The Economic Logic of Chinese Cultural-Creative Industries Parks: Shenzhen and Guangzhou [1st ed.] 9789811535390, 9789811535406

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The Economic Logic of Chinese Cultural-Creative Industries Parks Shenzhen and Guangzhou Vivian Yuan Yuan

The Economic Logic of Chinese Cultural-Creative Industries Parks

Vivian Yuan Yuan

The Economic Logic of Chinese CulturalCreative Industries Parks Shenzhen and Guangzhou

Vivian Yuan Yuan Shenzhen Culture Research Center Shenzhen, Guangdong, China

ISBN 978-981-15-3539-0    ISBN 978-981-15-3540-6 (eBook) https://doi.org/10.1007/978-981-15-3540-6 © The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer Nature Singapore Pte Ltd. 2020 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the ­publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and ­institutional affiliations. This Palgrave Macmillan imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-­01/04 Gateway East, Singapore 189721, Singapore

For my dear father Taiping Yuan who had always trusted me and encouraged me to achieve anything I like.

Contents

1 Introduction  1 2 Correlated Concepts and Theory Developments 11 3 Research Methodology 49 4 The Case Study on the Business Model of OCT-LOFT 59 5 The Case Study on the Business Model of 289 Art Park125 6 Comparison of the Two Cases197 7 Research Implications and Conclusions263 References279 Index289

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List of Figures

Fig. 4.1 Fig. 4.2 Fig. 4.3 Fig. 4.4 Fig. 4.5 Fig. 4.6 Fig. 4.7 Fig. 4.8 Fig. 4.9 Fig. 4.10 Fig. 4.11 Fig. 4.12 Fig. 4.13 Fig. 4.14 Fig. 4.15 Fig. 4.16 Fig. 4.17 Fig. 5.1 Fig. 5.2 Fig. 5.3 Fig. 5.4 Fig. 5.5 Fig. 5.6 Fig. 5.7 Fig. 5.8

Open gate Xiangshan East Street between Southern District and Northern District OCAT Old Heaven Bookstore Little Thing A3+ B10 C2 My Café My Noodle Loft Shop Starbucks The leisurely Donkey Bar T-Studio Chi Cha Qu Bridge gallery Barn gallery Cartoon map Bean2Cup café Cross Fit Cultural landmark Citizen space Internet celebrity made preparation work for photo in front of a restaurant Grand View Garden furniture shop Louis (right) in his café in my interview

63 66 69 79 84 89 90 91 96 97 98 99 101 103 105 117 118 126 133 133 142 143 147 182 183 ix

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List of Figures

Fig. 5.9 Fig. 5.10 Fig. 5.11 Fig. 6.1 Fig. 6.2 Fig. 6.3 Fig. 6.4 Fig. 6.5 Fig. 6.6 Fig. 6.7 Fig. 6.8 Fig. 6.9 Fig. 6.10 Fig. 6.11

Hennessy campaign in the park 186 Sculpture and play 187 WP flagship store 194 Organization structure of OCT-LOFT in OCT Group 220 Organization structure of Guangzhou 289 Art Park 221 Business activities of OCT-LOFT 227 Business activities and divisions of Guangzhou 289 Art Park 230 Development and expansion model of OCT-LOFT 234 Development and expansion model of 289 branded CCIP 235 Funding resources for construction and operation of OCT-LOFT236 Funding resources for construction, operation management and brand development of 289 Art Park 237 The “cultural highland” business model of OCT-LOFT 249 “Modular system” business model of 289 Art Park 253 4C model for the business model design framework of CCIP: black solid arrows represent the systematic relation design; blue solid arrows represent the observable activities for value creation; black dotted arrows represent the implied process of value capture 259

List of Tables

Table 3.1 Table 3.2 Table 4.1 Table 6.1 Table 6.2

The information of in-depth interviews on Shenzhen OCT-LOFT55 The information of in-depth interviews on Guangzhou 289 Art Park 56 List of the annual cultural activities in OCT-LOFT 93 Comparison of the two cases 207 Comparison of two case models 259

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CHAPTER 1

Introduction

Cultural-creative industries park (CCIP) is a recently emerging important issue with the rise of cultural-creative industries. Since it’s an integrated issue, connected with many different topics such as industry, policy, city, space, geography, creativity, economy, community and so on, literature discussing on this issue seems extremely diversified. Different disciplines contributed lots of academic literature from different perspectives, with different methodologies. Added with the development of practices in different countries during the past 20 years, there came out many different theoretic concepts and specific experiences. The discursive usage of a series of correlated concepts made the research difficult, and sometimes even impossible. Papers published in the international academic journals have discussed the concepts and cases of culture district, artistic district, cultural street, cultural cluster, creative cluster, creative industry cluster, creative industries park, cultural-creative industries park and so on at the same time. These correlated and different concepts demonstrated the chaos in academic literature at the early stage of creative cluster development. In China, this kind of chaos seemed more obvious. In the first decade when this new phenomenon emerged, from the titles of several main cities’ policy papers, we can clearly find the “anxiety of influence” from the West—“cluster” as a keyword and the diversified or random usage of concepts. For example, the Beijing municipal government published “Administrative Measures for Registration of Cultural and Creative © The Author(s) 2020 V. Yuan Yuan, The Economic Logic of Chinese Cultural-Creative Industries Parks, https://doi.org/10.1007/978-981-15-3540-6_1

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Industries Cluster of Beijing” (2006), Shanghai municipal government published “Administrative Measures for Registration of Creative Industries Cluster of Shanghai” (2008) and Hangzhou municipal government published “Administrative Measures for Registration of Cultural and Creative Industries Base of Hangzhou” (2007). Almost at the same stage, the three cities respectively used three different notions—“cultural and creative industries cluster”, “creative industries cluster” and “cultural and creative industries base”—in their policy papers to name the similar new phenomenon. However, with the development of practices and studies, not only the academics but also the policy-makers found it more and more necessary to give a clear definition and comparatively unified academic or official name to describe the main trend of Chinese-styled creative cluster. Both in the international academic papers and in the Chinese municipal policy papers, there are jumbled concepts to identify some kind of similar phenomenon, which is more and more beyond the automatic clustering of creators in space and is more and more becoming a policy tool of the local government to push the development of regional economy and city (Mommaas, 2004; Westrick & Rehfeld, 2003). Confronted with this challenge, Mommaas (2009) once pointed out that the concept of cultural cluster is too narrow, for not taking into account other cultural forms of creativity besides culture, such as the communication technology, science and engineering, research and development, marketing and communication, while the notion of creative cluster is too broad, for not sufficiently differentiating different forms of creativity. Hence, Mommaas made a proposal of using the phrase “cultural-creative” to deal with the dilemma. The proposal of an eclectic notion of “cultural-creative” reflected that the understanding and research of creative clustering are experiencing a process of deepening. In this newly coined phrase, “culture” hinted that the features of cultural-creative clusters should be definitely different from those of the traditional industry clusters. Although industrial agglomeration theory had been used as the theoretic resource to explain the creative cluster from the perspective of economy since the very beginning, the recent development of cultural cluster or creative cluster has brought this issue to diversified cross-disciplinary perspectives. Some research identified cultural-creative cluster as a dynamic network of social interaction (Zarlenga, Ulldemolins, & Morato, 2016); some took it as the policy tool to regenerate the downtown city (Stern & Seifert, 2010); and some concluded it as an innovation-encouraging approach (D’Alise, Giustiniano, & Peruffo, 2014), a long-term

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developing strategy of a city (Florea, 2015) or an urban planning strategy of sustainable district development (Sacco, Blessi, & Nuccio, 2009). All of these researches made great efforts in transcending single economic or industrial perspective. They tried diversified and integrated approaches and made advantage of multiple theoretic resources. In these academic papers, culture, economy, society and urban development have all been connected with each other. As a result, these discourses extended the meaning and function of “culture”. Based on these cross-disciplinary researches, the practice of cultural-creative industries park (CCIP) has also been constantly experiencing a version-changing process. However, it’s the historically developing and self-transcending process of cultural-creative industries park that made the notion or concept of cultural-creative industrial cluster/park a confusing thing. In mainland China, it has been a long time that many cities identify a special district, several neighborhood streets, newly built architectures and the regenerated old factories with the same notion—cultural industrial park or cultural-creative industries cluster. The adverse impact of this notion chaos leads to the constant lack of specific development strategies of an individual cultural-creative industries park. How to design, operate and manage a cultural-creative industries park is a new topic waiting to be proposed. In this research, my basic opinion is that cultural-creative industries park (CCIP) is a brand-new and special issue integrating culture, industries and urban space, which makes it a totally different case from the ordinary or traditional industrial parks. The traditional industrial parks are normally located at the outskirts of the city and related to a specific industry, with clear cooperation or co-creation along the industrial chain. In economics history, there are a series of theories to account this phenomenon, such as industrial agglomeration theory, external economies, scale economies, urbanization economies, the new industrial districts theory, industrial clusters and diamond model theory. But as a lot of scholars emphasized, cultural-creative industries park has their particularities. First of all, there are a lot of actually different industries under the umbrella of “cultural-creative industries”, and in different countries there are different classifications and definitions. Secondly, since most of CCIPs are regenerated from abandoned or old factories of industrial era, the location of CCIPs is usually in the downtown districts of the cities which have entered into post-industrial stage. Thirdly, as to the business model, the pure rent model has a paradox at two levels: in the first level, it either leads the CCIP

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finally to a sheer commercial place, which deviates from its original policy goals, or unavoidably goes to an upper limit of income, which falls short of its economic target; in the second level, for the small and medium enterprises, especially in creative industries, the rental cost they can bear has a ceiling, but the golden zones of the post-industrial city where CCIPs usually located will logically ask for higher economic value creation. This paradox which is ubiquitous in creative industries was given a metaphor by scholars as the paradox of “diamond and water”, which means the use value of culture is just like the air and water that human being’s living or existence is accounting for, but the exchange value of it is as rare as diamond that is precious and irreproducible. In that sense, it’s impossible to use the traditional economic theory to account for cultural economy and to use the traditional industrial agglomeration theory to explain the cultural-creative industrial cluster. What makes the issue more complex is that the phenomena of cultural-creative industrial cluster have been in a change process, for example, it developed from the accidentally original bottom-up model to the prevalent top-­ down model, and it had many different notions and concepts in different countries based on different political and economic context. In present mainland China, the national and local government consciously took advantage of CCIPs to accelerate the urban regeneration or push the village development. Hence there emerge a series of new notions, new trends and new practices, which urgently call for corresponding new theories or studies to generalize or support them. Because the development of CCIP is involved with the land policy, industrial policy and cultural policy, it has distinct differentiations among regions. This study wouldn’t discuss the status of its development across the world, but will take it into the specific political and economic context of mainland China and examine the sustainable developing strategy of a single CCIP from the perspective of operation and management. Its goal is to find out if there is any sustainable business model or business model design framework which could give inspirations or references to CCIP managers and meanwhile help the government to make more moderate policies to really support CCIPs, then realize its policy target. Considering that most of the existing researches focused on the policy, or the urban space transformation, or the development condition of cultural-­creative industries, this study will fill the theoretic gap on this issue with its concern mainly on the business model of a specific CCIP and will provide a guiding framework of designing a proper business model of

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CCIP for its manager or investor on the practical level in specific conditions or contexts. Below are the book’s main ideas and the structure of the research. In order to give a theoretic definition of CCIP of mainland China based on the comparison and contrast with other notions of different countries or different developing stages, Chap. 2 contributes an elaborate literature review on this issue. It discussed the evolution of some correlated concepts, such as “culture industry”, “culture industries”, “creative industries” and “cultural-creative industries”. Then it differentiated some very close notions among “culture district”, “cultural industries district”, “creative cluster”, “cultural-creative park” and “cultural-creative industries park”. With the review of all these concepts as the background, this study picked “cultural-creative industries park” as the convergent notion for the consideration that this notion embodied the integration of culture (with the term “cultural-creative”), economy (with the term “industries”) and bounded urban space (with the term “park”). Actually, we can find the notion echo in cultural policy—since 2010, after the first decade of creative cluster phenomenon becoming a hot topic in creative communities, researchers and governments of different cities of mainland China have gradually changed their former concept terminologies and gradually tended to use “cultural-creative industries park” in their policy papers, such as Hangzhou (2010), Shenzhen (2013), Shanghai (2014) and Beijing (2017). Based on the literature review of notions and the academic papers on CCIP and the definitions of business model, Chap. 2 pointed out that the perspective of management on this topic is extremely weak and scarce, but it’s exactly what this study tries to contribute. Chapter 3 illustrated the methodology of this research, which contains the features of the research fields, how to collect field data, how to do qualitative interviews, how to analyze the content of the interview with its scripts and what are the analysis methods of this qualitative research. The reason why this research took the methodology of multiple case studies is that the objectives of this research are to challenge the existing research perspectives on CCIP and try to propose a brand-new theoretic perspective and theory framework. And the advantage of qualitative research is exactly to propose new theoretic constructions. As to the choice of the CCIP cases for the study, there are some common standards: firstly, it was a top-down developed CCIP, which means the manager has to consider the business model from the very beginning; secondly, it was regenerated from the old or abandoned factory, which is defined in the study as the

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“classic CCIP”; thirdly, there are cases from the recognized post-industrial cities and the first-tier cities of mainland China—Shenzhen and Guangzhou; and fourthly, they are developed in a sustainable way, either sustainable vertically, which means it has been prosperous for at least a decade, or sustainable horizontally, which presents its reproductive power in a very short time and shaped a CCIP brand—developing different CCIPs in different cities with the same brand. Specifically speaking, the Shenzhen case is OCT-LOFT,1 while the Guangzhou case is 289 Art Park. The OCT-LOFT is one of the first well-­ known top-down designed CCIPs in mainland China. And since 2006, it has been the National Model CCIP named by the National Ministry of Culture. With more than a decade past, it had become more and more prosperous. Not only it enlarged its areas from the original South District to North District, and then to C District, but also it enjoyed a great fame across the country, which attracted famous galleries2 from 798 Art Park or other creative institutes from Beijing or Guangzhou to open its southern branch galleries or offices here. If we see OCT-LOFT as a case of sustainable development in a long time, then the 289 Art Park of Guangzhou is a case of another style of sustainable development. Although 289 Art Park was opened in 2016, which is very late compared with OCT-LOFT that opened in 2006, it successfully reproduced the 289 CCIP brand with another two CCIP projects, respectively, in Shenzhen and Foshan in 2017 as what the developer and manager expected when they were designing the 289 CCIP business model for Guangzhou 289 Art Park. This kind of taking advantage of CCIP brand value and swiftly realizing the CCIP reproduction in different cities is a very innovative case across the world. And what makes it more interesting is that the 289 CCIP brand is held by a public-private joint enterprise. In this case, we can find many innovation efforts of business model in creative industries. Some of the efforts realized its objectives while others not, which pushed the managers to adjust the model along the way of persistent exploration. This case vividly presents the complexities and dynamism of CCIP development in mainland China. Certainly, besides the two cases chosen in this study, there are still many other models of CCIP development—especially in Shanghai, the city with 1  Overseas Chinese Town (OCT) is a central state-owned enterprise having its headquarter in Shenzhen. The CCIP it created is named OCT-LOFT. 2  Such as the Bridge Gallery (桥舍画廊) and Hive Centre for Contemporary Art (蜂巢 当代艺术中心).

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the biggest amount of old factories in China, most of which were established since the early age of Chinese industrialization stage in the last century, hence having the largest amount of CCIPs in China. There are also many prominent CCIP brands in Shanghai, such as Dobe (德必), M50, Bridge No. 8 and so on. But according to field studies, interviews and their manager’s presentations at symposiums, we found that among all of these famous CCIP brands, until now, their incomes from rent still amount up to 90%. So from the perspective of business model, Shanghai and Beijing’s cases haven’t contributed enough new experience that could transcend the two cases from Shenzhen and Guangzhou. And the two cases have either vertically or horizontally representative meaning in sustainable development styles. If this qualitative study finds out a strategy framework for designing a CCIP business model based on the two case studies, then it would be beneficial for all the managers of CCIPs in the practical work. Chapter 4 enters the first case study, exploring the business model of OCT-LOFT. OCT Group, as a central state-owned enterprise, took out part of their self-owned old factories to develop a CCIP, called OCT-­ LOFT.  What is the secret that this CCIP keep on flourishing for over ten years? As the first and maybe the most renowned CCIP of Shenzhen, what is the inner connections among the city, the OCT Group and OCT-­ LOFT? Recently, this CCIP has been a very hot research object for international scholars, and there are several academic papers published in academic journals (O’Connor & Liu, 2014; Sonn, Chen, Wang, & Liu, 2017), which made OCT-LOFT a model and star CCIP of China. But these scholars are mainly foreigners, limited by their field study time and living experience in Shenzhen, and their research perspectives are not from the management. This chapter’s case study is based on the data from the researcher’s ten years’ living experience, intensive field studies and in-depth qualitative interviews with key managers and some entrepreneurs working in it and is analyzed from the perspective of business model and creative management, which would make the case study literature on OCT-LOFT more diversified for the future researchers and more inspiring for CCIP managers. Chapter 5 enters the second case study. It explored how a private “space operation” enterprise—No. 1 Business Holdings—cooperated with a provincial state-owned enterprise, South Media Group which is a media magnate of South China, to successfully develop and manage Guangzhou 289 Art Park, which helped the No. 1 Business Holdings finish its strategic transition and become a well-known “Urban Cultural Space Professional

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Operator”. Under the success of the business model concept of “reproducible” CCIP, they received quite a few invitations from local governments or other state-owned enterprises to “reproduce” the 289 CCIP brand model all over the country. This chapter elaborates the developing process of 289 Art Park and analyzes this new kind of CCIP business model based on in-depth qualitative interviews and field studies. Chapter 6 is the very key chapter of this research. It generalized two kinds of CCIP business models through the comparison of the two cases. One is “cultural highland model” represented by OCT-LOFT, while the other is “modular system model” represented by 289 Art Park. And then by comparison of the similarities of the two cases and with the examination of the four constructs in business model definition given in Chap. 2 through literature review, the chapter proposed a 4C model (context, culture, community, correlation) for CCIP business model design, which would be very useful for practitioners in CCIP development and management. Chapter 7 will go back to the literature of CCIP research and conclude the research and practical implications of this study. And finally, the concluding part of this chapter will point out the limitation of this research and give some suggestions on future research directions.

References English References D’Alise, C., Giustiniano, L., & Peruffo. E. (2014). Innovating through clusters. International Journal of Engineering Business Management, Special Issue: Innovations in Pharmaceutical Industry, 1–14. Florea, C. A. (2015). Clusters—A strategy for long run development. Eurasian Journal of Social Sciences, 3(1), 20–24. Mommaas, H. (2004). Cultural clusters and the post-industrial city. Urban Studies, 41(3), 507–532. Mommaas, H. (2009). Spaces of culture and economy: Mapping the cultural-­ creative cluster landscape. In L. Kong & J. O’Connor (Eds.), Creative economies, creative cities: An Asia Europe perspective (pp. 45–60). The Netherlands: Spring Press. O’Connor, J., & Liu, L. (2014). Shenzhen’s OCT-LOFT: Creative space in the City of Design. City, Culture and Society, 5, 131–138.

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Sacco, P. L., Blessi, G. T., & Nuccio, M. (2009). Cultural policies and local planning strategies: What is the role of culture in local sustainable development? The Journal of Arts Management, Law and Society, 39(1), 45–63. Sonn, J. W., Chen, K. W., Wang, H., & Liu, X. (2017). A top-down creation of a cultural cluster for urban regeneration: The case of OCT Loft, Shenzhen. Land Use Policy, 69, 307–316. Stern, M. J., & Seifert, S. C. (2010). Cultural clusters: The implications of cultural assets agglomeration for neighborhood revitalization. Journal of Planning Education and Research, 29(3), 262–279. Westrick, D. G., & Rehfeld, D. (2003). Clusters and cluster policies in regions of structural change-comparing three regions in North Rhine Westphalia. Paper presented at the International Conference of the Regional Studies Association, Pisa, Italy. Zarlenga, M. I., Ulldemolins, J. R., & Morato, A. R. (2016). Cultural clusters and social interaction dynamics: The case of Barcelona. European Urban and Regional Studies, 23(3), 422–440.

CHAPTER 2

Correlated Concepts and Theory Developments

2.1   Cultural, Creative or Cultural-Creative Industries? A Historic Perspective As I mentioned in the previous chapter, in terms of practical and pragmatic level, the three words “cultural”, “creative” and “cultural-creative” industries have been used in an extremely intertwined way under different contexts for a long term, which makes an easy misunderstanding for normal people that the three terms can be used equally. In mainland China, the term “cultural industries” has been used on the national official papers or cultural policies since the very beginning and up until now. But in several cosmopolitan cities, such as Beijing, Shanghai and Shenzhen, the city cultural policies demonstrated a changing attributes in the choice of terms, which witnessed the usage of “cultural-creative industries” taking place over the old-fashioned “cultural industries”. In my view, the differentiations of term reflected the concept and mindset evolution in historical development and also implied the uneven regional development from the perspective of political economies. 2.1.1  Cultural Industry and Cultural Industries In Chinese characters, the “cultural industry” and “cultural industries” share the same character shape. But in the development history of concepts, the two terms have very huge distinctions in their academic

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implications. There is a basic consensus within present academia that “cultural industry” used as a specific term should be traced back to the well-­ known classic work Dialectic of Enlightenment written by Horkheimer and Adorno, the two renowned representatives of the Frankfurt School, a very influential Marxism critical theory school. In this critical work, they named a chapter with “cultural industry”, where this concept was firstly and formally proposed. However, as Hesmondhalgh (2002) points out, the singular form “cultural industry” in the sense of Horkheimer and Adorno is totally different from the plural form “cultural industries” as we latterly used. The singular form cultural industry is a critical concept proposed by the Frankfurt School to criticize the more and more commercialized culture in the United States in the 1940s. Culture commercialization means that culture or culture products were created according to the demand of the popular markets, thus losing its original independent value and transcendence implication. However, this singular-formed and critical notion hasn’t been used too long. With more and more specific case study, many scholars found the restriction of this notion. Some French socialists and policy-makers started to explore the definite meaning and the complication of industrialized “culture” from the perspective of realistic observations. Based on their researches, the plural form notion “cultural industries” began to be used to refer to a series of industries, incorporating publishing, film, TV and recording and so on, which all have been existed for a long time since the modernization stage started. From the singular cultural industry to the plural cultural industries in the notion propositions, there implied a very significant turning point. Especially in the German and French social study circle which usually has very strong critical thinking tradition, this evolving and developing notion finally improved the legitimacy of “the Industrialization of Culture” in its realistic development. Among these scholars, the most representative and influential one is the renowned French socialist Bernard Miège, who thought that the critique of Horkheimer and Adorno on the cultural industry was a sort of cultural nostalgia lingering on the premodern stage. Another important German socialist Walter Benjamin, who was a good friend of Horkheimer and Adorno, also took the view that it was not wrong that the new technology and industrialization encouraged the commercialization of culture, but at the same time the culture had a better tool to get broader communication and swifter innovation, which should be seen as a great social progress with no doubt. Accordingly, there was a

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danger of simplifying the problem if we criticize the cultural industry from a totally negative perspective. The phenomenon of commercialization and industrialization of culture surely deserved more concern with its negative influence, but its large-scaled emergence in modern societies also has its positive meaning and liberal implication. Both Miège and Benjamin opposed to the pessimistic view from Horkheimer and Adorno on cultural industry, but they didn’t take the extremely optimistic attitude. In their arguments, the industrialization and commercialization of culture was a very complicated evolving process, which is full of contradictions and controversies. So it’s quite necessary to do specific analysis and detailed industries research, which is exactly the theory background and academic context of the development of cultural industries and culture economy as independent and cross-disciplinary fields in recent years. Compared with the critical thinking tendency of French and German scholars, Australian scholar’s research took a more pragmatic strategy. David Throsby’s classic work Economics and Culture was published in 2001, one year earlier than David Hesmondhalgh’s representative work The Cultural Industries. Opposite with the European scholars’ discussion approach from culture study to cultural industries, Throsby, as an economist, focused his research on the descending process of culture from metaphysics to economy and how the economic value of culture was intentionally explored and developed as a sector of economy in the past ten years before his book was published. By taking advantage of value theory, Throsby put “culture”, this very controversial and ambiguous word, into the economic context to do specific research, which was very different from the metaphysical perspective developed by Horkheimer and Adorno. With the common notion of “value”, the “foundation stone connecting economics and culture”, Throsby successfully redefined “culture” in contemporary context. In Throsby’s sense, culture had experienced a process of capitalization as “nature” had experienced in the new stage of capitalism development, and thus it has dual values known as cultural value and economic value. Due to closely focusing on the notion of “value” and taking value theory as the bridge between culture and economy, Throsby’s definition of cultural industries was specifically related with intellectual property, which allows the cultural products both having “economic value” and symbolic meaning which gives the cultural products “cultural value”. Therefore, Throsby constructed the well-known “concentric circle model” (Throsby, 2001) to classify the different cultural industries for policy-­ makers to stimulate the industries’ developments by different correlated

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policies. In this model, the core circle contains those industries with the highest symbolic value by given standards, and from this core circle to outside circles, the cultural implication of products of corresponding cultural industries is lessening circle by circle, while their commercial value is ascending with the circle diffusion. As a result of the emphasis on symbolic value of cultural industries and relating the creation and production of symbolic meaning to creativity, Throsby’s concept of “cultural industries” is similar to the “creative industries” proposed by the English central government in 1997. 2.1.2  Creative Industries Throsby’s “concentric circle model” met challenge later, which was based on the different understanding between “creative industries” and “cultural industries”. The term “creative industries” has very clear origin. It was proposed by the New Labour Party after Tony Blair was elected as the prime minister of the Great Britain in 1997. So quite distinct from other concepts, “creative industries” was first articulated by policy-maker in policy discourse, rather than by scholars in academic literature. The rooted reason came from the new strategy planning of the New Labor to boost the economy of Britain. Correspondingly, they reconstructed the National Heritage Department into the Department for Digital, Culture, Media and Sport (DCMS) as an approach of “rebranding” Britain and rethought the other value (e.g., economic value) of artistic department beyond the cultural value which traditionally asks for public subsidy. According to a report of DCMS in 1998, the GDP of creative industries accounted for 5% of the whole national GDP in 1997 and the creative industries were one of the fastest-growing economic segments in contemporary Britain. Therefore, when the New Labor put forward the concept of “creative industries”, there were very specific context, economic value-producing motivation, systematic institutional adjustment, concept definition and classified segments. First, the reason why the “creative industries” concept originated in 1997 could be simply seen a strategy designed by the Labor Party to win the election. At that time the United Kingdom was enduring high layoff rate, economic boost failure and glory-losing as an old capitalist country, which practically backed the new approach and made the idea necessary and feasible.

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Second, the cultural assets that accumulated in the Empire period of the United Kingdom has been consuming a huge amount of fiscal allotment every year in the name of art, but cannot generate corresponding economic value. How to creatively take advantage of these cultural and artistic assets to produce more economic value and improve the employment rate was the main purpose of the “creative industries” policy. Third, to facilitate the development of creative industries, the Department for Digital, Culture, Media and Sport was established, and the think tank—“Creative Industries Task Force”—was specially organized as an auxiliary institute to do professional research and provide policy advice. All of those presented the Labor government’s efforts on shaping the new concept of “creative industries”. And the replacement of “cultural industries” in existent academia with “creative industries” in new policy discourse implied that the concept upgrading was intentionally given by the government leaders. On the one hand, it could avoid the ambiguity of historic disputes; on the other hand, the new concept expanded the new economy boundary with “creative industries” compared with “cultural industries”. As a positive response to the new development demand of the era, the Blair government defined “creative industries” as engaged in “those activities which have their origin in individual creativity, skill and talent and which have potential for wealth and job creation through the generation and exploitation of intellectual property” (DCMS, 1998), which specifically contains 13 sectors: advertising, architecture, arts and antique, craftsmanship, design, fashion, film and video, electronic game, music, performing arts, publishing, software and computer service, TV and radio. Almost ten years later, UNESCO (2009) and UNCTAD (2010) gave their own definition or understanding of creative industries. But it was on the basis of the British pioneering definition that creative industries have been included into the national economic statistic framework as an independent segment. On the opposite of “cultural industries” as the pure academic discussion and generalization, the “creative industries” was more pragmatic and started its concept identity from policy discourse, then directly influenced the reality and became a part of economic statistics. With the drive power from the Britain national government and many stimulating policies, creative industries had been witnessed prompt development. Not only their GDP surpassed that of financial service segment in Britain, but also they alleviated the problem of youth employment and some social problems. Following the Blair government, across the world

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there emerged a popular trend to improve creative industries development with the policy encouragements and viewed them as a hopeful approach to boost economy of sustainable development. 2.1.3  Cultural-Creative Industries and Others However, the process and pattern of creative industries accepted as an economic segment and developing strategy was revised into different versions according to each country or district’s history, systematic mechanisms and rituals. Especially in Asian countries and districts, “culture” was still given more emphasis on purpose, and hence there came up with a new notion “cultural-creative industries”. We can find that Taiwan was the first Asian district which employed the notion “cultural-creative industries” in their official papers. In May 2002, Taiwan government initiated Challenge 2008: The Significant Plans of National Development, in which “The Plan of Developing Cultural-­ Creative Industries” was included as a sub-plan. This was the first time the concept of “cultural-creative industries” was officially stated by an important political paper. And then in 2010, the government launched “Cultural-Creative industries” Development Act, which kept the usage of the notion “cultural-creative industries”. On the opposite of the concept consistency of Taiwan, Hong Kong government’s attitude seemed a little bit ambiguous and changeable on the notion adoption. In a meeting of the Hong Kong Arts Development Council in 1999, the idea of developing “creative industries” was put forward for the first time. And then, the two crucial and official papers The Creative Industries of Hong Kong, released by the Hong Kong Trade Development Council in 2002, and The Baseline Research of Hong Kong Creative Industries, finished in 2003 by the cultural policy research center of Hong Kong University under the commission from Hong Kong central government, evidenced the consistent employment of “creative industries” as the echo of British ritual, which implied the traditionally close relationship between Hong Kong and the United Kingdom before 1997. But the situation changed in 2005, when the chief executive of Hong Kong Special Administrative Region Mr. Dong Jianhua began to use “cultural and creative industries” in his policy address. After that, whether in the official paper or in formal contexts, the term “cultural and creative industries” had been persistently used. For example, on the website of the HK government statistic department, a related article was named with “Hong Kong Cultural

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and Creative Industries”. And also, this new concept was used in a big official expo supported by the Hong Kong government and the Beijing central government since 2013, which was called “Hong Kong International Cultural and Creative Industries Expo”. These subtle adjustments in the literature of the official paper and large-scaled event exposed the ambiguous attitude of Hong Kong government in the development of creative industries. As we all know, the core of Hong Kong economy has been financial service and trade, which helped shaping a kind of pragmatic ideology unconsciously. Added by its comparatively non-displaceable economic status as a significant bridge between mainland China and the world, which would ensure its sustainable prosperity and competitive advantage among world cities, Hong Kong seemed not to account much on the development of creative industries to stimulate its economic vitality as urgent as other postindustrial cities which suffered a lot from the move-out of manufacturing industry. That’s why there hadn’t been any long-term and holistic strategic development plans or policies proposed by the government for the creative industries promotion. Although it was as early as in 1999 that the Art Development Bureau suggested to initiate the “creative Industries” development, it was not until in 2009 that the Creative Hong Kong Office which is specifically responsible for the development of creative industries had been established under the Commerce and Economic Development Bureau. Even since then, various stimulus plans have been mostly in the form of project funding. There is no holistic cultural policy or officially enacted law coming out later. The government added the word “cultural” before the formerly used “creative industries”, which could be understood as the governor’s thought that the GDP of creative industries was too small compared with other main industries in Hong Kong, like service industry or trades; so the so-called creative industries were more related with the culture development; or maybe the change of the official term from “creative industries” to “cultural and creative industries” was from the mindset of keeping pace with the central government’s policy which used the term “cultural industries”. However, no matter which logic is closer to the reality, it could reflect that the position of creative industries is a little bit awkward in Hong Kong. On the total opposite with Hong Kong, the central government of China has been using the classic discourse of “cultural industries” coming from the French theory literature since the very beginning, which embodied the acceptance of the phenomenon of culture economy generalized by a nation with the similar tradition of centrally governed culture. In 2009, the central government issued the Plan on Reinvigoration of Culture

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Industries, becoming the first authorized announcement on the importance and development strategy of cultural industries from the national level. With the term “cultural industries” used in the title of this document, we can understand that at the very beginning the Chinese central government tended to develop the industrialization and economization of culture according to the traditional definition in a French way more than in a British way which already created a new term “creative industries” in 1997. But on the civil government level, things seemed slightly different, especially in those first-tier cities of China with developed economies, such as Shanghai, Shenzhen, Hangzhou and so on. As the cultural industries in these cities have significant influence on the vitality of production and consumption and contributed a visible amount of GDP, even gradually demonstrated the tendency of integrated development with other industries, so in their issued cultural policies, there emerged evident term change from “cultural industries” to “cultural-­creative industries”. For example, the Beijing civil government issued Measures for the Identification and Management of Beijing Cultural and Creative Industries Clusters (Trial) in 2006; the Hangzhou civil government issued Measures for the Identification and Management of Hangzhou Cultural and Creative Industries Base (Trial) in 2007; and the Shenzhen civil government issued Plan on Reinvigoration of Cultural and Creative Industries of Shenzhen (2011–2015) in 2011. Moreover, among those developed cities, the Shanghai civil government went farther away with the term “creative industries” in the document Measures for the Identification and Management of Shanghai Creative Industries Clusters (Trial) in 2008. And what’s necessary to be noticed is that in the documents Outline of Shenzhen Cultural Industry Development Plan (2007–2020) issued in 2008 and Regulations on the Promotion of Shenzhen Cultural Industries issued in 2009, the term “cultural industries” was used consistently, which revealed that the change of the term used in later (2011) policy paper was a consciously deepening process in concept understanding. In fact, with the national promotion in innovation and entrepreneurship, millions of small and micro enterprises in high-tech or digital industry experienced swift development with the indirect encouragement and support from BAT.1 The trend of integration between culture and technology has become more and more clear; hence some new terms started 1  B is for Baidu, A for Alibaba and T for Tencent, all of which are Internet giant company in China.

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to appear in several important national strategic planning documents, such as “digital content industry”, “digital creative industry” and so on. Specifically speaking, in the Plan on the Development of National Strategic Emerging Industries during the 13th Five-Year issued in 2016, there were five industries named “emerging industries”, including information technology, high-end manufacturing, biology, green low carbon and digital creativity. In the plan, it proposed to facilitate the development of cultural creativity and creative design industries and to promote the deep integration of culture and technology and the mutual permeation and by 2020, the developing structure in digital creative industries would have been formed with culture as the guide, technology as the advantage, and not only the industry chain has been established entirely but also the related industries scale will amount to 8 trillion RMB.

From this recently issued official plan, we could see that the central government of China put the significance of cultural industries into a forward step with the industries integration strategy based on the original national strategy, which embodied the dynamism of concept and policy development on the national level. Certainly, there are still other understandings and discourses related with “creative industries” such as “cultural content industries” in Korea and Japan and “copyright industries” in the United States. But with the frequency of international academic exchange and the renewal of different countries’ policies, more and more countries or districts would more likely use the term “creative industries” or “cultural and creative industries” to synchronize the research target and academic discussion. The above was a particularly detailed understanding of the concepts development among different, especially, Asian countries or districts and demonstrated the extensive contexts behind the terms “cultural industries”, “creative industries” and “cultural and creative industries”. This discussion is important because what’s behind the term change in the policy documents is how the policy-makers or the governors understand the sectors of creative industries and how they value the emerging industries and is about the depth and significance of creative industries development in these countries or districts. Considering the influence from the West, the policy documents of some Asian districts, like Hong Kong and Singapore, on the one hand, followed Britain at the very beginning with the term used as “creative industries”, while on the other hand experienced consistent revision and adjustment according to their own traditions and

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development contexts based on respective history, politics, economy and cultural traditions. Actually, as what we analyzed above, some new terms gradually grew up in Asian countries and districts and step by step shaped as a common view, which made the whole map of creative industries development around the world more colorful and diversified. And this research will use the term “cultural-creative industries” to reflect the adjusted acceptance of the influence of British “creative industries” and to emphasize the unique development approaches of Asian countries.

2.2   “Cultural District”, “Cultural Industries District”, “Cluster” and “Park” The second section of this chapter will focus on the creative space for industries development. How do different countries and districts take advantage of special geographic space to develop cultural and creative industries? Or what’s the relationship between the development of cultural and creative industries and the urban space. 2.2.1  From “Cultural District” to “Cultural Industries Quarter” Although most academic literature about cultural-creative industries park (CCIP) have traced the theoretical origin to the cluster theory in industrial economics, more and more scholars admitted that the creative cluster has its own rules and distinctions. So Hans Mommaas, a Netherlands scholar, proposed another approach in tracing the theory developing history from an urban geography perspective to understand the creative cluster strategy. In his view, the agglomeration of cultural enterprises and cultural community in specific urban space can be traced back to the construction of cultural, art and entertainment district. And the rooted reason of these phenomena came from the cultural-led regeneration of city (Hannigan, 1998; Wynne, 1989). One of the most renowned cases is the art-led regeneration of South of Houston (SoHo) District in New York. Salon Zukin, the famous geographer from New York University, has contributed a lot of significant research and literature on this case (Zukin, 1989). On the practice level, there were thousands of urban planning or urban regeneration cases around the world followed the model of SoHo. In this model, artists and creative workers rented the abandoned factories or

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old buildings in the inner city at a very low price. Then with their personal artistic reconstruction, decoration or interior design, this original shabby environment magically changed into a place with Bohemian taste and post-industrial aesthetic charm, which unprecedentedly attracted a horde of new middle-­class people or families to buy properties around the area and settle there. On the one hand, the middle class made the place more diversified in demography and then brought the dynamic of community vitality and the economic vitality, while on the other hand, the highincome class’s entering led to the rise of rent, which consequently forced some low-income artists or creative workers to leave this district for the no longer affordable rent. And frequently, what made things worse is the developer’s violence in breaking the creative ecology by purchasing the property from the original owner and then developing it into a totally new and expensive one. This model had been automatically repeated all around the world and been criticized by scholars as “gentrification”, in which they thought the developers take the benefit while the artists are exploited and the creative energy are actually destroyed with the leave of the usually poor but talented creative communities. With all these failures in sustainable creativity and the sharp critics, although in 1980s the culture and art had still been taken advantage of by the developers and policy-makers as an obviously popular stimulus, the specific operation approach had become more complicated and diversified, in which the “mixed use” was more and more like a main stream. Culture and art had been interwoven into a more extensive, multifunctional and Publicprivate partnership (PPP) regeneration model. Multifunctional spaces of culture, business, housing and retail had been designed and constructed into a super huge complex, which has established a new model for urban regeneration. However, as some scholars argued, behind this model still is the speculative motivation of developers. For example, Hannigan (1998) pointed out the element of culture in these cases was mainly viewed as the tool of attracting financial investment from the government to lessen the investment cost and risk of the developer and strengthening the magnetism of the inner city to finally attract the new middle class back to the downtown from the suburbs property. So critics tend to generalize that the rooted target of this model of cultural-led regeneration is to develop cultural consumption. Then the creativity and display space, music studio, theater, cultural events and festival, fancy bar and restaurant, designer brands and shops, and artistic hotel could be found scattered around this district to add the place attraction. The most well-known cases included the

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Temple Bar District of Dublin and the urban regeneration of the art district of Glasgow and the Barcelona downtown regeneration, and so on. Another trend on the applied level that paralleled the instrumentalization of culture was redefining culture as a new source of innovative economy and promoting the economic value of culture by the government. In order to encourage the creative industries, the policy-makers thought the cluster theory of traditional manufactory industry can be similarly applied to the new defined creative industries. In fact, before the proposal of creative industries concept by the Blair government, the thoughts of commercialization of culture had been tested and practiced by the Thatcher government. The Department of Cultural Industries had been set up in the Greater London Enterprise Board (Bianchini, 1989). The difference was that the concept of “cultural industries” had been used to encourage the development of traditional cultural enterprises with the methods of business management, including marketing, management and the consultation on new technology. The classical cases in this model contained the Sheffield Cultural Industries Quarter, Manchester Northern Quarter and the cultural regenerated North Rhine in Germany, and so on. These several places had been the central district in industrial era, full of abandoned factories and suffering a lot because of the declined economy. Hence, the economization of culture was seen as a very important part of economic recovery policy at those places. For example, in the case of Sheffield Cultural Industries Quarters, there emerged a music studio called the Red Tape Studio. The studio rented an old factory there as an accidental experiment and then the government planned the whole quarter as cultural industries quarter, shifting the land function from industrial land to commercial land and renting the cultural enterprises to promote their developments. After 1990s, this quarter had really transferred into a mature cultural cluster with some extent of scale, covering affluent varieties of businesses from cultural studio to cultural economy training, from cinema production to live house, display spaces, night clubs and bars. 2.2.2  The Concepts of “Cluster” and “Park” The concept of cluster was first applied in the field of industrial economics and could be traced back to the “external economic theory” proposed by an England classical economist Marshall in the nineteenth century. The basic idea of this theory was that the enterprises could benefit from the

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mutual proximity in space, which made the scale economy possible, and then the cost of production and distribution could be reduced to almost the minimal. The cluster theory had been developed and deepened in the twentieth century (will be discussed in the next section of this chapter), but generally speaking, the original object of this theory was for the development of enterprises in the same industrial sector. Therefore, it’s a classical economic concept. Since the economization or commercialization of culture had been converged from different directions and levels, either from the perspective of urban regeneration or from the perspective of regional economic development, the role of culture was transferred from some sort of indirect “tool” of developing property to a redefinition of economic value called for the necessities of systematic strategies both from the theoretical level and the applied level. Although the booming of cultural economy finally depends on millions of cultural enterprises full of vitality, the government still could play some kind of role in the sense of “external economic theory”. As the core concept of external economic theory, the cluster theory provided the enterprises some inspiration on exploring innovative approach from the outside, which means consciously taking advantage of the geographic proximity with other enterprises in the same industrial chain to benefit from the external economies of scale. Therefore, the possibility of applying cluster theory to cultural-creative industries relied on the redefinition of culture as a source of new economy or even directly, a new economic sector, which made the logic of “cultural cluster” or “cultural industries cluster” seem sound. And the success of this redefinition of culture came from two forces, one of which is from the Blair government’s promotion of the concept of “creative industries” several years before the new millennium and the other is from a series of academic publishing and literature emerged in the first several years of the twenty-first century, such as Creative Cities (Landry, 2000), Creative Economy (Howkins, 2001), The Rise of the Creative Class (Florida, 2002) and so on. With these two significantly influential forces from politicians and academia, the ideology of “creativity” had been pushed to the cutting edge of economic, social and cultural trends and become an important intersection point of urban development, economic growth, regional competition and community identity. In the dual processes of theory application borrowing from industrial economics and the theoretical evolvement from cultural industries to creative industries, the sub-concept of “cultural/creative cluster” was created under such logic and gradually

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replaced the formal concept of “cultural district/cultural industries quarter” in new historic and global context. From the retrospection of the origin and development of concepts, we could found that the combination of “cluster” theory and creative industries became a strengthened dividing mark between “cultural industries” and “creative industries”. Hence, we have the old-fashioned concept and practice of “cultural district” and a new term and research issue of “creative cluster”. The concept of “cluster” is closely connected with industrial economics, and the shaping and development of “creative cluster” concept has been deeply rooted in the context of European culture, economics and urban development and presented a clear theory evolvement map with rich implications. Comparatively, “park” is a special concept more likely used in Asia. Either traditional industrial park or high-tech industrial park, or the cultural-­creative industries park emerged in the new millennium, Asian countries or districts, especially China, are inclined to use the term “park”, because there are very specific differentiations between “park” and “cluster”. In Chinese, “park” means the space has distinct boundaries and been planned and designed in a top-down style by the government or some companies or institutes, while “cluster” is more like a phenomenon arising spontaneously in a bottom-up way and usually has no fixed geographic limits. In Taiwan, mainland China and Japan, “park” is more popular. But in Hong Kong or Singapore which has special colonial history and relationship with England, they are more ambivalent. Normally, in the name of some kind of creative agglomeration, they tend to directly use the place name in English, such as Telok Kurau in Singapore and PMQ in Hong Kong. And in the academic literature or official documents, “cluster” is the term they frequently apply. The different usage contexts of “park” and “cluster” in Asia embodied the revision of Western concepts in practice. And more importantly, it reveals a very special developing approach different from cluster rule or cluster theory in Asian specific policy context and political-economy environment, which is exactly the issue that will be discussed and examined in this research.

