The development of a dynamic IT cluster in Nanjing: Differences between the traditional manufacturing and modern IT clusters and how to sustain a dynamic and competitive cluster

Previous research (Van Dijk, 2005) suggests that China can also advance in nontraditional industries, such as IT and software production, although it goes at a high price in terms of investments dedicated to this and largely financed by the government. The first effort made to develop the IT sector in Nanjing was a cluster of hardware and software selling shops and workshops developed in the inner city (Van Dijk, 2002). These shops were not very innovative and mainly catering for the local market. We will first summarize in why the IT cluster on Zhujiang Road is currently not an innovative cluster. In a second wave a number of software producing companies located in different centrally located and suburban clusters developed rapidly under favorable local, national and international conditions. An international value chain is developing in the case of the software sector of Nanjing and China is trying to play a more important role in that chain (see the case of Lenovo). The recent development of software activities in Nanjing has been extremely fast. We can no longer say that Nanjing is mainly a hardware-producing city, with a large number of outlets for computers and computer related activities at Zhujiang Road. The role of different layers of government in speeding up this growth process has been important and has not been analyzed in detail earlier. Other reasons for the rapid development of the software sector are the success of Software and Science Parks and the co-operation between software producers in what we call the emerging IT cluster governance structure (see map 1). This governance structure and the emerging IT cluster governance structure overlap in the Nanjing Software Industry Association.