three leaders. The development of Russian industrial sites is supported at the state level; yet, at this stage, some of the technology parks, both private and public ones, look more like office centers than high-tech production clusters because it is the only way they can be commercially successful. Acting General Director of Technopolis Moscow Igor Ishchenko describes some of the factors that influence industrial sites’ success.

Igor Ishchenko, Acting Director General of the SEZ Technopolis Moscow

To begin with, public and private technology parks operate in different conditions and have slightly different goals. Private clusters always follow the logic of ‘minimum costs, maximum efficient production.’ And it is not always high-tech companies that invest in research, development or personnel training. Private technology parks do not enjoy state support, but they do not have strict requirements for potential residents either, and therefore, they can attract more diverse investors. State industrial sites are there to create a nutrient medium for high-tech companies through all stages of their development. They offer more benefits and preferences, but they also have a list of requirements for potential residents, which complicates a new business’s admission.

However, there are factors that limit the success of both private and state technoparks.

Lack of ecosystem

Management companies often proudly speak about the versatile infrastructure for their residents. State-run technology parks even offer some financial perks to resident companies. In fact, far from all residents use these incentives. The infrastructure, although being important, does not matter so much if the platform lacks an ecosystem that connects all the components into an active business community. If the platform does not provide useful networking opportunities between different businesses, it simply becomes another business center and loses its main competitive advantage as a technology park.

To create an ecosystem, it is not enough to open a couple of coffee shops and a co-working area. The management company must take on a moderator role and, based on the existing infrastructure, help residents to communicate. Many tools are available for them, from a personal account with a marketplace functionality, chats organized in popular messengers, and internal events for residents.

Closed to external markets

At the Open Innovations forum last October, there was an intense debate about the success of industrial platforms. Participants claimed that technology parks in their current form cannot exist for too long; they must change. Thus, Luis Sanz, CEO of IASP (International Association of Science Parks and Areas of Innovation), noted that the industrial platforms must expand outside their regions and countries and become international. Only then resident companies will be able to find more new partners and carry out breakthrough ideas.

If it does not happen, ambitious residents are limited in their development and they have no reason to localize at the technology park. Platforms should make effort to attract the companies interested in entering foreign markets.

However, it is important that both exporting companies and components manufacturers receive assistance at technology parks. An industrial platform should be flexible when choosing residents as a gap in favor of exporters can negatively affect a technology park’s development.

Long production localization cycle

A long cycle of localizing production is a general problem that state technoparks are facing. Their activity is regulated by superior organizations and a broad range of federal laws. Receiving the status of a special economic zone resident includes three stages and takes up to 85 working days. All this complicates the process of coordinating and making development decisions.

In recent years, the business processes have accelerated. To retain, let alone to boost market shares, companies have to make quick decisions and promptly implement them. The processes that drag on for too long make an unfavorable impression at the very least and can deter potential investors at most.

Private industrial platforms register residents much faster, which is a considerable competitive advantage. However, it should be noted that the government is aware of this problem and seeking solutions to reduce the localization time at state industrial platforms.

Lack of financial tools

A managing company must have access to all required financial tools to make an industrial platform commercially efficient. However, both private and state technology parks note the extreme difficulty in gaining access to seed and venture funds, as well as to debt and capital markets, during all stages of a project implementation.

According to Rusnano CEO Anatoly Chubais, despite its huge potential, private business has still not joined up to the innovative high-tech sector. The reason is the excessive administrative burden, constantly changing game rules and a very high inflation rate until recently. These factors together create a fundamental instability: the private sector doubts that private property would be protected by the government. Russian investors are very cautious when dealing with what relates to technology parks, not least because there has been not so much information about how such platforms work. Only certain technology parks took it seriously to promote themselves on the media and now are considered reliable projects.

The spontaneously formed policy of not providing information does not help attract investors to technology parks, but the situation is changing: industrial platforms are ready to begin communicating.

To sum up, the commercial success of industrial platforms depends on two things: the activity of management companies and the external political and economic environment. Technology parks should influence both factors. They should have a clear development concept that takes into account all business trends; external influence should be through communication between the management company and the government agencies.

Openness and a joint search for solutions are the key to creating an environment that will benefit the commercial success of industrial platforms in a quickest and most efficient way.

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