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2.3   Several Primary Research Perspectives on Creative Cluster or CCIP 2.3.1  Cultural Economic Geography Perspective Before the concept of “creative industries” proposed by the British Labour Party government in 1997, there was another economic research branch exploring the economic value of culture called culture economics, whose initiator was normally referred to an American economist William J. Baumol with his renowned “cost disease” theory published in 1966. In addition to economists, scholars from other disciplinary background developed culture economics in a cross-disciplinary way. Among them, the American geographer Allen J. Scott from UCLA was a very distinguished one. His influential work The Cultural Economy of Cities (2000) made a good example on how to think with the integration of place, culture and economy, which discovered the economic logic and economic structure of modern cultural industries and explained the tight relationship between cultural production and industrial cluster in cities. For Scott, it is extremely necessary to find out the space logic of cultural economic production to understand the rule of cultural economy. So he did a lot of case studies from different cities all around the world to explore the reasons why these cultural economic clusters could be shaped in the specific places and what were the special organizational forms of these cultural economic productions. What needs to be mentioned is the primary awareness of Scott’s research question, which focused on why the central place or core cities of modern capitalist have the most developed cultural economics, which means that the geographic cluster in his discussion was taking the city as the research scale. For example, in this book he carefully studied the jewelry industry of Los Angeles and Bangkok, the film industry of Paris, the multimedia industry and the visual industry of South California. Until 2005, Scott had published a research work specifically on the Hollywood cluster of film industry, named On Hollywood: The Place, The Industry. In this book, he concluded five key factors that Hollywood cluster could arise as the global center of audio-visual and media industries: (1) it invented the drama film and film star system; (2) it has the institution of vertically integrating industry chain; (3) it has systematic support from government and intermediary organization; (4) the geographic agglomeration helped the cluster to become the learning district for practical techniques and abilities needed by film industry, hence it has a very

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dynamic and special local labor market; and (5) it has efficient marketing skills and the strategic system for global distribution. The cultural economic geography perspective on creative cluster could easily be attributed to the cluster theory of industrial economics, but it also came from some kind of common emphasis on the face-to-face knowledge communication and interaction to enhance the competition power of enterprises under the present context of knowledge economy. The latter factor actually gradually formed a basic theoretical hypothesis that the geographic agglomeration could add the chances of tacit knowledge diffusion between enterprises. The companies or enterprises which enjoy the space proximity could monitor their competitors, and then by direct observation, they are able to discover or imitate the new technology or products (Malmberg & Maskell, 2002). And beyond the competitive relationship, there are also possibilities of cooperation based on the formal or informal connections among companies and then result in knowledge exchange and creation. The key points rely on the mutual trust, the social capital, the shared views on the problems and targets and the acceptance of common rules or behavior discipline (Camagni, 1991; Putnam, 1993). And Storper (1995) emphasized the importance of informal relationship in a space cluster of innovative industries. The innovative enterprises which depend much on the knowledge innovation will invest a lot in the internal R&D, but at the same time should also be good at taking advantage of the external innovative sources, such as universities or research institutes. Hence, for the knowledge-intensive clusters, those kinds of intellectual institutes are very crucial resource factors. Similarly, the local network is also very pivotal for innovation of enterprises and companies in creating the shared knowledge, information and other resources (Cooke & Morgan, 1998). Therefore, the enterprises in the cluster could receive the “spillover” effect, theoretically, technologically and socially on the basis of frequent interactions among the network (Cooke, 2001). The empirical researches on the creative industries produced in the last decade had an apparent trend in examining the above hypothesis in creative cluster theory. Based on different places and diversified situations, there come out some conclusions supporting the above hypothesis (Etzkowitz, 2014; Fung & Erni, 2013; Krogh & Geilinger, 2014), while some didn’t have evident supports (Bayliss, 2007; Lysgard, 2012; Zheng & Chan, 2014). For this reason, the research from the cultural economic geography seems not able to convincingly explain why the creative clusters emerged

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out so rapidly in a global scale. So we need to notice that there are a lot of scholars having done abundant researches and theoretical development on the phenomena of cultural and creative clusters/parks from the perspective of cultural-led urban regeneration and urban planning. 2.3.2  Urban Regeneration and Urban Planning Perspective The agglomerations of cultural infrastructures, cultural enterprises or cultural communities in some district of cities could happen in two ways: one is the so-called organic or bottom-up way; the other is in a top-down manner, usually planned or led by the local government or some business group. No matter developed in which way, what existed behind this new urban landscape is the not new problem of urban decay and rejuvenation. That’s the academic background where the urban regeneration and urban planning perspective on cultural and creative cluster extended from. Perhaps, the most well-known and classical bottom-up case is the SoHo Art District of New  York. In the 1980s, with the middle-class lifestyle featured by automobile culture and suburb housing, the urban planning of New York also had a tendency to develop the suburb as the housing land. Meanwhile, the accelerating of economic globalization witnessed the shift of manufacturing industries from the Western developed countries to those undeveloped or developing countries and then left quite a lot of abandoned factories in the inner cities of developed countries. These two factors in habitation and industrial production transformations led to the downtown hollowing effect. The dual “moving out” factors made the low rent of central New York possible, especially the obsolete industrial factories with unique internal space structure. Cheaper and affordable rent attracted a lot of artists and creative workers and then gradually the former decaying district formed an artistic and creative community. These artists reconstructed or renovated the space with their creativity and personality, which added some sort of creative milieu or fancy image to the streets or community. Consequently, this new urban landscape attracted more and more young creators, craftsmen and cultural entrepreneurs to start their business or workshops there with comparatively low cost and less pressure. And if considering the rebuilt loft-styled space structure could function as both working and living place, it would be even cheaper. This growing creative community shaped a whole new renting market and business cluster, around which extended many brand chain shops, fancy restaurants, night clubs and other creative spaces or consuming items. With the rise of

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creative economy and knowledge economy, the original discarded factories or hollowed blocks had been transformed into creative spaces by a group of poor or unestablished artists and thus been added with cultural capital in Bourdieu’s sense. More and more young creative middle-class or young elite couples are eager to live there, rather than the suburb house anymore. Finally, the cultural capital of SoHo had the chance to be transformed in economic capital under the operation of smart developers with good investment instinct. But unfortunately, the first group of artists who actually rebuilt the nature of the district had to move out to other abandoned places, as they were not able to afford the soaring rents anymore. This notorious dynamism of urban landscape regeneration had been theorized by scholars as “gentrification”. For the group of artists, creative workers and local habitants, the gentrification phenomenon became a curse or nightmare, which made them the victims of profit-chasing capital. That’s why the top-down cultural district planning later led by governments experienced so many disputes and doubts. For example, the West Kowloon Cultural District of Hong Kong had a long way of 20  years’ discussion and planning since 1999 and only had one building at Xiqu Centre in operation now. Although endangered by the side effect of gentrification, the cluster or agglomeration of artists and cultural community has indirectly promoted the redevelopment of decayed inner cities. In that sense, for the policy-­ makers or private developers, the construction of cultural district is exactly an effective tool for urban regeneration or land developing, which was generalized as a trend of “cultural-led urban regeneration”. That’s why in the international academic literature there are so many researches viewing the cultural district as a space existence or several proximate streets. But gradually the research went deeper into the operational level beyond the superficial space regeneration. Some scholars proposed that the internal relationship in the cultural district should be paid more attention to (Valentino, 2003). And Santagata (2002) defined the cultural district as a network having the feature of geographic agglomeration, where a variety of cultural operators who produce the cultural products exist based on their creativity and intellectual property, and among them have a codependent relationship. But the complexity of the reality makes it hard to differentiate between a top-down and a bottom-up creative cluster. Some scholars argued that cultural district should be seen as a complex urban development style combining the planned or top-down project and the self-organized or

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bottom-up space ecology (Sacco, Blessi, & Nuccio, 2009), while other scholars suggested a clear classification among different natured cultural districts or creative clusters and gave them distinct definitions. For example, Cooke and Lazzeretti (2008) emphasized the necessities of legible distinctions between creative commercial cluster and the agglomeration of cultural facilities; Stern and Seifert (2007) took the view to differentiate the “organic” cultural cluster and the cultural district pushed by the policy; and Santagata (2002) divided the cultural districts into four models: the industrial cultural district, the institutional cultural district, the museum cultural district and the metropolitan cultural district. Generally speaking, the academic literature on the cultural district focused on two issues: one was on the definition and the explanations of the clustering phenomena of cultural industries and cultural events (Cooke & Lazzeretti, 2008; Lazzeretti, Boix, & Capone, 2008; Lorenzini, 2011; Pratt, 2008; Scott, 1997; Santagata, 2002); the other was on the urban planning about how the cultural policy is promoting the cultural cluster and then facilitating the cultural production and consumption (Frost-­ Kumpf, 1998; Le Blanc, 2010; Mommaas, 2004; Sacco, Tavano, & Nuccio, 2008; Stern & Seifert, 2010). The concept of cultural district or cultural cluster has been accepted over the world, but there are diverse contexts and operation model, respectively, in Northern America, Europe and Asia. For example, the American Mount Vernon Cultural District in Baltimore of Maryland state was constructed under the cooperation of government, private sectors and non-profit organization, whose main purpose was to rejuvenate the downtown with long history and the main measure was by regenerating cultural facilities and historic heritages to re-drive the vitality (Ponzini, 2009). However, in European cities, like Vienna or Berlin, it was the civil governments that had put more investment in agglomeration of museum and cultural facilities to develop cultural district (Roodhouse, 2010), while in Asia, as the government was more powerful and strong and thus cultural policies could be implemented more directly and with high efficiency, then they would more likely construct iconic or landmark cultural projects to win global cultural visitors, such as the West Kowloon Cultural District project in Hong Kong (Raco & Gilliam, 2012) and the Saadiyat Island mega-development project in Abu Dhabi (Ponzini, 2011).

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2.3.3  Cultural Sociology Perspective The concept of “creative industries” coined in the late twentieth century comprised 13 specific industries in the British DCMS’s definition, which are advertising, architecture, arts and antiques, crafts, design, fashion, film and video, music, performing arts, publishing, software, TV and radio, and video and computer games. The basic supporting idea behind this classification is viewing the human creativity as a significant and sustainable production element in capitalist system and as the strategic resource of facilitating the growth of national economy. Then how to push the development of creativity and how to promote the transformation from creativity to economic value became the realistic challenges for creative industries research. Whether from the production part or from the consumption part, creative industries are more closely involved with the aesthetics, emotions, psychology and feelings of human. So the research of creative industries has been different from the traditional economics research or the industrial research and has obviously cross-disciplinary implication according to the special nature. On this account, the sociology research perspective had been emphasized by a lot of scholars in different literature contexts. But the researches on the cultural-creative cluster/park from the sociology perspective sometimes have intersects with the researches from economic geography perspective or the urban planning perspective. For example, in a given economic geography, some scholars’ interests focused on how the social relations are established and whether the face-to-face interactions are just limited within the companies or on the economic exchanges among cooperators to maximize the economic benefits. Through some kind of empirical and cross-disciplinary researches, Glaeser (1999) argued that the hypothesis of more frequent and convenient knowledge exchange was just as opaque as a “black box”. Yet some other scholars still emphasized the importance of social dimension in the case of cultural-led urban regeneration, such as Comunian (2011) who pointed out that present analysis on the social relations and spontaneous personal interactions in the cultural and creative cluster was not efficient and precise, thus leaving much room for further researches. Although there existed some uncertainty in the actual effect of the highly expected knowledge exchanges and social relations in the

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hypothesis about cultural and creative cluster, quiet a lot of scholars had developed some new concepts from the sociology perspective. Lloyd (2010) defined the informal get-togethers and information exchanges among creators in the creative cluster as “the third space”, borrowing this term from Edward W. Soja; Currid (2009) took the view that the information or knowledge were more likely to exchange and the agreements of project cooperation were more easily to achieve in popular bars, cafés, night clubs through her well-mentioned empirical research on New York creative circle, while Storper and Venables (2004) called such kinds of places as “buzz”. And what made the discussions more diverse is the introduction of audience dimension, like the “art scene” concept proposed by Molotch and Treskon (2009), which mapped another interactive possibility between the creators and the public participants—the creative workers who agglomerated in this cluster would cooperate to create valuable cultural products and then attracted the community habitants or visitors, some of whom would be very possible to be cultivated as future buyers for those aesthetic productions or the future culture consumer. Because they had gradually and unconsciously developed the habit of cultural consumption by the influence of the so-called art scene in creative clusters. The sociology approach in the research on cultural cluster hasn’t been given enough development and still in a start-up state, compared with the other two approaches introduced above in this section. Presently, the main direction in this approach was in discovering the rules about how the interactive network in the cultural and creative cluster/park was set up and how many models of this kind of social interaction could be. Recently, Zarlenga, Ulldemolins and Morato (2016) took Barcelona as the study case to classify models of the social interactive dynamics in cultural cluster into three types: bureaucratic-dominated model, associativedominated model and community-dominated model. This sort of classification demonstrated the tendency that Western research on cultural cluster has grown beyond the original cluster theory borrowing from industrial economics and the research conclusion started to lead to a more specific direction.

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2.4   The Cultural-Creative Industries Park as a Creative Product and the Business Model Perspective 2.4.1  Defining “Classic” Cultural-Creative Industries Park (CCCIP) Although the discussion on creative cluster at the initiative stage was taken as a branch of traditional industries cluster, both Florida (2002) and Howkins (2001) put forward that the rule of creative economics is distinguished from traditional industrial economics. Kong (2009) advanced that each creative cluster has its own individual and special type and actually enjoyed differentiated features from traditional commercial cluster and industrial cluster. Above arguments pushed forward the significance of research on cultural-creative industries park, but whether in the policy-­ making or in the practical operation of specific projects, researches about how to manage a cultural-creative industries park in details are still in deficiency. The researches on the cultural-creative industries park from the management perspective are still on the start. Firstly, just as we discussed earlier, the concepts and terms related to CCIP are too interweaved and there is no unified term accepted by the intellectual circle; secondly, different national or local policy contexts indirectly encouraged or facilitated distinguished cultural-creative clusters with various models and managing logics. Ling’s (2014) literature review of a research on the management of CCIP mentioned: In our country’s CCIP theoretical researches, there seldom have ones presenting detailed norms about the CCIP classification and especially lack analysis on the management issue of CCIP. On the one hand, this proved the lagging state of the theoretical and practical research on CCIP; on the other hand, the unclear identification of different CCIPs will directly lead to the deficiency of pertinence and effectiveness of related researches.2

2  Ling, Q (2014). Study on the hybrid management model of Chinese Cultural Industries Park. Master Thesis of Hunan University.

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It’s exactly for this reason that my research set its subject on a specific CCIP type—“classic cultural-creative industries park” (CCCIP) in a specific political economic context—in mainland China. The concept of CCCIP is proposed by this research to respond to the deficiency in the literature of detailed researches on some specific model. As in mainland China, the distinct definition of CCIP is still short, so that some central streets,3 one or several clustered buildings would all be self-­ claimed as “cultural-creative industries parks” to make themselves qualified to apply for some policy supports or government subsidy, such as tax benefits, rent subsidies, grants or anything like that. Confronted with this multi-definition and multi-model status quo in China and in order to explore the creative cluster theory in a more detailed way, this study is planning to focus on a specific type of CCIP which was purposely reformed from devastated or abandoned factory buildings or industrial heritage. Considering the original bottom-up styled CCIP or creative cluster exactly started from the cultural or artistic regeneration of old factories heritage by the artists and the trend of CCIP construction closely related with the transformation from industrial society to post-industrial society, I named it “Classic Cultural-Creative Industries Park (CCCIP)”. In mainland China, this type of CCIP is in the majority, from some single bottom-up case to quite a lot of planned and top-down construction tendency, which could be seen as a logic result to the urban regeneration and urban economic development policy of “retreating from secondary industry to third industry”. Of course, with the adjustment of new economy structure, the necessities of CCIP also came from the office space demands from some start-ups or many micro-small entrepreneurs. 2.4.2   Defining Business Model and Literature Review on Business Model of CCIP 2.4.2.1 What Is a Business Model? There is an obvious lack of clarity, consensus and consistency in the definition of “business model”. According to an extensively cited research (Zott,

3  For example, the cultural core district around Beijing Street in Guangzhou was granted with “National cultural industries model park”; and the so-called Changsha Tianxin Cultural Industries Park in policy paper is actually a group of six distinguished cultural districts and six characteristic cultural streets.

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Amit & Massa, 2011),4 there were at least 1177 articles about business model published on the peer-reviewed journals. Although the discussions on business model are more and more popular, even in an “exploding” way, the commonly accepted research constructs of business model are still inexistent. With literature review, we found some main definitions of business model: different scholars defined it as an architecture (Dubosson-Torbay, Osterwalder & Pigneur, 2002; Timmers, 1998), a conceptual tool or model (Osterwalder, Pigneur & Tucci, 2005), a structural template (Amit & Zott, 2001), a method (Afuah & Tucci, 2001), a framework (Afuah, 2004), a pattern (Brousseau & Penard, 2006) or a set (Seelos & Mair, 2007). After analyzing the titles, keywords and abstracts of 1253 articles, Zott, Amit and Massa (2011) concluded that although different researchers had different concept frameworks, there were still some common themes: (1) Explicitly or implicitly, the business model is considered as a new unit of analysis differentiated from product, company, industry and network. Some researchers view the business model closer to the firm (e.g., Casadesus-Masanel & Ricart, 2010; Hurt, 2008), while others place it closer to the network (e.g., Tapscott et  al., 2000). No matter in which way, most business model scholars would agree that it is a new, distinct concept. (2) Business model researchers more and more adopt a holistic and systemic (as opposed to particularistic and functional) perspective on how business do it (e.g., how they bridge factor and product markets in serving the needs of customers). (3) The activity perspective is recurrent in many business model definitions, performed either by a focal firm or by any of its suppliers, partners or customers. (4) Business model scholars generally promote a dual focus on value creation and value capture. Based on these common themes generalized from 1253 papers by Zott, Amit and Massa (2011), this book will take such an integrated view on discussion of the CCIP business model definition, which is to explore the specific activities of CCIP and to discover how the value creation and value capture were realized from a holistic and systemic scale.

4  According to the author’s research on Google Scholar, this paper has been cited 1293 times until July 8, 2018.

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2.4.2.2 Literature Review on the CCIP Business Model Due to the uncertainty of CCIP definition and its different geographic and historic context (“CCIP” is used more in Asian countries, while “creative cluster” is more common in English literature), and for a long time CCIP or creative cluster has been considered as an issue of urban planning or city cultural policy, the academic researches on the business model of CCIP are very insufficient. If we expand the literature to extensive industries park, we can find comparatively abundant papers. For example, Fan Qiao and Guo Aijun (2013) identified the business model researches as the discussion of basic principles, theme and pattern, internal institution setting and internal managing institutions’ functions of industries park; Huang Tianmin (2013) took Changzhou Information Industry Park as an example, generalized the “government-assisted private” model and proposed to enrich and adjust the management model of information park through the improvement of service and successful experience at home and abroad; and Wu Shenbin (2004) summed up the management system of the world science and technology parks and obtained several different management systems of the world science and technology parks: government organization management, nongovernmental organization (such as foundation or association) management, specialized company management, university management and government plus university, enterprise joint organization management (i.e., “industry, government, university” co-management). If we refocus the business model from the extensive industrial park to the cultural and creative industry park, we will find that the management research of the CCIP is also considered as a “major problem that needs to be solved urgently” among scholars in mainland China (Ling Yi, 2014). From the domestic and international academic literature review, sporadic research on related topics has emerged one after another. For example, Wang Xuan and Shi Tongjian (2012) summarized three basic management models based on the types and characteristics of cultural industry parks in mainland China: government-led, developer-led and government-­ park integration; Jiang Ling and Ni Hongyi (2013) summarized the basic centralized management model of Shanghai Cultural Industry Park: owner-led, government-led, real estate-led, professional institutions-led, integration of spontaneity and management. However, these similar inductions of management models of cultural and creative parks mostly stay at the initial stage of classifying the types according to the different

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operators or describing a general situation, without the details of the operation. Thus it is difficult to play a real guiding role for the actual operation practice or policy-making. From the English literature, because it is difficult to reach a consensus on the detailed definition of creative agglomeration (Bourletidis, 2014), there are few literatures to study cultural-creative agglomeration/park from the perspective of operation and management. However, there are still some pioneers who try to explore from the management level and organizational model of the agglomeration area. Among them, Darchen and Tremblay (2015) clearly proposed and advocated the study of creative agglomeration from the perspective of economic organization and management. Smith, McCarthy and Petrusevich (2004) also defined the agglomeration model as “a special economic organization that can give economic advantage to an unpredictable and changing environment”. Porter (1998) initially defined agglomeration as the geographical concentration of interrelated companies, specific suppliers, service providers, companies in related industries and organizations in related special fields, which led to the emergence of competition and cooperation among them. And this kind of agglomeration will bring three main advantages: lower transaction costs, accelerating the cycle of capital and information and strengthening social ties and loyalty based on transaction patterns (Scott 2000). In fact, creative agglomeration and CCIP are not only different in motivation and process (one is more likely to be “bottom-up”, the other is more likely to be “top-down”), but also there exist a variety of explanations for the exact understanding of creative agglomeration. Lazzeretti et al. (2008) defined it as the Creative Local Production System based on the case studies of Spain and Italy, arguing that creative industries tend to cluster in large urban local production systems, thus “demonstrating the nature of their urbanism”; De Propris, Chapain, Cooke, Mac Neill, and Mateos-Garcia (2009) found that creative industries tend to pile up with each other in search of technological complementarity; and O’Connor (2004) believes that practical soft knowledge is more dependent on the particularity of the region than hard knowledge, and that the cultural industry relies heavily on this “learning by doing” practice and the ability to diffuse through special relevant networks. And it is these related characteristics of creative industries that determine the organizational form and management of creative agglomeration is different. Therefore, there is still a great deal of ambiguity and theoretical incompleteness in

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generalizing cultural and creative industry agglomeration or parks by creative economic organizations. 2.4.3   The Essence of Classic CCIP: “Mixed Creative Economic Products” In order to analyze the business model of classic CCIP, we need to sort out the multiple attributes of such parks and locate their essential attributes in the new economic context. As I mentioned in the above analysis, the concept of CCIP is both policy-oriented and historical. In the so-called policy-oriented, the predecessor of the classic cultural-creative industries park is the old industrial factory or the old traditional industrial space, so the original land attribute is industrial land. After being transformed into a cultural-creative industry park, its function is bound to undergo an obvious change. This change must be approved by the government at first. And the consideration of the government in approval for a temporary land-use change is to promote the development of “cultural and creative industries” with the effect of agglomeration. This is a popular logic widely accepted by cultural policy-­ makers, which is supported by the agglomeration theory of traditional industries and extensively promoted by academic discussions on such topics as “creative milieu” and creative network. This is also the source of the basic legitimacy of the “classic cultural-creative industries park” in mainland China. Therefore, as this book has repeatedly emphasized in understanding the concepts in the literature, CCIP should be taken first of all as “policy-oriented”, or it should be first identified as having public benefits or industrial infrastructure effects. However, although the government plays a decisive role in the legitimacy and necessity of the existence of cultural-creative industry parks, few governments will directly invest money or human resources into the operation of a CCIP. Undoubtedly, this style would allow the government to maximize control over the functions and original intent of the park. But it after all is a professional undertaking and actually a business to continuously operate and manage an industrial space which has a certain cost. So whether the government has the ability and the necessity to intervene directly is worth exploring. However, this is obviously another topic, and it is not the actual situation of most park operations. Most of the cultural-­ creative industries parks involve private enterprises in mainland China. If the park land is the property owned by the government, most of the governments

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adopt OT (operation transfer) model, subcontracting management to private enterprise. If the park land belongs to enterprises (state-owned or collectively owned), the enterprise would transform and operate the property by itself (as in OCT-LOFT case) or adopt the model of cooperation between the owner of the property and another private company after the approval of the government (as in Guangzhou 289 Art Park Case), or it is possible to lease the park to independent developers or operators to transform and operate (more likely in those “gentrification” cases). In a word, most of the cultural-creative industries parks in Asia are operated by enterprises than by governments. For an enterprise, it is its natural motive and mission to make profit and develop through its business activities (although meanwhile it will need to reach certain assessment indexes to realize its innate attribute of “public welfare” when applying for government approval). Since the cultural and creative industry park cannot exist as a purely government-run public welfare infrastructure like museums and libraries, it must contain both public welfare and profitability and ensure that these two values can be realized at the same time, which is accordingly an important dimension for the sustainable development of a cultural and creative industry park. This can be proved positively and negatively in the historical development process of CCIPs and the corresponding research literature. The earliest forms of CCIP in development history include cultural cluster and cultural district, both of which first appeared in Europe to stimulate creative activities and promote economic and regional rejuvenation. This initial form was later developed into the “Cultural Capital of Europe” project, which encouraged city governments to organize a large number of cultural events to promote urban creativity. But as Richards (2000) pointed out, as more and more cities in Europe are developing cultural capital activities, the competition among cities is becoming increasingly fierce, so that the government investment in this field is no longer efficient in obtaining long-term economic returns and cultural influence. Newman and Smith’s (2000) research on the Southbank of London also shows that the Southbank managed to become a place of modern cultural production cluster through three stages: the first stage is the resistance to high-level cultural production in the initial stage (1980–1992), the second stage is the recognition of cultural production as an economic act (1993–1995) and the third stage is to promote the individual or market-driven cultural production (1995–present). From the initial formation of cultural district, this process is inseparable from the intervention of government departments and the formation of the global

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cultural market. Brooks and Kushner (2001) summarized the management of this type of cultural agglomeration, arguing that successful cultural districts need effective leadership and intervention from municipal government at all levels and need the involvement of the private or voluntary sector. Mommaas (2000), in his analysis of the five cultural agglomeration areas in the Netherlands, also pointed out that cultural agglomeration usually has “a mixed form of cultural governance” and generally involves some combination of private and public sector interventions in order to maintain a flexible state in a rapidly changing urban economy and policy. He argues that the cultural agglomeration is empowered by a variety of public policies, including place promotion and positioning, stimulating a culture entrepreneurial environment, promoting innovation and creativity, finding new uses for old houses or abandoned industrial sites and facilitating cultural democracy and diversity. Therefore, the management context of cultural agglomeration is more complex in Mommaas’s sense than Brooks and Kushner’s (2001). For example, in his analysis of the case of Tilburg, a “bottom-up” cluster of creative industries permeated with the intense interest of multinationals, including Warner Music and the Texas-based Clear Channel Outdoor, his question was put on how local governments can intervene to confront challenges to local cultural policy from national and global capital, which is more complex and specific than just call for public intervention and participation. These scholars pointed out that government alone is not enough to bring long-lasting vitality and development of CCIP or cultural district; it also needs the participation of the private sector, which pushes the understanding of CCIP a step forward. However, their researches are still at a very comprehensive level, lacking careful analysis of the operation and management model and strategy in detail. In order to further explore the specific management measures, Hitters and Richards (2002) chose two cultural and creative agglomerations of the Netherlands for a comparative study: one is Westergasfabriek, a local government-led agglomeration in Amsterdam, and the other is Witte de Withstraat, a more decentralized agglomeration of creative enterprises in Rotterdam. This research is an early case study of cultural and creative agglomeration in which managers, local government representatives and individual enterprises are interviewed to explore the interactions between local and global forces and the relationships between different levels of management and administration.

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Gretzinger and Royer (2014) made some really inspiring conclusions in the research of agglomeration management. Starting with Porter’s famous diamond model, Gretzinger and Royer thought it was not enough to just systemize the advantages of geographic agglomeration to understand how value creation is generated. They proposed a relational perspective and examined how agglomeration management works with a Danish agglomeration case. Their conclusion is that the informal network structure of agglomeration area is relatively weak to generate agglomeration advantage consistently, so agglomeration area or cluster must have formal institutional management organization to promote this value creation. And the role of cluster managers is different from the traditional managers, but more like a broker and moderator. Since Gretzinger and Royer’s (2014) question starts with how value is created in the agglomeration area and the ways and processes by which it is created, so the focus of their research is more about how the individual enterprise in the agglomeration benefits from geographical agglomeration. However, it is still not clear for the cluster manager as an broker and moderator as to how to define their work target and how to develop the cluster in a specific operation. This may be related to the characteristics of agglomeration in Western countries. Gretzinger and Royer point out that the “topdown” agglomeration can get the maximum integration of resources in the network system because of its distinct planning and the inherent cooperation mechanism of the government agencies involved. If the bottom-up agglomeration area wants to be sustainable, it needs to develop a governance mechanism to realize its original economic demands with spontaneous agglomeration. Even though Gretzinger and Roger have made the necessary managerial analysis of the two main agglomeration models in the West, the theoretical framework of “social capital” and “symbolic capital” is still somewhat abstract. They defined their research to answer the question, “How to manage social capital and symbolic capital in agglomeration areas?” However, due to the fact that the focus was not on the “individuality” of a park, which takes a specific location and has a specific theme, and failed to explain the specific operation mechanism of the management organization, the business model of a cluster has not yet been entirely theorized in this chapter. In view of these deficiencies in summarizing theory and practical experience of CCIP, this research attempts to put forward a new perspective and definition of CCIP, which would take CCIP as a special kind of “hybrid creative economic product”. Only by regarding each park as a unique “product” in coordination with public and private interests and

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concretely examining the process of its operation can we find the most appropriate business model design for CCIP practice and push the development of theory on CCIP research. 2.4.4  Literature Review on the Business Model of CCIP in Mainland China In mainland China, due to the unique political system, economic environment, cultural and historical context and a strong sense of competition, the iterative development process of the CCIP is particularly obvious, resulting in a lot of new phenomena and accumulating a lot of new experience, but the related research is relatively lacking theoretical generality. In English literature, Zielke and Waibel (2014) studied creative space in mainland China from the perspective of urban governance. The basic hypothesis is that the trend in mainland China to transform abandoned industrial buildings into creative spaces is a symbol of China’s “second shift” (Bottelier, 2007), and it not only represents a restructure of inner city brownfield, but also represents a new urban governance model. Governance of these creative spaces may be understood both as an informal experiment in the local area and as a mainstream strategy at the urban level. The two German authors are very sensitive to grasp this new phenomenon of urban space, and the change in the overall policy environment in mainland China. However, the focus and objective of the study still lies in the role played by the local government. They point out that the local governments in mainland China have multifunctions as changers of land-use rights, regulators of the new legal framework, negotiators between operators of old properties and new property developers, investors and distributors of public funds, regulators and managers of local economic development, and regulators of creative spaces. Because the focus is on the roles of government in CCIP management, there is still no detailed observation of how a creative space is managed and operated. For the development and evolution of CCIP in mainland China, overseas scholars from mainland China and local scholars in mainland China take different perspectives. One of the most important points is that the development of Chinese CCIP differs greatly from the “original” creative industry zones (Gu, 2014) under the neo-Bohemian cultures in the post-­ industrial cities of the West. Gu was from the University of Melbourne in Australia, which initiated with the University of Queensland and Shanghai Jiao Tong University a joint research project on cultural and creative

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industry parks in three Chinese cities: Shanghai, Shenzhen and Qingdao. The important observation made by Gu (2014) is that different social, political and cultural contexts lead to the situation that CCIPs in mainland China are mostly developed by developers in cooperation with local governments. However, Gu (2014) still failed to explore the detailed management model from this observation, but formed a stereotype that these development funds mainly come from the direct investment of the government. She mainly examined the development process of these “official” creative agglomerations and criticized the deviation of Chinese CCIP development from the Western theory of creative agglomeration. However, the paradox is that Gu’s English papers still use the Western “creative cluster” to refer to the “cultural-creative park” or “cultural-creative industries park”, which are the names actually used by the mainland authorities and academia. Nonetheless, Gu’s (2014) study takes the study of China’s CCIP a step further by the proposition that in addition to the government’s initiative, the demands of property developers from the private sector are shaping the dynamics of the field as well. Since mainland China’s creative agglomeration is a way of public-private cooperation, then it is the “interface” of the two partners’ cooperation. And it will eventually be pushed to the market for the creative enterprises to rent as their official space, so it is a “product” that “consumers” would pay for, jointly promoted by the public and private sectors and mainly invested and operated by the private sector. Shi Jingjing (2016), from Shanghai Creative Industry Center, understood the development process of Shanghai Cultural-Creative Industries Park (CCIP) in detail and proposed that the park operation models actually have evolving iterations with 1.0/2.0/3.0 versions. In view of the pioneering significance of Shanghai in the development of CCIP in mainland China, this study is of great significance to the overall development stages of CCIP in China. CCIP in Version 1.0 is the initial stage of development, more like a pure “real estate operation model”, which is the “simple rental” model criticized by academic discussions; CCIP in Version 2.0 began to enter the theme planning stage and gradually formed brands in business model, which view the CCIP as a very important service platform for themed creative industries; and CCIP in 3.0 version is entering a more diversified integration stage, which would consider the park, the commercial and the community at the same time and the park’s services have been further upgraded with the implementation of a more intelligent, humane and refined service model, and the relationship between

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park operator and tenant enterprises has become more flexible and diverse. Shi Jingjing put forward the “iteration” discussion on the development and evolution of Shanghai CCIP, providing a good diachronic cognitive framework for the development of CCIPs in mainland China in the past decade. And the word “iteration”, as we know, was originally used to describe the continuous improvement and self-­transcendence of 3C (computer, communications and consumer-electronics) products. Therefore, when the author uses the word “iteration”, it implies that the cultural and creative industry park can be regarded as a kind of “product” concept that can be improved through the interventions of operation and management. In the current Chinese and English literature, O’Connor and Liu’s (2014) study on Shenzhen OCT-LOFT is more consciously from the management level to examine the outstanding success factors and operating mechanism of CCIP in mainland China. O’Connor and Liu put the development and success of OCT-LOFT in the unique context of cultural policy changes in mainland China and Shenzhen, an innovative city, and summarized the internal management and external environmental factors for the success of OCT-LOFT. Aimed at some other Western scholars who unilaterally understand and criticize the cultural park in mainland China (Keane, 2012), this study consciously points out the inadequacy of this Western external perspective. But it also points out some inadequacies of the OCT-LOFT model, for example: for the location with high land value, is it proper to transform it into a CCIP for only small businesses, innovation and creative departments whose outputs or economic value are not in line with the surrounding land value?; and they proposed the so-called “win-win” strategy with mutual benefits and cross-subsidy between creative atmosphere and land value would sometimes lead to the deprivation of one party from the other party. If considering the “gentrification” phenomena in cultural agglomeration all around the world, this concern is not superfluous. However, the reason why these questions would arise in this chapter is probably related to the macro perspective in this O’Connor and Liu’s research on OCT-LOFT. They didn’t explore how the specific relationship, interaction and creative atmosphere formed within the park from the specific operation and management level and the so-called cross-­ subsidization are actually not realized on the CCIP level, but should be referred to the balancing strategy among different products on a systematic level (I’ll analyze the discovering process in Chap. 4 on OCT-LOFT case study).

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From the above papers related to the perspective of management on CCIP, we have to recognize that the past researchers more or less realized that we need to care for the agglomeration/park internal management issues if we really want the agglomeration/park to play its anticipated roles and to maintain sustainable development. However, so far, there is no literature that regards the nature of the CCIP as a “hybrid creative economic product” that needs to be designed to meet the dual goals of public welfare and profitability. How to design the business model of this unique “hybrid creative economic product” to promote its sustainable and healthy development and how to achieve the dual expectations of public welfare and profit are the questions that this study attempts to explore and answer.

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Kong, L. (2009). Beyond networks and relations: Towards rethinking creative cluster theory. In L. Kong & J. O’Connor (Eds.), Creative economies, creative cities, Asian-European perspectives (pp. 61–75). New York: Springer. Krogh, G., & Geilinger, N. (2014). Knowledge creation in the eco-system: Research imperatives. European Management Journal, 32, 155–163. Landry, C. (2000). The creative city: A toolkit for urban innovators. London: Earthscan. Lazzeretti, L., Boix, R., & Capone, F. (2008). Do creative industries cluster? Mapping creative local production systems in Italy. Working Papers 5/08, Department of Applied Economics at Universitat Autonoma of Barcelona. Le Blanc, A. (2010). Cultural Districts, a new strategy for regional development? The South-East cultural district in Sicily. Regional Studies, 44(7), 905–917. Lloyd, R. (2010). Neo-Bohemia: Art and commerce in the Postindustrial City. New York and London: Routledge. Lysgard, H. K. (2012). Creativity, culture and urban strategies: A fallacy in cultural urban strategies. European Planning Studies, 20(8), 1281–1300. Lorenzini, E. (2011). The extra-urban cultural district: An emerging local production system. Three Italian case studies. European Planning Studies, 19(8), 1441–1457. Malmberg, A., & Maskell, P. (2002). The elusive concept of localization economies: Towards a knowledge-based theory of spatial clustering. Environment and Planning, A, 34, 429–449. Molotch, H., & Treskon, M. (2009). Changing art: SoHo, Chelsea and the dynamic geography of galleries in New  York city. International Journal of Urban and Regional Research, 33(2), 517–541. Mommaas, H. (2000). Cultural clusters and the post-industrial city: Remapping urban cultural governance. Paper presented at the conference Cultural Change and Urban Contexts, Manchester, September 8–10. Mommaas, H. (2004). Cultural clusters and the post-industrial city. Urban Studies, 41(3), 507–532. Newman, P., & Smith, I. (2000). Cultural production, place and politics on the South Bank of the Thames. International Journal of Urban and Regional Research, 24, 10–24. O’Connor, J. (2004). A special kind of knowledge: Innovative clusters, tacit knowledge and the “Creative City”. Media International Australia, 114, 131–149. O’Connor, J., & Liu, L. (2014). Shenzhen’s OCT-LOFT: Creative space in the City of Design. City, Culture and Society, 5, 131–138. Osterwalder, A., Pigneur, Y., & Tucci, C. L. (2005). Clarifying business models: Origins, present and future of the concept. Communications of the Association for Information Science (CAIS), 16, 1–25. Ponzini, D. (2009). Urban implications of cultural policy networks. The case of the Mount Vernon Cultural District in Baltimore. Environment and Planning C: Government and Policy, 27(3), 433–450.

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Ponzini, D. (2011). Large scale development projects and star architecture in the absence of local politics: The case of Abu Dhabi, UAE. Cities, 28(3), 251–259. Porter, M. (1998). Clusters and the new economy. Harvard Business Review, 76(6), 77–90. Pratt, A. C. (2008). Cultural commodity chains, cultural clusters, or cultural production chains? Growth and Change, 39(1), 95–103. Putnam, R. (1993). Making democracy work: Civic traditions in modern Italy. Princeton, NJ: Princeton University Press. Raco, M., & Gilliam, K. (2012). Geographies of abstraction, urban entrepreneurialism, and the production of new cultural spaces: The West Kowloon Cultural District, Hong Kong. Environment and Planning A, 2012(44), 1425–1442. Richards, G. (2000). The European cultural capital event: Strategic weapon in the cultural arms race? International Journal of Cultural Policy, 6, 159–181. Roodhouse, S. (Ed.). (2010). Cultural quarters: Principles and practice. London: Intellect Books. Sacco, P.  L., Tavano, B.  G., & Nuccio, M. (2008). Culture as an engine of local development processes: System-wide Cultural Districts. Working paper. IUAV University. Available from: http://www.sociologia.unimib.it/ DATA/Insegnamenti/14_3680/materiale/wp_2008_05.pdf. Sacco, P. L., Blessi, G. T., & Nuccio, M. (2009). Cultural policies and local planning strategies: What is the role of culture in local sustainable development? The Journal of Arts Management, Law and Society, 39(1), 45–63. Santagata, W. (2002). Cultural districts, property rights and sustainable economic growth. International Journal of Urban and Regional Research, 26(1), 9–23. Scott, A. J. (1997). The cultural economy of cities. International Journal of Urban and Regional Research, 21(2), 323–339. Scott, A. J. (2000). The cultural economy of cities. London: Sage. Seelos, C., & Mair, J. (2007). Profitable business models and market creation in the context of deep poverty: A strategic view. Academy of Management Perspectives, 21, 49–63. Smith, R., McCarthy, J., & Petrusevich, M. (2004). Cluster or whirlwind? The new media industry in Vancouver. In D. Wolfe & M. Lucas (Eds.), Clusters in a cold climate: Innovation dynamics in a diverse economy (pp.  195–221). Montrealton: McGill-Queen’s University Press. Stern, M.  J., & Seifert, S. (2007). Cultivating “natural” cultural districts. Philadelphia: The Reinvestment Fund. Stern, M. J., & Seifert, S. C. (2010). Cultural clusters: The implications of cultural assets agglomeration for neighborhood revitalization. Journal of Planning Education and Research, 29(3), 262–279. Storper, M. (1995). The resurgence of regional economies, ten years later: The region as a nexus of untraded interdependencies. European Urban and Regional Studies, 2, 191–221. Storper, M., & Venables, A. J. (2004). Buzz: Face-to-face contact and the urban economy. Journal of Economic Geography, 4(4), 351–370.

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Tapscott, D., Lowy, A., & Ticoll, D. (2000). Digital capital: Harnessing the power of business webs. Cambridge, MA: Harvard Business School Press. Thunderbird International Business Review, 44(1), 5–23. Throsby, D. (2001). Economics and culture. Cambridge: Cambridge University Press. Timmers, P. (1998). Business models for electronic markets. Electronic Markets, 8(2), 3–8. Valentino, P. (2003). Le trame del territorio: Politiche di sviluppo dei sistemi territoriali e distretti culturali. Milano: Sperling and Kupfer. Wynne, D. (Ed.). (1989). The culture industry. Manchester: Centre for Employment Research. Zarlenga, M. I., Ulldemolins, J. R., & Morato, A. R. (2016). Cultural clusters and social interaction dynamics: The case of Barcelona. European Urban and Regional Studies, 23(3), 422–440. Zheng, J., & Chan, R. (2014). The impact of ‘creative industry clusters’ on cultural and creative industry development in Shanghai. City, Culture and Society, 5, 9–22. Zielke, P., & Waibel, M. (2014). Comparative urban governance of developing creative spaces in China. Habitat International, 41, 99–107. Zott, C., Amit, R., & Massa, L. (2011). The business model: Recent developments and future research. Journal of Management, 37(4), 1019–1042. Zukin, S. (1989). Loft living: Culture and capital in urban change. New  York: Rutgers University Press.

Chinese References 凌旖, 2014。中国文化产业园区混合型管理模式研究。湖南大学新闻传播 学硕士学位论文。

范巧、郭爱君, 2013。中国园区内部关系处理模式研究综述——基于开 发模式、管理模式、治理模式和发展模式的视角。技术经济, 2013 年第8期。 黄天民, 2013。常州信息产业园管理模式的实践与探索。常州信息职业 技术学院学报, 2013年第2期。 吴神赋, 2004。世界科技园管理体制比较与启示。中国科技论坛, 2004 年第3期: 126–129。 凌旖, 2014。中国文化产业园区混合型管理模式研究。湖南大学新闻 传播学硕士学位论文。 王璇、史同建, 2012。我国产业园区的类型、特点及管理模式分析。商 界论坛, 2012年第3期。 江凌、倪洪怡, 2013。上海文化产业园区管理:现状、问题与对策。福 建论坛·人文社会科学版, 2013年第4期。 施晶晶, 2016。上海文创园区的迭代发展——文创园区迈进3.0时代。收录于荣跃 明、花建(编)上海文化产业发展报告(2016)。上海: 上海社会科学院出版社。

CHAPTER 3

Research Methodology

3.1   The Methodology of Case Study This research would take a case study method to analyze the management of cultural-creative industries parks. As the main method of qualitative research, case studies are particularly well suited to describe and deal with the questions like “What is happening, or what has happened?” and “How did it happen, or why did it happen?” (Yin, 1989). That is, the case study can present its unique “boundary” meaning in exploring the cause and the concrete realization way of a case, so that a specific phenomenon, which is usually fuzzy and ambiguous, can be clearly sorted out and explained in the specific contexts, and then the readers can have a profound grasp and inspiration in a new phenomenon that is taking place at present. However, the effectiveness of case studies once has been challenged in the history of social science research, especially in comparison with statistical generalization which was often regarded as more “objective”, while the “analytical generalization” used in case studies was considered as too small to be able to generate a theory. Yin (1989) pointed out that analytical generalization is to construct a logic that may be applied to other situations through the theoretical framework concluded from the study. This theory framework is not necessarily a final conclusion, but rather a “working hypotheses” (Lincoln & Guba, 1985). Case studies tend to be extended to other situations, while questionnaires and other quantitative methods tend to be extended to more samples. In that sense, when a new

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social phenomenon arises, many concepts are ambiguous, similar and even interweaved, case study is more possible to provide a theoretical framework for the explanation of this kind of phenomenon which seems similar yet not completely homogeneous. Therefore, in essence, case study, like narrative study, phenomenology, grounded theory and ethnography, is a science related to and based on hermeneutics to explain the observed object from a certain theoretical perspective and to explain the tension highlighted in the case (Dyer & Wilkins, 1991). Therefore, the study requires researchers to be able to reveal the implications of the case stories through the thick description of the selected analytic objects (Hsiao, 2006). Of course, there is also another case study method, which is based on the empirical philosophy to analyze the case through carefully built constructs. But once the constructs as variables have been established to analyze the case, it is also possible to set some kind of specific limits on the rich phenomenon, thus falling into the defects of taking a part for the whole with the isolation of social context. Because the CCIP as a new emergent phenomenon has an outstanding features of ambiguity, variability and consistent evolution, this research would choose the first type of interpretive case study method to generalize the logic of the operation and management model of CCIP under different conditions and different creation contexts, and then provide some guidance for practice in the process of demonstrating the theoretical assumptions. However, since this study adopts a multi-case study approach, therefore, after the interpretive depiction of each case, the research will compare the two cases by the methods of building constructs, which would highlight the similarities and differences between the two cases. Then the result from the comparison will be put back into the CCIP literature and let the theoretical dialogue generate new theoretical hypotheses or framework which would explain the case. In this way, we’ll obtain two detailed and generalized business models from the two cases. In the end, this chapter would use the picked definition of business model to converge the two models and finally to generate a CCIP business model design framework as the practical inspiration for CCIP managers. There are several reasons that Shenzhen OCT-LOFT and Guangzhou 289 Art Park are chosen as the case study objects of this research. First of all, of course, there are similarities between the two cases, because they belong to the “classic cultural-creative industries park” which is reconstructed from the old industrial plants. Second, in this kind of classic CCIP, which is closely combined with urban renewal and industrial structure transformation policy, the two cases are very representative. OCT-LOFT, a Model CCIP

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awarded by the Ministry of Culture in mainland China, has been in operation for more than a decade with maintained vitality and sustainable growth and is closely interwoven with the cultural development of Shenzhen as a recognized cultural highland in the city. 289 Art Park is a comparably new CCIP, but within a year after opening Guangzhou 289 Art Park, two 289 branded parks were successfully “replicated” in Shenzhen and Foshan. This “replicable” business model shows another representative management strategy and methods of CCIP.

3.2   The Description of the Research Fields The research field of this chapter is the two representative cultural-creative industries parks in mainland China mentioned earlier. The development of CCIP in mainland China is influenced not only by the creative agglomeration theory from Western creative industries, but also by the experience of Western cultural and creative agglomeration practice, as well as by the unique political, economic, cultural traditions and specific policy environment of the local cities. At the beginning, the formation process was “bottom-­up”, just like in the West. For example, the most famous Beijing 798 Art District, Shanghai Tianzifang, Guangzhou Red Brick Factory and other similar places in large cities were shaped by itself, all of which began with one or several individual artists who rented studios there and then more and more creative workers were attracted there and the original prototype of cultural and creative parks was formed spontaneously. In this regard, the birth of these early creative clusters in mainland China follows virtually the same logic as the birth of the most famous SoHo District in the United States and other creative clusters in Europe. However, the later development of CCIP in mainland China became quite different from other regions. From the central to the local governments, under the overall thinking framework of developing cultural industries and creative economy, they began to encourage the development of cultural and creative industry parks with related policies, including the selection and awarding of the Best 10 Demonstration Areas as National Cultural and Creative Industries Agglomeration and allocating subsidies to enterprises in the agglomeration areas, and so on. Although the specific policy contents of each city are different, the theoretical basis behind the policy is similar to the earliest development policy of cultural and creative agglomeration in Western countries: one is to develop cultural and creative industries by using Porter’s industrial agglomeration theory; the other is to improve

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the decaying image of the inner city through the regeneration and reuse of old industrial plants, which is also called “culture-­led urban renewal”. As I mentioned in the previous literature review, the development of cultural and creative industry parks in mainland China is a gradual process of concentrated eruption and iteration, which has caused many scholars at home and abroad to conduct in-depth research on this phenomenon, and put forward different models of 1.0/2.0/3.0 (Shi Jingjing, 2016) and systematic understanding of continuous evolution and development. Globally speaking, creative agglomeration has been an indispensable topic for all the important academic conferences and journals in the field of creative industry. However, due to the differentiations in the overall framework of land policy, public administration and cultural policy in various countries and regions, the developing speed and model of creative agglomeration are not in the same pace or style. Therefore, although foreign theories have been instructive to China, it is difficult to explain the development of CCIP in mainland China. Closely related to the economic transformation of the whole country and the background of innovation and entrepreneurship trend at present stage, CCIPs in mainland China are constantly changing and developing. In a sense, it is exactly the integration of various development elements and motivation in the current policy and macroeconomic environment that stimulated the extensive attempts and consistent evolution of CCIPs. Although there was “confusion” or short-term profit-driven “speculation” in CCIP operation at first stage, yet the unsustainability, failure and criticism led to more reflections. So we should understand that experiments or trial and error are also the process of learning and evolution, which forced the operators to have broader vision, stronger integration ability and learning ability. More and more adjustments and richer practical experience have gradually polished some successful cases in the development model innovation, and some win-win results also have been achieved in these adventurous attempts. With so much relationships with the holistic developing stage and economic structure transformation, the CCIP in mainland China is actually a comprehensive project reflecting the correlated characteristics of “creative economy” in contemporary China. However, because the development of cultural and creative parks is mostly related to the renewal of old industrial buildings, it involves a series of activities, like the land-use change, reconstruction investment, the operation and management of creative ecology and so on, and a group of subjects, such as the government, property owners, operators, enterprise tenants and so on. Therefore, compared with the specific industries in creative economy, CCIP business is more

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complex for its obvious relations to the publicity and sociality. That is why the research papers on CCIP or creative agglomeration have different perspectives such as economics, sociology and urban space. But even if the cultural and creative park is closely related to urban space issues, it is essentially an economic issue, especially in the top-down constructed CCIP cases. For these reasons, the real meaningful question lies not in whether there should be a cultural-creative industries park, but in how to position and manage the production and benefits of such a creative space.

