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Westward Ho to Chengdu, China's Tech Frontier

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Best known as a place to see pandas, sample spicy Sichuan food, and trek to Tibet, Chengdu is aiming high, trying to take on a new identity as a tech innovation hub in western China, following the lead of Silicon Valleys in Shanghai and Beijing.

This surprisingly modern city today sports software parks, incubation labs, science universities, few bicycles, and yes, plenty of young entrepreneurs who still idolize Steve Jobs and are eager to make their mark with a successful IPO of their techie startup. Multinational corporations including Intel, Lenovo and Texas Instruments have landed in Chengdu to do research and development -- not to mention that Apple makes iPhones and iPads here.

The rapid growth of Chengdu's software and technology businesses -- revenues were up 64 percent in 2011 to $48 billion -- makes worries about a China economic slowdown seem ridiculous.

So too does the bubbling consumer economy. Work crews and cranes are putting up a theme park and shopping mall in one gigantic complex that is also supposed to house two 7-star (!) hotels. (Only in China.) Then on another major thoroughfare a brand-new Louis Vuitton store stands out -- one more shopping option for newly minted Chinese millionaires.

In recent years, Chengdu has set out to transform its economy from a manufacturing and logistics base to a tech innovation capital that could hold a candle to Silicon Valley. It's what every city planner worldwide dreams of today.

From my recent explorations in Chengdu, this formula is beginning to show some results. The startup trend was particularly noticeable among the switched on technopreneurs I recently interviewed in Chengdu.

Take, for example, Kevin Yang, the founder of Tap4Fun, which makes games for iPhones and iPads. It's his third startup and Kevin acts and talks like a Valley boy, even though he's only been outside of China once, to Tokyo for a meeting with big-time venture investor Masayoshi Son of Softbank Capital.

Kevin says he has read all the books about Steve Jobs and has monitored on-line courses from Stanford and MIT. His computer science degrees come from Chengdu's top computer science school (USETC), where he cranked up his first mobile gaming startup while an undergrad. His second startup was a made-in-China Twitter application called TwitBird that proved popular in Korea and Japan but has been sidelined, Kevin says, because there was no revenue model for the app. Sound familiar?

I got a tip that Kevin is now on to a good thing (he wants to take his current startup public) when I happened to run into a leading Shanghai venture capitalist at Tap4Fun's office. So much for Tap4Fun remaining in stealth mode!

Other venture investors including Chengwei, Gobi, Morningside, Matrix and Ceyuan are looking to Chengdu as a next, lower-cost frontier in China as entrepreneurs in China's major cities have gotten greedy about deal terms. Angel investors have arrived too such as Maipu Ventures, a spin-off of Chengdu-based networking equipment company Maipu Communication.

Several other startups caught my attention during my tech tour of Chengdu. Pinguo Digital Entertainment makes a social app for sharing photos (like Instagram) and claims 30 million users. Then there's a very localized startup named the Institute of Care-Life that makes earthquake detection and protection equipment, a reminder of the massive earthquake that struck nearby in 2008.

It's still early days for Chengdu but the potential is there. Chengdu is home to 1,400 IT companies, including 200 of those in the Fortune 500 big leagues. The ultra-modern and sprawling Tianfu Software Park aims to be a second city rival to Beijing's Zhonguancun district, the heart of tech in China. Christine Du, the president of the software park, talks up the city's Silicon Valley culture and spirit and its carefree style.

Chengdu does have a friendly and relaxed culture. But it reminds me more of the U.S. Midwest than the San Francisco Bay Area. Chengdu's flat open plains and largely nondescript buildings signal big city Chicago to me but without the lake, extreme temperatures and the wind.

Promoters of Chengdu struggle to get the right message to tourists and to corporate investors alike about its attractions beyond pandas and assembly lines. Chengdu has put a major ad agency to work on crafting its brand and the city has hired a savvy social media strategist who tweets out chirpy messages on Twitter and China's Twitter-like Weibo.

Getting people to think of Chengdu for chips and bytes could really begin to happen as more and more tech majors move west in China and deal makers find the gems here.

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