China's 'Silicon Valley'

From the article it sounds like they might have removed the biggest blockade to building a "Silicon Valley". That is the fear of failure. Many tech centers, Especially Tech Valley in NY, is VERY risk adverse. People are worried that if their company goes down the tubes or explodes on the launch pad that they will be branded a failure by the local banks and money people; and their sadly right.

With the availability of cheap labor and educated workers ("China already graduates more English-speaking electrical engineers than does the U.S.")there is a massive labor pool to dip into for everything from HR experts to software engineers to ASIC designers to janitors. It also lowers the financial risk to any start-up exponentially. Rather than fund 10 American companies at $5 million each they can fund 100 Chinese companies at $500K each; and both the American companies and the Chinese will have the same market size and potential returns!
Not to say there aren't a slew of pitfalls, but on paper it looks good.

The article states that "one reason" American-educated Chinese return home is that "it's much cheaper to start a company in China than in Silicon Valley. How sad is that.

It's a reality. For the price of a house in Silicon Valley(Palo Alto's average price is $1.2 Million) you can pay rent, payroll and health benefits for 10 full time employees in China, for 3-4 YEARS.
I admit to making estimates on that but it's in the right ballpark.

There are many cheaper places in the US to start a business than Silicon Valley, which have the appropriate economic base and personnel to succeed. Maybe not as inexpensive as China, though.

There are cheaper places, but many of them do not have the technically trained people. Also there needs to be a reason to move there. Some of the biggest reason that some areas are low cost is simply that they have nothing worth moving their for other than a job. I wouldn't move to a place where I wouldn't be able to easily find work for my spouse and/or myself at short notice. Look at all the towns that were destroyed when GE or some other large company moved out.