3.3   The Sources of Field Experience and Data The data collection of this study could be traced back to 2008 since the author moved to Shenzhen from Beijing. During the past decade of my stay in Shenzhen, I went countless times to OCT-LOFT to participate in various cultural activities, to meet with friends, to enjoy artistic exhibitions or to lead friends from other places to have a cultural visiting tour. Honestly speaking, OCT-LOFT has been an important part of my cultural life and leisure life in all these years living in Shenzhen. So my daily observation of the CCIP in extensive sense could be counted as at least ten years. In strict sense, my academic-oriented field study of OCT-LOFT was first conducted in November 2015, when I had the initial two-hour in-depth interview with the general manager of OCT-LOFT.  And then I interviewed some other managers of tenant enterprises and some cultural visitors as the first stage of this case study. Based on these initial field study and observation, I finished my first case study paper on OCT-LOFT and submitted it to the 26th Biennial Academic Conference of the International Association for Cultural Economy (ACEI). The paper was accepted and I presented it in the main parallel forum themed on “creative cluster” of the conference held at the University of Valladolid, Spain, in June 2016. Since May 2017, I had conducted the second stage of the case study on OCT-LOFT with more in-depth interviews on a larger scale, especially in the part of the tenant enterprises, including the deputy general manager and the promotion department director of OCT-LOFT Cultural Development Co., Ltd, 12 managers or employees of tenant enterprises and some random interviews with anonymous passersby or cultural visitors in the CCIP streets. And in December 2016, I learned from one of my friends who works in the design industry in Guangzhou that 289 Art Park had been the most frequently mentioned and popular CCIP among his Guangzhou friend circle related to creative industries. In March 2017, when I participated in the

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forum “Urban Renewal and Culture Empowering: Cultural and Creative Industries Park”, I found the forum was exactly held in Guangzhou 289 Art Park. And the manager in charge of the CCIP operation, Mr. Wang Ling, was invited as one of the keynote speakers of the forum. He shared the operation experience of 289 Art Park in his speech, which aroused my intense interests in the so-called replicable CCIP model. Because of the popularity and the professional recognition of Guangzhou 289 Art Park, as well as its successful CCIP “replication” practice in Shenzhen and Foshan, I selected this case as the second case study of this research. After that forum, I kept the frequency of field study on 289 Art Park one time half a month to participate some of cultural activities or meet friends there to observe the daily life of the CCIP and carried out a series of in-depth interviews on the appointed time with the interviewees, such as Mr. Wang Ling, the manager of the park and co-founder of No. 1 Business Group, managers of some cultural start-ups initiated by South Media Group and employees of some tenant enterprises and the Lingnan Intangible Cultural Heritage Museum, as well as some random interviews with tourists. The interviewees of in-depth interviews were generally given a semi-­ structured interview questions in advance. In the process of interviews, I would extend more questions according to the narration of interviewees, and the whole interview process would be recorded with the permission from the interviewees. Finally, these interview recordings would be scripted into written materials as the basic data for the case study. Random interview is a short communication with the person that I accidentally encountered in the park, not having recording and not used as the main data, but would be kept in the form of field notes and research notes after finishing the field study trip. In addition, when interviewing the managers of the two CCIPs, they kindly helped me by giving a part of important research materials and useful data, such as OCT-LOFT’s quarterly journal @LOFT and the self-­ generalized work for the tenth anniversary of OCT-LOFT—Creative Ecology: Practice of OCT Creative Cultural Park, edited by the park management team and issued publicly. Guangzhou 289 Art Park also showed me its public-issued magazine—289 Art Fashion—as well as its own public We Media account and the online address of the e-commerce platform, which enriched the author’s information and materials collection of the operation of the CCIPs. For the specific information of the in-depth interviews about the two parks, please refer to Tables 3.1 and 3.2 for the interviewee’s names and positions, interview date and place, as well as the time duration (in minutes).

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Table 3.1  The information of in-depth interviews on Shenzhen OCT-LOFT No. Name 1

2 3 4 5 6 7

8

9

10

11

12

13

Institute

Position

Date

Place

OCT-LOFT Cultural Development Co., Ltd Zhao Lei Position Architecture Ah Fei Old Paradise book store Shen Bridge Gallery Yangang Tingting Istituto Marangoni (Shenzhen) Ren Little Thing Gang Zhang OCT-LOFT Han Cultural Development Co., Ltd Huang OCT-LOFT Jieyu Cultural Development Co., Ltd Mr. Wu The Barn Contemporary Art Space Kaka Hive Center for Contemporary Art (Shenzhen) Ms. Lin Hive Center for Contemporary Art (Shenzhen) Michael Cheers Wine Cellars

General manager

Nov. 2015

120

Co-founder, partner Co-founder, partner General manager Administrative director Co-founder, COO Deputy general manager

Nov. 2015 Aug. 9, 2017 Aug. 16, 2017 Aug. 20, 2017 Aug. 22, 2017 Sep. 14, 2017

Han Tang Building (OCT Group official building) OCT-LOFT OCT-LOFT

150

OCT-LOFT

60

Raffles City (Seesaw café) KK Mall (Aix Arome Café) OCT-LOFT

60 120

Promotion director

Sep. 14, 2017

OCT-LOFT

90

COO

Sep. 26, 2017

OCT-LOFT

60

COO

Sep. 26, 2017

OCT-LOFT

60

General manager (Shenzhen General manager, founder COO

Sep. 26, 2017

OCT-LOFT

60

Sep. 26, 2017

OCT-LOFT

60

Sep. 27, 2017 Sep. 14, 2017

OCT-LOFT

100

OCT-LOFT

60

Sep. 14, 2017

OCT-LOFT

30

Liu Hongjie

14

Song Ning Alex

15

Ms. Wu

C Foundation Shenzhen Pyro Education & Technology Ltd Crafts Jewelry

Co-founder

Sales

Minutes

120

60

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Table 3.2  The information of in-depth interviews on Guangzhou 289 Art Park No. Name

Institute

1

Wang Ling

2

Wang Ling

3

Mr. Fang Huang Bin Louis Chen Yama

No. 1 Business Co-founder, Group, 289 Art CPO, President Creation Company of 289 Art Creation No. 1 Business Co-founder, Group, 289 Art CPO, President Creation Company of 289 Art Creation 289 Art Creation COO Company Juyou Culture Founder, general Company manager Louis Canton Café Founder

4 5 6 7

WP Leather

Position

Shop manager

9

Ms. 289 Craftsmanship COO Zhang Company Mr. Luo Lingnan Intangible Activity planner Cultural Heritage Museum Chantra Bean 2 Cup Café Barista

10

Kellie

8

11 12 13

Grandview Garden Furniture Guo 289 Pictures Lishan Company Gong BicoBrand Kai Company Fan Liya 289 Craftsmanship Company, 289 Art Creation Company

General manager assistant Co-founder, general manager Founder, general manager Founder, general manager, Deputy President of 289 Art Creation

Date

Place

Aug.18, 2017 (morning)

289 Art Park

60

Aug. 18, 2017 289 Art (afternoon) Park

80

Aug. 18, 2017 289 Art (afternoon) Park Aug. 28, 2017 289 Art Park Aug. 28, 2017 289 Art Park Aug. 28, 2017 289 Art Park Oct. 28, 2017 289 Art Park Oct. 28, 2017 289 Art Park

30

Oct. 28, 2017 289 Art Park Oct. 28, 2017 289 Art Park Nov. 9, 2017 289 Art Park Nov. 9, 2017 289 Art Park Nov. 9, 2017 289 Art Park

Minutes

90 50 40 20 30

50 30 50 60 80

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References English References Dyer, W.  G., & Wilkins, A.  L. (1991). Better stories, not better constructs, to generate better theory: A rejoinder to Eisenhardt. Academy of Management Review, 16(3), 613–619. Hsiao, R. L. (2006). Research without numbers: Introduction to dialectical research methodology. Pearson. Lincoln, Y.  S., & Guba, E.  G. (1985). Naturalistic inquiry. Thousand Oaks, CA: Sage. Yin, R.  K. (1989). Case study research: Design and methods. Newbury Park, CA: Sage.

Chinese References 施晶晶, 2016。上海文创园区的迭代发展——文创园区迈进3.0时代。收录于荣跃 明、花建(编)上海文化产业发展报告(2016)。上海: 上海社会科学院出版社。

CHAPTER 4

The Case Study on the Business Model of OCT-LOFT

4.1   Background of OCT-LOFT Creative Culture Park of Overseas Chinese Town is commonly known as OCT-LOFT, where OCT is the abbreviation of Overseas Chinese Town, and LOFT is from the imagination of the earliest attic art in the SoHo District of New York. OCT-LOFT is the earliest CCIP in Shenzhen, and its parent company—Overseas Chinese Town Group (OCT Group)—tries to combine culture with industries after making leading achievements in domestic market with branded consumer electronics manufacture, cultural theme parks, real estate development and other fields. Founded in 1985, the Overseas Chinese Town Group (OCT Group) is a central enterprise under the State-owned Assets Supervision and Administration Commission of the State Council. At the beginning of the construction of Shenzhen as a “special economic zone”, the central government called on ministries and commissions to use their resources to drive the economic development of the “experimental field”. Among them, the Overseas Chinese Town Group is a new economic entity established in Shenzhen by the Overseas Chinese Affairs Office of the State Council. In addition to developing the service industry and tourism, many light industrial enterprises have been brought in and a large number of factories have been built by taking advantage of the superior-subordinate relationship between the Overseas Chinese Affairs Office and the Hong

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Kong China Travel Service. At the beginning of the operation, like most of the enterprises in Shenzhen in those years, they were all “three-plus-­ one” processing and compensation trade factories, which did custom manufacturing with imported materials, designs or samples and compensation trade. At its peak, there were hundreds of large and small industrial enterprises. The whole industrial park of OCT covers an area of about 1 square kilometer, which amounted to one-fifth of the 4.8 square kilometers of the whole Overseas Chinese Town area at that time. However, this phase is not long. About ten years later, which was around 1995 and 1996, the Overseas Chinese Town Group began to make large-scale adjustments to its business. It intentionally increased the proportion in the field of tourism and real estate development, reduced the proportion of industrial manufacturing and only retained “Konka Electronics”, which had developed into a relatively well-known brand and gradually grown into Konka Group. Other industrial production-oriented businesses were either eliminated by the market or relocated one after another due to higher rental costs and labor costs in Shenzhen. In the second urban planning outline of the Overseas Chinese Town in 1998, it was clearly put forward that “the scale of industrial development should be controlled and the proportion of cultural tourism industry should be expanded”. By around 2000, a large number of factories in the area where OCT is currently located were vacant. The decision-making process within the Group has experienced a great deal of controversy over what these vacant and old factories should be used for. The reason for the controversy is the emergence of two schools of thoughts. At that time, the main development business of the OCT Group had been transferred to cultural and entertainment theme parks and real estate development. The theme parks in Shenzhen, such as Window of the World, Happy Valley and Splendid China, have been very successful and replicated in different main cities of the country. And the real estate development in the area around these theme parks has also become a big profitable business of the OCT Group in addition to tourism and formed a remarkable “culture plus tourism” and “tourism plus real estate” model of the OCT Group. Because the tourism and real estate business prospects were good at that time, there was a voice in the Group to continue property development. The residence product “Splendid Garden” had very good responses from the market with its first three phases of developments, which were around the theme parks and shared the whole cultural and leisure atmosphere. With the same economic logic, the construction

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of four-, five- or six-phase residence property was expected to have good real estate earnings. Especially after many years, the real estate business is definitely a more explosive industry, judging from the fact that the real estate prices in Shenzhen have been rising with the status of the city and the average price has soared by at least 50% in 2016. However, when the OCT Group sought to transform itself and set up its long-term brand, another voice seemed to be coming out smoothly, that is, as the focus of OCT development shifted out of Shenzhen and gradually expanded to Beijing and Shanghai market, the Group could put more attention to experiment with more possibilities in diversifying industries and businesses in the future. At that time, Beijing 798 Art District and Shanghai Tianzifang creative block began to take shape and attracted a lot of media exposure, becoming the fashionable “new thing” at the beginning of the new century. As a large-scale business group enjoying an important position in the field of cultural tourism, the OCT Group is also very interested in this new thing. Chen Yifei, an artist who first participated in the planning of the Shanghai Tianzifang project, was also a good friend of Ren Kelei, then chairman of the OCT Group. After being specially invited to Shenzhen to inspect the site and environment, Chen gave a positive suggestion that it is feasible to turn some old factories into cultural and creative parks besides the already congregated business of several major theme parks in the Overseas Chinese Town. During 2002 and 2003, the OCT Group began to investigate around and make plans for OCT-LOFT. In 2004, it was decided to carry out the project and start the transformation of old factories. They hired three designers from Urban Practice, who had returned from the United States to do the detailed spatial planning and architecture design of the park. After more than ten years, the space planning and public area design of OCT-LOFT is not out of date, but more and more accepted and appreciated by the creative community nowadays with a simple and neat style of post-industrial aesthetics. Since the park was officially opened in 2006, it has become a unique culture space of Shenzhen. From the very beginning of the first Shenzhen Urbanism/Architecture Biennale to the China (Shenzhen) International Cultural Industries Exposition, and then to the various exhibitions and cultural events held in this CCIP, such as OCT-LOFT International Jazz Festival, Tomorrow Music Festival, Independent Animation Biennale, Art Film Festival, T-Street Creative Market and so on, the OCT-LOFT has

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gradually been shaped into a cultural cluster or center with dense occurrence of cultural and artistic events in Shenzhen, and it also naturally became the must-go place for the art community in this city and those cultural tourists. The first phase of South District was opened in 2006 as the initial part of the project. And the reactions from the media, the market and the public were very passionate. By 2008, OCT-LOFT has produced a very attracting cultural agglomeration atmosphere. So there arose the idea to continue to expand the scope of this creative park. This led to the birth of the North District of this CCIP, which was launched in 2009. The first phase of the park and the second phase of the new expansion were separated by Xiangshan East Street, a small two-lane street in the urban area of the Overseas Chinese Town, which has become the basic spatial structure of this cultural-creative industries park. North District was officially opened in 2011, resulting in the total area of OCT-LOFT amounting to 150,000 square meters of land area and 200,000 square meters of construction area. By 2013, District C, consisting of three factory buildings, had been developed, adding 35,000 square meters of construction area, of which the C2 Space had been transformed into a multifunctional space for showrooms or concert halls. On its official promotion wall in the CCIP, C2 is described as “the latest masterpiece in the upgrading of the industrial plant of the OCT-LOFT, aiming to further develop the park into an incubating platform for creative ideas, an innovation testing ground and a public art and cultural area”. After years of development, the park has attracted more and more art galleries and design brands with many OCT-­ LOFT branded international cultural festival, which makes the OCT-­ LOFT enjoy very good fame all over the world, and presents obvious cultural potential and advantages in creative industries clustering (Fig. 4.1). At its inception in 2006, OCT-LOFT was given the title of “Best 10 National Cultural Industry Demonstration Parks” by the Ministry of Culture and the honor of annual excellent cultural and creative parks in Shenzhen. Every year it receives hundreds of visiting teams. During the past ten years, OCT-LOFT has been enjoying the fame of most well-­ known and creative CCIP of Shenzhen, not surpassed by any other newly born parks. Because of its unique strategy on high-quality cultural content production, its brand value has become more and more outstanding and evident with the increasingly fierce competition among CCIPs. In 2017, 11  years after the opening of OCT-LOFT, the Hive Center for Contemporary Art, headquartered in Beijing’s 798 Art District, initiated

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Fig. 4.1  Open gate

its South China branch space in the Northern District of the park, becoming the second 798’s brand gallery after Bridge Gallery locating its South branch there. OCT-LOFT has become a truly branded CCIP in Shenzhen and even in the scale of the whole South China region, whether from its Model CCIP title granted by the government or from the practical choice of national or local well-known cultural and creative enterprises.

4.2   The Analysis of Business Model of OCT-LOFT 4.2.1  Basic Logic OCT-LOFT is a comparatively representative case in the swift development stream of CCIP in mainland China in the past decade. With its long-­ term prosperity and step-by-step expansion, it successfully illustrated what is sustainable development of a CCIP. For Shenzhen, the young city with only 40  years’ history, which was originally established as a special

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economic zone, OCT-LOFT has even special meaning and profound implication as a recognized cultural landmark of this city. To interpret the business model behind the success of OCT-LOFT, although it is very important to carefully examine the specific operation methods of the management team, which will also be the key perspective of our specific analysis, we should not forget the basic logic that OCT-­ LOFT is a new product and new industry experiment of the large-scale central enterprise—OCT Group. This large-scale central enterprise is not only famous for its theme parks and other related cultural tourism projects, consumer electronics brand and real estate development, but also the “elders” who built the city at the very beginning of Shenzhen’s establishment as a special economic zone, witnessing the city’s growth from the mudflat with nothing to present high-tech and innovative model city of China. With this historical origin, the OCT Group has a lot of self-owned abandoned and vacant factories, which were exactly what OCT-LOFT was rebuilt from. In this reason, whether from the perspective of overall organizational structure or from the land ownership, the development of OCT-LOFT was in a typical “top-down” construction model. The initial reconstruction team was from the real estate development company of the OCT Group. After the operation entering the stable stage, the OCT Group formally established an “OCT-LOFT Cultural Development Co., Ltd.” at the formal opening of the North District—the second phase of this park project. As the general manager of the park’s operating company, Mr. Liu Hongjie gave some more detailed information about the organization’s issue before the company was founded: This task has been done under the Group’s real estate company. At the initial stage, three departments of the real estate company were participating. Of course, the engineer department was in charge of the construction and rebuilding work, needless to say; the marketing department was responsible for the planning and organizing of the cultural events and activities; and the job of inviting businesses for the CCIP was allotted to the administrative department. Then we still had some branding work in the first stage. Later on, the administrative department gradually faded out and the rental department entered, but it was just responsible for the work of collecting rents from those businesses in this park and negotiating contracts. Although the marketing department began to organize activities to warm up this new cultural place, they did not care if the merchants clustered in this park would interact with each other or if there were networked with each other. They just finished the part of making the OCT-LOFT brand sound. I was in the rental

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department at that stage. When I signed the rental contract I would like to communicate with my clients and I got to know from their feedback that they thought the organization of OCT-LOFT was too confusing, having different departments to deal with different issues. And then, the Group also found it very difficult to communicate with the government with different problems about OCT-LOFT … So we set up a project department in the early days of the Northern District transformation, and finally we set up the OCT-LOFT Cultural Development Company in 2011 … and then we could efficiently put everything together in this specific organization.1

Looking back at the organizational establishment process in the early days of the company, we can clearly understand that for the OCT Group, OCT-LOFT was a strategic and tentative project directly designed and controlled by the corporate headquarter of the OCT Group, and it was closely related with some kind of branding function with those cultural events holding and exposing on the press, which was beneficial for the whole Group (Fig. 4.2). 4.2.2  OCT-LOFT: As the Strategic Branding Tool for the OCT Group OCT-LOFT, as a strategic trial project of the OCT Group in the global trend of cultural and creative industries development, is a special case in mainland China among the early years of the new century. At the start of 2000, the famous Chinese cultural agglomeration of Beijing 798 Art District and Shanghai Tianzifang gradually and spontaneously formed in an “organic” way with some sort of occasional clustering of artists and related creative workers who rented workshop space or studios in those obsolete and abandoned factories. And these “trendy” practices of the artists could also be seen as inspired directly or indirectly by the development of the SoHo District in New York City, thus having the so-called authentic style of cultural-creative agglomeration in a bottom-up model. So when the senior managers of the OCT Group made the strategic decision to create a top-town styled CCIP, there was no ready-made successful case for reference. At that time, the four major theme park projects had won great success, making the OCT Group become the market leader and model creator in 1

 From my interview with General Manager Liu Hongjie on November 20, 2015.

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Fig. 4.2  Xiangshan East Street between Southern District and Northern District

the development of “cultural tourism real estate”. Close to the most well-­ known theme park—Window of the World—there are other two theme parks—Splendid China and Happy Valley. The OCT Real Estate Company had developed a series of different properties and had gained considerable market returns due to its geographical advantages in the neighborhood theme parks. With this context, the OCT Group decided to create a top-down CCIP—OCT-LOFT—which at same time created a reverse phenomenon of the “gentrification”. Under the notorious gentrification process, the prosperity of cultural and creative agglomeration usually ironically leads to the rise of land prices in the surrounding areas, forcing artists to relocate because they could not afford rising rents, while the new urban middle class gathers around the cultural district by purchasing the newly developed apartments in the neighborhood. Hence, the cultural district often changed from the concentration of independent art galleries, independent design studios and independent shops into the “commercial district”

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where a large number of chain boutique shops choose to locate their branches there. The repeated cultural district developing fate was like a curse, which had been criticized fiercely by academia and people from the art and cultural circles. However, the development context of OCT-LOFT was just on the opposite. It started as a strategic thinking of the decision-­ maker of the OCT Group with its focus in the long-run development of the whole Group and a prudent experiment under the precondition of the explosive growth of OCT Real Estate development. In an in-depth interview in 2015, Liu Hongjie, the general manager of the park’s operating company, said: The area was largely vacant around 2000. At that time, there were two voices. One was that the market reaction in the third phase of Splendid Garden was particularly good. Then there was a natural logic that we could continue to develop the fourth and the fifth Splendid Garden for the residential market. Another voice, having the background of the times, stated that our development focus has already expanded to other cities, like Beijing, Shanghai, Chengdu, etc. Therefore, in Shenzhen, we had a good chance to control the pace and to see if it was possible to bring in other industries chances for OCT Group’s future. And then at that time we postponed the pace of property development.2

This statement has some credibility, but it is not the whole story. In the realistic aspect, the three theme parks receive nearly one million visitors each year, and the explosive development of OCT Real Estate in a short period of time increased the traffic pressure in that area. If those old industrial plants close to the theme parks and the first three phases of Splendid Garden property were simply redeveloped into residential buildings, the traffic pressure might have further increased, seriously affecting the living experience of the residents, and thus damaging the brand of OCT Real Estate. The OCT Group was very clear that the success of real estate development came from the advantages brought by the cultural and recreational atmosphere adjacent to the theme parks. So if OCT Real Estate wanted to compete as an independent real estate development brand in the whole country, it has not really established its own brand value and brand connotation. Mr. Liu Hongjie originally came from the rental department of the OCT Real Estate Company. In his interview, he made it very clear that: 2

 From the interview with General Manager Liu Hongjie on November 20, 2015.

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OC-LOFT’s cultural activities … mainly aimed to attract the attention of the public to achieve a dual purpose. That is, the public come to the park to be able to consume, to understand the design, creativity and at the same time we also hope to take advantage of this platform to transmit the ideas and spirit of the OCT. Therefore, it is not only operated in a way of real estate project, but also in a hope of allowing everyone know what kind of an enterprise the OCT Group is. We not only have tourism industry and real estate industry, but also have our own culture and cultural industries.

That is to say, on the strategic map of the development of the OCT Group, the establishment of OCT-LOFT took on a relatively obvious “brand development” function at the beginning, and the main appeal of the brand connotation is also very distinct, which is to further deepen the highend brand image of the Group in the “culture creation” field. Especially in Shenzhen—the young city which was born as a special economic zone and once was referred to as “cultural desert”—efficiency and practicality are the original spirit genes of the city, while culture and art on the opposite are the specially shorted assets. By developing theme parks in the 1990s, the Group realized the first successful transformation from manufacture industry and became a pioneer in the field of cultural tourism industries. By the OCTLOFT project, the OCT Group wanted to go further in cultural and creative industries development, which made OCT-­LOFT definitely become an important node in the process of the Group’s brand shaping. Although the development of the cultural-creative industries park is a “real estate project” subordinate to OCT Real Estate Agency at the very first, the OCT Group regards the creation of OCT-LOFT as the strategic thinking of the Group’s brand value-added beyond a pure commercial property project in the following aspects. 4.2.2.1 Establish Non-profit and Professional Art Institute—OCAT Compared with the magnificent Bauhaus architecture of Beijing 798 Art District and the unique Tianzifang traditional block in Shanghai, the architectural form of the old industrial factory buildings of OCT in Shenzhen is too mediocre. Most of them are the economical and normal tower architecture with five or six stories in the 1980s. In South District, the first phase of the park, the relatively featured space form is a warehouse with elevated internal height near the open entrance of OCT-LOFT. In the regeneration design of the park, the warehouse was transformed into a huge exhibition hall, initially affiliated to He Xiangning Art Museum, which was also

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Fig. 4.3  OCAT

managed by the OCT Group. The exhibition hall later was established as an independent “OCT Contemporary Art Center” (OCAT), directly managed by the OCAT Project Division under the OCT Group (Fig. 4.3). In addition to Shenzhen, the OCT Group has also set up branches of OCAT in Beijing, Shanghai, Wuhan and Xi’an. Each branch of the art center has its own professional focus, but all of which are in the field of contemporary art. OCAT’s branch galleries in China formed a gallery group with an independent website. On the first page of the website is stated the purpose of OCAT: to strengthen the communication between China and international contemporary art, to promote Chinese excellent contemporary art to the world and introduce international excellent contemporary art to China. Based on the above principles, OCAT thus established the operation mechanism of contemporary art which is rooted in China’s contemporary art context, promoting the healthy development of Chinese contemporary art and the benign interaction with international contemporary art.

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Its slogans are “Be the airport of Chinese contemporary art” and “OCAT is the synonym of Chinese independent art”. This art institute has its own council responsible for administrative decision-making and implementation, personnel appointments, funding, organization and supervision. Mr. Ren Kelei, then president of the Group, served as honorary president of OCAT, and the boss of OCT Real Estate Agency served as vice president. Professionals were also hired to form an academic committee responsible for academic decision-making and implementation of the museum. According to the information given by Manager Liu Hongjie in the interview, the total annual expenditure of the OCT Group in several art museums amounts to 20–30 million RMB. In addition to this museum group, in 2008, the OCT Group also built the first Chinese art museum with the theme of design called Hua Museum on the edge of Shennan Avenue, the main avenue of Shenzhen City. The Hua Museum is not far from the OCAT Museum and OCT-LOFT, which helped to create a bigger creative cluster beyond OCT-LOFT but still within the OCT area, and hence further strengthening the brand image of the OCT Group in the field of contemporary art and design. From the series of investments and operations in art and design, we can see the ambition of the OCT Group in cultivating its brand with high-end culture and art. Shenzhen is not like Beijing, which enjoys rich resources in historical and local culture tradition and as the national cultural center naturally attracts many artists and art institutions. Except the public art institutes within the government’s public cultural service system, the private art galleries on contemporary art are very scarce in Shenzhen. The OCAT Museum built by the OCT Group is of milestone significance in filling the cultural gap in the city. 4.2.2.2 C  losely Related the Branding Position of OCT-LOFT with the City Development The establishment of the OCAT Museum group in different cities is not only for the long-term strategic planning of the OCT Group to expand its brand, but also has very promotional and practical meaning. The OCAT Headquarter Museum, which is located in the entrance of OCT-LOFT, undertakes the initial propaganda service function for this newly constructed CCIP. In 2004, when the park was just completed, Professor Zhang Yonghe, curator of the first Shenzhen Urbanism/Architecture

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Biennale3 (“Shenzhen Biennale” for short) and then head of the Department of Architecture at Massachusetts Institute of Technology, was impressed a lot with this first CCIP transformed from old factories in Shenzhen. Especially, the OCAT exhibition hall reconstructed by the warehouse has the unique space temperament of the post-industrial city, which makes the world-famous architect and curator decide to put the exhibition area of the first “Shenzhen Biennale” in the newly reconstructed OCT-LOFT Phase I (South District). More than a decade ago in mainland China, it was very fashionable and novel to see a serious and academic exhibition in a warehouse and factory. As the only biennale themed in urban or urbanization in the world, “Shenzhen Biennale” has attracted much attention of many media and professionals. The success of the first Shenzhen Biennale and the wide spread of its reports on press and media have brought an influential public value for OCT-LOFT and rapidly enhanced the visibility of this new CCIP in the professional circles of arts, design and creative industries. To support the curation of this Biennale, OCT-LOFT also made its “sacrifice” to postpone the opening of the park to the end of the Biennale. OCT-LOFT originally planned to build a cluster of fine art galleries in South China, which would be renowned enough and comparable to the Beijing 798 Art Park. But through the first Shenzhen Biennial exhibition, they found that the participants are often professionals. For ordinary people and citizens at that time, the concept of the cultural-creative industries park was not too novel to accept. Added that Shenzhen doesn’t have as many artists and artistic institutions as Beijing, it is not realistic to let them spontaneously get together and cluster here like Beijing 798. Fortunately, they accidentally found that although the resources in contemporary art were still quite scarce at that time, Shenzhen actually had a very strong design energy. Architectural design, interior design, graphic design, clothing design, industrial design and so on, all of these design subdivision sectors have a large group of representative and influential companies and industry leaders in the national market. Therefore, the management team of OCT-LOFT adjusted the original plan and extended the theme of the park from fine art to design, avant-garde music and video, while contemporary art is still the focus of the OCAT Museum which would stand as an academic and professional benchmark for Shenzhen culture production 3  Shenzhen Biennale was changed into Urbanism/Architecture Bi-City Biennale (UABB), with HK as the cooperative city in the second Biennale in 2007.

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and accumulation, and then serve the strategic goal of the OCT Group in the long run. As a matter of fact, the OCT Group has been keeping in touch with a large number of designers to deal with its real estate business and theme park business. Therefore, the new adjustment strategy enables them to introduce well-known leading designers and design enterprises into the CCIP, including Gao Wenan’s Studio, who is a member of the Royal Institute of British Architects, senior member of the Royal Australian Institute of Architects and the “Father of Interior Design in Hong Kong”; Bi Xuefeng’s Yan Wen Design Co., Ltd., who is a member of the Alliance Graphique Internationale (AGI) and academic member of Shenzhen Graphic Design Association; and Urban Architecture Studio. Some of these design enterprises developed a lot of innovative business in the park with the observation of the daily dynamic. For example, the Gao Café, Gao noodle shop and Gao hairstyle design studio are all extended from Gao Wenan’s design studio. Mr. Gao has introduced many interesting art and design elements into those shops to encourage art entering daily life, which in a sense promotes art and design appreciation to the public and cultivated them unconsciously with aesthetic perception in commercial space. These innovative businesses’ blended art, design and commercial consumption had also become an important opportunity for the park to attract the general public, curious consumers and artistic groups to engage in and explore. In a word, in the brand positioning of the park, OCT-LOFT decision-­ makers firmly grasped the city’s feature and developed the CCIP in a right way, not only creating some new cultural images for the city as a differentiated supplement but also strengthening the symbolic value of the OCT Group in developing and sponsoring contemporary art and design, which is also based on the city’s original design power. So the right theme picking of a CCIP could have a win-win effect for both the developer and its city. 4.2.2.3 T  he Managerial Logic of OCT-LOFT on the Branding of the Group The strategic intention to create a brand image with a high-end and refined culture through the CCIP is also reflected in the internal KPI model set for the OCT-LOFT by the Group. In terms of the performance appraisal of OCT-LOFT cultural developing company, a senior manager of OCT-LOFT stated:

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Over the years, the Group’s real estate company, actuarial companies, joint-­ stock companies … are not measuring our performance at any level with rental returns. Our enterprise also has an assessment every year, but the economic indicator or the rental income is always only one of the assessment indicators, and will never be the only and the most important one. There are no quantitative requirements, such as a 30% increase this year over last year (and so on). Almost reaching the balance or just a little bit more is good. However, our assessment system includes the indicator of the media exposure frequency, which is like an indirect brand promotion requirement. So OCT-LOFT must be a brand presenting channel for the Group. … we have a slogan called ‘Creator of quality life’, which is the Slogan of the whole Group. What is quality life? A good house and good material conditions are definitely not enough. It is the interesting and spiritual things or culture that what OCT is actually creating right now.4

Specifically, the channel function as “brand promotion” of the OCT Group is divided into three parts: the first is the public cultural activities; the second is the brand magazine production, like the quarterly magazine with four issues a year—“@Loft”; and the third part is the park’s own social media management, such as microblog account, WeChat public account and the website, all of which are beyond the promotion of a single event. From the evaluation indicators of OCT-LOFT’s performance, we can see that OCT-LOFT, like many other cultural and creative parks, depends on rents as its main source of income. But unlike other CCIPs, backed by the OCT Group, on the one hand, it does not have too much economic growth pressure; on the other hand, it is an important tool or model in the overall strategic mapping of the Group, bearing an important function of enhancing the connotation of the brand culture, so it typically reflects the rooted nature of a “top-down” designed CCIP. 4.2.3  Some Main Management Measures of OCT-LOFT 4.2.3.1 Establishment of a Specific Management Entity for OCT-LOFT As we analyzed above, the birth of OCT-LOFT was due to the OCT Group’s adjustment of its own business segments and its long-term brand promotion strategy. So once the operation of the OCT-LOFT project went on the right track, continuous and professional management will be 4

 From the interview with General Manager Liu Hongjie on November 20, 2015.

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a challenge if the park was still taken as a project department under the OCT Real Estate Company. In fact, the favorable market response with the success of OCT-LOFT Phase I (South District) had prompted the senior manager of the OCT Group to make the decision to expand the park area to Phase II, which is almost twice the area of Phase I, resulting in the current OCT-LOFT taking the land area of 150,000 square meters and the final construction area of 200,000 square meters. It is also after the second phase of redevelopment in 2011 that finally an independent operating company—OCT-LOFT Cultural Development Co., Ltd.—was established to carry out all-round management of the park. From the perspective of management, there are two levels of organizational management: one level is the management of OCT-LOFT Cultural Development Company by the headquarter office of the OCT Group; the other is the management and operation of the internal affairs of the CCIP by OCT-LOFT Cultural Development Co., Ltd. It should be said that the two levels of management are closely related. As previously analyzed, OCT-LOFT started from the Group’s brand strategy consideration, which had defined very clear management objectives and self-position of OCT-­ LOFT from the outset. It’s exactly because of the clarity of management structure and management organization at these two levels that OCT-LOFT can continue to develop sustainably and strengthen its brand after expanding its area. Before the birth of the operation company, OCT-LOFT was invested, rebuilt and managed by the OCT Real Estate Company. Although the idea of developing the OCT brand has been strategically proposed by the Group’s general leader, the OCT Real Estate Company was essentially a purely market-oriented company and had to be assessed by the Group’s board of directors in the aspects of property sales and profit-making, which was exactly in contradiction with the objective of long-term investment and operation of the CCIP and hence went against the long-term development of the park, not to mention it had to deal with the busier and more professional management affairs after the CCIP area expansion. From the perspective of economic logic, if the OCT Group or OCT Real Estate Company, which was responsible for the specific development of the CCIP, only regarded OCT-LOFT as a tool for property renting earnings or in other words just developed it with the aim of collecting rent, then it is absolutely unnecessary to set up a special operating company. In fact, in addition to the investment department and the administrative department, one of the most important departments of the

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operating company is the activities planning and operating department in the organizational structure design, which is actually in great need of talents with cultural background and vision. The reason why OCT-LOFT could be prosperous consistently and sustainably is that the artistic exhibitions, cultural festivals, professional-oriented cultural activities and events have been able to stay at a stable high-quality level and could attract the public and professionals in long time, which should be seen as an obvious competitive advantage generated from the unique management strategy of the OCT-LOFT Cultural Development Company. 4.2.3.2 T  he Management Strategy of OCT-LOFT: Cultivate Creative Ecology (A) The Psychological Construction of Creative Manager: Experiment and Exploration Although OCT-LOFT is a creative cultural park reconstructed from old factories in a “top-down” way, the “top” level delegated the specific management and operation right of the park and thought it is necessary to establish an operating company to manage it. Does it mean that the management of a CCIP is different from the usual corporate management or project management? For the central state-owned enterprises in China such as the OCT Group, normally speaking there is a set of rigorous organizational structure and evaluation system. For them, the operation failure is not only an economic issue but also a political issue. Although the OCT Group has collected some successful management experience in the theme park creation and operation related to cultural tourism industry, for the “new things” such as the cultural-creative industries park, they still hold humble attitudes of careful learning and prudent testing. In 2014, OCT-LOFT Cultural Development Co., Ltd. published Creative Ecology: Practices of OCT-LOFT in memory of OCT-LOFT’s tenth anniversary, in which the editing team generalized the construction of “creative ecology” as the main strategy of CCIP operation and management and pointed out that its self-called “unparalleled creative operation” was closely related to two aspects: one is the efficient design and allocation of the public space of the CCIP as cultural infrastructures for diversified cultural activities; the other is the careful operation of cultural services. In addition to the advantages of its geographical location and the convenience of the public transportation system, the managing team put the

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CCIP advantages of its “careful operation” on the effect that the park was a real “public space without entrance tickets and barriers, so that the community residents can really get close to culture”. In the management and strategy map, the operators clearly identified that the park is not only for business and rent: There are a large number of public art space, such as the OCAT Museum, B10 space, A3+ and so on. Through planning and organizing a large number of high-level, professional cultural and artistic activities, the unique artistic charm of the park is formed and hard to replicate, which has brought about the renewal of ideas and the expansion of vision, and also enhanced the enthusiasm of the park’s institutions to participate in public cultural exchanges, with intentional efforts to promote professional interactions, lead the industrial trend, and create a cultural highland for creative industries in South China.5

The above statement, recorded in the chapter of “OCT-LOFT Model Discussion” at the beginning of the book, can be regarded as a summary of the core management idea and operation experience of the CCIP defined by its management team. It can be said that it is the strategic awareness that supports the overall practices of OCT-LOFT in spatial reconstruction and long-term operation. For example, in the rebuilding of the second phase of the park, that is, the North District, it took advantage of the experience of the South District development, sparing out 3000 square meters to redevelop into public cultural activities venue—B10 space and A3+ space. And later on, some very influential and popular cultural activities produced by the park, such as the OCT-LOFT International Jazz Festival and “Lifting Weight as Light—Art Film Season”, are respectively held in these two public art spaces, which are owned and operated by OCT-LOFT.  Recently, more old factories close to the CCIP in the North District are undergoing reconstruction and redevelopment, and among which a new exhibition space—C2 space—was the first place to be finished transforming and it is exactly where the “New Vision” art exhibition had been held. Perhaps in favor of the accumulation of “cultural resources“ from the past successful projects in cultural tourism industry, the planning and design of OCT-LOFT had been collecting advice consciously from important professionals in the cultural-creative field since the project was initiated. In 2003, when the CCIP business was finally decided to be carried 5  Shenzhen OCT-LOFT Cultural Development Co., Ltd. 2014. Creative Ecology: Practices of OCT-LOFT. Beijing: Golden City Press. P20–21.

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out, Chen Yifei, a famous Chinese painter living in the United States, was invited to visit the old factory buildings of the OCT Group, and Chen gave some critical suggestions: We must not turn the future CCIP into a painter’s village. We must bring in well-known artistic and creative organizations or studios, including some commercial organizations, to embrace the new arts and the new economy, so that (cultural-creative) industrialization can be shaped.6

And the manager of the park operation company also said that in order to run OCT-LOFT properly and successfully, the top managing level of the Group specially organized a team to visit the SoHo Art District of New York for on-the-spot investigation. In their perception: The successful model of redeveloping old factory buildings around the world is the SoHo art district in Manhattan, New  York, which started between the 1950s and 1960s. Gallery operators and designers gathered in the cheap SoHo old factory buildings, which gave birth to a new industrial model of post-­ industrial society, the Loft model. Although there were not even real art industry and there were no large scaled galleries or artist groups back to the start time, Shenzhen designer group has collected considerable influences. For example, some graphic designers like Chen Shaohua, Han Jiaying, Bi Xuefeng and so on already had enjoyed great fame and influence around the country. Actually many well-known brands in China are served or created by these graphic designers. These designers’ understanding of the new economy and their creation of urban vitality had helped OCT to see new experimental foundations and exploration opportunities in urban creative communities and spaces.7

What we can clearly understand from the above statement is that the Group decision-maker took two reference coordinates for OCT-LOFT positioning: from vertically historic coordinate, taking the success of the SoHo Art District in New  York as a model, they judged that this “loft model” would represent the new industrial trend of “post-industry” in the future; then from the horizontally environmental coordinate, based on the development stage of the Group in Shenzhen and the existent large designer community, they thought OCT-LOFT could seize the “new 6  Shenzhen OCT-LOFT Cultural Development Co., Ltd. 2014. Creative Ecology: Practices of OCT-LOFT. Beijing: Golden City Press. P18. 7  Shenzhen OCT-LOFT Cultural Development Co., Ltd. 2014. Creative Ecology: Practices of OCT-LOFT. Beijing: Golden City Press. P18.

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experimental foundations and exploration opportunities in urban groups and spaces” as its starting point. From the above analysis, the basic attitudes of “experiment” and “exploration” can be regarded as the keynote of how to operate the OCT-­ LOFT, which was set by the senior managers of the OCT Group under the help of the field study and professional consultancy. (B) The Managerial Tactics of OCT-LOFT: De-hierarchization and Cultivation of Creative Ecology In his book Creative Ecology, John Howkins (2009) states: A creative ecology is a niche where diverse individuals express themselves in a systemic and adaptive way, using ideas to produce new ideas; and where others support this endeavor even if they don’t understand it. These energy-expressive relationships are found in both physical places and intangible communities; it is the relationships and actions that count, not the infrastructure.8

It is difficult to determine whether the manager of OCT-LOFT has read this passage beforehand in his actual management practice. But some important cultural assets that OCT-LOFT have accumulated so far definitely benefited from the “relationships and actions” between the manager and the tenant enterprises in the park. In May 2011, the North District opened and the park administrator invited the then-famous independent bookstore—Old Heaven Bookstore—of Shenzhen to settle in OCT-LOFT. By this chance, one of the main founders of Old Heaven Bookstore, Ah Fei, realized his dream of a three-in-one space creation, which combined bookstore, coffee shop and live house. There regularly staged various kinds of music performances, including folk songs and jazz performances. Because of his big influence in Shenzhen’s independent music community and his experience in holding various music festivals for many years, he was able to invite a lot of well-known international musicians to perform in his space, which made Old Heaven Bookstore more famous and gradually became the representative of independent bookstores in Shenzhen and even on the national scale (Fig. 4.4).

8  Howkins, J. (2009). Creative Ecologies: Where Thinking is a Proper Job. Brisbane: University of Queensland Press. P11.

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Fig. 4.4  Old Heaven Bookstore

In a casual chat with the park manager, Ah Fei proposed the idea of holding the OCT-LOFT International Jazz Festival, which was warmly encouraged and supported instantly by the CCIP manager. Ah Fei talked about his observation on OCT managing culture in the interview:

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They actually have a learning attitude. They don’t know what you mean by the International Jazz Festival at that time, but they thought it sounds good. And because I’ve done some music performance on my own bookstore and it seems good, so they were willing to give me a small amount of money to try it out. Then there was the first OCT-LOFT International Jazz Festival in October 2011. They didn’t expect that I had produced this festival with my greatest effort. Even in the case that the fund they provided was not enough, I took out my own money to achieve the quality I want. They were moved by that. Actually, this music festival not only brought along a group of jazz fans in Shenzhen, but also because of the international and high level of the bands favored by the national and international jazz fans were invited to this festival, many crazy fans even pre-booked festive set tickets, then booked flight tickets to rush to this big jazz fan party. All of these enthusiasm and buzz encouraged the CCIP managing team to invest more in the next year’s jazz festival, which finally made it lasting year after year and now it was in its seventh year. The OCT-LOFT Jazz Festival has grown as an important medium for OCT-LOFT to enjoy good fame and high evaluation overseas. And the international jazz festival brought a really nice atmosphere and trained the niche music audience and fans of Shenzhen, so that the market presents a richer demand for diversified music festival product. It was on this audience and market basis that the experimental music festival— Tomorrow Festival was given birth.9

The OCT-LOFT International Jazz Festival has now become the most internationally influential cultural event of the OCT-LOFT. In 2016, 27 bands from 17 countries were invited to the Sixth Jazz Festival, which lasted for 16  days. The Seventh Jazz Festival in 2017 invited 25 bands from 16 countries for 19 days, all of which have reached a city-level international jazz festival in the scale and quality. The International Jazz Festival and the derived Tomorrow Festival are not the cultural activities designed by the manager of OCT-LOFT, but by the creative evolution of small-scaled start-up project initiating from the interaction and communication between the manager and some important tenant cultural enterprises in the park and based on the good relationship of mutual trust in this creative network. Such an example is not an accidental case. Another magazine concept store, Little Thing Shop, was also born by chance. Since 2008, the OCT-­ LOFT has been organizing the outdoor “T-Street Creative Market” in the South District every half month, inviting independent designers and 9

 From my interview with Ah Fei on August 9, 2017.

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creators from Shenzhen to participate in the fair free of charge. What the participant has to do is just to submit a complete application and product description in advance, which shall be selected by a special professional committee. In this way, the Little Thing magazine was given the chance to participate in the T-Street Creative Market and had reported this on-the-­ spot experience of the market culture in its own magazine. This independent magazine with a strong vintage style caught the attention of the OCT-LOFT manager. He invited the magazine producer and owner to open a shop in OCT-LOFT.  Exactly at that time, the magazine’s two founders also had the idea of opening a vintage design products store to enhance the customer experience and to promote a culture of independent design, handwork, vintage groceries and fair trade from both online and offline. That’s how Little Thing’s grocery was given birth in OCT-­ LOFT. And because of its unique vintage-styled cultural taste, it gradually became a major and representative cultural-creative brand in the CCIP. Ren Gang, manager of the magazine and brand shop, concluded: The Little thing magazine concept store and the creative park can influence each other. We may create a special cultural space for the creative park and make Shenzhen more interesting. In turn, the creative park provides us with a relatively free and creative environment.10

In fact, this “relatively free and creative environment” also offered a preferential and affordable rent for the two creators and cultural entrepreneurs of the magazine brand, which is vital to its existence and sustainable development in the long run. In explaining the balance between the cultural nature of magazines and the commercial nature of shops, Mr. Ren said: Like all companies in the park, everyone is first of all a business organization. To make a profit and survive, you have to run the business with your own model. For us, the first thing is the magazine’s editing and operation. We try out best to achieve the break-even between the cost of magazine’s content production, distribution and advertisement income. This is the bottom line we have to keep. And then we’ll do some expansion on that basis. In the past few years, for example, we successfully distributed the magazine from a very small network to a nation-wide Newsstands and convenience stores, even to the magazine market of Hong Kong, Taiwan, Japan, Singapore and Thailand. This is actually a  From my interview with Ren Gang on August 22, 2017.

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process of acceptance by audience and market. The efforts on the magazine’s content production and distribution network expansion had attracted and trained a growing reader group, as well as brought about some profitable projects of advertising or commercial brand promotion. The whole process is to make a smooth circulation or good mutual influence among the magazine production, its readers and the commercial part.

The high-quality editing of Little Thing has been recognized by important brand bookstores at home and abroad. It has been successfully distributed to 40 cities, provinces and countries. Japan’s Tsutaya Bookstore, Hong Kong’s Eslite Bookstore and Thailand’s Books Kinokuniya in Siam Paragon even promoted this Chinese magazine for free and highlighted the magazine in their visual display design of bookstore space. With this sort of international influence and professional recognition, Little Thing could be seen as a rare and representative cultural brand created and developed in Shenzhen. Considering that this is a high-tech city, the birth of such a very niche-styled vintage cultural brand is more or less like a miracle. And in the brand development and expansion process, the support from the CCIP operator could be seen as a very crucial turning point. With a physical shop in OCT-LOFT, the magazine brand was not only exposed to more people and enjoyed the creative milieu, but also managed to diversify its businesses beyond magazine operation, by which the magazine brand actually had the opportunities to develop into an extensive vintage cultural brand. Just like Howkins (2001) emphasized, it is the “relationships and actions” that really count for the creative ecology building, which could really nourish the development of creative enterprises and creative industries. Little Thing is a very good example. OCT-LOFT discovered this cultural and creative brand potential in the T-Street Creative Market through observation and communication, and then made the decision of inviting the brand to open a store in the park with some rent discount, which helped Little Thing realize their store dream and develop their plan in advance. Little Thing developed a lot of new businesses within their space in OCT-LOFT, such as providing free exhibition space for artists, initiating a small-scaled Vintage Flea Market on the street in front of the store (with the permission of the OCT-LOFT property management) and inviting designers and handworkers to sell their creative products to promote the culture of independent design, fair trade and environmental design. They also held some very interesting free cultural activities for the

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public, such as fashion show in cooperation with Japanese artists in the fourth anniversary activity of Little Thing magazine, and some design exhibitions and so on. These cultural activities created interesting daily dynamics for OCT-LOFT and attracted a lot attention both in the offline events and on the online social media. As for the relationship between the CCIP and the tenant enterprises in it, Mr. Ren gave his understanding from his own experience: OCT-LOFT is a big family. Everybody took this place as their own home. When our friends or professional partners from other cities came here, we always try to take them to visit this building, that building and take part in some activities in OCT-LOFT. We just want to let others to have more profound and comprehensive understandings about Shenzhen and the creative park… When we prepared to open the business in the Creative Park, we had searched and collected a lot of information on excellent cases of foreign countries and gave them suggestions on how the practices of foreign creative parks had carried out. I hope our creative park is one of the best in the world. If people say ‘China has OCT-­ LOFT’, which means OCT-LOFT is a place you can think of when you go to China, then that would be great. This is one of our expectations.11

The commercial tenants in the park do not regard themselves as only a tenant for the land or space. Instead, they feel that the park is a “big family” and a “place of their own”. Communication and interaction with the park operator seemed more like between friends who really care about each other. And there are mutual support and symbiotic idea in their relationship. Not only the OCT-LOFT provided the chances to help the cultural entrepreneur development, but the cultural brand would also like to help the CCIP business to perform better. Mr. Ren’s information search work and intelligent contribution on his own initiative made their relationship not like the landlord and tenant, but more enjoying the meaning of “partnership” (Fig. 4.5). Therefore, the management of OCT-LOFT is no longer as the traditional enterprises which have well-defined leader-member relations and distinct functional division. In the symbiosis of creative ecology, CCIP operator is the manager of both abstract and specific ecology, and itself as a whole is also a “cultural-creative” brand. How to make this special cultural-­ creative business brand sound and influential from zero also depends on the wisdom to deal with creativity and management. When  From my interview with Ren Gang on August 22, 2017.

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Fig. 4.5  Little Thing

the CCIP was at its initial stage, OCT-LOFT made a lot of operations in taking advantage of the existing cultural influential power of the tenant enterprises and cultural brand, most of which at the very beginning were invited into the park with comparatively discounted rent in the vision of potential “cultural assets” and for the effect of value anchoring for the park. Through friendly communication, fund-supporting or spacious resources support, OCT-LOFT played the role of further developing common “cultural assets”, which are beneficial for both the tenant enterprises and the CCIP brand. Based on those newly created cultural brand and cultural activities on the platform of the CCIP, the operator successfully cultivated and created a unique “cultural capital” (Bourdieu, 1986) and hence the “creative milieu” (Landry, 2000) of the whole park. The International Jazz Festival, Tomorrow’s Festival, T-Street Creative Market, Flea Market or the exhibition spaces for independent designers had actually attracted a lot of talents, students and professionals of arts and cultural creation. With the persistence of annual music festivals, weekly cultural

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activities and daily exhibition, the creative park had gradually accumulated very good fame and acknowledged creative atmosphere. It is these “cultural capital” and “cultural assets” created through creative management or creative ecology that shaped the unparalled and lasting brand effect of OCT-LOFT, which constantly absorb new and influential cultural institution and enterprises. For example, the Bridge Gallery and Hive Center for Contemporary Art who started their business in Beijing 798 Art District have successively selected OCT-LOFT as their branch gallery location to explore the South China art market. And the world famous Italian fashion institute—Istituto Marangoni—has also opened its second campus in mainland China at Shenzhen OCT-LOFT in 2017 after a series of strict market research and investigation. Quite a few owners or employees of design companies based in the park have registered in the institute to study, for the purpose of enhancing their professional techniques, fulfilling their interests or making contact with the international fashion design and fashion industry. These nationally and internationally well-known cultural and creative brand branches chose OCT-LOFT as their business location, which had further strengthened the unique position of OCT-LOFT as the “cultural highland” of Shenzhen. Therefore, in this process there formed a virtuous cycle or a good “creative ecology” in the park that would be beneficial for future more possibilities of networking, connection, cooperation, derivation and development. 4.2.3.3 O  CT-LOFT Operation Target: To Build a “Cultural Highland” as a Promotion of Cultural Brand of the OCT Group OCT-LOFT took the strategy of de-hierarchization to cultivate cooperative “relationship and action” with the tenant enterprises, then constructed the creative ecology in the park actively, providing the infinite creative possibility for the park’s future development. As analyzed earlier, a good attitude of learning, exploration and experimentation is the beginning of all these possibilities, which means allowing uncertainty or failure to occur and viewing the cultural enterprises tenants in the park as partner. The manager of OCT-LOFT actively cooperated with those established or promising cultural brands and constantly adjusted their own pace depending on the results of cooperation experiments, which fruitfully produced several influential cultural festival brands and finally formed a cultural highland for Shenzhen City with high-frequency cultural activities

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happening and distinguished cultural brand clustering. This is how the so-called creative ecology management strategy put into use with Howkins’s (2009) theory. Although the idea of “creative ecology” is an important strategy, the thorough and profound understanding of OCT-LOFT management model, especially the rooted business model, cannot simply stop at this step. If the construction of “creative ecology” is more about an open mindset and a “loose” go-to-see operation tactics, then the purpose of building a cultural highland by shaping creative ecology in OCT-LOFT should also be “controlled” according to the necessary development of the OCT Group. After all, top-down established CCIP is a business involving a large area of industrial land and quite amount of investment in space renovation. With this background, the OCT-LOFT manager must try to reach the two-way balance of “control” and “loose” in order to achieve the dual goals above. And this is the key issue and most challenging part of the business model design for a CCIP, because sometimes in a short term, the development of cultural quality is on the opposite of economic value capture. The OCT-LOFT site is based on the old industrial land in the eastern industrial zone of OCT. The OCT Group has made a decision to transform part of the industrial zone into a creative cultural park, which made this case a typical “top-down” attempt. Since the senior strategic planning is carried out “from top to bottom” by the top managerial level of the Group, the business model and operation strategy of OCT-LOFT has been relatively clear and designed in a view of holistic group business system. As mentioned above, the OCT Group intended to use OCT-LOFT to deepen the “cultural” temperament and brand image of the whole Group, so the Group was willing to invest heavily in its own contemporary art institute group—OCAT, which set its first and head museum in Shenzhen OCT-LOFT, demonstrating the OCT Group’s systematic strategy thinking in designing the OCT-LOFT business model. In fact, the name of the OCT-LOFT operation company—“OCT-­ LOFT Cultural Development Co., Ltd.”, which was founded after the opening of the park in North District in 2011—also showed the expectations of the Group on the “cultural development” function of the park. At the beginning, OCT-LOFT was an experimental “real estate project” undertaken by the OCT Real Estate Company, but it was not only a “real estate” project in the normal business sense. In the interview, the park manager said:

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I communicated with a lot of people—with developers, government departments, etc. The government leader may be better in understanding that this is a good thing for the public and the creative community. But the developer peers do not understand not at the least. They didn’t understand why OCT did it. Some people even said, ‘Only the OCT would do such a thing’. Of course, I would understand this judgment as a compliment. This is doing a public goods, a thing of social value.12

The manager here mentioned that other developer peers cannot understand the OCT-LOFT project, who have to invest so much money on totally non-profit OCAT for public goods, and this is obviously not as profitable as household projects. But actually, this superficially illogic part is precisely the most significant in OCT-LOFT business model. Each year, OCT-LOFT receives more than 200 delegations from all over the country, which indirectly illustrated its influence and model meaning in China CCIP construction. And the reason its reputation has been maintained for such a long time is because it has a strong symbolic meaning of “cultural landmark” in the eyes of local cultural enterprises, community residents and cultural visitors. All of these come from the long-term high-level operation of OCT-LOFT on the cultural capital of the park. Cultural capital is a concept put forward by Pierre Bourdieu (1986), a French philosopher who divides capital into three forms: economic capital, cultural capital and social (relational) capital. Among them, cultural capital is a kind of capital form which shows the cultural advantages or disadvantages of the actors. Under certain conditions, it can be transformed into economic capital. The creation and operation of cultural capital for a top-down CCIP such as OCT-LOFT is a comparably new thing. The basic logic in OCT-­ LOFT case is to manage and activate various tangible or intangible cultural assets in the park. Specifically speaking, it focuses on three areas in strategic management: public cultural and artistic space, cultural brand activities and creative communities. (A) Operating Diversified Public Cultural and Artistic Space OCT-LOFT differs significantly from other CCIPs in its various public cultural and artistic space with different scale and functions. In addition to the landmark of OCAT gallery, which is directly operated by the Group in  From my interview with General Manager Liu Hongjie on November 20, 2015.

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the South District, there are other three different public art spaces in the North District and C District, namely, A3+, B10 and C2. A3 is an old factory on the Xiangshan East Street, a road between North District and South District. Because of its special geographical position and the very catching graffiti on the outside wall of it, A3 is more or less like the gateway or entrance to the North District. When the North District reconstruction engineering started, OCT-LOFT entrusted the URBANU to rebuild a public cultural space for lectures that are free and open for citizens close to the A3 building. The URBANU then designed an affiliated concrete architecture at the entrance of the A3 building, hence named it A3+. This affiliated building is shaped like a rectangular gray box and has its door a little bit secluded in the back end opposite to the front Xiangshan East Street, like an entrance to a mysterious artistic and cultural scenery or wonderland. This additionally reconstructed space with strong artistic temperament is the main venue for OCT-LOFT to hold regular cultural activities such as art film festival and designer lectures. The use frequency of A3+ is very high. Anyone who has participated in free public lectures in the park knew this place (Fig. 4.6). Originally used as Konka Energy’s plant, B10 was chosen by the general curator as the main exhibition hall for the Second Urbanism/Architect Bi-City Biennale in 2007, initiating its exhibition space functions. Later, when the North District was developed in 2009, the B10 space was converted into a public art site used by OCT-LOFT, half of which was for visual arts exhibitions and the other half for live music performance. The OCT-LOFT International Jazz Festival and Tomorrow’s Festival are usually held at this venue (Fig. 4.7). C2 is a newly developed visual arts exhibition space of OCT-LOFT, regenerated from a warehouse with special architecture space style and a spacious open land in front and a newborn Barn Contemporary Art Space next to it. Just like the OCAT in the South District and A3+ and B10 space in the North District, C2 space will play the same “cultural anchoring” function to the C District, which would help to attract visitors with cultural exhibitions and activities (Fig. 4.8). Through these explicitly designed and planned space transformation and regeneration, we can clearly see the technique and carefulness of OCT-LOFT in public cultural space operation. Because the park itself does not have walls and is a relatively free space for people to flow in and out, the public cultural spaces for different cultural events scattered in different buildings of the park are significant for introducing people into

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Fig. 4.6  A3+

different corners and helping the new developed and expanded park area warm up and then attract new commercial or creative enterprises to locate in. (B) Produce Branded Creative Cultural Activities Since the South District opened in 2006, OCT-LOFT has been intentionally holding diversified cultural activities, events and festival. After several years of development, it had formed its own features and different sequences. (1) Pursuing High Standards in Professional and Academic Value According to the brand positioning of the park, OCT-LOFT’s cultural activities were mainly in contemporary art, creative design and avant-garde music. In order to ensure a high-level cultural quality in the park, all commercial activities or promotions are not accepted and would be rejected by the operator. In particular, the OCT Group invested heavily to build a

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Fig. 4.7  B10

purely academic-led contemporary art gallery—OCAT. According to statements made by park managers in interviews: This thing (OCAT) stands there like a flag and it sets a height. Commercial activities can make money, but can never replace the notion of a spiritual highland. National wide influence I dare not say, but in South China after operating for more than a decade, the influence of OCT-LOFT is still there, exactly because of his commonweal nature and his demands for professionalism. The Curators and artistic directors of OCAT would never be bothered by the money issue completely, and the Group headquarter did not give them pressure or any requirement in financial rewards. Therefore, they would certainly invest the budget money given by the Group in something more professional, more public-­ oriented, and more academic. This is very valuable.13

 From my interview with General Manager Liu Hongjie on November 20, 2015.

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Fig. 4.8  C2

The OCT Group has very clear understanding that only when OCAT has the pure academic pursuit and professional influence in the contemporary art field can it really support the concept of “cultural highland” in Shenzhen. And this was the soul benchmark set for OCT-LOFT at the very beginning of its establishment. It is said that OCAT’s unique old factory architecture structure and the temperament of the museum rebuilt in this “post-industrial” space attracted many commercial attention, expecting to hold some kind of product press conference inside or for some other commercial rent. All of these ideas have been denied and rejected. The only exception was for an Asian singer star Jay Chou’s concert, when the Group has just opened the gallery. Because this commercial event had triggered very negative feedback from the art professional community, the senior management level realized the huge damage of the commercial activities on the cultural brand identity of professional venue. And then no matter in what situation, the senior manager would never open the opportunities to the commercial activities. Therefore, over the past decade,

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OCT-LOFT has been able to maintain a high degree of recognition in the art community, and it is closely related to its rigorous control of the park brand identity, and strictly defined its identity in the domain of high-end culture and pure creative culture. (2) Operating Branded Cultural Activities in Series However, OCAT is curated and operated by an independent organization supported by the Group’s headquarter. Although it exists as a “soul benchmark” to the park, the space usage of OCAT is not dominated by the park’s operator. Only after OCT-LOFT has expanded to the North District that the CCIP was able to have their self-owned public art space which can be freely used for all kinds of cultural activities. In an interview with the vice general manager of OCT-LOFT, who specializes in event operations, she mentioned that the park’s daily management and operations are revolving around the main cultural activities of each month. After the first Shenzhen Urbanism/Architecture Biennale14 held in the park in 2005 (even before its official opening in 2006), OCT-LOFT was also chosen as the venue for the 2007 and 2011 Shenzhen/Hong Kong Urbanism/Architecture Bi-City Biennale. In addition, the park also self-­ developed various international cultural festivals, including “OCT-LOFT Creative Festival”, “OCT-LOFT International Jazz Festival”, “Shenzhen Independent Animation Biennale”, “Lifting the Weight as Light—Art Film Exhibition”, “One Person, One World-Lecture from Cutting-Edge Designers” and some other indoor exhibitions, outdoor public art exhibitions and forums related to contemporary art, creative design, avant-garde music and so on. The brand identity of OCT-LOFT as the center of urban cultural activities has been further strengthened. These activities have played a very key role in the shaping of creative atmosphere and creative communities in Shenzhen—a young creative city. In particular, when OCT-LOFT runs these cultural and artistic events, it always made the efforts to do it in sequence, not on a whim. In strategy, it consciously develops design, music, film, contemporary art and animation, which have comparably abundant resources or competitive industries in Shenzhen. Thus these cultural and creative activities could consistently attract a lot of participants, which helped in keeping the place prosperous and enhancing the brand connotation and cultural value of the whole park both in public culture production and in industrial information exchange and mutual learning (Table 4.1). 14   Later it was renamed “Shenzhen/Hong Kong Urbanism/Architecture Bi-City Biennale” (UABB).

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Table 4.1  List of the annual cultural activities in OCT-LOFT Cultural activity

Time

Frequency

Regular or not

OCAT exhibitions China (Shenzhen) International Cultural Expo Sub-venue OCT-LOFT International Jazz Festival OCT-LOFT Creative Festival

Whole year May

Since 2005 2007, 2013

Regular Irregular

Sep. or Oct.

Since 2011

Regular

Since 2007

Regular

2005, 2007, 2011

Irregular

Every two weeks since 2008 Every two years since 2012 Since 2012

Regular

Regular

Since 2012

Regular

Since 2013

Regular

Since 2014

Regular

From Nov. to Dec. Shenzhen/Hong Kong Urbanism/ From Dec. to Architecture Biennale next March T-Street Creative Market Saturday and Sunday Shenzhen Biennale Sculpture From May to Exhibition Aug. “One Man, One World—Lectures From Jul. to for Cutting-edge Designers” Aug. Shenzhen Independent Animation From Dec. to Biennale next March “Lifting the Weight as Light”—Art May, July and Film Exhibition November Tomorrow’s Festival (Pioneer May Music Festival) Public Art Exhibition May New Visual Arts Festival

From Sep. to Nov.

Irregular

2009, 2012, 2013, Irregular 2017, 2019 Since 2013 Regular

This table was edited by the author with the information from the public report

(C) Consciously Operating Creative Community In addition to the public cultural space and branded cultural activities, OCT-LOFT paid a lot of attention to the management of creative communities. Creative community, strictly speaking, should be a group of creative talents with loose or close interaction or communications in an organization, but extensively speaking, it refers to the group of creative talents in or around a certain space. As a creative cultural park, or creative agglomeration area, the network and interaction among creative talents are often thought as a necessary implication and the source of spillover effect, because the proximity of physical space made them easier

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to form weak links and the so-called creative network. But most seemed to hold the view that such a creative network and creative community are shaped in a spontaneous or automatic way. This kind of informal social links and interaction generated by random “encounters” is of course very common in real life, but the case of OCT-LOFT shows that the park managers actually play an important role in the process of creating and stimulating the interactions among creative community to produce good results. The good “creative milieu” formed in OCT-LOFT actually benefited from the long-term active communication and idea exchange between the OCT-LOFT manager and the creative community in the park. And the park manager usually took different tactics with different creative talents to achieve a win-win cooperation for the park and the creative businesses in it. Among them, for the already established and well-known creative groups, the park manager encouraged them to develop crossover business to build more diversified and unique creative ecology in the park; for young creative groups or new cultural brands, the manager would like to provide them supporting platform and well-conditioned opportunities to explore their potentialities and then help the brand to develop commercially. The result is that the two sides co-create a more creative and artistic cultural asset for the park. (1) Supporting the Established Creator to Operate Crossover Creative Consumption in the Park The coexistence of production and consumption in CCIPs or creative agglomeration areas is regarded as an important common characteristic. Cafés, bars or restaurants are also often seen as places for creative people to meet, chat, inspire and make network (Currid, 2009). However, once the consumption businesses in the parks and agglomeration areas are excessive or expanding out of a certain proportion, they will ultimately affect or damage the essence and atmosphere of the whole park. And then the park tends to be criticized as “too commercialized”. The worst case is that the presence of large commercial chains trigger a vicious price competition in the rent, forcing the creative groups to move away and ultimately changing the community of the creative agglomeration areas and creative parks. They are no longer the agglomeration areas of creative communities, but the fancy consumption places of the “gentrified” middle-class or wealthy classes.

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These failures have been taken as lessons by OCT-LOFT managers from the very start. Many of the existing consumption businesses in the park are actually “growing” out of the creative community. When it opened in 2006, the park was not popular, so there were little commercial shops or restaurants operating there. With more and more cultural activities happening in the park, more and more people were attracted to the park, which naturally increased some consumption demand in the CCIP. On that basis, Mr. Gao Wenan,15 a well-known Hong Kong designer, who was invited to open his office in the park, proposed to the park administrator to open a café called My Café on the main street of the park for visiting people to rest. And then in order to provide the visitors somewhere to eat, he opened a noodle shop called My Noodle (Figs. 4.9 and 4.10). The manager of the park was very pleasant to rent such stores to the designers in the park although he had very strict control on the commercial business, because in the process of communication he understood that the designers had very strong cultural communication consciousness with the consumers. In the interview, Mr. Gao said: I will put some cultural and artistic works in the café. These things will be changed in a period of time, maybe every two months. I hope that every time the guests come to here, they could have a fresh feeling. Later, some people said, you opened a cafe to promote Western culture, then what about our Chinese culture? So I thought of making another noodle shop. … I hired a noodle master to come over and to make noodles not in the backward kitchen but in an open kitchen in front of customers like a performance. We didn’t expect that it would make a success after several years… And the artistic work displayed in the noodle shop are mainly Asian works.16 Later, I felt that the hair style of my company’s employees were not good enough, so I applied for opening a hairdressing salon in the North District, hoping that the company’s colleagues could do a good job of their personal appearance. I also give them coupons, they can use them to consume with discount … So my first thought was to meet the demands of our employees. My company has 400 employees in total.17

 In Chinese character, his name is 高文安. His English name is Kenneth Ko.  Shenzhen OCT-LOFT Cultural Development Co., Ltd. 2014. Creative Ecology: Practices of OCT-LOFT. Beijing: Golden City Press. P117. 17  Shenzhen OCT-LOFT Cultural Development Co., Ltd. 2014. Creative Ecology: Practices of OCT-LOFT. Beijing: Golden City Press. P117. 15 16

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Fig. 4.9  My Café

Therefore, the earliest consumption places and commercial shops of the park actually started from the self-development of the internal creative community or the needs for enterprise development. And they also expressed their cultural attitudes and cultural communication with the stores. Creative community and the park manager formed a very good mutual-trusted interaction. It was on this foundation that the well-known designer began to try more interesting crossover businesses in OCT-­ LOFT. This kind of interesting creative consumption business with artworks and noodle-making performance can be seen as a cooperative creation between the park manager and the creator. It’s the control of mass commerce and the accumulation of cultural assets of the creator that makes it possible to grow out of such creative consumption. Apart from Gao Wenan, president of the Association of Graphic Designers of Shenzhen, famous designer Bi Xuefeng also opened a Loft Shop in the park, selling some selected designer works. The Old Heaven Bookstore also spared out a coffee bar space for book lovers and a live house space for

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Fig. 4.10  My Noodle

music fans. The Little Thing magazine has expanded from their main business of editing magazine to operating a physical store, selling vintage clothes and various designer works and objects. And the Blooming Garden specialized in large digital creative exhibitions also run a restaurant close to its exhibition hall in the North District (Fig. 4.11). There are a large number of commercial businesses derived from the designers’ crossover practices and crossover experiments run by the creative community in OCT-LOFT.  Even the only one mass-market chain shop—Starbucks, located at the South District entrance—had to communicate its design style and its rebuild plan with the operator of the park to make sure that its existence and brand image would not damage the whole visual effect of the CCIP. Actually this is a reserved Starbucks shop with star sign, its final rebuilt effect paid a lot of efforts in the interior design to go with the brown-red rusting styled gate of the park (Fig. 4.12). This means that the OCT Group had very strict control over the chained mass-consumption business in the whole park, when it

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Fig. 4.11  Loft Shop

encouraged the internal creative communities to do creative consumption business. The “control” and “loose” management suggested by Chris Bilton (2006) was really helpful in differentiating CCIP from the commercial center in shopping malls in terms of consumption businesses. When I asked about the strategic thinking of the commercial business planning, Liu Hongjie, the general manager of the park, answered: We don’t think in proportion, we just think about space arrangements and visitor flow direction. For example, if there would be some places suitable for public to participate on his/her trip in the park, then we would consider to open some commercial shops. … Mr. Bi (Bi Xuefeng) opened a shop … As a famous design, he has never entered this retail business field. But after setting his new office in the park, he began to think about this project, indicating that the park gave him some inspiration. This may seem normal now, but it was rare between 2006 and 2008. Because at that time, we realized that the park’s creative atmosphere needed to be strengthened.

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Fig. 4.12  Starbucks There were a lot of big shopping malls opening at that time, which was also a place for people to go to enjoy their leisure life, but we didn’t think that was a new thing, or we even thought that was stressful. As a visitor, it’s very clearly that you go there to consume, to spend money more or less on something. But in the place of CCIP, the atmosphere is kind to you. It’s not necessary for you to spend money on anything. If you really want to, you can just have a cup of coffee or eat something, it’s affordable. So young people like to come here. He can come to enjoy the exhibitions, drink coffee, meet friends, or to find out what artists, designers are doing. If you are a serious creator, you can come to observe what would be the latest news in the academic development by participating a cultural activity or attending a lecture. All of those things are actually quite attractive to young people. We were hoping to become a necessary part of his life.18

 From my interview with General Manager Liu Hongjie on November 20, 2015.

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According to Ms. Zhang Han, the vice general manager of the park’s operation company, OCT-LOFT has controlled the proportion of the consumption businesses within 20%, and all of which have been strictly selected by the park’s operator. The crossover creative consumption businesses run by the creative community are encouraged in the first place, while other commercial businesses should be considered with their differentiating part from those in the shopping mall. By this way, the park is very successful in creating a unique artistic and cultural atmosphere. In random interviews with visitors to the campus, it was mentioned that: I love the atmosphere here. I love coming here for coffee, reading and enjoying live music when I’m free.19

Another young lady, Miss Huang, who just joined the OCT-LOFT Cultural Development Company in 2017, mentioned that before she changed job to work here: I often came here after work with friends and we meet here (The Donkey Bar in North District of OCT-LOFT) for coffee, wine or dinner. Sometimes even the time was very late, we still would like to take a taxi to come here.20

Therefore, the creative consumption in the park is also a highlight to attract young people who love book, design and art as well as creative milieu to get together in their leisure time. From the perspective of creative atmosphere, commercial and consumption businesses with artistic flavor are also significant constructing elements for the cultural brand building of a CCIP (Fig. 4.13). (2) Helping Potential Creator to Create Their Creative Brands OCT-LOFT’s management of creative communities is not only reflected in its win-win cooperation with established creative stars or talents, but also in its exploration, encouragement and resource support for young creative talents in the community. The “T-Street Creative Market” providing young creative makers and designers with presenting chance for free has been existing for nearly ten years since its first operation in 2008. It still keeps its pace at one time for every two weeks. The full cost is  From a random interview with a college girl in Old Heaven Bookstore in August 2017.  From my interview with Huang Jieyu on September 14, 2017.

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Fig. 4.13  The leisurely Donkey Bar

supported by OCT-LOFT so that the young creative talents, usually freelancers or students, could start their business with minimal economic burden and make their talents seen and accepted by the market. The basic purpose of this creative market is to explore and encourage the creative enthusiasm of fresh creators: Young people, they are so energetic. They are creating new things every day. Each time we can only have 80 to 100 booths prepared for the creative market, but 200 to 300 creative talents or brands would apply for the chance. We found it very hard to decide who can be accepted and who cannot temporarily. And meanwhile, we don’t want to frustrate their enthusiasm. Imagine, if you never get selected, you’ll be disappointed. So we always tried our best to promote this enthusiasm. It was too important. Put the good or the bad quality aside… honestly speaking, the qualities of these applicants’ work are really intermingled. So we basically have to make sure that 30% of the market participants are relatively fixed and stay at a stable quality. Then we can say that actually the

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c­ reative market participants are selected in two pools with two sets of standards and targets.21

While encouraging the enthusiasm and motivation of young creative people through T-Street Creative Market, the park operators have also set up an “Excellence-in-Excellence Selection Plan”, which aimed at selecting and inviting some potential creative talents from the market participants and encouraging them to create their own creative brand stores for commercial operation: This plan has entered its fifth year of practice. It’s a little bit like an incubation work. We select excellent creative talents from the creative market, and if they also have the will to create their own brand workshop or store, we will incubate them directly. At the end of 2011, we picked out six to seven creative market brands and found a place (T studio) at the upstairs of Old Heaven Bookstore in the North District as the store space to support them. This place could provide six or seven rooms for small shops or workshops. … These selected brands are very popular in the creative market and we found that there are already accepted by the market, which could reduce the risk of entrepreneurship in their next step. And of course, he/she should also have some kind of financial ability and have strong willing to do the brand-creating business. We’ll supply them with a store place in the park with some rent discount.22

These six or seven young creative brands selected from the creative market to receive “incubation” support were unified as T-Studio space, more like the “front shop and back factory” type of new creative business space. For these incubated brands, the park offered them a 40% discount on rent, hoping to help them survive and develop easier at their start step in the fierce market competition (Fig. 4.14). Among the six brands selected, the most well-known one until today perhaps is “Chi Cha Qu”, a designer clothing brand. The brand was founded by a graphic designer, Liao Wei, who had rented his own design studio at other place of OCT-LOFT. After the “Chi Cha Qu” brand established in 2010, it was selected to reside at T-Studio through the “Excellence-in-Excellence Selection Plan” derived from the T-Street Creative Market. With the T-Studio space, he used half of the store in

 From my interview with General Manager Liu Hongjie on November 20, 2015.  From my interview with General Manager Liu Hongjie on November 20, 2015.

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Fig. 4.14  T-Studio

front for products display and sales and the other half at the back of the studio as workshop. The founder said: With the physical display space, the cultural value and the product feeling of Chi Cha Qu are better to be communicated to the customers. Of course, at first the visitor flow is relatively small, but in the weekend it will be added a lot. With more media giving interests in original designs and styled retail stores, Chi Cha Qu enjoyed more brand communication channels than ever before. People from different places often come to visit OCT-LOFT and sometimes they wandered to the Chi Cha Qu brand store in the T-Studio on the second floor. They are often impressed very much and able to understand what we want to make. Although the products and the space display are still in a developing stage, the culture core and value of this brand could be seen and deeply recognized by some people with direct contacts at the store.23 23  Shen Ting and Guo Dawei, 2017. The Secrets of Cultural-Creative Brands: from Creativity, Design to Promotion. Nanning: Guangxi Arts Publishing House.

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The brand has maintained good operation and development so far. It was selected as a success brand story in the book named Secrets of Creative Brand: From Creativity, Design to Promotion, published in February 2017. Recommended by Mao Jihong, founder of Fang Suo Commune,24 and Lin Hsin-bao, chief executive of Taiwan’s Creative Design Center, the book collected and analyzed the stories of successful cultural brands in Taiwan, Japan, Germany, China and other regions, including Zhangsheng Guli,25 Itoya, KIKOF, Blom & Blom, Fnji Furniture and so on. Among all of those representative cultural-creative brands, Chi Cha Qu was very young but had its uniqueness in communicating very philosophic Zen culture with simple clothing design. Its success can be seen as a success of OCT-LOFT’s strategy in managing the creative community. Chi Cha Qu is just one case of the well-known brands born here. Another is “Firewood Space”, which was visited and praised by Premier Li Keqiang during his visit to Shenzhen in January 2015. It was regarded as a pioneer and leading Maker in the trend of “Maker Movement”, which is exactly seen as the representative fruit of “Mass Entrepreneurship and Innovation” policy proposed by Premier Li in 2014. The founder of Firewood Space, Pan Hao, also started his dream in OCT-LOFT with OCT-LOFT Maker Fair. Through this Maker Fair, he was able to make close contacts with the park’s manager in creative ideas and information exchange. And it was under the support, incubation and the platform of OCT-LOFT operator that Firewood Space created a legendary story of Maker entrepreneurship. Although as a national wide star maker, Firewood Space had expanded very fast to reside in different CCIP, they still kept their first office space at T-Studio of OCT-LOFT (Fig. 4.15). These creative talents would have seldom possibilities to build their own cultural or creative brand so smoothly and successfully without the strategic operation of OCT-LOFT. They are originally clustered as a loose creative community connected with the CCIP. But it’s the managerial strategy of building creative ecology with “control and loose” management technique that helps those creative potentialities grow into successful cultural-creative business. In return, with the media exposure and 24  Fang Suo Commune in Chinese is 方所文化, which has just won “the Bookstore of the Year Award” in London Book Fair International Excellence Awards. 25  An agriculture product brand with cultural-creative design and culture connotation, in Chinese named 掌生谷粒.

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Fig. 4.15  Chi Cha Qu

social media communication, these new brands gradually have their own influences and they also increased the cultural assets and symbolic value of OCT-LOFT.

4.3   The Business Logic and Negative Evaluation of OCT-LOFT 4.3.1  The Essence of “Cultural Highland” Business Logic Through the above analysis, we find that OCT-LOFT, as a “top-down” CCIP under the OCT Group, was given a special responsibility to shape the cultural connotation and to experiment industrial transformation opportunities for the OCT Group, especially for the OCT Real Estate Company. The main operation and management model of the park is to construct “creative ecology” through “de-hierarchical” management and create the unique “cultural assets” of the park, including public cultural

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space, branded cultural events/festivals and creative communities with unlimited creativity and possibilities, which can also be summarized as the space, content and talent assets of the CCIP. According to the in-depth interviews with many tenants, although the popularity of OCT-LOFT is constantly expanding and the development of Shenzhen’s cultural and creative industries has undergone a leap forward in the past decade, the rent increase of OCT-LOFT has not seen such a big rise. There has been a long-term shortage of rentable space in the park, which means the market demands exceed the supply, but the actual rent rise of the park has been maintained at a steady pace with only 5% every year. So the new enterprises which want to have their office in OCT-LOFT have to stay in the list for a period to wait for the chance. During the field study, most of the tenants interviewed thought that the rental pricing of the park was reasonable, which was much lower than that of the commercial office buildings in the same area, and it was fair to increase the rent by 5% every year. From this perspective, we can also understand that the economic logic of operating OCT-LOFT does not come from maximizing rent to obtain short-term economic benefits. According to interviews with the park’s manager, there are even cases where commercial tenants were willing to pay higher rents than what the park is required for the priority to rent some space here for business, but the general manager denied the requests. It is mainly because if the business is too commercial or not in the theme of the park, it would damage the branding image of the park. In other words, the park managers have a very strong self-awareness of their own brand connotation all the time since it opened in 2006. So in order to maintain the cultural connotation and the symbolic value of the brand, they even would like to pay the expense of short-term economic interests. As for the cultural activities in the park, the managers of OCT-LOFT do not simply understand them as a tool of attracting tourists and as an excuse for publicity, but more as a key production and creation of a cultural “content”. From this perspective, although OCT-LOFT is a profit-­ making economic product with the rents as its source of incomes, it is also a “cultural and creative platform” to promote the production, distribution and consumption of cultural contents in its daily work or activities. This dual nature of OCT-LOFT reflects the uniqueness of the operation and management model of top-down styled CCIP. The high-quality, purely public cultural and creative activities helped OCT-LOFT to create an outstanding brand of CCIP in Shenzhen and

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even in South China, and meanwhile established itself as a private yet public welfare natured “highland” of creative cultural activities in Shenzhen. With its decade of careful operation, it was recognized as a special kind of spiritual and cultural landmark in the special economic zone of Shenzhen by the cultural creators and citizens. Based on that, it greatly enhanced the cultural value of the OCT Real Estate brand and promoted the holistic brand of the OCT Group, which ultimately made other industrial projects under the Group, like theme parks, hotels, travel agency and so on, more competitive in the market. 4.3.2  Some Negative Evaluations from the Tenants: Brand and Service OCT-LOFT, in general, as a “top-down” model of CCIP brand building, has realized the benefits as expected—not only the park itself has become a prosperous and popular creative cluster and turned into the cultural highland of the city, but also it has brought a good brand effect for the Overseas Chinese City Group. However, there are also some “shadow sides” behind the glory of OCT-LOFT. In the interviews, some tenants gave some negative evaluations from their own perspectives and experiences, mainly including the following aspects. 4.3.2.1 Insufficient Infrastructures and Supporting Services OCT-LOFT attaches much importance to the brand building of the park, mainly reflected in the cultural aspect in the brand connotation, but as a physical space for office, some tenants thought that there were certain infrastructure deficiencies. The so-called infrastructure here refers to the leased space provided by the park to tenants, public hardware facilities including the park indicating system, public sanitary space and road cleaning and so on. What OCT-LOFT had done best in space is probably the space function planning and green coverage area, which are the obvious advantages of the OCT Group. In the space planning, they have a clear visitor flow line design, as well as the corresponding arrangement of public cultural space or commercial space. In addition, they also have a more brilliant design of affiliated space and advanced public leisure space design. However, most of the regenerated old buildings are in actually relatively boring five or six-story tower building style, with higher floor space yet

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steeper staircase. What made it more difficult is that there are no elevators equipped to these buildings in the renewal construction to consider the convenience of tenants, which means that the OCT Group didn’t invest too much as some other parks did in infrastructure reconstruction. I climbed the stairs of the tower building personally in my field studies for the in-depth interviews with a manager of a tenant enterprise. It was really not a comfortable experience for a person who lived in the modern city getting used to the elevators. Those tenants having their offices on the fourth or fifth floor have to climb the stairs every day. Especially considering the long summer season and hot weather in Shenzhen, this will exacerbate the negative experience of the office space usage. In addition, although for merchants located on the first floor or for those invited well-known enterprises, OCT-LOFT may have a price at a reasonable level, for those cultural start-ups, especially those cultural NGOs that do cultural promotion or cultural undertakings, they feel that the rent is expensive with the corresponding quality of the leased space: Expensive. This is the old factory and there is nothing in it. The decoration cost of my place amounted to more than 1.3 million RMB. Because there’s no way for a company like us to go to the conventional office building and other CCIPs in Shenzhen. Those other CCIP are either located in the suburb of the city or poorly managed. … If you take the decoration fee into account, the cost of space renting in OCT-LOFT is not lower than that of a conventional office building, or even higher than that. The three-year lease contract will be expired and we have to renew it in the spring of next year, which means the rent will rise again. So it’s really expensive.26

The manager of another cultural foundation institute, who has been working in Beijing and is familiar with CCIP business, also expressed similar ideas: The land price in Beijing is also expensive, but Beijing is big. So there are many choices for cultural institutes or artist workshops. … But in Shenzhen it is generally expensive.27

 From my interview with one of the tenant enterprises on November 16, 2015.  From my interview with one of the tenant enterprises on September 27, 2017.

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One gallery noted that the basic environment of the park was unrivalled, but the sanitation maintenance in public toilets was not enough and that road cleaning could be done more carefully: At my gate, you could see cigarette butts thrown down by passengers or visitors almost every day and you can still see them now. Maybe for the gallery, keeping the cleaning is more demanding. Actually, it’s not a difficult work. The park hired cleaners but the work was not emphasized. Maybe it’s a problem about management.28

The tenant did not clarify what the problem exactly was. According to the interviews with the park managers, the property management work of the park is outsourced to another company belonging to the OCT Real Estate Company. While the management organization of the park, OCT-­ LOFT Cultural Development Co., Ltd., is also subordinated to the OCT Real Estate Company, the park manager seems to stay at some awkward place in the management authority of the property management in details. As for the cleaning issue of public toilets, there are different opinions from different tenants. Some think that the management is not proper, some think that it is not bad. From my own experiences, there is indeed a certain gap in sanitary situation and design consideration of public toilets in OCT-LOFT with the ordinary situation of shopping malls in Shenzhen. And compared with some other CCIPs (e.g., 289 Art Park in the next case study), OCT-LOFT seemed to have not put much effort in this aspect. Of course the toilet is not dirty, yet its management standard is not fit for the cultural and creative brand image expected by the OCT Group. In addition to the park’s facilities and services, some tenants also mentioned the difficulties to find affordable living place for their employees in the vicinity, because the park is surrounded by higher middle-class residential communities. In its early years, the Shenzhen government had allocated a wide range of land to the OCT Group, including industrial plants, tourist sites, residential sites, hotel sites and so on. Therefore, in the process of continuous development of the OCT Group, the eastern industrial zone of it has been surrounded by residential buildings developed by OCT itself. As the OCT area is located at the junction of Nanshan District and Futian District, which are the two central districts of Shenzhen, the housing price and the rent have been at a high level. When the park was  From my interview with one of the tenant enterprises on August 16, 2015.

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developed at first, it did not take into account the accommodation issue of the employees that the tenant enterprises may need to deal with. However, in view of the long-term development of the park, the vice general manager realized that the latest development trends of other CCIPs have put more related service to the tenant enterprise into their work as a part of the CCIP business and were considering making some new attempts: It’s going to expand the area of the existent OCT-LOFT. Some of the old houses around here can be redeveloped into a new part of the park. But there also have some possibilities to construct some supporting facilities, such as some hotels, or policy apartment buildings for talented people or young designers who work here. Because with their present economic condition, they can’t afford to live in this area … but this idea hasn’t been developed [in detail] yet. Firstly, we haven’t got a feasible plan; secondly the government didn’t give us positive feedback.29

In fact, in an interview with the general manager Mr. Liu of the park at the end of 2015, we talked about this issue. He also mentioned that the park might add new area with more old houses or abandoned factories for constructing supporting infrastructure, but he also admitted that there might be difficulties in gaining the approval of land-use change given by the government. Nonetheless, these are the problems at the current stage of OCT-­ LOFT. And these problems are closely related to the policy context, the fundamental management model and operation logic. 4.3.2.2 Deficiencies in the Business Services The business services of the park usually refer to the value-added services provided by the park operators or managers to facilitate the operation of enterprises in the park, including industrial and commercial registration, taxation, legal affairs and helping enterprises to apply for government subsidies. The range of these business services varies in different CCIPs, depending on the market competition objectives of the main investors and managers of the CCIP. With the increasing number of CCIPs in mainland China, the competition in this field is gradually intensified. In addition, more and more researches of CCIP discovered that the single renting  From my interview with one of the tenant enterprises on September 16, 2017.

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model of CCIP is not sustainable. Because of the evolved perceptions, CCIP is not only a clustered creative office space but also a platform for facilitating cultural-creative industries development. So more and more new CCIPs focus on providing relevant services for tenant enterprises to enhance the competitive power and to increase attraction of the park. From this point of view, OCT-LOFT, as the first CCIP in Shenzhen, seemed to pay very little attention to business service for tenant enterprises. But tenant enterprises in the park actually took this kind of business service as a very important indicator for judging the level of operation and management of the park. One of the tenants who is knowledgeable about the CCIP business mentioned in an interview: The so-called operation level means the quality of relevant business services provided by the park operation institute, which is very critical … The so-called business services could have two meanings: one is about living, food, clothing, housing and transportation; the second is related to what you can solve in this park, like enterprises services. OCT-LOFT has not given any business services, which includes many, such as company registration, human resources services, corporate administrative services, agency and so on. So, er … Beijing CCIPs maybe pay more attention to these parts … some bigger CCIPs even have cultural venture fund, some investment and financing service, mortgage finance service, copyright service, etc.30

For mature and established companies, these services may not seem so crucial. But for many cultural and creative start-ups, their ability or advantages may focus on the creative professional part. They are unfamiliar with the business operations and actually more in need of government subsidies: … (We) live very hard. All the things we did are not to make a lot of money, just small projects. Although I believe in their (OCT-LOFT) quality, we also really need funding subsidy from government. How can you not need it? At the end of every year, we get nervous. If you do it well, you can survive. If you don’t, you’ll die. We still have this heavy pressure of high rent cost every year. It seems that a lot of companies have subsidies, but we just can’t get them.31 Of course, I think it would be better to have government’s money to support. After all, it is not easy for everyone to live. Before we moved in, OCT-LOFT  From my interview with one of the tenant enterprise on September 27, 2017.  From my interview with one of the tenant enterprises on November 16, 2017.

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held a series of lectures on architecture. But they stopped it since we started organizing architecture lectures. Because that’s not necessary. OCT-LOFT applied for a lot of money from the government every year. Another example is independent bookstore, many of which can apply for subsidies from the government. Yet we don’t know how to make it.32

When OCT-LOFT was first initiated in 2004, there were not so many CCIPs in mainland China. And considering that Shenzhen city was established originally as a special economic zone, it did not have so much cultural accumulation or influential cultural institutions as Beijing and Shanghai, both of which are historically central cities with abundant political, economic and cultural resources. There are a large number of artists, designers, writers, critics and musicians gathered in Beijing and Shanghai, which spontaneously led to very original “creative agglomeration”, such as Beijing 798 Art District and Shanghai Tianzifang. Back to that time, other cities have no bottom-­up cultural agglomeration area and no cultural industry policy. And “top-­down” model of CCIP development was even less. The OCT Group of Shenzhen was probably the first to do so and created the first top-down model of OCT-LOFT. Therefore, the earliest tenants of the park basically were invited by the OCT Group. Most of them are often design enterprises or studios that have cooperated with OCT Real Estate in many former projects or have already gained considerable prestige and brand status in the industry: The first batch of companies setting their offices in OCT-LOFT were all invited because we had worked with them before and knew their professional level, quality or position in the industry.33

During the interview, the vice general manager also admitted that these “invited companies” would initially enjoy “preferential” rents. This could explain why OCT-LOFT administrators do not pay as much attention to specific “business services” for enterprises as some other new CCIP did later. Firstly, it has something to do with the era context of the park’s establishment. In the first generation of CCIP, the park has not been generally regarded as a service-oriented platform organization. Secondly, most of the original tenant enterprises are well-known creative design companies with special “invitation”, which have no need in business service in  From my interview with one of the tenant enterprises on November 16, 2017.  From my interview with Ms. Zhang Han, vice general manager of OCT-LOFT on September 16, 2017. 32 33

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their mature developing stage. Thirdly, it is limited in the nature and target of the specific management model formed in the early stage. OCT-­ LOFT put the main focus of management on the accumulation and operation of “cultural assets” of the park brand. Because of the symbolic cultural landmark identity of the park, there is no worry about the office space renting when the market has been in a state of “demand exceeding supply” for a long time, which makes the park having no motivation to attract more enterprises by providing value-added business service beyond the existing “success” model. Moreover, many branded cultural activities of OCT-LOFT have also applied for the government subsidies: Some have (subsidies). We will (apply for that). Shenzhen (government) has already established quite standardized application process and selection criteria. There are some evaluation standards and procedures and we all follow them, including that you have to provide various materials and audit reports. We will apply for the fund subsidy every year with the required material and also participate in the evaluation. Then we will be given some subsidies according to the evaluation results in certain proportion.34

To some extent, the main activities of OCT-LOFT as a firm are to produce cultural activities and provide cultural content for the public, which has the nature of a “creative organization”. Therefore, there is an indirect “competitive relationship” between OCT-LOFT operating company and the cultural and creative enterprises in the park when applying for government cultural fund or subsidies. For the above multiple reasons, it lacks corresponding economic logic or motivation for OCT-LOFT to provide business services for the park enterprises. 4.3.2.3 I nadequate Opportunities and Activities for Creative Interaction Among Enterprises Based on the classical agglomeration theory in Western industrial economics, enterprises in the same or similar industries tend to gather around a relatively concentrated geographical space; the main purpose of which is to reduce the cost of interfirm transactions, which may include logistics costs, human resources costs, information acquisition costs, iterative innovation costs and so on. This means that the enterprises and people could  From my interview with Ms. Zhang Han, vice general manager of OCT-LOFT on September 16, 2017. 34

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interact with each other in the agglomeration area to construct some form of social network. In the literature on creative agglomeration, there are also many empirical studies around the authenticity and effectiveness of the interaction and network connection between enterprises in creative agglomeration. The conclusions are often different—some studies believe that this connection does promote the growth of enterprises, some think that this connection is very weak or only exists in the former network of friends or acquaintances. According to the field study and interviews conducted on the OCT-­ LOFT, most tenants do not see many opportunities for frequent connections with other enterprises: A few neighbors, like Old Heaven, Fannou House Bar and Loft shop, are our good friends. But people working in the South District, probably, we don’t know much about them. And we don’t make much contact with other businesses or enterprises in the park either.35

The founders of a niche vintage magazine, Little Thing, which is distributed in major landmark bookstore and independent bookstores across Asia, have observed that there is little connection between tenants in the park: Now the park, only Old Heaven (bookstore) and us Little Thing (vintage store) still have influence in culture. The rest enterprises are almost business-oriented. Cafes are not creative enough in themselves, so they are not active enough. If the park has 20 representative cultural and creative brands, all of which have strong ideas, frequent activities, the cultural planning ability (of the park) is not the same. If the park can bring all the good cultural brand merchants together, it will have a lot of power.36

The magazine’s founder, Mr. Ren Gang, started the business of editing and distributing a niche magazine Little Thing with his wife, who once worked in a 4A advertisement agency. With the T-Street Creative Market, the CCIP operator found their talents and potential. After discussion and communication, the two parties made a cooperation, which allowed them to open the Little Thing store, selling vintage commodities and doing independent designer’s exhibition in shop-in-shop style and initiating  From my interview with one of the tenant enterprises on August 22, 2017.  From my interview with one of the tenant enterprises on August 22, 2017.

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creative “Little Thing Market”. So in the whole business activities of the firm, there is a strong tendency in pursuit of pure cultural-creative quality with vintage culture promotion in a young city. From his point of view, such kind of enterprises in OCT-LOFT is too few, which results in a weak creative interaction atmosphere, and thus failed to produce a close connection or creative network among the people working in the park. In addition, since the park is divided into North and South Districts, there was a public motorway—Xiangshan East Street between them; thus geographically and psychologically, the two districts have formed relatively independent functional divisions and atmosphere. Both of them have art space, commercial space and office space to fulfill the basic daily needs of the tenants in their respective districts. But this also made an important reason for the low rate of “accidental encounter” or weak linkage among the tenant enterprises in the CCIP. Another interviewee who had just moved from Beijing, an operating officer working for a design theme foundation, with office in OCT-LOFT, noted that although the park offers many public cultural events that make the park seem lively, there are few opportunities or social occasions which are relevant to professional exchange and industrial dynamics for possible encounters and connections among tenants in the park: I think, to some degree, cultural industries didn’t do as much road show or salon as the Internet or the IT industry. Like in some parts of Beijing … there are salons all over the place and everyone is talking together. But in cultural industries, it’s not the same. So there’s still some room to improve and learn from other industries in the future.37 (OCT-LOFT) also have commercial exhibition spaces like the Pal’s Club. Of course, the basic demand of cultural creativity is exhibitions. But exhibition space isn’t as causal and relaxed as cafes or other places where people have the chance to exchange their ideas … we watched quietly and then went away … I think it’s better to do some roadshows sometimes, roadshows or small workshops … We still need to know the latest trend in the industry and it’s better for us to do brainstorm then create some new things.38

In addition, there are few social activities for employees of tenant enterprises, especially when compared to the Beijing CCIPs:  From my interview with one of the tenant enterprises on September 27, 2017.  From my interview with one of the tenant enterprises on September 27, 2017.

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There’s no time or platform for communication, and there don’t have any … small ‘Singles Get-together’ activities … This kind of activities should be small-­ scaled, and then participants could have a little more interactions and know each other better. … I’m just giving an example. The Zhongguancun Administrative Committee almost organized this kind of activities every day, such as Singles Get-together, making dumplings together to celebrate all kinds of festivals, etc. Although it looks very low, there is an atmosphere in it, and people feel that young people, uh, could have a sense of belonging.39

Compared with these creative production enterprises, or business related in the upstream of the creative industrial chain, those businesses focused on the downstream of the industrial chain or the sales part, such as art galleries and other art agency enterprises, would feel that they actually enjoyed and benefited from the creative atmosphere, social interactions and cooperation brought about by this most representative creative cluster of Shenzhen. Consequently, in 2017, another two new art galleries were opened in the park, including the South China branch Hive Center for Contemporary Art from Beijing 798 Art Park and the Barn Contemporary Art Space operated by local art collectors in Shenzhen. These two new professional galleries on fine arts added new power and participants to the existing gallery industry in the park, as well as added competitors for the Bridge Gallery and WE Gallery, which have been located here for a long time. In my field study, I visited these galleries and the quantity of galleries exactly created strong artistic and creative milieu to the park (Figs. 4.16 and 4.17). And the general attitude of the participators in the industry is also positive: I think it’s nice to have new galleries coming in, and it makes us feel like our team (in this industry) is growing again. We can work together to warm up this atmosphere, and it’s always better than only having one or two persons or institutes to cultivate the art collection market in Shenzhen. This phenomenon also indicates that the market opportunity has come. We’ve visited each other, and we went to participate each other’s new openings of exhibitions. Although there is competition in business, yet the group of art collections is different. Instead, if there are exhibitions opening with constantly new contents exhibited in the park, it can attract collectors or those interested in art collections more often to come in and have a look at these new works, which would invisibly drive

 From my interview with one of the tenant enterprises on September 27, 2017.

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Fig. 4.16  Bridge gallery the market and atmosphere. So we should view it as a competition and cooperation relationship.40

As a well-known creative park with high-end artistic atmosphere in Shenzhen, OCT-LOFT attracts well-known galleries from all over the country, mainly relying on its own cultural brand advantages and the symbolic status of Shenzhen’s cultural highlands. For Shenzhen, gallery industry belongs to the emerging industry with many “new money” created by high-tech industry in this city, so it is still on the early stage of development. When these scattered galleries chose to cluster in OCT-LOFT, it will naturally form a promotion effect with the space accumulation and space atmosphere. So we could find that the recognized creative atmosphere of OCT-LOFT should be understood more from the consumption side. In fact, each gallery has its own business resources, strategy and  From my interview with one of the tenant enterprises on August 16, 2017.

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Fig. 4.17  Barn gallery

different art market positioning, so they are more likely to enjoy the gallery clustering. Moreover, some enterprises really found their own creative network and cooperation partners in the park, exactly because of the geographical convenience and the proximity of the community. For example, the We Gallery mentions that although the façade of their shop is not big, it is not important, as it’s only a window for their products. They have been working with some professional peers in design and fine art in the park to increase the exposure chance of their works. Some of the artworks displayed in the Pal’s Club in the South District of OCT-LOFT are from the artists under their agency.41 However, this kind of cooperation is mostly based on the established relationship between the tenant enterprises, or on a geographical convenience. It is seldom the result from efforts made by the park operator.  From a random interview with a shop assistant in We Gallery on September 22, 2017.

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4.3.2.4 D  isadvantages from the Central State-Owned Enterprise Identity The rebuilt and redevelopment of OCT-LOFT relied on the “top-down” resources and business model designed by the central enterprise OCT Group. And the logic of brand strategy enabled and even forced OCT-­ LOFT to not seek short-term returns, but to operate a series of high-­ quality cultural brand activities in the park to accumulate cultural asset and cultural capital for the OCT Group. However, OCT-LOFT is an economic project in its business nature; the identity as a subsidiary company of the central state-owned enterprises also brought some inevitable drawbacks. Its drawbacks are mainly from the lack of market competition pressure, so that there is no strong motivation for self-transcendence. And objectively speaking, because of some management regulations in state-owned enterprises, OCT-LOFT really has limitation in terms of more possibilities. Many enterprises, whose main business is the production of cultural and creative content, believe that OCT-LOFT would be fully capable of doing a better job in the creative atmosphere and construction of creative network: At that time, we saw (some successful) practices of foreign countries and provided some suggestions to the general manager of OCT-LOFT, but they were state-owned enterprises and could not try any more novel things. … If the park can bring together all the excellent cultural enterprises, there will generate a lot of power. Again, because they are state-owned enterprises, they may have their own limits and difficulties in breakthrough the settled rules. For example, they (OCT-LOFT managers) cannot control the tenant enterprise list completely by themselves. Some (enterprises) may have good relationship with high-level leaders … In fact, the creative park should be a place for creative entrepreneurship, not for enterprises with good relationship. Then the park operator could do integration according to the real creative power and ability, and let these new talents and cultural brand could be seen.42

To operate “cultural assets” by organizing cultural activities and attracting branded creative enterprises is the strategy of the park set at the outset. And OCT-LOFT definitely presented its creative managing capability on building creative ecology and some mechanism to support potential creative brands in growing and expanding. However, since OCT-LOFT is  From my interview with one of the tenant enterprises on August 22, 2017.

42

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affiliated to the OCT Real Estate Company, it is not so financially independent and its function was designed and set by the Group. Therefore, both in motivation and in actual practice, OCT-LOFT is not likely to create a profitable mechanism to consistently incubate creative entrepreneurs as other parks did. The vice general manager of the park also mentioned in the interview: The main strategy is to keep the star cultural or design enterprises stay in the park, then you could keep the creativity and attraction at a certain level. Meanwhile, you have a lot of flexible mechanisms for incubating those young talents … But we can’t account on this part for the profit-earning of the park. First, as a state-owned central enterprise, it is impossible to have such a flexible or free right to allocate the funds to try the venture capital model. This is not very realistic for us. Hence, we are more likely to support the enterprise or the creative entrepreneur to grow with a creative management model in our specific operations.43

In other words, once the top-down mechanism was designed by the senior managers of the Group with a clear branding function, there is very little room for the general manager of OCT-LOFT to redesign the model or innovate the mechanism structurally in the later development. From a long-run perspective, this constrains the possibility of OCT-LOFT to keep up with the latest development trend of CCIP, which means that OCT-­ LOFT is more likely to do their best to maintain the existing cultural creation level or influence, yet lack of further self-breakthrough pressure or motivation. Some observer in the field of art and culture coming from Beijing gave his critic on OCT-LOFT: It still needs to be a little more international. I’ve observed some events (in the park), but I still can’t find anything representative. I know that OCT Group has another Design Gallery not far from OCT-LOFT besides OCAT located in the park. Although it has done a lot of good jobs, yet there are still some gaps in the quality and professional level of the exhibitions from the best in this circle.44 OCAT … has been sponsored (by the Group) with so much money every year, then it has to make some voices (establish its influence in the professional circle). If there is not a certain of influence, then (there may be a problem in) the original strategy … it should choose a strategy that can make some difference. It  From my interview with Zhang Han on September 14, 2017.  From my interview with one of the tenant enterprises on September 27, 2017.

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doesn’t make any sense if it positions itself the same as the Chinese Museum of Fine Arts, or the Central Museum of Fine Arts, or even the Today Art Museum created by Zhang Baoquan in Beijing. Actually, in a word, just present your own characteristics…45

With regard to the brand positioning of OCAT, the leaders within the OCT Group do have very big ambitions to run a constellation of art galleries around the whole country to build the cultural capital for the OCT Group. But the influence of OCAT is hardly to say on the top level. Perhaps for the local art circle in Shenzhen, OCAT is a filling-the-gap contemporary art museum, having some breakthrough meaning, while for the whole country, with a broader vision of non-profit art institutions or galleries, the OCAT influence is obviously not very high. A professional tenant, Bridge Gallery, also mentioned in the interview: The idea of the park having its own art museum is good, but the contents of the exhibitions had better be more in line with the park’s positioning, which means its existence could have greater help and interaction with the tenants in the park, or could show its local advantages and practical significance. Otherwise, what they do was just a kind of performance or an attitude for others to see.46

Some tenants belonging to the art industry have pointed out that the underlying mechanism for those problem is: The big problem with this kind of private non-profit (art museum) is there is no market competition. On the one hand, there should be market competition; on the other hand, even if there is sustainable money to (support), there also should be some evaluation criteria … And correspondently, the management team on the one hand should have an international vision and professional resources, on the other hand, they should make a clear long-term positioning plan. It’s not good to keep swinging around.47

These critical ideas from the interviewees seemed seldom reflected to the park manager as the manager generally heard good words or positive reflections. There exists a problem that maybe only a part of the merchants which have close private relationship or cooperation with the manager of  From my interview with one of the tenant enterprises on September 27, 2017.  From my interview with one of the tenant enterprises on September 27, 2017. 47  From my interview with one of the tenant enterprises on September 27, 2017. 45 46

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OCT-LOFT could more easily communicate their ideas or feedback. Or people tend to avoid to express “adverse advice” in person. For example, on the feedbacks of OCAT exhibition, the vice general manager of the park, Zhang Han, mentioned: Our designers (resident in the park with their office) are all very fond of this exhibition. … our first batch of enterprises entering the park are not so much in industrial product design, but more in the field of art design … So they still have a high acceptance of contemporary art … We did contemporary art exhibitions, whether they understand or not, or whether he feels good or not, they would all come to see it. Every time when a new exhibition opened … a lot of people would say they’ll definitely go to see the exhibition.48

Due to the lack of incentive mechanism, it is difficult for the park itself to make more breakthroughs. Although OCT-LOFT definitely has successfully initiated some co-created cultural events (such as the Jazz Festival and Tomorrow’s Festival), some creative consumption business with tenant enterprises (such as My Café, My Noodle, Loft Shop) and even some new cultural, creative and technological brands (such as Little Thing, Firewood Maker Space, Chi Cha Qu) with talents discovered from the OCT-LOFT Creative Market, all of these were the cases happened four or five years ago. OCT-LOFT has established itself as the most famous CCIP of Shenzhen and has to receive more than 300 visiting teams every year, yet nothing totally new happened here. The OCT Group organized new cultural industry group to develop cultural and tourism projects with OCT-LOFT as its convincing case.

4.4   Reflection on the Operation and Management Model of “Cultural Highland” OCT-LOFT is Shenzhen’s most branded and most recognized CCIP. At the beginning of 2004, the park already had a good planning and vision. After more than ten years of operation with the fierce competition in the market, OCT-LOFT still has its uniqueness meaning and not been replaced, which proved the originality of the park in the management model and set a referential example for the latecomers in the test of time.

 From my interview with Zhang Han on September 14, 2017.

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OCT-LOFT is a typical “top-down” CCIP. Unlike the other top-down cases organized by the government, it was planned, invested and operated by a centrally administered enterprise group. The developing strategy didn’t focus on the short-term benefits of land appreciation, but on creating the cultural brand and the cultural capital for the Group with high-­ quality cultural activities and creative ecology. Consequently, the good feedback of the park greatly exceeded the Group’s expectations, so that three years after the opening of the South District, the leader of the Group decided to develop the North District. However, the added 200,000 square meters of the North and South Districts is still difficult to meet the enthusiastic market needs of the cultural enterprises to have their office in OCT-LOFT.  At present, the park is undergoing further expansion and rebuilding more old factories, which proves that the development of the park has achieved long-term sustainability. However, after the first decade, standing at a new starting point to expand the park, the new blueprint and development plan given by the OCT-LOFT management became vague. And there are not many breakthroughs in terms of some existing conceptual ideas. To a large extent, the overall decision-making power of the institutional and operational mechanisms is still concentrated in the hands of the top leaders of the Group. Based on the “cultural highland” brand recognition by the public, the park still has a long-term vitality. As a “creative economy” product, the profit-making of OCT-LOFT seems confined to the rent. There is no room for the possibility of diversified structure of investment return on the single project of OCT-LOFT.  But as a “creative culture” product, OCT-LOFT has no doubt in taking root in the cultural texture of Shenzhen. For this legendary and explosive young special economic zone city born under the reform and opening-up policy, whose cultural development has lagged far behind its economic development, OCT-LOFT can continue to enjoy the benefits of cultural capital brought about by the conscious accumulation of “cultural assets”. With the market recognition and market demand and its geographical advantage, its position in Shenzhen as the first brand of the CCIP is hard to shake. This also illustrates the long-term effect of the “cultural highland” model of CCIP. However, with the development of culture has increasingly become the focus of the entire city, latecomers also have the possibility of making transcendence in the new version of “cultural highland” model. For example, the China Merchants Group in Shekou of Shenzhen is developing a large-­ scale ecological complex with culture and tourism as its theme, including

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a series of international-oriented buildings and cultural institutes, such as the Sea World Cultural and Arts Center/Design Society designed by a Japanese modernism architecture master Fumihiko Maki, K11 Art Mall (Shenzhen) and the Ecological Park. The China Merchants Group, also a centrally administered enterprise, relying on the geographical location of Shekou National Cruise Center, is vigorously increasing the cultural construction and cultural aggregation of the Group’s brand and has a higher starting point and greater ambition. The OCT Group and OCT-LOFT need to be prepared for future competition at present peaceful time, examining their shortcomings, paying attention to the suggestions of the park tenants, reckoning on their “invisibility” caused by those “insights” in the management model, which would be the real long-term strategy for sustainability and prosperity.

References English References Bilton, C. (2006). Management and creativity: From creative industries to creative management. New Jersey: Wiley-Blackwell. Bourdieu, P. (1986). The forms of capital. In J. G. Richardson (Ed.), Handbook for theory and research for the sociology of education (pp. 241–258). New York: Greenwood. Currid, E. (2009). Bohemia as subculture; ‘Bohemia’ as industry. Journal of Planning Literature, 23(4), 368–382. Howkins, J. (2001). The creative economy: How people make money. London: Allen Lane. Howkins, J. (2009). Creative ecologies: Where thinking is a proper job. Brisbane: University of Queensland Press. Landry, C. (2000). The creative city: A toolkit for urban innovators. London: Earthscan.

CHAPTER 5

The Case Study on the Business Model of 289 Art Park

5.1   Description of the Background of 289 Art Park Case 289 Art Park is a cultural and creative park located at No. 289 Guangzhou Avenue—the center of Guangzhou. Its original building was the old printing houses belonged to South Media Group, including four old buildings—printing house, printing office building, production building and living building, as well as two internal courtyards. In 2014, No. 1 Business Group (Shenzhen) Co., Ltd, in cooperation with South Media Group, transformed these old buildings into a remarkable cultural and creative park in the city central of Guangzhou (Fig. 5.1). Since the park was officially opened in August 2016, it has gained a great deal of attention from the industry, the public and the media. In just half a year, more than 200 high-quality art events were held to attract the public, becoming an extensively recommended new urban cultural destination for young people in the city. It has successfully obtained the special fund support from Guangdong’s cultural industries development foundation in 2015. It has been listed in the important government-supported projects, such as provincial Maker Space and municipal incubator, and has been selected into “Ten Classic Cases of Cultural and Creative Park of Mainland, Taiwan, Hong Kong and Macao in 2016” by the Knowledge and Learning Institute.1 It has become a benchmark project for the 1

 知学学院 in Chinese.

© The Author(s) 2020 V. Yuan Yuan, The Economic Logic of Chinese Cultural-Creative Industries Parks, https://doi.org/10.1007/978-981-15-3540-6_5

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Fig. 5.1  Cartoon map

transforming development of South Media Group and has gradually realized its initial self-position as a “new cultural landmark of Guangzhou”. What made the case of 289 Art Park more in the spotlight is a piece of news reported on January 20, 2017. No. 1 Business Group (Shenzhen) held a press conference jointly with South Media Group (SMG) and CITIC Poly (Tianjin) Private Equity Funds (CPPEF) to announce that CPPEF will strategically invest 300 million RMB in Round A to No. 1 Business Group, and South Media Group will invest worth of 200 million RMB media resources to support the development of 289 Art Park brand. The three partners are determined to work together to replicate the 289 Art Park model in Beijing, Shanghai, Guangzhou, Shenzhen and other cities. In fact, since obtaining the financing support, No. 1 Business Group immediately launched the “289 Digital Peninsula” project in Shenzhen’s Futian Free Tax Zone and the property lease started in June 2017, realizing the first model “replication” project with “289″ brand. Foshan and Wuxi projects were also initiated in 2017.

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In the process of CCIP development in China, a lot of private enterprises took part in this emerging business. But most of those private companies have too strong aim for short-term profit to develop a sustainable business model beyond rent. And even because of their simple rent model, the concept of CCIP suffered many misunderstandings and some negative news and effects. For example, quite a few private enterprises rented the old factory buildings from its property owner with a very low price, and then after a very simple rebuilding, they rented the new property out with higher prices under the name of CCIP, by which they could also apply for some government fund for initiating the CCIP. Yet this kind of pure rent-­ gap economic logic cannot be sustainable. On the one hand, if the location is popular, then the park is very likely to attract commercial tenants, changing a cultural industries cluster into a consumption cluster and then experiencing gentrification phenomenon; on the other hand, if the park location is on the edge or suburb of the city, it would very likely face the risk of high vacancy rate with inadequate rental market, and then the park as a business has to go bankrupt. However, as some scholars have observed, China’s cultural and creative parks have undergone a persistent process of iteration and evolution. The disadvantages and negative effects in the barbaric growth stage of CCIP have been evaded to a certain extent under the extensive discussion and criticisms among academia, practitioners and policy-makers. Not only the government came to be aware of the policy loopholes, but also the enterprises themselves seek more sustainable development models. No. 1 Business Group is a company founded in 1999 by two Hong Kong people in Shenzhen. They started their business with the office space renovation and leasing, accumulating a lot of experience in space renovation, cost managing, space operation. With the tendency of office property saturation in mainland China, especially in Shenzhen, the supply of office rentals in the market is in excess demand; No. 1 Business Group is also actively seeking transformation in the challenges of changing market. Prior to the CCIP project of 289 Art Park, their first transformation attempt was to integrate the industrial chain in a leased property and consciously design thematic industrial cluster for the office demands of the enterprises in the same or similar industry. They completed the first transformation and operation project in the education and training industry. Different training institutes would like to aggregate in the same building to attract more customers. No. 1 Business won the success of transformation. After the success, at the end of 2014, they rebuilt a joint office space

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named Phoenix Warehouse with the theme of design industry agglomeration in the Taikoo Warehouse near the Pearl River in Guangzhou, and then renamed it “Join Us Joint Office”, marking the beginning of the transformation from the office building operation to the cultural and creative space operation. It was exactly because the two little projects related to the creative cluster have won success that No. 1 Business has the possibility to get involved in the 289 Art Park project, which really made an important progress in the strategic development of No. 1 Business Group. This regeneration project from an old printing house to a CCIP was cooperated with the South Media Group, which is a provincial state-owned enterprise and the property owner. 289 Art Park was positioned by No. 1 Business Group as a model project for transferring the enterprise identity from office building operator to urban cultural space operator. In this pivotal project with an extremely superior geographical location and abundant cultural media resources, No. 1 Business conducted a series of dazzling and colorful cultural and creative practices and creative space operation experiments, creating a self-named “urban space culture + operator” model, which formed its self-defined core competitive power underlying in the characteristics of “innovative cultural businesses + artistic consumption upgrading + high-­quality cultural activities”. With the South Media Group as the CCIP development partner, No. 1 Business firmly grasps the media resources as its unique cultural capital, based on which they designed a replicable CCIP case. And it’s because the model is replicable that they successfully won the trust of the capital market and receive the financial support for the future large-scale replication of 289 branded CCIP around the country. At the same time, No. 1 Business Development Co., Ltd, also carried out the shareholding transformation in 2016 and reorganized into the current No. 1 Business Group. And with the actual developing situation of the parks in different regions, the organization structure is constantly experiencing adjustment. It is reported that the No. 1 Business is totally operating 1 million square meters’ profitable space. Under a very healthy cash flow and the experience to construct CCIP, No. 1 Business Group is negotiating and planning more than 20 new projects around the country. It is expected that within five years the operating “culture +” space will add another 1 million square meters. In the following part, we’ll start our analysis from the 289 Art Park in Guangzhou to the rooted logic, management techniques and business model of the “replicable” and branded 289 CCIPs.

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5.2   Analysis of the Business Model of 289 Art Park 5.2.1  Basic Logic The reason why No. 1 Business Group can stand out among the numerous private enterprises in CCIP operation is more or less related to the holding company’s former main business in office building operation. Since the establishment of the company in 1999, they have been deeply plowed in the operating office space of the central business district in central cities, so that they are very sensitive to the business service demand of the leading industries in different times and have the first-hand information from the office rental market to evaluate the general trend of the economic development at present and in the near future. Whether actively or passively, the company has been adjusting its business and development strategy to keep pace with market fluctuations and peer competition over the past decade or so. As the company’s founding partner, Chief Product Officer Wang Ling, introduced: From a development perspective, Shenzhen was the earliest market to take the business center model, which would provide cubicles for small and medium-­ sized enterprises and provide some public service … of course, this model is the product of the times. When this kind of business slowly went into a decline stage, that’s about six or seven years ago, we entered Guangzhou market and then decided to do this themed joint office product to transcend that kind of cubicle-­ styled office space. After making the attempt in building creative office rental product, we expanded very fast from thousands of square meters to 30,000 to 40,000 square meters in space operation. In this second stage of company development, we first tried a concept of an educational themed ‘supermarket’, which is actually a whole building with total rentable area amounting to more than 6,000 square meters. The target companies of the market were all concentrated on the education industry chain. Then you would find that it was easier to do business and those enterprise tenants can also easily establish network and ­produce cooperation chance, which finally added the viscosity between the tenant and the office space. The success of this model was proved feasible, so we continued to do another bigger project in Phoenix warehouse of Guangzhou. This project included three rows of warehouses along the Pearl River. We regenerated these architectures into Join Us joint office product, which was themed in design industry, so there are many design companies clustered in it. Join Us is a national-level Maker Space, accredited by the Ministry of Science and Technology … then after this project accepted by the market, before we decided

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to start 289 (Art Park) project, we have basically determined the future core business of the company and we decided to design a model that would be replicable. That model is what we generalized as the concept of ‘urban space culture + operators’.2

Therefore, for No. 1 Business Group, the 289 Art Park project is the “core business” in the company’s strategic transformation and has been designed and built from the very beginning as a “replicable” sample project. And what we cannot forget is that the operation team has experienced several small-scale project practices and experiments in operating top-­ down designed agglomeration space for the educational industry and design industry before they actually started operating this large-scale CCIP project. This proceeding process can be regarded as an important evolutionary path for the successful strategic transformation of the company. However, the success of this company’s evolution is not only from the internal motivation but also related to the crises and challenges of traditional media groups in the era of creative economy and digital media. From the perspective of physical space, 289 Art Park project was rebuilt from the obsolete printing plants of South Media Group. And if we go deep into the observation of operation mechanism of 289 Art Park, we’ll find that South Media Group was an important partner and cooperator in this project. And the birth of 289 Art Park was actually also a strategic transition experiment for South Media Group. And even from the perspective of talent or key mediator, we cannot neglect that the Chief Product Officer (CPO) of No. 1 Business Group, Mr. Wang Ling, was exactly the ex-director of the Activities Department of Southern Metropolis Daily, which is a very influential media brand of South Media Group. In the recent decade, because of the emergence of new media, the traditional media of newspaper has been shrinking its market share, and the number of printed newspapers has been greatly reduced, which made the printing house and its affiliated old buildings lose their original functions. And correspondently, the shrinking of market means the drastic decrease of advertisement and substitution incomes, which then lead to the departure of a bunch of excellent talents. For South Media Group, this was a great crisis and challenge and they have to find new ways to add incomes to compensate for the loss and to discover a systematic transformation 2

 From my interview with Mr. Wang Ling on Aug. 18, 2017.

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chance. Therefore, 289 Art Park project was the transformative chance for both No. 1 Business Group and South Media Group. In a sense, the cooperation of the two partners was some kind of strategic alliance. They co-­ create a joint venture company to operate 289 Art Park and shared their respective industrial advantages on this platform. On the one hand, as a provincial state-owned enterprise, South Media Group has the property right of this CCIP and the trust from government in shifting the land-use nature of printing house from industrial land to commercial land. And as the most influential media group, it cultivated a lot of experienced talents in cultural content production and cultural industries operation. On the other hand, No. 1 Business Group, as a professional operator on urban space rental market, is very good at how to manage the urban office space and make profit from it. Between the two parties, the most important core figure is Wang Ling, who left Southern Metropolis Daily from a middle-­ level manager position in 2014 to join as a partner in No. 1 Business. In this project, he also accidentally played a role of mediator to bridge a real estate operator and cultural tycoon, which actually was very crucial for this cross-industrial cooperation experiment. Based on the joint venture and some smart strategic alliance management techniques, 289 Art Park won a huge success in a short time and quickly generated brand effects. It created the “289 urban cultural complex” model and then managed to expand the brand to several other main cities of South China, such as “289 Digital Peninsula” project in Shenzhen and “289 Rice Boat Dock Park” project in Foshan. They have a very conscious and clear slogan at the very beginning to explore a “replicable” CCIP and actually made it in one year with two “replicated” 289 branded projects. Therefore, they must have designed the business model of 289 CCIP brand as a system as they started the first project—289 Art Park in Guangzhou. How did they fulfill it? We’ll discover it in the following analysis. 5.2.2  The Essence of 289 Art Park as an Urban Cultural Complex: Creative Economic-Ecologic Circle As mentioned above, 289 Art Park was rebuilt from four out-of-use buildings with two courtyards in the South Media Group, covering an area of only 30,000 square meters. Although its original architecture space was divided into production space and living space, from the perspective of overall spatial feature, it is a relatively normal slab-floor type of building,

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unlike Beijing 798 or Guangzhou Red Brick Factory Park, whose Bauhaus-­ styled buildings or red brick buildings have a sharp sense of discrimination. The overall spatial layout of the park is also relatively cramped. It’s in a semi-closed shape, with a small courtyard in the center of the buildings as parking lot. But the vehicles that can be accommodated in it are very limited. This has become a relatively obvious shortcoming of the park. But with the scale of the whole city, this CCIP has quite convenient and golden central location, especially in terms of cultural creativity facilities cluster. With Guangzhou Avenue as the central axis, Guangzhou Grand Theater, Guangzhou Civil Library, Guangdong Provincial Museum, Xing Hai Concert Hall, Guangdong Provincial Performing Arts Center, Guangdong Provincial Art Museum and Guangzhou Civil Children’s Palace are distributed on both sides of the avenue. And 289 Art Park is exactly at the center of the main public cultural venue circle. What’s more, across the street of Guangzhou Avenue, on the opposite of 289 Art Park is the Pearl River New Town—Guangzhou’s new city center, which was planned and developed as the new landmark of the international city construction of Guangzhou, with 39 Grand-A office buildings and quite a few five-star hotels and many district headquarters of the world’s top 500 enterprises in it. If evaluated from the business value of the location, 289 Art Park enjoyed a very strong competitive advantage in the office and commercial space rental market. In a field study, I met a frequent coffee drinker in Bean2Cup café. He is a computer programmer, who came across the street from a technology company in the Pearl River New Town to drink coffee. He chatted freely with the barista at the bar and was very familiar with the handmade coffee. I also got to know from the barista that some white-collar workers from offices across the street will first go to Cross Fit, a gym chain brand, to do exercise on weekends and then come to Bean2Cup to pack a cup of coffee back. This shows that in daily life, the park provides diversified functions beyond office space, and it not only supports the enterprises in the park but also attracts workers from those Grand-A office buildings (Figs. 5.2 and 5.3). Of course, this kind of attraction comes from the excellent geographical position of the park. In a sense, the geographical position can even determine the life and death of a CCIP, which is also an important reason why No. 1 Business Group chose this place as their model case for their holistic transformation to urban cultural space operators. However, the prime geographic location of 289 Art Park cannot be replicated in other cities, so it is not enough to understand the success of 289 Art Park’s “replicable model” with geographical location alone.

Fig. 5.2  Bean2Cup café

Fig. 5.3  Cross Fit

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When an economic model is called “replicable”, it is bound to mean that it is in line with the overall trend of economic development or transformation and has sufficient market demand and long-term development sustainability. So what is the essence of this model? At the press conference of “Let Every City Have Culture + complex” and “Strategic Investment in No. 1 Business Group by CITIC POLY Private Equity Fund (CPPEF)”, held in 289 Art Park on January 20, 2017, Wang Chuilin, the general manager of South Media Group, said: After two years of exploration, 289 Art Park has formed the core competitiveness characterized by ‘new cultural creative formats + artistic consumption upgrading + high-quality cultural activities’. It has become a new landmark of Guangzhou’s urban culture … creating a new operation mode of the Chinese CCIP … ‘Culture +’ has become the engine of urban renewal and constantly endowed the city, industry, consumption and space with living cultural contents, new spatial forms and poetic place spirits.3

Wang Qing, co-founder and CEO of No. 1 Business Holdings, has positioned the project from another perspective: In 2013, we seized on the chance of urban renewal wave by upgrading to ‘Urban Space Operator’, and formed a cultural-creative complex model by partnering with South Media Group in the project of 289 Art Park … . At present, we are operating 27 cultural spaces in Guangzhou, Shenzhen, Shanghai, Xiamen and other places. In 2017, we started the Foshan and Wuxi projects one after another, and built comprehensive and vertical cultural spaces in central cities such as Beijing, Chengdu and Hangzhou. Eventually we managed to form a model of ‘Urban culture + Ecosystem’.4

Tan Yan, deputy general manager of the CITIC POLY Private Equity Funds (CPPEF), another major protagonist of the event, who helped to mark a new milestone in the development history of the No. 1 Business Holdings, investing 300 million RMB in the potential “urban space operator”, said on the press conference:

3  The 289 Model will be Replicated. Chinese Language Website: Sino-US Innovation Times. http://suinnovationtimes.com/2017/01/24/289艺术Park模式将复制. 4  The 289 Model will be Replicated. Chinese Language Website: Sino-US Innovation Times. http://suinnovationtimes.com/2017/01/24/289艺术Park模式将复制.

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The CPPEF pays close attention to financial innovation, emerging industries and industry integration. The main reason we decided to invest No. 1 Business Holdings was in the industry potential and their team abilities … We are very optimistic about the business of space integrated operation. 289 Art Park is a mature work; moreover, the team of No. 1 Business Holdings is very professional, dedicated and very capable of resource integration.5

In the process of making this “space integrated operation” business evolve into a “replicable mode”, the three parties of South Media Group, No. 1 Business Holdings and CPPEF are equally important participants and promoters. Correspondently, the 289 Art Park project, as a successful model case, also provided transforming chance for the long-term strategic development of the three parties. Cultural undertakings, creative space, emerging industries and even financial innovation are deeply integrated, mutually beneficial and complementary in this project, building a brand-­ new “creative ecosystem economy”, that is, an integrated economy driven by a consciously designed ecological system. In this new economic developing mechanism, creative economy shows its broadest and essential connotation. It is no longer limited to the 13 sectors of creative industries defined by DCMS, but a kind of holistic ecosystem economy driven by creativity and creative management. How did the creative ecosystem economy work in the case of 289 Art Park? Based on the work of data and related material collection, qualitative interviews and field study, the following analysis tries to generalize the operation and management of the case with detailed information and attempts to extract the model behind it. 5.2.2.1 C  ommercialization of Cultural Capital: Creating Cultural IP as the Linkage Between Content and Commerce Although the project of 289 Art Park is just like a start-up business under the huge South Media Group, a provincial state-owned enterprise, it has been seen as a key transformative project with the care and participation of the Group’s first leader from the very beginning. Because of the emergence of new media and the wide spread of mobile Internet, the traditional newspaper industry has been confronted with severe challenges both in subscription and advertising revenue. How to explore new 5  The 289 Model will be Replicated. Chinese Language Website: Sino-US Innovation Times. http://suinnovationtimes.com/2017/01/24/289艺术Park模式将复制.

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strategies, innovate business and increase the Group revenue in the changing situation is a serious test for South Media Group. Prior to the launch of 289 Art Park project seriously, South Media Group had made a number of little attempts in integrating media resources and operating cultural contents across borders, among which the Southern Metropolis Daily has been particularly active in various operations. As early as more than a decade ago, it launched and held the “Chinese Cultural Media Awards” (2003), the “Chinese Music Media Awards”, the “Chinese Film Media Awards”, the “Chinese Architecture Awards” and the “Global Chinese Photography Awards”. In 2013, Guangdong AND Culture Communication Co., Ltd. a specific organization oriented to value-added projects and businesses, was established to operate public relations activities, entertainment projects, the series of Chinese Media Awards and integrated communication. Therefore, it should be seen that before the large-scale transformative project of 289 Art Park, the South Media Group has begun many small-scale market-oriented operations and commercial projects with their high-quality content production abilities and their advantageous communication platform as the biggest and state-­owned media group in South China. The 289 Art Park project should be understood in the context of transformation in traditional media. In the report on the opening of the park, 289 Art Park was regarded as “a brand-new attempt by the South Media Group to expand the emerging new businesses and promote the transformation of the media, which is a benchmark project for the transformative development of the media in our province”. Therefore, at the very start, CCIP was seen as a kind of feasible business project, and its economic considerations and driving force cannot be ignored. That is to say, the Group has a very clear profit-earning demand when they made the business model design of the park. This is in sharp contrast to the case of OCT-LOFT, in which OCT Group did not put the economic benefits from the park in the first place. It is due to the clear economic aim of South Media Group in this project that matches the goal of its partner—No. 1 Business Holdings. The business transformation of traditional media and the business upgrading of office space rental operator accidentally discovered the chance of mutual support and complementary cooperation in the CCIP business with the general trend of cultural and creative industries development as the background.

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In retrospect of the origin of the park, some interviewee recalled: The planning (of the park) began in 2013. The head of the Group was in charge of 289 project by himself … Basically at the same time, just after the Group approved and initiated the project and made the first plan to prepare the project, then the No. 1 Business came to negotiate the cooperation.6

Another interviewee, who was deeply involved in the first planning of the park, said: The Group initiated the park project at first, and then made some contacts with potential partners. And several other companies, including Vanke, were put in the list of possible future partner at that time. But in the end we chose the No. 1 Business … mainly because of their professionalism in this area.7

Both the interviewees cited above are general managers of the subsidiary companies or projects on 289 Art Park’s management platform. They were the business backbones and elites selected from South Media Group to participate in the CCIP project. When initiating the business of the park, the Group specially established Guangdong Southern Urban 289 Art Communication Co., Ltd (289 Art Communication Company), as an independent institute in charge of the implementation and operation of the park project: In fact, the team of 289 [Art Communication Company] was constituted with people drawn from the top manager level of the various sub-newspapers and subperiodicals in the South Media Group. There were South Daily, Southern Metropolis Daily, and City Zine (《城市画报》) … one or two people from each subsidiary organization. At the earliest stage, there were probably fewer than 10 people in the newly formed team, and then gradually to spread out with development.8

The 289 Art Communication Company, established by South Media Group in preparation for the construction of the park in 2014, is not only an independent institute established by the Group for operating the new 6  From my interview with the general manager of 289 Pictures, Ms. Guo Lishan, on Nov. 9, 2017. 7  From my interview with the general manager of 289 Craftsmanship, Ms. Fan Liya, on Nov. 9, 2017. 8  From my interview with the general manager of 289 Pictures, Ms. Guo Lishan, on Nov. 9, 2017.

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CCIP business but also a cultural asset agglomerating platform cultivated by the Group for the long-term development of the CCIP business: 289 Art (Communication Company) has a strategic plan at the end of 2013. It of course took the park as the big goal and the general background, but after this big IP (of 289) was established, we hope that some sub-IP could be extended (from this big IP platform). Then we could do some (business of) brand licensing, brand replication in the future, such as the brand IPs of 289 Design, 289 Pictures, 289 Gallery and so on.9

This strategic plan as well as the establishment and initial operation of projects like 289 Pictures, 289 Crafts and 289 Art Lectures have obviously instilled the soul of creativity and culture into the upcoming business of CCIP. For example, 289 Pictures company already had a mature project of “Global Chinese International Photography Media Award”, which has been profitable since the first session in 2013. The organizer managed to take this opportunity to obtain abundant resources on the photography industry chain, laying the foundation for the future development of 289 Pictures in the vertical integration of the photography industry chain. The theme of the 289 Crafts project is focused on creative handcrafting. In addition to handmade experience classes, the highlight of the project is to run an e-business website to sell the products of the independent designer community. 289 Art Lectures is more like a commonwealth organization, mainly engaged in public lectures on culture and art. Besides, the Group issued a new magazine named Art Fashion to promote fine art, with the aim of increasing cultural capital for 289 Art Park. This magazine is distributed nationally and having a high-level brand position, employing a lot of internationally celebrated Chinese artists to form an advisory committee, including Liu Xiaodong,10 Chen Danqing,11 Xu Bing12 and so on. These cultural content production enterprises are subsidiaries under the umbrella of 289 Art Communication Company. They are understood as intellectual property (IP) businesses which could serve for the long-­ term operation and “replicable model” of the park as an important cultural asset of 289 Art Park brand. On the most realistic level, they can also 9  From my interview with the general manager of 289 Pictures, Ms. Guo Lishan, on Nov. 9, 2017. 10  刘晓东. Famous painter. 11  陈丹青. Famous painter, writer, professor. 12  徐冰. Internationally well-known artists.

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be used as bargaining chip when the Group negotiated the cooperative conditions with No. 1 Business Holdings on the 289 Art Park project. Wang Ling, co-founder of No. 1 Business Holdings, who left Southern Metropolis Daily earlier to join No. 1 Business Development Co., Ltd, and now is the vice president of No. 1 Business Holdings and vice general manager of 289 Art Park, said in the interview: We have built a joint venture with South Media Group, 289 Creative Art Company, which specializes in the operation of these IP content enterprise. These cultural IP brands will directly serve this park in the future. As the condition of cooperation, we have invested 20 million RMB in cash into this IP contents company … to invest in this IP of 289 Art Park. Its only advantage is that the location is good, so it’s worthy for us to take this park as a model for our strategic transformation. Whether the geographical location or the (CCIP) business, it can be constructed as a model of our business upgrading. The most important thing is that we are still optimistic about those IPs. Although those IP content enterprises haven’t generated substantial profits, they at least can maintain normal operation, which will have a good layout for the following operation, the later expansion and long-term planning of the whole park.13

In interviews with several key executives at 289 Art Park, one of the keywords they all mentioned and repeated was “IP” (intellectual property). In China’s current economic context, with the development of cultural and creative industries and the deepening of research, IP has been extended from the narrow sense of the “intellectual property” of a single cultural product to a broader sense of branded cultural content producers, which are powerful or potential in sustainable economic value realization. The earliest source of IP theory came from the book Super IP: Internet New Species Methodology, published by Wu Sheng, co-founder of Logic Thinking14 in 2016. The most important conclusion of this book is: “In the future, all businesses are about content production, all contents are IP. And the only way for individuals to survive on the commercial scale in the future is IP-based survival”.15

 From my interview with the general manager of 289 Art Park, Mr. Wang Ling, on Aug. 18, 2017. 14  逻辑思维。A very influential knowledge communication and online courses app. 15  Wu, Sheng. 2016. Super IP: Internet New Species Methodology. Beijing: Citic Press. 13

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The several executives of 289 Art Park borrowed the concept of IP to refer to the content production projects planned by South Media Group specifically for the development of the park, including 289 Pictures, 289 Crafts, 289 Gallery and 289 Art Lectures. The same “289” is used, in front of the different content producers, which shows the strong brand awareness and systematic design consideration for the “replicable” model of the park. Through such an operation, South Media Group has created a customized IP group for 289 Art Park. The IP group as a whole can add the cultural value of 289 CCIP and independently each 289 cultural IP enterprise could develop by itself. It is at this point that the transformation of traditional media groups is actually a business model design of transforming cultural value into economic value with the IP concept. 5.2.2.2 C  reating Multifunctional Compound Space Within the Park: Public Cultural Space, Creative Industry Space and Consumption Space Traditionally, the concept of cultural and creative parks or creative aggregation is basically an economic geography concept. It is an “industrial space” and a geographically relative aggregation of enterprises in the field of cultural and creative industries. Most of these kinds of industrial agglomeration were located in the suburb of the focal city or sprout out in some special district without top-down planning. With the development of creative economy as well as cultural-oriented urban renewal, the creative industries cluster is more and more like a designed and planned space operation project within the process of inner city regeneration in mainland China. Such kind of rebuilt old factory project tends to locate in the urban center and has distinct space-scale limitation by the permission from the government in land-use change. To some extent, how to win the approval of government is very crucial for this kind of CCIP. Therefore, how to define and position this “redevelopment” project in advance and in the application for land-use change was absolutely the most important decision for the park management team. Due to the unique joint venture model made by state-owned enterprises and private enterprise, 289 Art Park has the nature of both profitmaking to meet the needs of economic value realization in space operation business and public-oriented to meet the diverse demands of diversified stakeholders. And to achieve those multi-targets, the park executive team planned deliberately in the park space usage.

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(A) Integration of Public Cultural Service Space and Cultural Industry Space South Media Group is a party newspaper group and a provincial state-­ owned enterprise developed from South Daily, the official newspaper of Guangdong Provincial CPC Committee. The president of the Group, Mo Gaoyi, is not only the party secretary of the Group but also the deputy director of the propaganda department of Guangdong Provincial CPC Committee. Therefore, 289 Art Park, as one of the six benchmark projects in the transformation and upgrading business of the South Media Group, carries multiple meanings at the same time. For the official opening of the 289 Art Park on August 18, 2016, South Daily published a press release illustrating the significance of the transformed and newly born art park: It is not only a symbol of the news highland, but also a platform for carrying forward advanced culture, displaying excellent works, enhancing artistic experience and incubating cultural enterprises. Through the capabilities of artistic content production, art communication marketing planning, artworks trading, CCIP operation, incubation & investment and so on, 289 Art Park will be built into China’s first outstanding cultural and artistic resources integration operators.16

As an important decision-maker behind the project, Mo Gaoyi, the Group’s president and party secretary, interpreted this “integration operation” as “service capability”: Through practice, South Media Group has deeply realized that improving service capability is the foundation of media transformation. Building 289 Art Park is an excellent chance for us to take our initiatives, play our unique advantages, improve service ability and create service value. … These new service capabilities enable the South Media Group not only to operate market-­oriented cultural industries, but also to better serve the central work of the province, promote cultural innovation-driven development of Guangdong and strive to explore a new sustainable development path for media transformation and development.17

16  289 Art Park Opened Officially, Devoting to Create New Cultural Service Platform. 2016. Chinese language website: South Daily. http://gz.southcn.com/content/2016-08/19/content_154101701.htm 17  289 Art Park Opened Officially, Devoting to Create New Cultural Service Platform. 2016. Chinese language website: South Daily.http://gz.southcn.com/content/2016-08/19/content_154101701.htm

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It is based on the positioning of the park as such a “service” function and a “new cultural landmark of Guangzhou” that 289 Art Park made an application to the government for the title of “Guangzhou Literature & Art Citizen Space” (Figs.  5.4 and 5.5). And under the support of the Guangdong Provincial Government and the propaganda department of the Provincial Party Committee, it set up a Lingnan18 Intangible Cultural Heritage Museum to focus on displaying the excellent intangible culture of Guangdong. In this public-oriented space, they actively organized a series of activities to create some kind of “promotion space” for outstanding intangible cultural heritage projects to help them enter the public vision and urban daily life. Citizens can register to participate in those activities provided by the organizer, such as attending craftsmanship workshops or lectures given by masters on intangible cultural heritage, visiting

Fig. 5.4  Cultural landmark 18  A traditional and extensive naming of the land of or around Guangdong, containing Hong Kong and Macao in the history.

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Fig. 5.5  Citizen space

the permanent exhibitions in the museum, such as “Lingnan Craftsmanship” and “Guangdong Intangible Cultural Heritage Masters Exhibition”. At the same time, the museum’s operator has also reached a long-term cooperation agreement with the Guangdong Federation of Literary and Art Circles (GFLAC), holding various free and high-quality cultural activities for citizens almost every weekend, which successfully made it a real “citizen cultural space” with high-frequency usage: Our experience activities held here will provide free materials for the public, such as rice paper and ink for calligraphy classes, dyestuffs and fabrics for tie-­ dye classes. People need to make a registration on our We Chat public account in advance. The general quota is 30 people. Public participation is really active and quotas are usually filled very quickly. … the instructors of these classes are appointed by the GFLAC or the specially invited successors to some Intangible Cultural Heritage. … But for lecture activities like this afternoon, people don’t need to register in advance.19 19  From my interview with a cultural activities planner of the Lingnan Intangible Cultural Heritage Museum, Mr. Luo, on Oct. 28, 2017.

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Lingnan Intangible Cultural Heritage Museum is an important cultural asset set by the Group in the park, which has more than 1200 square meters’ exhibition space, including displaying hall, presentation space with multimedia equipment, demonstration room for master creation, interactive experience room and performance lamp. The space is themed in intangible cultural heritage, taking the public cultural service as the main function. On the one hand, it embodied the public cultural service function of the South Media Group as an important state-owned cultural enterprise; on the other hand, the museum also strives to build itself into a sales base for creative products with intangible cultural heritage and an incubation base for the intangible cultural heritage industry. Geographically, Lingnan Intangible Cultural Heritage Museum is located in the park, but it is a wholly owned subsidiary of 289 Art Communication Company. 289 Art Communication Company (289 ACC) is different from 289 Creative Art Company (289 CAC). The former 289 ACC belongs to the Group 100%, while the later 289 CAC is the joint venture of the Group and No. 1 Business Holdings. Therefore, the Group can freely implement public cultural activities in this space to achieve the public goal of strengthening Lingnan cultural communication. The Group’s party secretary, Mo Gaoyi, mentioned the meaning of this museum: Based on a strong sense of cultural mission, we are building the 289 Art Park to open a window to showcase the fine Lingnan culture and promote cultural exchanges. So people can gain a better mutual understanding while enjoying art and culture, by which we think the Lingnan culture can continue to flourish.20

Although intangible cultural heritage is a very typical carrier of traditional culture, it also has the potential to be commercialized and branded. As Dr. Gou Xi, general manager of Xiangyun Homeland, a famous silk brand and specialty of Guangdong Province, said: The best way to protect the Intangible Cultural Heritage is to brand and market it, so that the traditional Intangible Cultural Heritage projects can radiate new vitality.21 20  289 Art Park Opened Officially, Devoting to Create New Cultural Service Platform. 2016. Chinese language website: South Daily. http://gz.southcn.com/content/2016-08/ 19/content_154101701.htm 21  289 Art Park Opened Officially, Devoting to Create New Cultural Service Platform. 2016. Chinese language website: South Daily. http://gz.southcn.com/content/2016-08/19/content_154101701.htm

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In the process of China uprising and with the background of globalization, it had become a mainstream discourse to protect and develop the national and local intangible cultural heritage. Under the guiding policy of central government, local governments of all levels actively respond with various local policies, which means there are corresponding fund allocated and a lot of events related with intangible cultural heritage happened. So the establishment of an intangible cultural heritage museum in 289 Art Park is not an optional choice, but an elaborately designed decision. Firstly, museum is a public service institute with comparatively professional collection, display and illustration. It’s about knowledge and civilization in nature. So museum has the symbol of cultural highland and hence helps to add the cultural capital of newly born 289 Art Park. Secondly, South Media Group has the responsibility to promote the intangible cultural heritage as a very powerful propaganda base of South China, considering that the head of the Group is the deputy director of the propaganda department of Guangdong Party Committee. Thirdly, there are abundant supporting funds they could apply for to plan and organize activities to promote Lingnan intangible cultural heritage. Fourthly, those excellent intangible cultural heritage projects have the possibilities and potentials to develop into some business, which is also suitable for the CCIP context. In fact, 289 Art Communication Company has launched and participated in a number of cultural projects in the field of intangible cultural heritage dissemination, Lingnan cultural highland construction project, Beautiful Village service project and so on, including the opening concert of Nanguo Music and Flower Fair, Script supermarket, 100 classic songs in praise of China Show, field study of Longmen New Village Demonstration Zone, field study of Foshan Longjin New Countryside Construction, public art creation scheme of Zhaoqing Red-crowned Crane waterfront Art Avenue and so on. Although these activities are not carried out by 289 Creative Art Company22 but by 289 Art Communication Company, those projects with official cultural engineering background indirectly promoted the 289 brand. For the park, these activities and projects with the nature of public cultural services actually are intangible cultural capital accumulation. In addition, since the intangible cultural heritage museum is located in the park, it can also play a service function for the commercial enterprises in the park. For the tenant enterprises in the park, the museum space is equivalent to a service supporting space:  The direct operator of the park.

22

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Enterprises in the park can also rent the space to carry out their own promotional activities when we don’t have any scheduled activities. For example, the Grand View Garden had rent our venue for their brand’s ‘Master Afternoon Tea’ series.23

(B) Integration of Cultural Industry Space and Cultural Consumption Space The original function of the cultural and creative park is to cluster the enterprises engaged in cultural production. Therefore, it can be said that the cultural industry space is a basic nature of the park. So the business model of most CCIP is to lease the rebuilt or new property as office space for creative enterprises. And because the cluster theory tends to think that the basic meaning of industrial agglomeration is to exchange information, especially in informal social occasions, people can inspire each other with creative spark and form close or loose network, then promoting the development of enterprises in the long run. This argument makes the consumption business of cafés, trendy restaurants and bars in the park an acceptable or even “standard” supporting service (Fig. 5.6). Although the business of consumption is a common thing in CCIP, 289 Art Park takes this integration of cultural production space and consumption space a step further. They advocated cultural consumption in multiple forms. If the “cultural consumption” is understood narrowly, it may only refer to the “consumption” in cultural products. But if we understand it in a broad sense, cultural consumption can also refer to the experience or participation in cultural products. In terms of public policy, this area is often referred to as “cultural participation”. But even such kind of free cultural activities can create business chance for a park. To play the advantage of the park to the most, 289 Art Park made out very characteristic strategies on both levels of “cultural consumption”. In the narrow sense of “cultural consumption”, 289 Art Park’s actual operator, No. 1 Business, actively expanded the business of performing arts and even invested into excellent start-ups to shape self-owned cultural IP group: In our cultural creation complex (CCIP), I want to cultivate a group of my own IP businesses. We are building avant-garde small theatre with Person Media, which can be exported to any of our projects. It is a composite space and 23  From my interview with a cultural activities planner of the Lingnan Intangible Cultural Heritage Museum, Mr. Luo, on Oct. 28, 2017.

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Fig. 5.6  Internet celebrity made preparation work for photo in front of a restaurant can be profitable by itself. We will have more than 200 original modern drama copy rights with the cooperation with Person Media and Drum Tower West Theatre. All of these dramas have been performed and operated for more than four years. We set up a joint venture together that will be the core resource of our cultural creative complex. Two such avant-garde small theaters will be opened in Shenzhen and Guangzhou at first. In this sense, the performance in the park is no longer activities, but a product created by us. We have invested in Person Media, whose main business is to operate self-media as a platform. There are already more than 80 WeChat Official Account (WOA) on this platform, each WOA is a well-known person’s self-media … The social resource of each big figure on Person Media platform can be shared with us in the park’s development. So Person Media for us is like an interface on multiple correlation, which will endow my space with infinite possibilities. Citizens can come here to drink coffee, read books and enjoy performances … In this way, (the composite small theatre space in) the park created new cultural destinations and new forms of cultural consumption for the citizens.24 24  From my interview with Mr. Wang Ling, general manager of 289 Art Park, on Aug. 18, 2017.

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Judging from the strategy mentioned above, the park’s managing team has taken the concept of the so-called park one step further with the practice of 289 Art Park project or 289 branded CCIP design. As for the question of what CCIP could be, they gave a further expanded answer in operation—CCIP is not only the clustering place of cultural production for cultural and creative enterprises but also the cultural consumption space for fashionable restaurants and bars, and what’s more, the destination of cultural tourism. Beyond the above multifunctions, 289 Art Park showed that CCIP is also the destination of daily cultural consumption and cultural life for Guangzhou citizens. Actually, in the blue map for future development, the actual manipulators and managing team of the park are developing more business possibilities related to the CCIP: We also have an apartment rental brand called Memor home, which has already opened in Shanghai and Xiamen. Apartment business will be a part of my cultural creative complex, and [the park] is an iterative version of the commercial complex. So there are creative offices, residences, art hotels, apartments, consumption, exhibitions and performances. This will be the basic components for my complex.25

And from the broad sense of “cultural consumption”, the park also has a certain number of activity IP—branded cultural activities held in series. In the 289 Art Space, there is “289 Art Lecture”, with Masayuki Kurokawa, Lu Shengzhong,26 Yang Liping27 and Ruan Yizhong28 as guest speakers. And “Humble Opinion: Cross-Border Dialogue” has invited Mo Yan,29 Yang Jinlin,30 Xu Anhua31 and Mao Jihong32 as the guest speakers. In addition, curators have also planned the Jin Shangyi33 Oil Painting Exhibition 25  From my interview with Mr. Wang Ling, general manager of 289 Art Park, on Aug. 18, 2017. 26  吕胜中 in Chinese. Famous painter and professor. 27  杨丽萍 in Chinese. Famous dancer. 28  阮义忠 in Chinese. Famous photographer. 29  莫言 in Chinese. Novelist. A Nobel Prize winner. 30  杨锦麟 in Chinese. A famous current affairs commentator, editor-in-chief of a newspaper and magazine and well-known compere of Hong Kong Phoenix TV. 31  许鞍华 in Chinese. A prize-winning and well-known film director of Hong Kong. 32  毛继鸿 in Chinese. An international prize-winning bookstore operator and a fashion brand creator. 33  靳尚谊 in Chinese. A famous painter and professor.

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and the Portrait of Southern Persons Exhibition. These kinds of indoor lecture activities are basically inviting people from the cultural and creative circles at the celebrity level, the main purpose of which is to attract people to the park, create cultural topics and shape the brand identity of the high-­ end cultural taste for the park. There is also another category of outdoor activities focused on public participation and on the interaction with the tenant merchants in the park to promote their business and the park brand, such as the “289 Fancy Life Festival” which has held the first Boutique Coffee Festival in August 2017 and got a very enthusiastic response. The festival is a joint initiative of several boutique cafés in the park, including Louis Canton Coffee and Bean2Cup café. They have extensive network in the boutique coffee community in Guangzhou, so it’s not hard to invite quite a few of influential boutique coffee brands and its creators to participate, attracting a lot of coffee lovers and Guangzhou citizens to the festival. This activity promoted the boutique coffee culture, advertised the park’s merchants and brought visitor flow to the park in the weekend, which really played a multiple win-win effect. According to the product planner of the 289 Art Park managing team: Next time we are going to do a music festival and planned it into an event IP, then the music festival could be exported everywhere (in different 289 series of parks).34

As what the management team calls a “cultural-creative complex”, 289 Art Park’s involvements in the field of cultural-creative industries actually have more exploring experiments. In the park there are very diversified businesses, such as the Southern Cultural Equity Exchange (SCEE), We+ (a co-working space brand), Technology Financial Investment (having the investment cooperation agreement with the park), Cultural Creative Fund (with governmental background), Internet equity crowdfunding platform, Internet financial incubator and so on. Because of all these serving institutes for cultural-creative industries development, the park won the title of “Provincial Maker Space”, “Guangzhou Demonstration Base for Innovation and Entrepreneurship (Incubation)” and other titles endowed by the government.

34  From my interview with Mr. Wang Ling, general manager of 289 Art Park, on Aug. 18, 2017.

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(C) Ecological Integration of Culture, Real Estate and Finance: Creative Economic-Ecologic Circle In the traditional theory of creative agglomeration, rents and land prices are rising because of the boom in creative neighborhoods. Elite middle class or affluent class would move in because they like the cultural and creative atmosphere. So the real estate development is quite profitable in this district under the economic and cultural policies of neoliberalism. As a result, the developer of the properties on or around the CCIP or creative cluster has often been presupposed as the representative of “evil seeking-­ profit capital”. The phenomenon of “gentrification” is especially obvious in the case of spontaneous or bottom-up creative agglomeration. Particularly, original artists usually suffered the greatest harm. However, for those planned or top-down cultural and creative parks with clear operation strategy and business model design from the very beginning, the real estate developer and financial capital with similar value visions may become a driving factor instead. The operation and management model of 289 Art Park provides us with some enlightenment from this perspective. 289 Art Park’s main operator and business model designer—No. 1 Business Holdings, formerly No. 1 Business Development Co., Ltd—was originally a company specializing in office space rental, renovation and operation. For the company whose main business is space rental, the basic profit-earning point logic is to enhance the property value through space renewal and long-term service. With the wave of cultural and creative industries upsurging, No. 1 Business has sensitively caught the new business opportunities in CCIP regeneration and operation. By focusing on the theme of “culture”, space rental business can obtain higher value-­ added profit and possibilities, which is the initial driving force for their investment and transformation of 289 project. Therefore, we can view the 289 Art Park case as a reverse cross-border initiative by space operators from the real estate business to cultural-­ creative industries. In strong contrast to the gentrification phenomenon in the traditional creative cluster theory, witnessing the urban change from “cultural and creative agglomeration” to “real estate development”, 289 Art Park case shows that some mainland China developer or space operator would like to strategically invest in culture at first to survive and expand itself in the fierce market competition. When I say “strategically invest”, it also means that the how to invest and to whom to invest are very crucial. In this case, No. 1 Business, the space operators are very lucky to have a

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powerful partner in cultural production and cultural communication—the South Media Group, which has abundant cultural resource, talents, discourse right and credibility. And if we consider the logic from the traditional “cultural production” side of South Media Group, we can find that because the swift development of digital technology and the popularity of mobile terminals represented by smartphones have rewritten everything in the media industrial ecology and social texture, the traditional print media are forced to transform and expand itself with new businesses in any possible directions. As a famous media giant, South Media Group owns 8 newspapers, 9 periodicals, 53 websites and 1 publishing house, including South Daily, Southern Metropolis Daily, South Weekend, 21st Century Business Herald and City Pictorial, all of which are branded media publishers and have nationwide influence. How to transform the high-quality content production capacity into creative new businesses to face the digital economic challenge by the cross-border integration is also what the head of the Group is thinking about. Mr. Wang Chuilin, deputy secretary of the Party Committee and general manager of the Group, is very clear about the multiple meanings of “culture” in this new creative economy era. He also has his idea and vision in feasible strategic transformative path with the cooperation of the space operator and financial capital: The idea of ‘Culture +’ has become a new engine of urban renewal, and continuously endowed the city, industries, consumption and space with new cultural contents, new spatial forms and poetic place spirit. South Media Group spreads cultural values through media, connects cultural users through platforms, and creates urban cultural ecology through cultural and creative parks. With the help of the CPPE Funds, it is believed that the pace of replicating the 289 Art Park model in major cities across the country will be more feasible and efficient. At present, South Media Group and No. 1 Business Holdings are negotiating and pushing the cooperation in cultural space projects in some key cities in the Pearl River Delta with CPPE Funds. We are striving for finishing the projects of replicating one or two 289 branded parks successfully in the province this year.35

In fact, in the process of the transformation of South Media Group, 289 Art Park is not the only case of realizing leapfrog development under 35  The 289 Model will be Replicated. Chinese Language Website: Sino-US Innovation Times. http://suinnovationtimes.com/2017/01/24/289艺术Park模式将复制.

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the help of financial market. Southern Metropolis Daily (SMD), the most innovative and nationwide influential newspaper, has completed a transformative attempt in entering the cultural and entertainment industry with financial capital. In the opening ceremony of SMD Guang Yuan Entertainment Co., Ltd, in November 2016, the new enterprise operator summarized the “model” meaning of the company’s establishment in the report that: Both Southern Metropolis Daily and Tianrun36 are very competitive. The win-­ win cooperation innovated a new transformative model of “media + capital”, which is an important exploration for South Media Group to increase the proportion of asset securitization, strengthen high-quality content production, improve user service and improve self-development capability by capital-­ driven path.37

The report also revealed that the Southern Metropolis Daily and Tianrun Digital Entertainment & Cultural Media Co., Ltd will set up a New Media Industry Buyout Fund to invest and incubate high-quality transformative projects under South Media Group. Similarly, in the industrial ecosphere associated with the project, South Media Group participated in the financial capital cooperation with No. 1 Business and the CPPEF in their jointly launching of a cultural and creative industries development fund with the total subscribed capital amounted to 5 billion RMB in August 2016, which would mainly be used to boost the layout and rapid replications of 289 branded parks in major cities across the country. In fact, by the time of September of 2017 when the in-depth interview with the general manager of 289 Art Park was conducted, both Shenzhen’s 289 Digital Peninsula project and Foshan’s 289 Rice Boat Dock Park project have signed the agreements and started the reconstruction. Among them, the Shenzhen project was signed in March 2017 and has initiated the business invitation work. And the replication of 289 branded park has more possibilities in the general difficult context of current commercial real estate developer. No. 1 Business Holdings has a strong content production capacity in partnership with South Media Group. For example, they incubated a lot of  Hunan Tianrun Digital Entertainment & Cultural Media Co., Ltd, a quoted company.  Southern Metropolitan Starts New Business of Guang Yuan Entertainment, to Creating One-Stop Entertainment Service. 2016. Southern Metropolis Daily. http://epaper.oeeee. com/epaper/A/html/2016-11/29/content_99252.htm 36 37

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start-­ups, under the umbrella of the park operation company with the cultural talents, resources from the long-time accumulated cultural assets of South Media Group, including 289 Pictures, 289 Craftsmanship and 289 Art Fashion magazine. Each cultural start-up is a valuable IP, which could be replicated in different 289 parks. With the communicative coverage of 200 million people by South Media Group, No. 1 Business and 289 branded park could quickly accumulate its “cultural capital” in a short time. In addition, with its background as an experienced space operator and the capital support of CPPEF specialized in real estate, No. 1 Business has actively started the planning of more extensive “cultural real estate” development projects: The project (in Zhongshan city) has won the bid, which was the first step. Next, we will first build a top-level joint company with the South Media Group and Zhongshan City Construction Investment Group. And then, we’ll establish a cultural property company with CPPE Funds. … If (the Zhongshan Cultural Estate Project) is developed successfully, we may set up another company and use it to take over another project.38

In fact, the current commercial real estate development and property market transactions are strictly tightened by national policy regulation, because the crazy speculation of property market led to a serious damage to the entity economy, resulting in serious economic and social problems. From the perspective of real estate developers in mainland China, it is also necessary for them to transform the operation strategy to achieve a sustainable development. Cultural and creative parks such as 289 Art Park are classified as one of “operative real estate” in China’s real estate research and practice discourse, which is seen as a future direction by mainland China’s real estate: He (the founder of Zhi Xue Academy) used to be a real estate developer. Why did he want to operate such a training institute? That’s because they saw the business chance in urban renewal, and the changing trend in real estate and space operation. … So their slogan is ‘From development to operation’, which implied that the future of real estate will definitely enter the operation age. … Vanke (real estate) in Foshan has taken a developing project with the land property 100% owned by the government. What is that concept? It means that 38  From my interview with Mr. Wang Ling, general manager of 289 Art Park, on Aug. 18, 2017.

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after Vanke finish the construction on the land, Vanke cannot sell the property to individuals. It only can make the profits by operation. So this is the best case illustrating that the real estate has changed from the era of development into the era of operation. In this new context, the management ability of the real estate will be tested by the market competition. In the past, the developer is not equipped with the operation team, but now, Vanke and some other big real estate brand are beginning to do the (operation) work.39

Around 289 Art Park, the CPPE Funds, which provides financial capital support, is a well-known private equity fund management organization in China, with a total fund management scale of more than 50 billion RMB.  It is jointly established by CITIC Group, Poly Real Estate and Everbright Financial Holding, ranking among the top ten real estate funds in China. It has a strong real estate background of its own. In the boom years of mainland China’s property sector, this fund had won rich rewards by the nationwide real estate projects of Poly. However, the era of speculation on the property market has ended under the pressure of national regulation policies. So the professional real estate fund sensitively seized the new trend to support the uprising “operating real estate”, which is also an important reason why the CPPE Funds invested 300 million RMB in the No. 1 Business Holdings as the A-round financing. Ms. Tan Yan, deputy general manager of the CPPE Funds, revealed: The reason that we choose to invest No. 1 Business Holdings is mainly for the new emerging business and their excellent team. We are optimistic about the space integration operation business and appreciate the dedication and professionalism of their team. They are good at the industrial resources integration and have already presented the very successful case of Guangzhou 289 Art Park. We hope to bring some new concepts to No. 1 Business Holdings in the sectors of finance, industries, internet, science and technology +, and some advantageous resources in real estate, finance and some complementary experience in operation and management of listed companies. We believe that (No. 1 Business) could create more imaginative space in business operation for the capital market and then bring new development directions, strength and contents to Chinese cities.40

39  From my interview with Mr. Wang Ling, general manager of 289 Art Park, on Aug. 18, 2017. 40  CPPEF Invested 300 Million RMB into No. 1 Business Holdings. 2017. 21st Economic Report. http://www.sohu.com/a/124876137_115443

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Therefore, from the analysis of the transformation and development demands of the three parties above, South Media Group, No. 1 Business Holdings and CPPE Funds served each other as platforms and assistances under the recognized operation strategy of “culture+”. Culture, real estate operator and financial capital have formed a close-knit business ecological circle and then created a new model of common development with the experimental case of 289 Art Park. The ecology here refers to not only the creative ecology in the park but also the “economic ecology” consisting of cultural industries, real estate industries and financial capital. Because the core integrated point is around the “value-added cultural content” in the ecologic circle economy, and the innovative practice in organizational construction, cooperation and evolution model is created accordingly, which shapes the highly creative economic growth form, we hereby named it “creative economic-ecologic circle”. 5.2.3  Main Measures Taken by the Park in Operation and Management As we mentioned earlier, the initiative of 289 Art Park project came from the transformative demands of two organizations in business development, among which one is the No. 1 Business Holdings’ strategic expansion as a private enterprise while the other is the traditional media giant South Media Group’s forced transformation in the challenge of digital media as a state-owned corporation. These two above transformational demands and motives coincided with each other in the tide of creative economy and complement each other in resources, resulting in the birth of 289 Art Park. Cultural and creative parks have become an important opportunity for the public and private enterprises to cooperate with each other and share complementary advantages, which finally contributed to the common leapfrog development and evolved into a creative ecological circle economy. However, in this process of creating a completely new integrated economic model, everything didn’t happen automatically. Although Guangzhou 289 Art Park officially opened on August 18, 2016, it has prepared for nearly two years in the early stage planning and the establishment of relevant cultural start-ups. From the perspective of management, Guangzhou 289 Art Park makes the flexibility and creativity of creative economic organizations more complex and exciting. In fact, it is also due to the operation of the “module ideas” in the creative organization

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structure created by the management team and by transforming the cooperation of different subjects into the alliances of small start-ups or enterprises and then forming a large-scale economic ecology with the combination of different “module” enterprises that the realization of the 289 branded CCIPs can be derived from a specific Guangzhou project to different 289 projects in other cities and meanwhile created with infinite possibilities for diversified business expansions. In order to analyze the “hidden” patterns in the “module” strategy of this case more clearly, we will first analyze some significant managerial “behavior” of the two main structural partners which are the South Media Group and No. 1 Business Holdings. 5.2.3.1 T  he Creative Management Strategy of South Media Group: Balancing the Innovation and the Earnings The origin of Art Park comes from the decline of the traditional newspaper industry and the great challenge of the digital content era. It is an important experimental project for South Media Group to make a self-­ breakthrough as a huge media giant and transform its development route in response to the new economic form. On the one hand, layoffs and the plant idleness resulting from the drastic reduction in subscriptions and printing volumes put the Group into stiff challenge; on the other hand, the Group’s golden urban location in Guangzhou provided a great chance to transform these old factories into the most popular CCIP business. But when South Media Group planned to build a cultural and creative park at the end of 2013, the upsurge of CCIP trend in mainland China had experienced two stages of development in the first decade. At the beginning, there were many problems in the extensive development, such as the disguised commercial development, the loss of state-owned assets, the violation of regulations in the park rebuilding and so on, which became a lesson for the South Media Group when it set about the park project. In addition to the spontaneous initiative as a bottom-up self-organizing creative cluster, the newly developed version of top-down designed CCIP has become a business feasible development project in mainland China. Are there any other possibilities beyond simply space-rental model? Does CCIP operation belong to a kind of creative economy? How does the South Media Group as the developer of CCIP play its own advantages in this process? All of these questions have become the new challenges of the times for the senior leaders of South Media Group.

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(A) The Design of the Managerial Organization of the Park: Two-Level Planning In order to meet these challenges, the first decision made by the senior manager of the Group was to establish a wholly owned subsidiary as Guangdong South 289 Art Communication Co., Ltd (hereinafter referred to as “289 Communication Company”), for the relevant preparation work of the park. The company was founded in March 2014, two years before 289 Art Park officially opened on August 18, 2016: We did the (289) communication company at first, which was formally established in March 2014. And our project team were formed in February (of 2014) … when the Group issued the document internally to start this project.41

In launching this whole new cross-border business from newspaper media operation to CCIP operation, the top leader of the Group had paid adequate priority to it. The first behavior is to set up a special office and call for a competent team: The idea and initial planning began in 2013. The head and Party Secretary of the Group attended and led the work in 289 project personally. It was also because 289 Art Park was geared to the cultural industry.42 After the Group decided to do this project, the leader started to organize the team of the project. The team members were transferred from the sub-units and I was the eighth person (of the team). In the case of the eight members, I was [in charge] of the business-invitation work.43

What will the team do with the company and what are the advantages and resources of the Group in the operation of the CCIP business after the team is formed? How should these advantages be exploited? It is also in this regard that South Media Group has shown the advantage of “lessontaker” as a latecomer, which means they could enjoy the more cautious “hindsight” after reflecting the trials and errors of its predecessors: 41  From my interview with the general manager of 289 Craftsmanship Ms. Fa Liya on Nov. 9, 2017. 42  From my interview with the general manager of 289 Pictures Ms. Guo Lishan on Nov. 9, 2017. 43  From my interview with the general manager of 289 Craftsmanship Ms. Fa Liya on Nov. 9, 2017.

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We … may have invested more creativity of our own to do this (CCIP) market than any other groups. We have invested with people and money and have studied a lot by ourselves, which was very different from what some other media groups did. They just rented their own land out and then renamed it as some CCIP, but didn’t care about the operation of it at all.44

By the way of “self-study”, on the one hand, the South Media Group has gradually found its own position from reflecting other failure cases in the past; on the other hand, through the introduction of partnership, they managed to complement its weaknesses in space operation. The management of cultural-creative industries park seems to be the business of cultural and creative industries, but in essence it’s closely related to a real estate operation with intensive professional know-how in space rental business. According to the observation of the senior project operator, although the park operation seems to have diversified income models and possibilities, the most important and large-portioned income so far still comes from rent: Unlike most of other experimental CCIP cases, we will consider to solve the problem of profit-making at first, while in reality a lot of people deal with it backwards. For example, some of them have the ambition to operate the CCIP as a start-up incubator … but before his company can raise money form the capital market, it had run out of its cash flow and go bankrupt. So this is putting the cart before the horse. What we did is to lay a solid foundation at first and make sure that every start-up of our projects is profitable … Don’t underestimate the operation of the rent. Generally speaking, seldom CCIP could do it well and sustainably. We can ensure that the rent can increase with time, that the ecology of the park is getting more healthy and richer and that the resident organizations can grow together with us. After the stable income can be secured, then we can add more business to the platform, such as start-up incubator and service, equity investment in some potential enterprises in the park, etc. All of these things are the icing on the cake. In that case, there will be no dangers and threads in overspending, team dismissal or bankruptcy.45

Obviously, how to operate a space and how to ensure its long-term sustainable development and long-term profitability are not the South 44  From my interview with the general manager of 289 Craftsmanship Ms. Fa Liya on Nov. 9, 2017. 45  From my interview with the general manager of 289 Art Park Mr. Wang Ling on Aug. 18, 2017.

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Media Group’s profession. They wisely know that this gap is not easy to fill with their present abilities. Therefore, South Media Group has made an extremely important decision on the operation structure—to introduce professional space operator or real estate developer as the partner on this project to ensure the success. Before contacting No. 1 Business, the Group had talked with several different real estate developers including Vanke—one of China’s most renowned and powerful developers. The No. 1 Business was occasionally informed of the progress when they did some other cooperative projects with SMG: This project is in the direct decision of the Group at the beginning. We had negotiated with quite a few cooperative partners. Some had almost got the agreement. But coincidentally … Wang Ling was informed of the project. He was our former colleague … and was going to give some help in other projects. After he knew the CCIP project, he found that No.1 Business also meet all the qualifications for the cooperative partner with South Media Group on this project. In the process of the contact with different possible partners, we also want to choose the most appropriate. Finally, we thought the No. 1 Business is most appropriate cooperation partner among them.46

How to “structure” the important partner into the project operation and how to maximize the economic value from their differentiated advantages in cultural value through the organizational structure design are the important initial decisions in the management of the CCIP project. This crucial step of the cooperation partner choice looked like “accidental”, but in fact it has its own logic in decision-making. First of all, Wang Ling’s professional background was the former director of the activity planning department of Southern Metropolis Daily, an important newspaper owned by SMG.  With his more than ten years’ working in Southern Metropolis Daily, he is more familiar with the operation mechanism, internal leaders and colleagues of SMG and has extensive contacts or Guanxi network with the cultural system of Guangzhou government and major cooperative state-owned groups. Secondly, the work in activity planning gave him the chances in playing the role of “mediator” between the media and the industry for a long time, so that he had long-term front-line work experience in the cultural content production, the media communication model 46  From my interview with the general manager of 289 Craftsmanship Ms. Fa Liya on Nov. 9, 2017.

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and the demand of the industrial economic sectors. Thirdly, he changed his director position from South Media Group to CPO47 of No. 1 Business in the past two years, which added his capability in space operation. So Wang Ling had become an interdisciplinary talent and can play the mediator role in the CCIP project which needs to combine the business of culture and real estate. Finally, because both parties are at the crossroads of transformation and each has its own outstanding professional advantages, they can meet the mutual interests of both parties with a comparatively “equal” attitude in the early stage of cooperation and negotiation. After the decision of selecting No. 1 Business as the partner, Guangdong South 289 Art Communication Co., Ltd (289 Art Communication Company), a wholly owned subsidiary of South Media Group, had established a joint venture with No. 1 Business, which was named by the Guangdong South 289 Creative Art Culture Development Co., Ltd (hereinafter referred to as “289 Creative Art Company”). In terms of equity ratio, in order to ensure the safety of state-owned assets (politically correct requirements) and the smooth passage of the following administrative application and approval (such as the land-use nature transforming), the shares held by 289 Art Communication Company and No. 1 Business are respectively 51% and 49%, which secured that South Media Group, state-owned enterprises, took the control of the new enterprise. After the completion of establishing the new organizational structure, 289 Creative Art Company accepted the entrustment of 289 Art Communication Company to become the actual operation and management subject of 289 Art Park in Guangzhou. (B) Managing the Value Production: Taking Advantage of the Cultural Content Production to Endow the Brand Value for the 289 Art Park In fact, in this round of cooperation terms, No. 1 Business is the actual money investor in the CCIP regeneration project, which not only covered all the costs of the park’s physical rebuilding but also the investing fund in a cultural start-up called 289 Craftsmanship company. Meanwhile, 289 Art Communication Company has contributed to the partnership by setting up a range of cultural start-ups in advance, including 289 images, 289 Craftsmanship, 289 Art Fashion magazine and an all-media operations center, which could serve as the basic “module” and replicable businesses for the 289 branded CCIP in the future.  Chief product operator.

47

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For South Media Group, 289 Art Communication Company, which was founded as a wholly owned subsidiary, is an important strategic base or organizational subject in the Group’s transformative experiment in CCIP economy. Besides, it is also a parent company platform created by the Group to cultivate cultural assets into the cultural and creative industry enterprises. The South Media Group may not clearly know what could happen in the company at the very beginning, but it was definite that the future CCIP economy should not be limited in the normal rent model. It should not only continue to create cultural content and keep cultural quality but explore a replicable model for CCIP operation under a systematic mindset. There were some controversies at its early planning stage … this place was the former printing plant, if we just simply rent it out, it is also profitable. But of course, there would be no cultural implication in this kind of operation … Our present head and Party Secretary, Mr. Mo, has been the deputy director of the Propaganda Department of the Provincial CPC Committee even before he came to the Group. He has been responsible for publicity—external publicity to foreign countries in Guangdong provincial CPC committee, so his vision is relatively broad. He also has a lot of accesses to information from different levels. With those information on overall situation, he can judge the major trends of development in present China and sense the possible chances in advance. For example, he thought there are some good opportunities in urban renewal and “three old” transformation. So when the park was set up, he said the new business chance was not limited in this park. 289 Art Park was just the starting point. It’s like the equivalent of, say, a sample house produced by a real estate developer. We will definitely replicate this model in the future. So that’s why we latterly have other two 289 branded parks in Foshan and Shenzhen. We are going to replicate this CCIP model all over the province, even all over the country.48

Based on these considerations, 289 Art Communication Company believes that it is necessary to create cultural start-up projects around the park operation, which can both inject cultural content to the CCIP and replicate the group of self-owned cultural business as 289 “modules” to other 289 branded CCIP.  So under the parent company of 289 Art Communication Company are 289 Pictures company, 289 Craftsmanship 48  From my interview with the general operation supervisor of 289 Art Park Mr. Fang on Aug. 18, 2017.

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company and a publishable magazine called 289 Art Fashion. Among them, 289 Pictures project was derived from the “Global Chinese Photography Media Award” (hereinafter referred to as “GCPMA”) project of Southern Metropolis Daily newspaper, which has been successfully operated for the first year in 2013. Relying on the influence of South Media Group and the cooperation with the government, the project “basically gain[ed] both fame and fortune”, which means it has not only established a brand but also produced a considerable profit. It should be viewed as an area with broad business prospects: Then, from the first half of 2014, we had been communicating with the Group leader in this respect. And finally, the Group leader had made the decision that to operate and develop 289 Pictures as a subsidiary of 289 Art (Communication Company). So in 2014, GPPA project was incorporated into the 289 Art Communication company. … Because of 289 Art’s strategic plan at the end of 2013, 289 Art Park was definitely the big target and big background. But after this big IP (289 CCIP) was established, it could do some subsidiary brands extension. So we started to think about if GPPA project could be extended as 289 Pictures company after we finished the second GPPA.49

The reason for creating 289 Craftsmanship company was because the decision-maker thought the domestic lifestyle market was optimistic and has the business potential to do art e-commerce. So they created a 289 Craftsmanship e-commerce platform which sold fine and high-quality products made from independent designers and craftsmen. And the magazine named 289 Art Fashion is positioned as the professional fine art magazine. In terms of the several already published issues, the members of the editorial board are all important figures in the art circle at home and abroad, from which we could see the ambition of South Media Group in creating the art highland both on discourse production and in physical space. These cultural content production projects, which are similarly customized for the 289 Art Park, are referred as “IPs” by different interviewees, all of whom are members of the managerial team, such as the start-up managers or project managers. As I mentioned in the previous analysis, “IP” in contemporary Chinese creative industry context is a concept theorized and proposed by a business popular book named Super IP: The 49  From my interview with the general manager of 289 Pictures Ms. Guo Lishan on Nov. 9, 2017.

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Methodology for Internet New Species, written by Wu Sheng. He defines the success of cultural and creative industries as the ability to create a “brand” symbol with specific content orientation and personalized characteristics. Here we can extensively understand it as the cultural brands which have stable cultural content production ability as the core competitiveness power. So in the case of 289 Art Park, it’s notable that the South Media Group has consciously and actively explored the transformation of cultural assets into commercial IPs, such as the 289 Pictures, 289 Craftsmanship, 289 Art Fashion magazine and so on. All of those commercialized cultural IPs could be transferred as the cooperative capital of South Media Group with their economic valuation as an enterprise entity. Therefore, in cooperation with No. 1 Business on the 289 Art Park project, 289 Art Communication Company could use the several content IPs and its extensive media communicative resources as the “investment” in the joint venture, which No. 1 Business put out the real money to inject into the joint company—289 Creative Art Company: 289 Arts Communication Company and No. 1 Business have jointly established 289 Creative Art Development Limited Company. In this company, 289 Art Communication Company accounts for 51% without directly injecting funds. It uses the various media resources of the Group to (invest), which means they calculated the page charge that had been or will be used for 289 Art Park promotion as their investment valuation to the joint company. For example, South Daily will take their pages valued 50 million RMB and Southern Metropolis Daily will another 50 million RMB page charge value … and so on. The total page charge value invested in this project will amount to 250 million RMB … We have to use up these pages in a few years, which is almost equivalent to the money we invest in.50

Through the 289 Art Communication Company and its several subsidiaries of cultural content IP start-ups, South Media Group has successfully transformed its cultural assets into “economic capital”, which is due to the ingenious strategic structure of the creative company of the Group. Not only has 289 Art Park been added with cultural brand value, but 289 Art Communication Company has also opened up the possibility for the Group to operate the park economy independently:

50  From my interview with the general operation supervisor of 289 Art Park Mr. Fang on Aug. 18, 2017.

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With 289 Art Park, we are strategic partners. But in other projects, we both have other choices. Depend on who took it (project) at first. If No. 1 Business took it, they can choose to cooperate with us, but they can also choose to cooperate with others. If it (the project) is taken by 289 Art Communication Company, we can choose to cooperate with No. 1 Business or with someone else. Each side has its own priority.51

(C) Managing Income: Guaranteeing the Appreciation of State-­ Owned Assets by Designing Double-Layer Income-Security Mechanism For the provincial state-owned enterprise, the economic transformation and business expansion to face the challenge is a big event, but it is more important to avoid making “political mistakes”, which means the manager should ensure the safety of state-owned assets in these new projects and avoid the loss of state-owned assets, and then it could be considered as a successful transformation project. Especially when the project partners involved private enterprises, how to avoid risk has become an important consideration for managers of state-owned enterprises in the design of the cooperation model and organizational structure. For South Media Group, which looks to further increase “three-old” transformation markets and cultural and creative industries in the country’s major cities, the 289 Art Park project is an experiment with model meaning of being “replicable”. So it is necessary to do a good job of pattern design at the beginning of the project. As far as the development of CCIP in China is concerned, there is no particularly successful precedent for this kind of CCIP with public-private partnership and market-oriented operation aiming at economic prospects. Therefore, how to design the organizational structure and operating mechanism of this cooperation is itself a creative economic management problem. As one in-house executive who has been deeply involved in the construction of the park puts it: The Group and No. 1 Business executives have put a lot of sincerity to communicate with each other. It’s not easy to reach this cooperative agreement. Because in this model, after all, there are state-owned enterprises as well as private enterprises, which should secure the newly established joint venture state-­ controlled. How to ensure the operation rights of private enterprises is something that everyone has to consider about. Meanwhile, when private companies share your (the state-owned Group) intangible assets how to ensure our own (the 51  From my interview with the general operation supervisor of 289 Art Park Mr. Fang on Aug. 18, 2017.

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Group’s) rights and interests. In fact, it is really worth seriously exploring. How to design this organization is still quite a brilliant thing.52

In the general partnership and cooperation rules, benefit sharing and risk sharing are basically included. But under the present mainland China’s political and economic system, state-owned enterprises are not only economic entities but also having responsibilities for public goods. So ensuring the economic security of stated-owned asset is the so-called restrictive condition for this CCIP cooperation project. However, as Chris Bilton suggests in his creative management theory, creativity is not an unrestrained and innovative idea, but rather an operable and practical management process and a cooperation within the existing restrictive boundaries of the system. Both South Media Group and No. 1 Business need each other’s strengths. But a basic condition for the possible cooperation is to devise a plan that will allow the Group to secure basic incomes at first. In fact, in the initial discussion on whether or not to rebuild the cultural and creative park, there were objections: Some people also said at that time, just rent it (the old plants) out. After you rebuild the Park, you will still make the money by renting it out. So why bother?53

The actual situation supports that argument. As the Group is located in the center of Guangzhou Avenue, close to the Central Business District (CBD) downtown area of Pearl River New Town, there is already an IT company renting a floor of buildings as their office space, even before the printing plant has been rebuilt: It was rented in 2014. We haven’t had No. 1 Business involvement. When we sent out the message that we are going to rent the space out, someone wanted to rent it. It’s a technology company. It’s me that personally dealt with the business at that time, and the contract has expired now.54

In view of such a situation that there is still office rental market demand even without transformation, South Media Group has designed a twofold guaranteed revenue model on the Guangzhou 289 Art Park project:  From my interview with the general manager of 289 Craftsmanship Ms. Fa Liya on Nov. 9, 2017. 53  From my interview with the general operation supervisor of 289 Art Park Mr. Fang on Aug. 18, 2017. 54  From my interview with the general manager of 289 Craftsmanship Ms. Fa Liya on Nov. 9, 2017. 52

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After we set up the joint venture, we commissioned Rippling Wheat Culture (Limited Company) to carry out property management. The money taken back from the tenants was given to the Group first. Actually, most of the rent was given to the Group. There are two-fold of bottom-line revenue: the first level bottom-line is no matter whether you (No. 1 Business) can rent the rebuilt park out or not, you have to give us (the Group) a certain amount of secured bottom-­ line income. This is not a problem of rental business, but the problem of profit-­ secured of the state-owned Group (in the cooperation). Then the left revenue from the rent goes to the (289) Creative Art Company. On this company account, the joint parts (the Group and No. 1 Business) respectively gained 51 and 49 of the left revenue from Rippling Wheat, which would be the second level of secured bottom-line income.55

Even so, 289 Art Communication Company only commissioned 15 years of operation license to 289 Creative Art, the joint venture. That is to say, after 15 years, the wholly owned subsidiary of the Group—289 Art Communication Company—will be able to independently operate the park and enjoy all the actual rental income of 289 Art Park. In that case, it seems that No. 1 Business has to suffer a lot of losses in this cooperative project. Not only do they have to shoulder the cost of the park’s renovation but also they have to take out money to invest in the 289 Creative Art Company, while in the end most of the revenue from the Park’s rental business has to be distributed to the Group through the twofold bottom-line guaranteed allocation plan, and No. 1 Business only has 15 years’ cooperation agreement on 289 Art Park. Through a series of structural operations, South Media Group has successfully added value to its property assets. However, No. 1 Business in this project is really the weak side to bear the loss. What are their plan and management strategies? What did they do to recover the costs, realize their own interests and finally achieve win-win cooperation? 5.2.3.2 The Creative Management and Operation of No. 1 Business As a private enterprise in its rapid growth and transition period, No. 1 Business actually is the comparatively weak side of this cross-border cooperation with the well-known media giant—South Media Group. As the Group has the political responsibility to secure the state-owned asset increase when it cooperates with private enterprises, it had to design such kind of two-level 55  From my interview with the general manager of 289 Craftsmanship Ms. Fa Liya on Nov. 9, 2017.

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bottom-line guarantee mechanism to make sure that the majority of the rental income of the CCIP should be obtained by the Group. Then No. 1 Business must have planned some other income sources beyond the rental incomes but closely related to the operation of 289 Art Park or the replicable 289 projects in the future. Actually, No. 1 Business firmly grasped this historical opportunity and made a very strategic development plan. We can analyze the organizational behavior of No. 1 Business from these several parts. (A) Managing the Cultural Capital: Making Strategic Cooperation with the South Media Group In the project of Guangzhou 289 Art Park, the South Media Group, a provincial state-owned enterprise with huge cultural resources and communication channels, is a powerful booster for the strategic transformation to the “cultural space” management field for the No. 1 Business. At first, the ideal partner in South Media Group’s eyes should be a real estate star brand like Vanke. No. 1 Business was not in the list of the Group’s consideration. That it had the opportunity to learn the project should be attributed to its present CPO—Wang Ling, who was the former department director of Southern Metropolis Daily. From another perspective, we can also say that the accidental “connection” between No. 1 Business and South Media Group started with the transformation preparation of No. 1 Business in human resources. It is because of the evolution of the organization that the latter story is made possible by the join-in of Wang Ling as a senior talent and manager from the cultural arena. Therefore, from the perspective of the development of the No. 1 Business, the starting point of the cultural space operation and the subsequent strategic transformation of the whole enterprise should be tracked to the introduction of “creative talents” with a background of cultural management or cultural content creation positions in the South Media Group, hence helping the whole enterprise enjoy the extensive network with abundant cultural capital. Prior to Guangzhou 289 Art Park, Wang Ling led the Phoenix Warehouse Project, which transformed the abandoned warehouse along the Pearl River into a joint office space for the design industry. This project became the first water-test project for the No. 1 Business to shift to a culture-themed space operator. However, due to the instability of the Phoenix Warehouse property, one row of the warehouses which was in the rebuilt plan had to be given up due to the conflict with the renovation plan of the government’s public space construction. Therefore, for the

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“space operator”, the certainty and stability of the land planning of the property under rebuilt operation is a fatal issue. Once there are deviations, it will be a great blow to the survival and development of the enterprise. For example, one tenant enterprise, Ji He Brand Management Consultancy Company which set its headquarter office at Phoenix Warehouse, has to move to 289 Art Park when the government decided to make use of a part of the warehouse to construct public space. In an interview, the general manager of Ji He mentioned that after renting office space at Phoenix Warehouse, hundreds of thousands of RMB had been spent on the repairs and refurbishment of the old building and now they had to suffer the losses. Luckily, the No. 1 Business had made the compensation for the decoration fee after they moved to 289 Art Park. This lesson also made No. 1 Business deeply aware of the instability and risk in cooperation with small property owners. Actually, in the past history of “three-old reconstructions”, there are many precedent cases that famous cultural and creative agglomerations have to be terminated or destroyed due to the change of land-use planning, such as Old Summer Palace Painter Village, Song Village Art District, Guangzhou Redtory Art District, North Bank Cultural Wharf and so on. All kinds of these frustrated cases made private enterprises like No. 1 Business eager to form alliances with large state-owned enterprises with strong discourse power, high visibility and credibility. Especially for the cross-industry transformation and the urgent need to obtain the cultural assets, the joint venture alliance with South Media Group is even more significant. Cultural asset is a long-term accumulation on cultural creation and cultural talents. No. 1 Business doesn’t have such kind of advantage. So if it wanted to successfully achieve its transformation from office building operator to so-called urban cultural space operators to catch the trend of cultural and creative industries development, the most needed things were cultural assets, which were exactly what the South Media Group has. On the other side, the Group also sensed the chance of cultural industries development and had to face the challenge of traditional media transformation. So it had made some preparation in organization design and talent arrangement. After the two partners have established the joint venture, the Group injected its cultural assets into the park in many ways. In addition to 289 Pictures, 289 Craftsmanship and 289 Art Fashion magazine, which were originally set up for the cultural content production of the park, the Group also has a strong social network in government

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departments for more convenient public relations and extensive communication channels with its subsidiary newspapers, magazines and websites as the solid support for the invisible construction of “cultural atmosphere” and “cultural capital”. Although 289 Art Park was officially opened in August 2016, the start date of the project can be traced back to the end of 2013, while the earliest promotion campaigns and lecture activities can be traced back to December 2014. As the park’s senior manager mentioned, the public space for public participation was the first finished space which is located on the side of the main Guangzhou Avenue, with 289 Art Space and Lingnan Intangible Cultural Heritage Museum as its main components. Among them, 289 Art Space was the first put into use. At least on December 8, 2014, at the launching ceremony of 289 Art Park, it was announced that a series of lectures named “289 Art Opinion” given by international cultural celebrities including Japanese internationally well-known designer Masayuki Kurokawa and Chinese famous painter, cultural critic and professor of Tsinghua University—Chen Danqing. On August 18, 2016, the Lingnan Intangible Cultural Heritage Museum was also opened at the same time with the park. Thanks to the museum’s opening and its cooperation with the Guangzhou Federation of Literary and Art Circles, the park is guaranteed to have exhibitions every day and four public cultural events every weekend. Therefore, the park is endowed with the title of “Guangzhou Civil Space for Literature and Art” by the government. It not only ensures visitor flow rate but also provides an opportunity for 289 Art Park to be exposed to the public and be recognized in the release of these activities. In response, one of the park’s executives from the Group side analyzed: That to entitle the whole 289 art park as ‘Guangzhou Civil Space for Literature and Art’ can be seen as our intentional design. We are willing to pack this park with this title, because this is our own place. People would like to come here, because they think this place is full of cultural and art artistic demeanor under such kind of ‘label’ and with so many high-quality cultural events. Well, we’re not going to ask the No. 1 Business to pay for this ‘label’ or title. When the district government has some cultural events to promote or to organize for the public, then we can negotiate with them to make the events to happen in our park (with our social network) under the title of ‘Guangzhou Civil Space for Literature and Art’. Then when these public events were released in the press, the 289 Art Park would be mentioned as the venue in the reports. And that is an indirect promotion for the park. This is why with this endorsement the No. 1

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Business really began to have the capital to do cultural industry park. It starts from our place. So you know how important this place is and how valuable it is. Of course you could do it (the CCIP) at other place, it would have some kind of communication too, but it wouldn’t have the same effect like this.56

For a cultural-creative industries park, geographical location is important and so is the transformation of space hardware, but it is by no means the decisive factor of a park’s fame and long-term success. As with any public physical space, the constant flow of people can give it vitality, reputation, visibility and finally the redeemable brand value. In this invisible level, the Group has brought huge invisibly value-added “cultural capital” for the No. 1 Business. Moreover, the top leader of South Media Group is also the deputy director of Guangdong propaganda department. The credibility of the Group provides intangible opportunities for No. 1 Business to continue to develop other projects with other local governments. And the cooperative case of 289 Art Park indirectly promotes and endorses the brand of No. 1 Business during various government visits on this park: We receive at least four to five visiting groups a week. They are from other cities of the province or other provinces of the country and last time a group from ASEAN countries. Some of them are in a form of traveling and training. It’s not about how beautiful this place is, but about how much it has become a model of media transformation. When we gave the introduction of this park to these visitors, we always told them that we had a partner in space operation named No. 1 Business. Because we’re in the same interest and our (289) Creative Art company is a joint venture. So everyone will come (to get to know more about No. 1 Business). The power of endorsement is very strong, so some (projects) also try to invite the No. 1 Business to cooperate. And the No. 1 Business has done a lot of other projects by itself, from which they do not have to share the profits with 289 Creative Art company. That’s OK. But what made them have the capital and capability to do similar projects or attract others to negotiate with them about future cooperation? Because they have 289 (Art Park) as the model. Without this model case, maybe they could have the similar idea in operation of CCIP, but there would never have such a rapid effect on their future development or expansion.57 56  From my interview with the general manager of 289 Craftsmanship Ms. Fa Liya on Nov. 9, 2017. 57  From my interview with the general manager of 289 Craftsmanship Ms. Fa Liya on Nov. 9, 2017.

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Likewise, the executive from No. 1 Business acknowledged that working with big state-owned enterprises like South Media Group is a more convenient way to explore a replicable model of cooperation in the future for the transformation and operation of the market in the “urban cultural space”: At the beginning, in order to take this project, our company designed this model with the Group. This model resolved the similar problems that we will encounter when we negotiate with other partners in different projects—there are many properties (to be transformed) owned by state-owned enterprises under SASAC.58 And there will be many policy obstacles under the State-owned Assets Supervision and Administration Commission. For example, the property under the Guangzhou SASAC has the renting limit by 6 years, so if we want to transform the property we only have 6 years to operate. However, from the perspective of our investors, the cost of the investment will not be recovered by the rents from 6 years. Besides, a lot of property owners may not only want to do property rental, they may take out a lot of comprehensive conditions to negotiate with you. Based on these realities, we will talk to a lot of partners, including Economic Daily News in Beijing about … the new model that we have created with the South Media Group.59

Thus, in the process of jointly operating 289 Art Park, the No. 1 Business shared the brand and reputation of South Media Group. By taking advantage of the intangible cultural assets and social resources of the Group, No. 1 Business successfully shaped their new identity of branded CCIP operator and attracted a lot of attention and cooperative chances with other local governments, which marked the realization of their initial targets of strategic transformation of the enterprise. (B) Managing the Financial Capital of the Organization: Cooperate with the CITIC Poly Private Equity Funds (CPPEF) The success of Guangzhou 289 Art Park project has brought obvious brand effect to No. 1 Business, and the credibility and government resources of South Media Group have also made No. 1 Business have more chances for cooperative projects. According to the cooperation model initiated by 289 Art Park, No. 1 Business is the investor of the project. With more and more cooperative chances and possibilities, it means that more financial support is needed:  State-owned Assets Supervision and Administration Commission.  From my interview with the general manager of 289 Art Park Mr. Wang Ling on Aug. 18, 2017. 58 59

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At this stage, we have to cooperate with financial capital and to develop a new model. We are also exploring with the CPPE Funds that in the future we will not only repeat this type of rental model, but will also consider on investing self-­owned property. That is to say, we are not only doing the reconstruction investment and operation of the CCIP, we may also buy the property. After the property is bought, we will run it by ourselves, and we can also enjoy the premium of the property appreciation. Another model is that we may not exclude the real-estate development and will place equal emphasis on both operation and development. For example, in the two projects we were negotiating on recently in Changsha and Zhengzhou, the industrial heritage of the whole factory will be reserved for them, and they would not be demolished. But for those having no value in retaining, the government would turn them into development projects.60

The CPPE Funds in mainland China is a joint venture between CITIC Group and Poly Real Estate. It is a branded fund among private equity funds in China. In the past, it was mainly used to raise funds for the development projects of Poly Real Estate. But with the past of the lucrative era of real estate, the central government made a tightening policy, which made the developable land increasingly limited. So the CPPE Funds also has to re-explore new ideas or strategies to develop. In the sector of “operational real estate” which this industry generally favored, the CPPEF also smelled business opportunities. The decision that it invested 300 million RMB to No. 1 Business can be seen as a test in the industry. In addition, cultural and creative industries have become new economic development hotspots and the direction of economic structure transformation. So No. 1 Business that has space operation experience and outstanding CCIP case as the model becomes a very ideal investee for CPPEF. And with the capital from CPPE Funds, No. 1 Business made an adjustment of their own organizational structure, which changed the No. 1 Business Co., Ltd, into No. 1 Business Holdings (Shenzhen) Co., Ltd Then it could bring some possibilities in some new models in future development. (1) Establish Cultural Real Estate Company with CPPEF

The advantage of the CPPE Fund is capital. We could cooperate with it in two-­ fold style: in the (real estate) operating part, it is our minority shareholder while in the property (development of cultural real estate) part, it is the large shareholder and we don’t want too much, just 10% is enough.61

60  From my interview with the general manager of 289 Art Park Mr. Wang Ling on Aug. 18, 2017. 61  From my interview with the general manager of 289 Art Park Mr. Wang Ling on Aug. 18, 2017.

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(2) Initiating the Separation Model of Investment and Management to Stimulate Internal Innovation

Separation of investment and management … is a model initiated by us. The project in Shenzhen (289 Digital Peninsula) is based on this model. But our separation of investment and management is for internal separation, not for external separation. Investment is provided by the No. 1 Business Holding— our parent company as an investment platform. When we took up the project, we will set up an investment company … and then set up an operation company under the investment company. The management model is that the operation company first rent the property from the investment company with a settled price, which equals to making a commitment with the investment company to keep the cost and profit at a bottom line … for example, at least to recover the 70 million RMB investment in the reconstruction. Beyond that basic cost given back to the parent company, the operation company could make profits by its own ability in operation with higher rental price to tenants. This is a new model for encouraging internal entrepreneurship.62

(3) Establish Agent Operation Company with Light Assets

We are now setting up a very light agent operation company. This agency can work not only with No. 1 Business, but also with outside partners. For example, you are a private owner and you have a property, but don’t know how to run it. Then you can cooperate with this agent operation company with a contract of 15  years’ income sharing. We can negotiate on how to allocate the whole premium or just on a part of operation process, such as how we cooperate in the part of inviting commercial tenants, how we export our CCIP brand to you, how we output our whole business service system or how we introduce our own cultural IP businesses, etc. Any possible cooperation style can be discussed and negotiated. That’s very flexible.63

(4) Invest in Operation Team

For example, Beijing has a very strong [operational] team. They don’t have enough money to take up a CCIP reconstruction project. That’s no problem. We can invest with CPPE Fund in this project. And the team could set up an operational company with us. But we have to control the shares of the operational company, because we want to go public. So if the team agrees to account for 49% shares in the joint venture and we account for 51%, they can bring the project chance to cooperate with us.64

62  From my interview with the general manager of 289 Art Park Mr. Wang Ling on Aug. 18, 2017. 63  From my interview with the general manager of 289 Art Park Mr. Wang Ling on Aug. 18, 2017. 64  From my interview with the general manager of 289 Art Park Mr. Wang Ling on Aug. 18, 2017.

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Before the transformation, No. 1 Business has been operating 29 projects. After taking over Shenzhen and Foshan projects in 2017, the operation area reached 1 million square meters with a stable and predictable cash flow. But the company has to invest, rebuild and operate the project by itself, so the growth rate is limited. However, with 289 Art Park project, No. 1 Business has successfully transformed into a well-known cultural space operator, which gave the capital market a huge imagination space in cultural real estate operation. Therefore, the investment from the CPPE Funds and the diversified cooperative possibilities in business model seemed to promise the No. 1 Business a bright prospect in cultural real estate development, operational real estate investment, operational real estate service export and so on in the future. (C) Managing the Creative Community in the Park: Derive and Incubate Subsidiaries Creative community in the park could be understood as the creative network of the tenants in the park. Managing the community could be seen as the core of operating a CCIP. No. 1 Business has launched a series of structural initiatives as its main behavior in the production of cultural content and park services, which are important to improve the competitiveness of the park brand. These behaviors include the following: (1) Incubate Content IP Businesses The term IP businesses here means a series of 289 cultural start-ups, such as 289 Pictures, 289 Craftsmanship, 289 Art Fashion and other content IP created by South Media Group. They were transferred as cultural assets to the joint venture company—289 Creative Art from 289 Art Communication Company—when the Group decided to co-build the park with No. 1 Business. The former project departments under 289 Art Communication Company also won the chance to be incubated on the platform of the new joint venture: When I was in the (289 Art) Communications, we were trying to sort out some directions after the park was established. Such as 289 Craftsmanship, 289 Pictures and an all-media (platform) were organized to serve the future development demand of the (content) IP businesses. So the IP businesses integrated the resources and assets of the South Media Group and the No. 1 Business. They are transferred to the 289 Creative Art company platform. Of course, the prof-

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itability of these IP businesses depends on your abilities to incubate cultural start-ups. At present, 289 Pictures and 289 Craftsmanship have been hatched out and operated as independent companies.65

Specifically, there are different forms of incubation approaches for different content IPs. 289 Pictures shares are partly owned by 289 Creative Art Company, while the other part is open to the project manager—Guo Lishan, who was also from the famous subsidiary of the Group, Southern Metropolis Daily. Ms. Guo had successfully organized the “Global Chinese Photography Award” project. 289 Creative Art transferred part of the equity to the manager of 289 Pictures to fully motivate the internal creative talents. By actively transforming the talent into partner in the park business whether in terms of funds or incentive mechanism, this partnership model can ensure the rapid and effective development of the content IP. As for 289 Craftsmanship and 289 Art Fashion, because the revenue model of two content IP businesses seems not clear at this stage, they are only required to cover their own costs and to provide services to the park’s visitors and park brand: We hope them (profitable), but not in the short term. The consideration is that we have other businesses in this industry chain to support this part and the prime target is to make them branded. So I just said that we are going to launch a [art] list campaign, which will be an important content or function of the magazine (289 Art Fashion). Then we can have the credibility (of the list). This is what we’re preparing and planning.66

About the planning and incubation of content IP businesses, No. 1 Business has placed the importance to the “soul” status of the park. In this area, No. 1 Business and South Media Group have made quite a lot of planning attempts in the preparing stage, including a series of IP, such as magazine, e-commerce, pictures, gallery, all-media platform, art space and so on. According to the existing accumulation of cultural capital and future business trend, they have designed respective developing model. For example, the 289 e-commerce website separated from 289 65  From my interview with the general manager of 289 Pictures Ms. Guo Lishan on Nov. 9, 2017. 66  From my interview with the general manager of 289 Art Park Mr. Wang Ling on Aug. 18, 2017.

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Craftsmanship has now found a powerful partner—Great Guangdong Web (gd.qq.com)—in which the big IT giant Tencent also has a stake. Based on this cooperation, No. 1 Business and South Media Group have also joined the second round of investment. And under the IP business of 289 Pictures company, it is possible to hatch another space IP business, such as 289 Pictures SPACE which has the possibility to form a chain shop model and then follow other 289 branded CCIP projects to open its chain spaces. An executive from No. 1 Business shares the strategy behind the replicable operation of this kind of content IP businesses: The soul of the park must be indispensable. A lot of people can’t understand this. And even some people might realize it, they don’t have the ability to do it. Or some people might want to do it, but if they don’t make money in the short term, they may give up. … However, this is actually the core competitiveness (of CCIP) in the future … . In the early stage, these content IP businesses could attract visitor flow and enrich the park’s business formats. But the most important is these sectors based on cultural products can develop as independent businesses in the future. In the long run, it must be profitable. Finally, by the time I go public, [these] business from concepts will be put under the No. 1 Business Holdings.67

(2) Creating Service Business for the Tenant Companies of the Park As we mentioned above, the long-term strategy of No. 1 Business is to create a replicable branded CCIP, and No. 1 Business defines the 289 Art Park as “urban cultural complex”. So it places great emphasis and efforts on the business services for the tenant companies within the park. In the manager’s eyes, the service provided by the park is the critical behavior of creating the park economic ecology. Besides, these services could also be operated as businesses. (a) Functional Service The functional service provided by the park was closely related to the understanding of “evolutionary version” of the park. In No. 1 Business’s view, the new generation of industrial park, whether it is a simple industrial park or a comprehensive cultural park, needs a more complex functional service:

67  From my interview with the general manager of 289 Art Park Mr. Wang Ling on Aug. 18, 2017.

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We don’t want them to be just a traditional industrial park, we don’t want it to be a shopping mall, and we don’t want it to be a simple first-generation CCIP. We want it to be an ecological CCIP. What is the concept of park? It is an ecology in its nature. So we emphasize the diversity of the business format … a complex format. … Last time we went to Dongguan (to negotiate a project). Why did they invite us to do the project? Because we can provide a series of supporting service. When these enterprises come to reside in the park, it means that this will bring a lot of business chances to serve these people working in it. These people need to eat, drink, and consume for entertainment and spiritual experience, which should not to be rejected or neglected, but to be fulfilled with business and cultural activities.68

Thus, in the structured layout of the organization development of No. 1 Business, they have also added the investment in excellent enterprises and partners in such functional service businesses as apartments, hotels, small theaters and book bars. And in this process, it not only created the park’s economic-ecologic map but also expanded the business of No. 1 Business. We cooperate with Person Media by taking 3% shares, and cooperate with the small theater by 40% shares. We invested in these excellent enterprises and they operate with their own team. In the future … there may be apartments and hotels in the park. Hotels are not invested through CPPE Funds, but by our regional companies. For example, we hold shares of JI Hotel, which is … invested through our project company in Xiamen.69

(b) Business Service In addition to the functional supporting services on the hardware, No. 1 Business attaches great importance to the business services for the tenant enterprises and consciously sums up this business as a “systematic industrial service product”: We have two persons to take charge of the work with administrative examination and approval. We have also set up a special department for business community service, called ‘No Second Temple’, which is specializing in the park’s innovative value-added services, including the administrative approval procedure, admin From my interview with the general manager of 289 Art Park Mr. Wang Ling on Aug. 18, 2017. 69  From my interview with the general manager of 289 Art Park Mr. Wang Ling on Aug. 18, 2017. 68

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istrative application as well as the services of business registration, tax policy consultancy and air tickets booking … This company has been established and operated for a year. And gradually we will create a clear service supply chain in different professional sectors, such as finance and taxation, legal service, industrial and commercial consultancy as well as administrative approval.70

Through these commercial value-added services, the manager of the No. 1 Business can also get knowledge of the real operation situation and specific data of the tenant enterprises, by which they can decide if there are any chances or possibilities to invest in some potential enterprises. They called it “Key elements close-loop model”: The company—'No Second Temple’… has been involved in since we started to promote the park. All the service for the new tenant enterprises, including industrial service, entrepreneurial services, application for government subsidies and start-up subsidies capital, etc. had been providing by this company. … By this approach, we have invested in some [enterprises] now. And we are in the process of setting up a fund with CPPE to invest the institutions and businesses in our CCIPs.71

In the management of the creative community in the park, No. 1 Business has successfully constructed a highly integrated business ecology involving various stakeholders of the park by means of capital market, mutual beneficial cooperation and equity investment. Although in the case of Guangzhou 289 Art Park, No. 1 Business seemingly stayed at the weak side of the cooperation with South Media Group especially from the perspective of rent allocation, it still expanded its business landscape by redefining the CCIP business possibilities and boundaries by developing various replicable business “modules”, such as content IP business, service business, hotel and small theater and so on. All of the module businesses more or less enjoyed the investment from No. 1 Business, which increased the cultural capital, social capital and financial capital of No. 1 Business in its future development as a professional CCIP operator. In this way, No. 1 Business realized the diversification of business, organizational transformation and expansion. 70  From my interview with the general manager of 289 Art Park Mr. Wang Ling on Aug. 18, 2017. 71  From my interview with the general manager of 289 Art Park Mr. Wang Ling on Aug. 18, 2017.

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5.3   The Essence and Negative Evaluation of the Business Model of 289 Art Park 5.3.1  The Essence of 289 Art Park’s Business Model: Developing Replicable “Module” Businesses with Strategic Cooperation Guangzhou 289 Art Park was officially opened on August 18, 2016. In less than a year, it successfully developed another two 289 branded parks, which are 289 Digital Peninsula in Shenzhen and 289 Rice Boat Dock Park in Foshan. This kind of replicable CCIP with very flexible partnership and “module” businesses has created a brand-new model for CCIP operation. It could be seen as the latest development in the operation model of CCIP in mainland China in recent years. This operation model is totally different to that of OCT-LOFT, which relies almost entirely on the single financial support of the central enterprise—OCT Group. From the very beginning, the common demand of South Media Group and No. 1 Business is to make the 289 park profitable and “replicable”. This makes the theoretical hypothesis of the park as a “creative economic product” have a realistic reference point. But when we say “product” here, it’s not necessarily mean it’s just a “physical or visible thing”. On the opposite, this “creative economic product” is created like a “creative economic ecology” with the operator defining the 289 Art Park as an “urban cultural complex”. Undoubtedly, understanding cultural-creative industries park as “complex” is not a fresh thing. In OCT-LOFT, it’s even a very significant strategy to organize activities and events for public cultural service and to encourage cultural production, cultural entrepreneurship and even cultural consumption in the park. As we analyzed in the last chapter, OCT-­ LOFT also has been very conscious in establishing creative ecology. However, what the manager of 289 Art Park did in the park operation is more than creating an ecology of culture or creativity. Actually, beyond the business model of rental, they innovated many start-up cultural IP businesses based on the cultural asset of South Media Group and engaged quite a lot of service businesses, such as apartment rental, hotel, theater, book bar, investment institute for the tenant enterprises in the park. As a professional space operator, No. 1 Business has rich experience in urban office leasing space operation, space reconstruction and cost-benefit balancing. In the process of strategic transformation in cultural and creative economy, it skillfully took advantage of sufficient cultural capital, social

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capital, the credibility and brand power from state-owned large media giant by means of joint ventures. With the 289 Art Park as an outstanding CCIP design and operation case, No. 1 Business has been able to make a big leap in a short time. Such leap not only meant cultural space operation but also explored and started a series of business chances related with CCIP. In fact, by taking the park as a platform of resource sharing and exchanging, No. 1 Business gradually built a “creative ecological community economy” with multi-party participation and multi-industry linkage. 5.3.2  Negative Evaluation of Park Tenants: Beautiful Ideal and Unsatisfied Reality Guangzhou 289 Art Park has developed a brand-new model of park operation with the goal of “replicability” through a variety of commercial operations on the platform of the park with an inherent idea of creating shared value. In the dazzling variety of commercial cooperation, the two main enterprises involved in the project operation, South Media Group and No. 1 Business Holdings, have obtained the win-win opportunity of crossindustry strategic transformation. However, because this commercial cooperation was based on the park platform which came from the operator’s ideal design or plane, there are also gaps and contradictions between the design and the actual practice. Although the park operators have a positive mindset of win-win approach with the park tenants, they had to make quick adjustments to control some possible commercial risks or losses when the practice presented some kind of failure in making profit. After all, No. 1 Business is a private company and it has a very definite pursuit of “profitability”. Accordingly, some enterprises in the park had some psychological gap between the beautiful imagination given by the promotion and the changing reality in practice, thus resulting in the negative evaluation of the park. In particular, the issues involved the following parts: 5.3.2.1 Cultural Production: Deficiency of Artistic Atmosphere Although Guangzhou 289 Art Park put forward the resounding slogan “Art is life, life is art” to promote the newborn CCIP, it failed to keep the cultural activities at a high level. At the beginning, the operator invited the arts and cultural celebrities and stars at home and abroad to enhance the park’s cultural positioning and brand image, but this effort to create a high-end artistic and cultural atmosphere did not continue, so that the cultural and art community in the park expressed a very strong emotion of disappointment:

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When they tried to attract investment and enterprises at the beginning, they positioned themselves as a base for cultural and creative industries development. But that was defined by themselves, not by us. Even now when they introduce themselves to outside investor or visitors, they still pronounce that their main business was in cultural and creative industries. That is to say, what they are doing is for culture, for art and for creativity. Yet the truth is all of those self-boast turned out to be some kind of gimmickry for making money. Right? You could go to look at the promotion pamphlet used for inviting business and some of the representative cultural projects they reported on the pamphlet and press and the earliest version of their planning on the park, which is totally different from what it is at all.72

In fact, according to the interviewee’s statement, the park had experienced very obvious and significant adjustments in its space function design and business selection. In August 2016, South Media Group reported the upcoming opening of 289 Art Park through its website South.com, which also showed the picture of 289 Gallery in the park. However, in my first field study to the park in March 2017, I actually found that the exhibition space originally used for the 289 Gallery no longer existed, and what located there has changed into a mahogany furniture sale center named “Grand View Garden”. Although the above floor of the sale center was kept as the public cultural space named as 289 Art Space, it cannot deny that the “Grand View Garden” on the first floor took more advantageous location and, besides, it has large squared window facade facing the main street—Guangzhou Avenue—which made the identity of the art park dubious, and the warehouse-styled sale space does harm the “art” image of the park (Fig. 5.7). However, what makes this case particularly interesting is the “identity compensation” strategy. In the 289 Art Space area close to the furniture sale center is Bean2Cup café, which is a tasteful and specialty coffee shop well known in Guangzhou and Shenzhen coffee community. This specialty coffee brand was founded by Bunco Wang from Hong Kong. He has the title of president of China’s Specialty Coffee Association in HK and is renowned in the southern specialty coffee circle for its professional quality requirements and promotion of coffee education. The Guangzhou branch in 289 Art Park was introduced by the owner of the “Grand View Garden”. The furniture businessman established a joint venture with Bunco Wang, which made the coffee shop a part of the furniture brand. Totally different from the warehouse style of the furniture sale center, the  From my interview with Louis Café creator on Aug. 29, 2017.

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Fig. 5.7  Grand View Garden furniture shop

coffee shop is designed creatively and professionally, having an interactive bar counter between the barista and customers. Because of the high-­ quality handmade coffee and various specialty coffee beans provided by this coffee shop, it even attracted many white-collar workers from the Pearl River New Town CBD across the Guangzhou Avenue. To some extent, the coffee shop did enhance the image of the park in high-quality lifestyle promotion.73 More interestingly, Louis Canton (Press Room), whose creator was highly emotional in his criticism on the lack of artistic atmosphere of the park, also has a very widespread interesting story of its own. Louis, the founder of Louis Canton Coffee, studied hotel management in New Zealand and is keen to introduce the coffee culture back home because of 73  This judgment should be kept in the mainland China context, where the specialty coffee trend is still on its uprising stage. It’s more expensive and related to some specific knowledge in coffee beans and handmade technique. Usually, the urban high salary yuppie community is its target customers.

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Fig. 5.8  Louis (right) in his café in my interview

his strong interest in coffee. He started his coffee business with a mobile coffee stand next to the South Media Group. After the establishment of the park, he was invited to open a coffee bar in the park with comparatively lower rent. The legend of Louis Canton Coffee was created with a very legendary story: one time when the New Zealand ambassador visited Guangzhou, he searched all over the city for a cup of coffee that suits his tastes but had not been satisfied. Finally, he got recommended to Louis Canton Coffee. And of course, this time he got what he wanted (Fig. 5.8). This story at least reflected that Louis has his own standard for quality and taste. That can easily explain his strong disappointment on the final realization of the park, which he thought was far away from what they advocate. He expressed his discontent very directly, as a real artist: At the plan stage, they put out ideas and blueprint to you and invite you to come in as a tenant … You would have a prediction or imagination with that effect in your understanding. But could that idea be turned into reality and

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kept is another story. For example, the art museum I saw at the beginning made me interested. I thought it could be kept for a long time. But it was finally turned out to be a furniture sale center. If you think the present mahogany furniture store is not suitable for the art theme, then you would be more surprised that they even sell jade stone, jadeite, cordyceps there before.74

The change of the art space into sales space is really a great harm to the tenants who come to the park mainly for the possible art atmosphere in the park. And the original promise of “cultural and creative enterprises clustering” is also difficult to fulfill ideally, resulting in the flow structure of people to the park that has also undergone major changes: Where do you think the cultural and artistic atmosphere of this park comes from? Do you feel the culture in the whole cultural park? Have you seen artists and cultural elites walking around here? However, there once had the time before. That’s why I said the park really had something to do with the art world at its beginning, when I often met calligraphers, painters, sculptors in the park. They came here because they hold exhibitions here in the art space or in the former 289 Gallery. But now the situation was changed.75

However, for those who seem to know a little more about the background of the situation, it seems that the final outcome of the commercial tenant structure in the park is also related to the excessive length of time required for administrative examination and approval: If the structure of this park is really very artistic, (our store on) the fourth floor is not an obstacle for business running. But because of the reasons in the administration examination and approval and others, the whole structure of the business tenants has changed a lot from the time we made the decision to enter the park before.76

The response from the senior manager of the park to the question of whether the park needs artists or original creative workshops in it also reflects some kind of helplessness:

 From my interview with Louis Café creator on Aug. 29, 2017.  From my interview with Louis Café creator on Aug. 29, 2017. 76  From my interview with Yama, the chief executive officer of WP (one of the tenant enterprises), on Aug. 29, 2017. 74 75

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We actually took some detours before. The situation (of artistic development) is different according to the different stage of economic development in different cities. In fact, if you observe carefully, you can find that the independent creative studio or designer is still at a start-up stage in China … which means that their value haven’t had enough potentiality to convert into economic value or production value at present stage, so they do not have the ability to rent an office in the golden location of the city. At the beginning, we had planned to have a lot of such creative studios in the park, because there were already more than 300 designers and more than 3,000 products on the 289 Craftsmanship e-­commerce website, covering all kinds of products, such as lamps, woodwork and leather goods. They were kind of niche products, so we hoped that they could exist here in the form of “having stores in front and factories behind”. Of course our wish was good, but the reality was they can’t afford it since he himself is still in the stage of incubation.77

Objectively speaking, we cannot deny that the operator had actually made some efforts to create an “artistic” atmosphere for the visitors and tenants. And in this park, it really happened many interesting and unexpected creative stories. For example, there are several bronze creative sculptures in the outside street of the park. During the lunch break of a field study, the author was taking a break at the Bean2Cup café stand next to a sculpture and saw a pair of foreign young couple who were also waiting for ordered coffee to play with imitating the sculpture’s gesture in difficult dance form, creating a joyful and interesting moment and picture for the daily life of the park. And what was worth mentioning was that the specialty coffee shop had the temporary coffee booth next to the sculpture because on that day the 289 Art Space was rented as a branding promotion activity venue by the world-renowned cognac brand Hennessy. In order to create an overall image of the brand space, the Bean2Cup café bar space on the ground floor was also rented. That’s why the temporary coffee stand existed next to the sculpture and how the little creative story happened. What made the story more interesting is although some of the tenants criticized the lack or the loss of artistic or creative atmosphere of the park, the fact that the international luxury brand Hennessy picked the park as the branding promotion activity venue seemed to prove that the cultural “symbolic value” of 289 Art Park had been more or less established or accepted and even paid for (Figs. 5.9 and 5.10). 77  From my interview with the general manager of 289 Art Park Mr. Wang Ling on Aug. 18, 2017.

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Fig. 5.9  Hennessy campaign in the park

Indeed, 289 Art Park does not strictly control the purity of the art space as OCT-LOFT does. Because of direct commercial interest demand, they have been constantly adjusting their business forms according to the market response. The originally idealized clustering of “literary and artistic” tenants and space formats had to be experiencing a variety of flexible adjustments to achieve their economic targets. From the perspective of

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Fig. 5.10  Sculpture and play

existent tenants, the park’s operator made the changing situation far away from what they had expected. But things seemed not that bad. Some creative and interesting events and daily life stories are happening here at a comparably high rate. That’s also the reality of the park. Even for the park manager, pure artistic originality clustering was a “detour” practice in the park’s operation and positioning. It can be seen

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that in the experimental project of 289 Art Park, the park executives themselves are experiencing a trial-and-error process in which both the ideal and the reality have to adjust to fulfill each other. 5.3.2.2 C  ommunity Management in the Park: Failure and Adjustment of Cultural Content IP Start-Ups After learning and generalizing the development experience of the existent CCIPs all around the country, the head leader of South Media Group made a decision to break through the existing model. That’s why they created 289 Pictures, 289 Craftsmanship, 289 Art Fashion all-media magazines and other content IP start-ups under its subsidiary company 289 Art Communication Company. However, among all of these cultural start-ups, the 289 e-commerce platform under the 289 Craftsmanship project has been temporarily shut down by the operator. 289 Craftsmanship is a collection platform of independent designer brands. In its official report of the opening of the 289 Art Park, it was highly touted as an important part of the park’s business model: Over the past two years, 289 Art Park has been actively experimenting in building a trinity cultural industries model consist of ‘Art Park’, ‘Art Media’ and ‘Art E-commerce’. We will not only provide media services for enterprises in the park, but also provide financial support, start-up incubation and other services, forming a ‘Culture and Art complex’ integrating artistic experiencing, artistic exhibition and performance, cultural creativity and entrepreneurial incubation. And finally we’ll build a co-creating and shared cultural industry ecology in which the enterprises are interrelated, growing together and connecting all related businesses.78

It can be seen that the “289 Art E-Commerce” represented by 289 Craftsmanship e-commerce was planned as an important component in constructing the cultural industry ecology of the park. But the operation practice/experiment had proved that there are unanticipated difficulties in this design of the “industry ecology” which was actually only based on subjective assumptions:

78  289 Art Park Opened Officially, Devoting to Create New Cultural Service Platform. 2016. Chinese language website: South Daily. http://gz.southcn.com/content/2016-08/19/ content_154101701.htm

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(289) Craftsmanship was just a department, not a company, in 2014 when the 289 Art Communications program was launched. At that time, we wanted to do a vertical e-commerce operator, and the website is still in our hands … At that time, from the perspectives of promoting indie design culture and our established talents’ (network) … we defined it as a selected design products platform. It would be close to the model of Netease’s Strict Selection e-commerce, but unlike Netease’s Strict Selection which has been supported by a mature IT company. … All of our art derivatives showed on this website are very artistic, but you can use it in your daily lift. We had carefully selected some products which are pretty good. But it failed. Then what was the problem? I thought it was because we didn’t tell a good and impressive story about this platform. Thus it was operated as a simple vertical e-commerce platform. But in this field, the market already has many strong performers, such as Taobao, T-mall, Amazon, JD.com, dangdang.com. Each of them has their own characteristics. Our original strategy in this business at that time was to make a market differentiation in the content creation, but it was not successful in gaining enough the click rate. After all, it was operated by a cultural communications company, which had seldom business experience accumulation in e-commerce. Unlike other [e-commerces], they have their own business advantages, like distribution and so on.79

Through the investigation of other parks and the theoretical generalization, the operators of CCIPs have generally realized that it is necessary to build industrial ecology to secure the long-term and sustainable development of the parks. However, the “ecology” designed according to theory and imagination still needs to be tested in the practice. What kinds of businesses are indispensable to this ecology? What kind of businesses was good in logic, but the operator has not enough ability or resources to do it well? South Media Group has a wide range of creative talent resources and strong cultural content production capacity, but how to transform these “cultural assets” into a sustainable and profitable business is still a challenging issue. And it is also a common problem for most of the cultural institutions with cultural resources in the process of transforming to cultural industries. Although there are many successful and wise structural designs in the business model of 289 Art Park, they hardly escape to make some mistakes coming from “imagination over reality”. The initial plan of 289 Craftsmanship was to develop both online and offline to manage the indie design and handcraft business. But online 79  From my interview with general manager of 289 Craftsmanship Ms. Fa Liya on Nov. 9, 2017.

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e-commerce needs to make structural and model adjustments to compensate the lack of experience in e-commerce operation. The offline space—289 Craftsmanship space located on the cultural and creative street in the park—has also met with some problem after a year’s operation: The coffee bar inside the space was run by somebody else, who signed some cooperation agreement with us. What you see now is that we are experiencing some changes for the reason of the venue. We have been seriously informed that on the behind street (Cultural and creative street), the location where we rent has the limitation of running drink and food business. On the business license, they said these kind of businesses were not permit. Recently, there is very definite regulation on this part having been issued.80

No matter the Waterloo of market operation in online business or the forced change because of administrative rules and regulations in offline business, it shows that there are many challenges in transforming “cultural and creative asset” into a sustainable development business. CCIP operators must have the ability to adapt their business forms and models to these changes at any time. It is reported that although the 289 Craftsmanship e-commerce project has been suspended, the senior managers of the park are still optimistic about the originally created handmade market. At present, a research team from Tsinghua University has been introduced into the project to help analyze the possible business model and explore the feasible plan. Meanwhile, an investment team has also been introduced to jointly promote the business. 5.3.2.3 P  ark Services: Disadvantages to Tenants Caused by Opening the Park While Building South Media Group and No. 1 Business started to contact and cooperate in 2014, and their joint venture company was formally established in 2015. In this cooperative project, the role of the No. 1 Business is the investor, holding 49% shares. The Group, as the owner of the property, has 51% shares of the equity in the cooperatively established 289 Creative Art Co., Ltd, with their cultural asset value transformed into the shared value. The two companies have formed an alliance with the joint venture company 289 Creative Art to jointly explore the “three-old transformation” market of the whole country. 80  From my interview with the general manager of 289 Craftsmanship Ms. Fa Liya on Nov. 9, 2017.

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In this specific project of Guangzhou 289 Art Park, 289 Creative Art was given the right to rent the old printing factory group to reconstruct it into a CCIP by 289 Art Communication Company which is the subsidiary of South Media Group. Under this business structure logic, the joint venture 289 Creative Art has to pay the first level of original rental for the old factories to 289 Art Communication Company which stands for the South Media Group. And then, 289 Creative Art has to allocate 51% profit of what they earned from the rebuilt CCIP business to South Media Group. Besides, all the cash put into the project should be invested by No. 1 Business. In this top-level business structure design, No. 1 Business as the practical capital investor has great economic pressure in this project. Because under that economic logic framework, no matter whether or not the park is opened and when the park is opened, profitable or not with the rebuilt CCIP property, No. 1 Business has to pay the first level of basic rent to South Media Group for renting the old factories. Even in the process of reconstruction engineer, the rent had been counted. In order to decrease the cash pressure and make some cash flow, No. 1 Business adopts a progressive development strategy of “opening CCIP while rebuilding”. Due to the different times of entering the park, the tenants who entered the park in the early stage were easily disturbed by the decoration construction of the tenants who entered the park in the later stage. Moreover, due to the unexpected influence of administrative examination and approval, the progress of officially opening the park has been slowed down, which is also a problem for some tenants: The time of waiting for officially opening was too long. It’s said that because the renovated infrastructure or something of the first floor of the park was not given pass by the government related department, so it took a long time. The whole park was finally opened in August of 2016. But we already took use of our new office in the park in December 2015. There should be some problems in the administrative approval. Otherwise why the first floor cannot be able to open their business.81

Some tenants believe that this situation has something to do with the large number of shareholders involved or with the financial capability of the investor. So it was impossible for the park to be decorated as a shopping mall and then open business as a whole. But this lack of unified planning can cause problems for incoming tenants: 81  From my interview with Yama, the chief executive officer of WP (one of the tenant enterprises), on Aug. 29, 2017.

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There have been a lot of problems in the building reconstruction, such as water leakage, ground crack and wall crack. The wall has shatter crack because the above, below and next offices were doing the decoration construction at the same time. That situation was very normal here … We are the first group of enterprises to enter the park. After that we discovered there was a big problem in decoration construction planning. The property operation and management company didn’t make a holistic planning on this part. … You know, Hong Kong New Times Square will spend a year or even two years in the decoration construction. A year before they open the mall, they would start the interior decoration construction and work on the selection of businesses, and then a year later opened the whole mall at the same time. Then the kind of management is very good. Sometimes this is also related to the financial resources of the developers. Because sometimes once you rent out the property, basically it would begin to calculate the rent. Sometimes the developer will have some financial resources to give you half a year to decorate for free rent. But in our case, as long as we signed the contract the developer would immediately charge the rent. So this decoration period of different offices in the park is uneven. Some offices even hadn’t been rented out or rented in a progressive process. In fact, the rent rate of our floor is the slowest. Besides, the hardware facilities of upstairs and downstairs are not the same.82

As a result, although 289 Art Park was officially opened on August 18, 2016, it actually went into operation well before that date. From the operators, regardless of the promotion campaign or locking in revenue as soon as possible, it is a very smart strategy with “opening park while building”. But for those tenants who were in the first group to enter the park, this operation strategy had definitely brought the negative impact and inconveniences for quite a period of time. 5.3.2.4 Lag in Park Supporting Infrastructure Construction Although Guangzhou 289 Art Park has been officially opened for more than a year in October 2017, the park has lagged far behind in terms of the hardware supporting of the parking lot. At present, the only parking area is a central courtyard enclosed by four buildings, but it is clearly not enough for all the tenants. Some tenants said that they generally park their cars in the opposite district across the main street of the park and then walk over the pedestrian overpass to come: 82  From my interview with the general manager and creator of Ju You Culture company, Mr. Huang, on Aug. 29, 2017.

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For example, we have a lot of parking problems in this area. I can’t park my car in the temporary courtyard parking lot, I can’t park my car on the other side of the street where our office building locate. Sometimes I have to cross the flyover to see a customer, because we are not able to get the parking permission card in the limited parking lot of the park. Recently, our company got another license for car and we are faced with the problem of how to park the new car. Well, actually, I know and I also understand that sometimes there’s seldom chance to have a fixed parking space in this golden location. But what makes the things more difficult is the traffic jam in the early evening when many diners drive here to enjoy those fancy and creative restaurants on the first floor. The jam caused a lot of noisy sound of the horn at that time. You can do nothing with it … So we have to take the company as our home and work until late night. But sometimes it’s so noisy that you can’t work, so I have to leave here early.83

The senior managers of the CCIP also confirmed that the parking lot is not enough, and it is indeed a problem to be solved. At present, the park has taken action to design a mechanical parking system, which has entered the “detailed rules” examination and approval procedures, that is, the design and construction plan of the new parking system must go through a longer period of administrative approval procedures by the government planning department. And the infrastructure of the CCIP should be properly completed as soon as possible, and by the time the park is officially opened, but there is an obvious lag (Fig. 5.11). The inconvenience could be attributed to the park management, but some tenants who know more about the details also point out that the government background also made some more strict restrictions: Because the park also has a very good side, that is, the whole park enjoys a very advantageous location and convenient public transportation. Right? Then it also has very powerful media resources. But, uh, the planning of the whole park has not been very mature, maybe because it is more or less an act of the government. Well, although the project does not belong to government institutions, many of its actions and standards are closely related to the government. So that’s why its progress will present a little bit slower than commercial organizations. Yes, that’s it. 84

83  From my interview with general manager and creator of Ju You Culture company, Mr. Huang on Aug. 29, 2017. 84  From my interview with Yama, the chief executive officer of WP (one of the tenant enterprises), on Aug. 29, 2017.

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Fig. 5.11  WP flagship store

5.4   Reflection: The Business Model of “Modular System” Guangzhou 289 Art Park has created the latest business model of culturalcreative industries parks (CCIPs) in mainland China in the past two years. This business model has been designed with the goal of “replicable CCIP” from the very beginning, reflecting a clear demand to operate itself as a

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sustainable development entity with definite and clear economic value production. This is in sharp contrast to the indirect profit-chasing model represented by OCT-LOFT, which is fully funded by the central enterprise OCT Group, and its premier object was to enhance the brand image of the Group in real estate developing. 289 Art Park has involved local state-­ owned enterprise South Media Group, but the biggest winner in this model is the private enterprise—No. 1 Business Holdings. By designing a win-win organizational structure and long-term expanding strategy, it suppressed China’s real estate giant—Vanke Properties—in the competition of this CCIP partnership. The business model involving the management of replicable “289 CCIP” brand quickly helped No. 1 Business increase their own “cultural capital”. Moreover, it has established its fame as a “professional cultural real estate operator” backed and cooperated by a powerful media Group and obtained a 300 million RMB investment as A-round financing from the CPPE Funds, which allowed a development leap from the original No. 1 Business Development Co., Ltd, to the No. 1 Business Holdings. At this new stage, it has been actively planning to go public, opening up a broader prospect for business development. Through the detailed case study in this chapter, we can clearly see the process and economic logic on how No. 1 Business can achieve this great development in just two years (2014–2016). As I analyzed in this qualitative case study, this is largely due to the ingenious creation and utilization of “systematic module” strategy to make the CCIP replicable so that all of the businesses involved could be integrated into a creative economic ecology circle, making it possible for more businesses to develop around it. In that sense, the 289 CCIP could be comprehended as a creative “complex product system” at two levels. One level is the branded 289 CCIP system, which started from the first CCIP—289 Art Park in Guangzhou—and then added another two 289 series of CCIPs, 289 Digital Peninsula in Shenzhen and 289 Rice Boat Dock Park in Foshan. All of these 289 CCIPs are a correlated system with cultural content IP start-ups as the replicable and chained “module businesses” and co-shared media resources provided by South Media Group. The other level refers to the park platform system. No. 1 Business as the main operator had successfully developed a series of closely related businesses as a creative economic ecological circle, including various life service economies, such as hotels, apartments, small theaters and business service economies, such as enterprise value-added services and business incubation.

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Therefore, the “replicability” of the 289 CCIP is not exactly replicating the same buildings or architecture of the art park in different cities, but replicating the “module” businesses or services in different parks and reorganizing the “module” in the commonly shared economic ecological circle. This business model of the park operation needs to deal with many problems, especially the cooperative model between the state-owned South Media Group and the private-owned No. 1 Business Holdings. Behind this kind of “replicable” CCIP operation, it is actually a co-­creating model of promoting economic growth by creating “shared value” on the platform of the park through systematic modularization strategy and through the co-shared business opportunities in the economic ecological circle. Since the creation of the “modular system” (complex product system) platform largely comes from the vision, experimental spirit and cross-­ border management experience of the managerial team, it is inevitable that sometimes the subjective imagination and inadequate experience in different businesses of the manager will lead to losses or failure in some operation, such as the failure of the initial operation of 289 Craftsmanship e-commerce. However, the reason why “modular system” can become a kind of feasible business model of CCIP may be due to the allowance to bear the cost of trial-and-error and the possibilities to correct the error. Quickly discovering problems, making adjustments, finding new strategic cooperation partners and forming new “module” business units to fit the changing situation may be exactly the advantages of the “modular system” model. However, the biggest drawback of this business model of CCIP, which is originally based on economic returns, may be that the investment in high-end culture is unsustainable. Although the operators have an idealized imagination of creating and supporting high-end culture and art, it is very easy to make “temporary” or “strategic” compromises when they have to confront the realistic economic pressure. For example, the park operator changed the 289 Gallery space on the first floor near the main street of Guangzhou Avenue into a “Grand View Garden” selling mahogany furniture, which clearly reflects the limited support for non-profitable fine art under this model.

CHAPTER 6

Comparison of the Two Cases

6.1   Basis of the Case Comparison OCT-LOFT of Shenzhen and 289 Art Park of Guangzhou, as the qualitative research objects of this study, are of great significance in the development of cultural and creative industry parks in mainland China. There are four main common points in the two cases. 6.1.1  Typicality The development of cultural-creative industries parks (CCIPs) in mainland China has experienced three stages of “model” iteration: from the initial spontaneous aggregation of art communities to the new “top-­ down” planning “park” which has become a phenomenon the government attaches importance to, the academics discuss enthusiastically and enterprises actively attempt (Shi, 2016). In the process of development, some parks have failed to operate continuously or some parks have undergone great changes in the form and content of operation so that it is difficult to be considered as a “cultural and creative industry park”. However, some of them have developed steadily after careful water testing at the beginning. More than ten years later, they are still flourishing and become the cultural landmark and a cultural brand of a city. What are the reasons for this? Shenzhen OCT-LOFT is such a CCIP which has experienced a “sustainable” development history and then became a recognized typical

© The Author(s) 2020 V. Yuan Yuan, The Economic Logic of Chinese Cultural-Creative Industries Parks, https://doi.org/10.1007/978-981-15-3540-6_6

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case. OCT-LOFT receives more than 200 visiting groups from all over the country every year since it was awarded as one of the first batches of national demonstration parks in 2007. Therefore, whether from the perspective of sustainable operation and expansion or from the perspective of national “demonstration park” title, we can find enough typicality of OCT-­LOFT Park as a successful Chinese CCIP. The “typicality” of Guangzhou 289 Art Park is reflected in other aspects. Although 289 Art Park was a “latecomer” compared to OCTLOFT and its official opening of the first park in Guangzhou was in 2016, the “replication” of the 289 park brand in other cities—Shenzhen 289 Digital Peninsula and Foshan 289 Rice Boat Dock Park—was completed in only one year. From the perspective of the development of culturalcreative industries parks in mainland China and even the world, there is almost no precedent for the rapid formation of branding and the completion of brand project replication in a year. Therefore, in a way of horizontal expansion with branded project replication in different cities, 289 Art Park has created another development “model”. This model appeared in the current mainland China rather than other places at other times. It can also fully reflect its “typicality” in the specific context of mainland China. Therefore, a detailed case study of 289 is also very important. 6.1.2   Park Space: From Reconstruction of Old Industrial Factory As this research shows in the first chapter, the concept of cultural and creative industry park, which has been enthusiastically discussed by academia, actively promoted by the government and practiced by enterprises, has a long history of evolution and development. Its earliest embryonic form began with the culture-led regeneration of European industrial cities. That is to say, in the process of economic globalization, due to the transfer of labor-intensive industries (such as manufacturing) to the developing countries, the industrial buildings which occupied the inner city center have been emptied. Some artists were attracted by the cheap rental space of the inner city factory and then revitalized these districts. With such kind of New York “SoHo effect”, in order to regenerate more abandoned inner city districts and solve the social problems, more and more governments actively introduced artistic resources and cultural elements to urban renewal. These two trends constructed the urban spatial picture of the Western developed countries after they entered the post-industrial society

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in the 1970s and 1980s. Therefore, cultural agglomeration, cultural streets and cultural districts have actually become the classic spatial features and urban development trends of post-industrial cities. With the rise of the topic of “creative economy” at the turn of the new century, the cultural district model, which originally belongs to the field of urban planning, had gradually combined with the promotion of creative economy and then had evolved into a “top-down” and planned “creative aggregation”, which was strongly advocated by the government and the academics and had become a comprehensive issue integrating industrial development, community development and cultural tourism. From this perspective, we find that the most classic construction model of cultural and creative industry park is inseparable from the transformation of the inner city, old industrial plants and some historical heritage. It is a comprehensive issue in itself, a classic representative of the evolution of cities in the post-industrial era under the dynamic logic of space and economic development. And also, it’s a universal issue that a modern industrial city will inevitably encounter in the process of historical changes and transformations. Looking around the world, representative cultural or creative clusters have been transformed from historic heritage or industrial buildings. Whether it is the SoHo District in New York, the Ruhr District in Germany, the Sheffield Cultural Industry District in the United Kingdom or the Huashan Cultural and Creative Park and the Songshan Cultural and Creative Park in Taipei, PMQ in Hong Kong, 798 Art District in Beijing and Tianzifang in Shanghai, all of which are recognized as representative blocks and parks when it comes to cultural and creative industry agglomeration. They were all rebuilt from old historical buildings. Therefore, it is the classic model of cultural-creative industries parks which were transformed from the old industrial plants. In mainland China, because of the promotion of the cultural industry by the government, the CCIPs have usually been taken as an important policy tool. So the governments would likely put in quite a few funds to encourage the construction and development of CCIPs. But at the same time, there is no clear definition for “cultural-creative industries park” (CCIP), resulting in a swarm of people flinging into the CCIP construction and arbitrarily interpreting “park” or self-naming it as cultural “park”. As a result, the word “park” has become a vague commercial concept due to excessive “concept consumption”, and the practice of park construction has been chaotic because of its association with land-use change and accompanying ultra-high land profit space. Of course, the government’s

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cultural policy-­making also changes with the development of the market and the arisen problems. The identification conditions of CCIP and the distribution of the related support funds have been given more and more detailed requirements in various regions and cities. For example, Hubei, Hunan, Guangdong and Shandong provinces have put forward the management methods of cultural industry demonstration parks from 2015 to 2017, with a view to guiding the park construction in the market to achieve its due creative industrial driving purpose. In October 2017, for example, Tianjin promulgated the Measures for Assessment of Tianjin Cultural Industry Demonstration Parks and Demonstration Bases (for Trial Implementation); Shenzhen also launched a preliminary study in early 2018 to establish an assessment index system for the CCIP. All of these policy practices mean that the development and management of CCIP in mainland China will go more and more standardized. Shenzhen OCT-LOFT and Guangzhou 289 Art Park are two typical CCIP examples with upgrading old industrial plants, which are both located in the urban inner cities of Shenzhen and Guangzhou. As two first-tier cities in South China, Shenzhen and Guangzhou have already completed the transfer of manufacturing industry and entered the postindustrial society as early as the 1990s. So the two CCIPs reconstructed from old factories in the heart of the two cities not only are comparable but also could form a dialogue with cultural and creative industry parks in other parts of the world. 6.1.3   Operating Entity: Wholly Owned or Holding by State-Owned Capital Shenzhen OCT-LOFT and Guangzhou 289 Art Park also have similarities in operating subjects. However, the slight difference is that OCT-LOFT is operated and managed by Shenzhen OCT Creative Park Cultural Development Co., Ltd, which is 100% owned by the central enterprise— OCT Group—while Guangzhou 289 Art Park is operated and managed by Guangdong South 289 Creative Arts Cultural Development Co., Ltd, which is 51% owned by Southern Newspaper Group. Although the property of the old factories in the two parks belongs to two state-owned capital groups, there is a distinction in the management models of the two park projects. And the different business models directly led to the final park development model differences. This kind of having distinctions in similarities exactly constitutes the best basis for comparison.

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6.2   The Dimensions of Case Comparison In Chaps. 4 and 5, descriptive strategy analysis is made on the data collected from the two cases. By using a time-series analysis method, this chapter analyzes the origin of the two cultural-creative industries parks, their strategic ideas, operating motives, operating subjects, operating activities, sources of funds, management means, main assets, development achievements and so on. This chapter mainly analyzes the business model of cultural-creative industries park. Although the definition of the business model has not been given a commonly recognized version in the academic circles, this chapter will take the research results of Zott, Amit and Massa (2011) mentioned in Chap. 2 with the literature review as a reference. Within this extensively cited chapter, they analyzed 1177 papers on business model since 1995 and came to four consensus conclusions. This chapter will take these four consensus conclusions as the analytic framework to discuss the business model, which is from a systematic perspective, and will examine the specific activities of park managers, how value creation occurs in these activities and how value is finally realized in a holistic approach that transcends the single operation and management company of a CCIP. Within the framework of this definition, I take these four consensus conclusions as the first level of constructs in the comparison of the two cases: (1) the holistic system level of the CCIP, (2) specific activities of the CCIP, (3) value creation, (4) value capture. 6.2.1  The Holistic System Level of the CCIP As we mentioned in the theoretical analysis of Chap. 2, the CCIP of mainland China has dual attributes of “public welfare” and “economy”. Added with necessary policy support and profit-­making operation demands, the organizational attribute of the CCIP operative company is a “hybrid creative organization”. Hybrid organizations typically include social enterprises, some non-profit organizations (Monroe-White, 2014) as well as more mission-oriented organizations and can even extend to those companies that emphasize and implement social responsibility practices although for-profit-driven (Alter, 2003). According to this definition, the operating company of the CCIP should consider the two related systems embedded in the park and the relationship between the two systems when the CCIP business model is designed.

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The first embedded system is related to the “public welfare” orientation of the park. In order to make the original industrial land converted into office space and commercial space for creative industries, the land for CCIP should be empowered by the government through vetting and approving. The basic function of CCIP in the government’s view is to provide a boost for the development of creative economy by reducing the rental cost pressure of small- and medium-sized creative enterprises and entrepreneurs and to generate creative network by promoting the aggregation of creative enterprises, as well as to provide a culture-led renewal path for the old urban industrial areas to enhance the image of the city and enhance the cultural atmosphere of the community and even create the cultural landmark of the city. To achieve these goals and make the CCIP sustainable, the theme design of the park needs to be related to the development context of the city or a specific urban area where the park is located. Through the cultural and creative agglomeration in the park, it can produce a new type of cultural atmosphere for the development of cultural and creative industries in the district or city. The second embedded system is related to the profit-driven “economic” orientation of the CCIP. That is, the CCIP operators should bring the economic revenue or value creation of the park into a broader business system which is beyond the single “space lease” logic of the park. Only by this approach or economic logic, the CCIP operators could avoid becoming a pure “second landlord” and avoid the ongoing raise of the rental, which was usually the damaging factor for the park’s “public welfare” attribute, the park’s creative enterprise development and creative ecology, finally deviating from the park’s original intention. In this related system, the relationship between the operators and the original property owners of the CCIP is important, as well as the former industry that the actual operators of the park originally engaged in, which may be related to the necessary resources and assets when a CCIP carries out its unique innovation of the business model. According to the above analysis, under the first-level comparative construct of “holistic system level”, this chapter sets up the following four second-level comparative dimensions: urban context, property owner, the relationship between property owners and park operators, and the industrial sector of the CCIP operators.

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6.2.2  Specific Activities of the CCIP The specific activities of the CCIP refer to a series of business activities carried out by the CCIP operators on the “interface” of the park. Zott and Amit (2010) defined the business model as a series of transactions or an activity system. The so-called activity system borrowed from Afuah and Tucci’s (2001) understanding of the system includes not only the components but also linkage among the components and the dynamics. Therefore, the activity system associated with the business model includes not only the activities of the enterprise but also how and when they do it. When it was applied on the analysis of CCIP, the activity system of the park should include what they have done to deal with different aspects of the park. Typically, they need to reform the physical space of the park at first, and usually the space “redevelopment” with creative design should also consider meeting the needs of the future development of the park. For example, OCT transformed a warehouse into a museum known as OCAT Contemporary Art Museum at the entrance of OCT-LOFT. When the park has expanded to the North District, it also added several public cultural spaces such as A3+, B10 and C2 for various cultural public activities, like lectures, small-scale performances and professional exhibitions. Therefore, the renovation of the old factory space is not only closely related to the cultural content production by the park but also in a “dynamic” process. Guangzhou 289 Art Park has also set up a museum named Lingnan Intangible Cultural Heritage Museum and a small theater space transformed from the old print plants for public cultural activities in the park. And both of the CCIPs take advantage of the open space of the park to hold temporary cultural activities such as weekend creative fairs. Apart from a small part of the CCIP space used for public cultural activities and basic supporting commercial services, most of the space is used to provide office space for small- and medium-sized cultural and creative enterprises. Because the public cultural activities held by the park for the public are not profitable, the park business model innovation should put a lot of consideration on the tenant enterprises who take the vast majority of the park space. So it will be important to observe what activities the park has done for the resident groups of enterprises. Therefore, under the first-level construct of specific activities of the park, we can concretize it into five second-level comparative structures: the space planning and transformation activities of the park, the expansion activities of the park, the activities open to the public, the

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activities for the enterprises in the park, and the activities of the park as an enterprise to carry out propaganda and promotion to the outside world. 6.2.3  Value Creation of the CCIP If the park’s activities are the “explicit behavior” in the CCIP’s business model, then the creation and realization of “value” are the “connotative economic logic” of the business model. A lot of research literature on business model also regards “value” as the core of the business model. But how to understand “value”? In the context of the new economy, there are more diverse understandings. Especially when “sustainable development”, “sharing economy”, “platform economy” and other new concepts/new business models become popular issues, many researches had extended the traditional linear value chain and simple economic value understanding based on Adam Smith’s “exchange value”. For example, the concept of “value-­in-­use” put forward by Vargo and Lusch (2007) has become a new term that is often discussed. This concept stems from the tendency of more and more manufacturers shifting to a service-­ oriented business model, which embodies a strong customer-centric nature. Porter and Kramer (2011) put forward the concept of “shared value”, which also shows that the creation of economic value should become the way of social value creation at the same time. Therefore, Evans et  al. (2017) clearly proposed that sustainable value should include social value and environmental value in addition to economic value in their research on the sustainable business model. For the dual attributes of CCIP in “public welfare” and “economy”, the values it created should also reflect different value orientation at the same time. As the enterprises in creative industries are mainly based on knowledge creation, the environment of CCIP is usually green and pollution-free, so there is no need to emphasize the environmental value as a special value orientation when designing the business model of a CCIP. However, as CCIP is to transform the old factories into a creative cluster for cultural and creative enterprises and often seen as an approach of culture-led urban renewal, it is expected that CCIP can create cultural value for the district or the city. Therefore, this chapter will replace the environmental value with cultural value as a key element of a sustainable value of CCIP, which is proposed by Evans et al. (2017) in their research of the “sustainable business model”.

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After defining the value categories concerned in this chapter, it is obvious that the traditional forward-value chain creation process does not conform to the current discussion framework. Kortmann and Piller (2016) proposed an integrated framework for manufacturing economy, shared economy and circular economy in their study on the closed-loop value chain of an open business model, distinguishing nine value chain production situations corresponding to nine different economic types. As the discussion of value chain is another issue, this chapter does not intend to develop it here, but to illustrate that the traditional forward-value chain cannot explain the value creation of the more complex situation of CCIP. In addition, this chapter borrows the definition of value creation by Peric, Vitezic and Durkin (2017), which is that “value creation means the dynamic change of resources”. Therefore, it will be an important part of observing the value creation process by examining how the operators integrate and play the multi-resources on the “interface” of the park. Peric, Vitezic and Durkin view employee, infrastructure, technology, information and IP as five key interdependent resources, emphasizing in particular the importance of IP. They took IP as a result of creativity and innovation in the collaborative works across all sectors and as a tool of protecting and promoting the sustainability of the brand value. Additionally, having an IP can be beneficial for partnerships as well as for various other relationships. The above five key resources of creating value could be adjusted according to the specific operation of a CCIP, in which the employee is related to human resources and the organization structure, so it is adjusted as the “organization derivation” dimension in the second-­level comparative constructs in this chapter. Infrastructure corresponds to the innate conditions of the park. Because the “classic cultural-creative industries park” discussed here is transformed from old factories, the most important part related to infrastructure resource of the CCIP is the “location” of the park. Technology is the core of value creation. So in which industries that the park could develop new value creation in the future is closely related to the intangible or tangible assets accumulated by the operator of CCIP in its former industrial production and creation. Therefore, this chapter interprets technology as the dimension of “industrial derivation” of the CCIP by taking advantage of the tangible and intangible assets of the park operators. Information, which is the important part of aggregation theory about the spillover effect and knowledge production caused by network construction, if we do not assume it as “automatic generation” but put it

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on the conscious value creation by CCIP operators, could be understood as closer to the “construction of social network” achieved by park managers through various activities. Finally, IP creation can be regarded as an important intangible asset creation after the park manager integrates various resources. These intangible assets could be the brand IP of the park itself or the IP of cultural content production closely connected with the brand of the park. Here, “IP” is uniformly used as one of the dimensions in second-level comparative constructs. Therefore, under the first-level comparative construct of value creation, this chapter also sets up five second-level comparative dimensions: organization derivation, location value, industry derivation, social network construction and IP creation. 6.2.4  Value Capture Since value creation includes economic value, social value and cultural value, value realization also includes the realization of these different values. Therefore, this chapter compares the realization of different values with three secondary dimensions of economic benefits, social benefits and cultural benefits (Table 6.1).

6.3   Comparison of the Two Business Models 6.3.1  Comparison of Two Cases in Four Main Constructs of Business Model 6.3.1.1 Related Systems of the CCIP Since CCIP has dual attributes of “public welfare” and “economy” in its nature, it must be embedded in the two systems to operate to avoid simple “rent collection model”. The first systemic consideration is at the level of the public welfare. As we have discussed above, in order to realize its cultural value, the park should be connected with the cultural context of the city and explore the advantages of the development of the local cultural industry in order to provide better relevant services for the cultural enterprise residents in the park. The second systemic consideration is at the economic level. As we know, the CCIP constructed in top-down approach inevitably lack the market-testing process compared with those grown from the bottom-up approach. Therefore, in the process of designing the

1. Related system of the CCIP

The relationship of the property owner and the CCIP operator Industry system of park operator

Property owner

City context

1. Guangzhou is an important central city in South China, the capital of Guangdong Province and the economic, cultural and political center of Guangdong Province. 2. Guangzhou has a long history of traditional culture and developed media culture. 3. A large number of manufacturing plants were left vacant as the industry shifted.

Guangzhou 289 Art Park

(continued)

Provincial state-owned enterprise: South Media Group The property owner of the park is the South Media Group, the property owner of the parent company of the park operation park, and No. 1 Business (Holdings) Group, a company. private company, jointly established the park operation company—289 Art Creation Company. The main businesses of OCT Group South Media Group is in a traditional media include cultural tourism, manufacturing, industry—newspaper (classic cultural industry). hotel and real estate development. The No. 1 Business (Holdings) Group is an urban space operator (a niche real estate operator).

1. Shenzhen is the first special economic zone in mainland China, with developed economy and relatively lack of urban cultural accumulation. 2. Shenzhen is the first UNESCO creative city network member in mainland China, with the title of “Design Capital”. 3. Manufacturing plants in urban centers are left vacant as industries move. Central enterprise: OCT Group

Shenzhen OCT-LOFT

Table 6.1  Comparison of the two cases

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2. The specific activities of the CCIP

Expansion approach

Space planning and transformation

Table 6.1  (continued)

1. The post-modern industrial style of minimalism is the main visual effect after the rebuilding of the park. 2. The OCAT Contemporary Art Museum under the management of the Group is built on the site of the first phase (South District) of the park. 3. A3+, B10 and C2 public cultural activities and exhibition space have been rebuilt in the second phase (North District) of the park. 1. At first, set aside a small area from the abandoned factory area to carry out the operation test of CCIP. 2. Then expand to the adjacent areas of the park to rebuild the second phase, then the third phase.

Shenzhen OCT-LOFT

1. Transformed several printing houses owned by South Media Group to Guangzhou 289 Art Park, as the CCIP brand model. 2. Then the 289 CCIP brand will be “copied” to Shenzhen, Foshan and other cities to construct different themed CCIPs.

1. Animation graffiti is the basic temperament of the visual effect after the rebuilding of the park. 2. Lingnan Intangible Cultural Heritage Museum and a small theater are transformed from old factories for public cultural activities in the park space.

Guangzhou 289 Art Park

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Activities open to the public

1. OCAT curates free and high-quality contemporary art exhibitions for the public as the main perennial exhibitions. 2. The first Shenzhen Biennial Urban/ Architectural Exhibition was held in the park, positioning the cultural brand of the park with the development of urban culture. 3. Dozens of series, high-quality and international cultural brand activities are happening over the years. Making sure that the public cultural activities in the park are staged every week without interruption for one year. 4. The “T-Street Creative Market” of OCT-LOFT has been established since 2008, and it is still maintained on a semimonthly basis. 5. Four issues a year of the thematic, in-house quarterly publication—@ Loft.

Shenzhen OCT-LOFT

(continued)

1. Apply to the government for the title of “Guangzhou Civic Cultural Space”. Make a cooperation agreement with Guangdong Federation of Literary and Art Circles to produce various free cultural activities for citizens in the park every week. 2. Lingnan Intangible Cultural Heritage Museum was set up to display the excellent intangible cultural heritage of Guangdong Province in the reformed space of CCIP, in which the permanent exhibition of “Guangdong Intangible Cultural Heritage Masterpiece” is open for citizens for free. 3. Series of branding activities: “289 Art Lecture”, “289 Fancy Life Festival”. 4. Creation of an officially published magazine—289 Art Fashion.

Guangzhou 289 Art Park

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Publicity and promotion

Enterpriseoriented activities

Table 6.1  (continued) Guangzhou 289 Art Park

1. Basic property services. 2. Industrial economic service: to create a company as “systematic industrial service products”—No Second Temple, which specialized in innovative value-added service for the tenant enterprises in the park. The service content includes official paper preparation, financial aid application and so on, establishing a service supply chain for an enterprise in the aspects of finance and tax, the law, the industrial and commercial. 3. Functional supporting services: develop businesses on apartments, hotel, small theater, book bar and other projects to serve the employees of those tenant enterprises. 4. Invest directly in the equity of individual enterprises in the park. 1. Public media coverage of important 1. South Media Group takes out a certain amount cultural events of the park. of newspaper page resources from each subsidiary 2. Produce promotion contents on media under its control to report and promote social media, like Weibo and WeChat 289 Art Park activities, the page charge of which official accounts of OCT-LOFT. was evaluated as equal to 250 million 3. Publish and send internal magazine @ RMB. South Media Group took advantage of the Loft for cultural exchange. page charge as an intangible capital investing in 289 Art Creation Company, which serves as a mass media for propaganda of the park. 2. WeChat public account of 289 Art Park. 3. 289 Art Fashion magazine.

Basic property services.

Shenzhen OCT-LOFT

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3. Value creation

Industry derivatives

Guangzhou 289 Art Park

(continued)

1. Discovering original cultural products 1. Incubate 289 Image Company, 289 with growth potential from “creative Craftsmanship Company and 289 Art Fashion fair” and then providing them magazine from 289 Art Creation Company, all of preferential rents to support them in which become the cultural IP projects under the starting cultural entrepreneurship. park brand. 2. OCT Group has established the OCT 2. The No. 1 Business Holdings developed some Culture Group under the Group’s related service businesses for the CCIP, such as JI headquarters, which specializes in Hotel, My+ Apartment, Person Media, Drum urban cultural renewal projects and Tower West Small Theatre and so on. characteristic town construction 3. No Second Temple Culture Technology Co., projects. It has become an important Ltd, which is for a systematic industrial service industrial derivative of the Group’s business, has been derived from the enterprise development and transformation business service demand. under the new form of strict regulation and control of real estate. OCT-LOFT is the beginning of this spin-off and the benchmark project.

Shenzhen OCT-LOFT

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Building social networks

Table 6.1  (continued) Guangzhou 289 Art Park

1. OCT Group has long-time 1. As a provincial state-owned enterprise and connection and cooperation with all national propaganda base, South Media Group kinds of creative design enterprises has a wide range of resources in the cultural because of its cultural tourism, real propaganda department of Guangdong Province, estate and other businesses. So it’s enabling the “Lingnan Intangible Cultural easy to invite some star enterprises or Heritage Museum” and “Guangzhou Citizens’ designer studios to reside in the park Cultural Space” to give birth in the park. to form the foundation of creative 2. Cooperate closely with Guangdong Federation of network. Literary and Art Circles to hold a large number 2. Support creative enterprises in the of cultural activities in the park. park to operate in cross-border 3. Widely connect with the tenant enterprises in the consumption businesses to help park, launch “289 Fancy Life Festival”, attracting promote the artistic atmosphere of the creative communities in the city to get the park. together and promoting the enterprises in the 3. Keep connection with young creative park, then creating chances for closer creative groups by “creative fair” and idea network at the same time. exchange, then select the best of them to try some cooperation in cultural activities. 4. Support technology-based creative enterprises to launch Make Fair in the park, which later led to the launch of the “Maker Campaign” in China.

Shenzhen OCT-LOFT

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4. Value capture

1. The park is affiliated with OCT Real Estate Company (2004–2011) in the form of new business department under the OCT developer. 2. Establish an independent operation company: OCT Creative Culture Development Co., Ltd (2011–present). 1. The rental income of the original old factory buildings has been greatly increased after the renovation. 2. OCT has gradually become one of the cultural core locations and rich class clusters of the city due to the aggregation of diversified cultural industries and creative communities. 3. Because of the establishment of the park, the OCT area has become more diversified in the business types of cultural industries and more intensive in cultural atmosphere, then the real estate value has been promoted.

Organization derivatives

Location value

Shenzhen OCT-LOFT

(continued)

1. South Media Group established 289 Communication Company, a wholly owned subsidiary of the Group, and then started the preparation work for the park project. 2. 289 Communication Company and No. 1 Business Holdings Group jointly established 289 Art Creation Company as the operation organization of the park, with the equity ratio of 51:49. No. 289 on Guangzhou Avenue, where Guangzhou 289 Art Park is located, was originally in the central business and cultural district of the city. After the renovation and operation of the park, the value of the rental has been greatly increased.

Guangzhou 289 Art Park

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Cultural benefits

IP creation

Table 6.1  (continued)

1. Build the brand of OCT-LOFT Cultural Park and become the most popular CCIP of Shenzhen where cultural and creative enterprises compete to enter. 2. It has realized the cultural value of the OCT brand represented by the slogan as “Quality Life Creator” and greatly enhanced the market competitiveness power of real estate project and other urban renewal projects of the OCT Group. 1. Expand the operation area of the park and enlarge the agglomeration of the cultural and creative communities. 2. More and more important galleries enter the park, increasing the cultural landmark value and cultural symbolic value of the park. 3. With the expansion of the renovated park space, the public cultural space is also increased to hold more types of high-quality cultural exhibitions and performances for the public for free. 4. Provide Shenzhen citizens with more diversified and international public cultural services, which managed to make up the lack of public cultural products which were usually provided by the government.

Shenzhen OCT-LOFT

1. With the idea of branding operation, the “289 Park” brand has been “duplicated” in other places, and the cultural-oriented urban renewal project has been added, which also expanded the public cultural and creative space in the city. 2. The establishment of “Lingnan Intangible Cultural Heritage Museum” has promoted the propaganda and inheritance of Guangdong’s intangible cultural heritage and provided Guangzhou residents with a new public cultural space.

1. Created the IP of the 289 park brand and realized the replication of the 289 park brand in other cities of the country through capital market and joint ventures. 2. Created cultural IP brand closely connected with the IP of the park, including 289 images, 289 Craftsmanship and 289 Art Fashion. 3. No. 1 Business Group has realized the IP creation of branded developer on “Urban Cultural Complex”.

Guangzhou 289 Art Park

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Economic benefits

1. The current operating expenses of the park operation company are fully self-sufficient. However, the fund for the continuous transformation and renovation of old factories to expand the park still needs to be supported by the parent company, OCT Real Estate Company. 2. The brand image of “Quality Life Creator” of OCT Group has been greatly promoted, and the apartment or house prices of OCT Real Estate could enjoy more profit margin. 3. OCT Group has completed the successful operation of theme parks, cultural tourism, hotels and cultural-creative parks, making it more competitive in the comprehensive development of commercial real estate and cultural real estate and making it easier for the Group to win more “creative characteristic town” development projects nationwide.

Shenzhen OCT-LOFT

(continued)

1. South Media Group has designed a double-level “bottom-keeping” income mechanism in the 289 Art Park project. That is to say, the premise of cooperation with the private company—No. 1 Business—is that the South Media Group will charge a fixed amount of rental as the first-level guaranteed income within 15 years after leasing the property to the joint venture 289 Art Creation Company. 2. Excluding the fixed rent paid to South Media Group, 289 Art Creation Company distributes the remaining rent between South Media Group and No. 1 Business Group by a ratio of 51:49, by which South Media Group could realize the second guaranteed income. 3. No. 1 Business pays for the renovation cost of the park in full, but owns the operation right of 289 park brands. 4. No. 1 Business obtained a series of important cultural assets under 289 park brand platform and received 300 million RMB A-round financing from the capital market, which help them to start Initial Public Offerings (IPO) plans in Hong Kong stock market.

Guangzhou 289 Art Park

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Social benefits

Table 6.1  (continued)

1. Since the opening of the park, OCT-LOFT has been awarded the title of “State-level Cultural Industry Demonstration Park” by the Ministry of Culture, which provides a benchmark for the upcoming development trend of the CCIP. 2. Holding international and highstandard cultural activities, music festivals and design lectures all the year round, which has improved the general taste and quality standard of Shenzhen’s urban cultural activities. OCT-LOFT has then been recognized as the indisputable cultural landmark of Shenzhen, which enhanced the brand image of Shenzhen as the design capital of UNESCO. 3. The Firewood Space—a maker studio resident in the park—set off the beginning of the Maker Movement of China. 4. The park has formed a stable network of creative communities and a distinctive creative atmosphere, where it attracted nationally renowned cultural enterprises to open southern branch institutes as their first choice in Shenzhen under its cultural and symbolic image of pioneering, high-end and urban cultural landmark.

Shenzhen OCT-LOFT 1. Position itself as “Guangzhou Citizens’ Cultural Space” and provide convenient and diversified cultural activities for citizens in Guangzhou Avenue, the central section of the city. 2. Take “Lingnan Intangible Cultural Heritage Museum” as the carrier to promote the intangible cultural heritage of Guangdong Province. Some famous masters’ intangible cultural heritage work pieces have been brought into here to display for the public in the form of permanent exhibitions. At the same time, it provides the cooperative chances for some enterprises in the industrialization of intangible cultural heritage projects. 3. Explore an exemplary path for the transformation of traditional paper media and newspaper groups. 4. It provides a successful case for the reconstruction of “three old” spaces all over the country. The CCIP model of “replication” and public-private cooperation experience could reduce the trial-and-error cost of the local governments in the exploration of CCIP projects.

Guangzhou 289 Art Park

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main industrial association of the park, it’s especially necessary to carry out careful research, thinking and decision-making. The selected industrial agglomeration theme must be linked with the cultural and creative industries development context of the region or the city to find a long-term and sustainable development approach for the CCIP. The OCT-LOFT case is from Shenzhen, a city of reform and opening up in mainland China. As an immigrant city, Shenzhen does not have a long history of local cultural accumulation like Guangzhou, Shanghai or Beijing. The contradiction between economic development and insufficient cultural accumulation has long been the main contradiction plaguing the cultural image of Shenzhen. Although the civil government had made a great effort in promoting the development of public cultural services, the public cultural products are still limited, especially the cultural activities in elite aesthetic taste and high-end art and cultural atmosphere have always been insufficient. Therefore, when OCT-LOFT was designed at the very beginning, the original idea was to follow Beijing’s well-known case of 798 Art Park and become a cluster of contemporary art. However, because there was no stable artist group and mature artistic consumption demand in Shenzhen, the “idealistic” follow-up was not put into practice, and theme design had to be adjusted according to the current cultural resources and cultural development demand. After a series of investigations on the development situation of the urban cultural industry, senior leaders of OCT Group have learned that Shenzhen’s design industry has reached a certain scale and has been in a nationwide leading level; the senior executives of OCT Group then adjusted the theme of the park to design, contemporary art and avant-garde music. This kind of adjustment fully shows that the senior managers who set up the park know how to think and how to make the decision by prudently considering the cultural context and economic context when designing the operation direction of the park. When designing the economic model of the park, the OCT Group did not rent out the factory properties to others, but operated the CCIP project by itself. This decision was reasonable, because OCT Group has abundant experience in theme amusement park operation, such as Window of the World, Splendid China, Happy Valley, Folk Custom Village, all of which are extremely successful. With those huge and recognized success of operating cultural institutes, cultural real estate and cultural tourism, OCT Group is viewed as the leader in the cultural tourism industry by professionals, which encouraged the Group to be the pioneer to transform their

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own factories into a “top-down” CCIP in the early twenty-first century. It was not clear to them at that time whether and how they would succeed. However, what was clear is that the park should be linked to the business of the whole group from the very beginning. Because the existing cultural theme parks were mainly for the mass entertainment, OCT Group was eager to lift up its cultural brand image to enable more competitive price and develop rich class housing products in the real estate market. Although OCT Real Estate products near the theme parks were already very popular, how to improve the cultural brand image to attract high-end customers and develop more profitable luxury homes or villas emerged as a challenge at that time. Finally, the Group leader decided to create a spiritual and cultural landmark for the city with this CCIP. Therefore, the OCAT Contemporary Art Museum was rebuilt from an old warehouse in the CCIP.  In order to keep this art museum independent from profit-making, it is directly supported by the OCT Group headquarters, which guaranteed the museum could have enough fund to hire professional academic team with high salary to carry out a series of high-end cultural activities such as planning exhibitions, publishing art piece album and so on. This initiative, for OCT Group, is pure input. But the benefits of this investment result in multiple levels. First of all, it helped OCT to establish a new cultural image by generously supporting art exhibition and academic research in contemporary art; secondly, the OCAT Contemporary Art Museum set its headquarter museum in OCT-LOFT of Shenzhen, although it has several other branch museums in other main cities throughout the country, such as Beijing, Shanghai, Xi’an, Wuhan. In Shenzhen, where contemporary art museums are relatively scarce, OCAT Contemporary Art Museum then has the unique cultural position in supplementing the shortage for the city. When the first Shenzhen-Hong Kong Biennale of Urban Architecture (“Shenzhen Biennale”) was just launched in 2006, OCAT was selected by the famous international curator as the main exhibition venue, which is also sufficient to illustrate its unique significance to the city in terms of its cultural uniqueness and architectural features. In order to coordinate with the important and international biennale, OCT Group made the decision to postpone the opening of the park. Actually, the extensive and related press reports helped to warm up the new CCIP; thirdly, with the development of the city, the contemporary art market began to ferment gradually in Shenzhen. OCAT Contemporary Art Museum also presented a magnetic force—more and more famous galleries from Beijing opened the South

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branches in OCT-LOFT, which proved that this kind of anchor role of cultural landmark institutions has long-term positive influential effect in the formation of the artistic and cultural atmosphere for a CCIP or a place. As I analyzed in Chap. 4 with the case study of OCT-LOFT, the pursuit of high-end cultural taste and high-quality cultural image by attempting CCIP operation was an important strategy set by OCT Group for the further development of its overall businesses, especially its real estate business. The final economic return is reflected in the high “premium” sales of the high-end and luxury housing and villas built around the park. In the first decade of the twenty-first century, the most expensive houses and the rich residence cluster were recognized in OCT or the real estate products built by OCT. Of course, the success of OCT Real Estate should be viewed as a combination of various factors, such as the ecological value factor, technological value factor and design value factor. But the cultural value factor was also an intentional consideration and seen as a major strategy behind the OCT-LOFT construction designed by the leader of OCT Group. Therefore, the economic system related with the operation and management of OCT-LOFT is the overall business ecosystem of OCT Group. No matter the investment in the park renovation, OCAT operation or the final economic benefit realization, the whole economic circulation was achieved in the business system of the Group. The systemically economic correlation beyond the CCIP project is the fundamental economic logic and sustainable guarantee in OCT-LOFT development. (More direct understanding can be obtained through the organizational structure diagram of OCT-LOFT with other business segments of the Group in Fig. 6.1.) 289 Art Park is located in the old cultural center, political center and educational center of Guangzhou, which has a definitely richer accumulation of cultural resources compared with Shenzhen. There are a series of well-known universities in China, such as Guangzhou Academy of Fine Arts, Sun Yat-sen University, South China University of Technology, Jinan University and so on. Guangzhou has a representative artist group, known as Lingnan School of Painting, emerged in the modern history of culture and art. And Guangzhou Academy of Fine Arts also enjoys international reputation in contemporary art. So there is no lack of high-end cultural and artistic resources in Guangzhou city. If considering the long history of trade business as the only trading ports in the Qing Dynasty, Guangzhou had enjoyed even more diversified and modern history than any other cities in China.

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Fig. 6.1  Organization structure of OCT-LOFT in OCT Group

Under such city context, if the park wants to establish itself as a cultural hub of this city, then it should choose those themes that have not yet been fully developed, but also has been seen as hot topics in recent years to match the trends or market demands. Logically, the most important public cultural space rebuilt in the park has been transformed into “Lingnan Intangible Cultural Heritage Museum”, which is successfully evaluated as a civil-level cultural venue of Guangzhou. From the perspective of cultural positioning, 289 Art Park actually once attempted to develop in both high culture represented by contemporary art and folk culture represented by intangible cultural heritage. However, after a period of operation with 289 Gallery, the park’s actual operator—senior manager from No. 1 Business— discovered that the contemporary art market environment in Guangzhou hasn’t been mature, and if they operate the gallery as a non-profit institute, it seemed to go far away from the business of a private enterprise. Finally, the space for 289 Gallery was changed into a furniture sale center, which can earn some rental incomes for the operational team. At the same time, the Lingnan Intangible Cultural Heritage Museum in the park has exactly became a popular public cultural space with consistent interesting cultural activities open for the citizens every week. We can understand that this museum for folk culture and arts is actively incorporated into the

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urban cultural context, realizing one of the park’s nature as a “public welfare” product. On the other nature of “economy”, Guangzhou 289 Art Park demonstrated more complicated economic logic than that of OCT-LOFT (Fig. 6.2). The reason for this is that South Media Group is not like OCT Group which had some similar experience in operating theme parks and had definite strategy to run its own CCIP. Moreover, not as other property owners who just rented out their old plants or factories to actual operators, South Media Group tries to step into the CCIP operation business to help in the self-transformation from a sluggish paper media industry. Then the business challenge lies on that, on the one hand, they didn’t have any experience in space operation business which, on the other hand, they can’t afford the failure of the CCIP start-up trial for their identity as a provincial state-owned enterprise. After negotiation with different influential developers, they finally picked No. 1 Business as its ideal partner. They co-created a complicated “mixed operation” approach which is rare at home and abroad in CCIP operation. This “mixed operation” played in different levels: firstly, 289 Communication Company (which is the wholly owned subsidiary of South Media Group in the CCIP business) and No. 1 Business started a joint venture named “289 Art Creation Company” as the cooperative platform for running the Guangzhou 289 Art Park

Fig. 6.2  Organization structure of Guangzhou 289 Art Park

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project; secondly, from the outset they reached a long-term development strategy to build a “replicable” CCIP brand; thirdly, No. 1 Business and South Media Group share the right to construct 289 branded CCIP, and they enjoy the benefits according to their different investment rates on different cases. From the cooperation on the single project of Guangzhou 289 Art Park to future “replicable” projects and possibilities, the business model designed for 289 Art Park is not on the single CCIP level, but on a systematic level. The reason that the systematic business model could be conceived out should be attributed to a very special “transformation” context of the creative economy development. Both South Media Group and No. 1 Business strategically and intentionally took the project of Guangzhou 289 Art Park as an important transforming case for the Group’s future development in new CCIP business. For the South Media Group side, the digital media and We Media had demonstrated huge challenge for the existence of traditional paper media, like newspapers and journals. The main income from various advertisements has been in a consistent shrinkage. Then the South Media Group had to find out new approaches to add the income and avoid being broken. As it has old printing plant properties and various cultural capital accumulated as a media group, considering developing the CCIP business became a very logic choice at the transforming point. For the side of No. 1 Business, it also sensed the trend that the traditional business office space has been more and more replaced by those creative co-office spaces, especially for those small- and mediumsized creative enterprises or young generation entrepreneurs. Therefore, transforming from traditional business office operator to creative office operator also logically became No. 1 Business’s development direction and strategy. The two partners matched at this project, and what they cared were both at present and in the future. That’s why the systematic business model was necessary. However, if we focused on the single project of Guangzhou 289 Art Park, we would discover that the cooperative agreements seemed quite “unfair”. In the cooperative agreements, the No. 1 Business took out money to invest in the renovated construction of the CCIP, and whether the CCIP was profitable or not in the future, the No. 1 Business has to pay the “rental” of those old printing plants to the South Media Group as the Group’s property renting income to eliminate the risk of the state-owned enterprise in this project, and then when the joint venture won profit in the CCIP operation, the two partners would share the left profit after the

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first-level rental payment with the ratio of 51:49. So the No. 1 Business should use their experience of space operation to ensure that the premium of the property after renovation can recover the investment cost within the 15-year lease term of the agreement and meanwhile ensure a certain profit margin, which involves “professional” experience such as cost control of space renovation and calculation of space rental income. Therefore, we should put the seemingly unfair cooperative agreements into a long-term and sustainable business system to understand, especially the announced “replicable” CCIP strategy. No. 1 Business, as a medium-scale private enterprise, actually had few cultural capital accumulated from the past business. Although it realized the necessities of cultural turning, it just started its first cultural and creative office project after Mr. Wang Ling took part into the enterprise as partner. And Mr. Wang Ling was exactly a department manager out of South Media Group because of the income cut in the traditional paper media. It’s because of Wang Ling that the No. 1 Business had the chance to know the project of 289 Art Park. From the perspective of strategic alliance, South Media Group, which has huge cultural assets and media channels, was a great opportunity for No. 1 Business to stand out and expand in other projects with this project as a model. The fact proved that 289 CCIP brand really formed a great influence for other local governments at all levels in such kind of “three-old” renovation projects. Because those renovation projects often involve changes in the land use from industrial land to commercial land, most local government officials under the mainland China context would put political responsibility and state-owned asset security first. The case of 289 Art Park provided them a very imaginative and inspiring publicprivate cooperation model. With the park brand secured by South Media Group, the business map and opportunities of No. 1 Business have been successfully expanded, and the business value behind those opportunities even attracted the financial capital to join in. What we should pay attention to is that all of those subsequent developments were actually designed within the systematic business model framework embodied by the “replicable” strategy. In 2017, just one year after the opening of Guangzhou 289 Art Park, No. 1 Business won 300 million RMB investment from CPPEF as A-round financing, which helped 289 CCIP brand successfully and quickly expand its branded projects in Shenzhen and Foshan. At the end of 2017, No. 1 Business had completed the negotiation and agreement signing of the Shenzhen 289 Digital Peninsula and Foshan 289

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Rice Boat Dock Park projects in which No. 1 Business will be the main operator, while South Media Group will also share the newly agreed benefits on different individual cases. The 289 CCIP case definitely illustrated the significance of developing CCIP business beyond the space economy of a specific and physical park. To find the correlation between the CCIP space operation with the original industrial development and extension of the operators is the key element for the seemingly impossible 289 Art Park in sustainable development. Therefore, the economic logic of 289 Art Park strongly proved the necessities of a systematic business model which especially emphasized the context consideration with the city and the correlated business design out of the single rental model thinking. Through the above analysis on the respective process of business model design of the two cases, we can see that although Shenzhen OCT-LOFT and Guangzhou 289 Art Park adopted different cultural strategies and business logic in the CCIP operation and management, their thinking methods had something in common in business model design. That is, the operators both started their thinking from the cultural and economic context of the city in which the park is located and attempted to take their own advantageous industrial areas as the correlated economic system as where the CCIP business could extend out of the “curse” of gentrification under the simple and even violent rental logic. Both the economic revenue logic of the parks actually go beyond the single-site physical space economy revenue to keep its cost-benefit balance and sustainable development. On the one hand, it can ensure that the public cultural space of the park will not be eroded by commercial space under the logic of pure land rental economy and diversify the continuous investment of public culture besides what the government has invested. On the other hand, the economic benefit demand of the park development could avoid the risk of being stagnant because of the rental rising arriving to the price ceiling and could protect the interests of enterprise residents in the park to finally make an ecological creative economy possible. This kind of intentionally systematic thinking is very important for the sustainable development and actual fulfillment of the park’s dual nature of “public welfare” and “economy”. Therefore, the design of the specific business model of CCIP should take the context and correlation as the first two crucial elements.

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6.3.1.2 Specific Activities of the CCIP The specific activities of the CCIP are what the CCIP do or perform on a daily basis. Some scholars even directly define the business model as “a set of systematic activities” (Zott & Amit, 2010). Definitely, it is impossible to understand the economic logic of a CCIP at first glance, but by observing the activities of a CCIP or an organization at least, we can find a clue on their development models. According to the case study and analysis of the two CCIPs, the main business activities of them can be divided into two categories: one is the business activities for the resident enterprise community, the other is public cultural activities, which are free and open to the public. Among them, cultural activities open to the public were what both of the two cases have positive plan and practices. However, the types of activities and audiences are slightly different. OCT-LOFT is a park with the theme of design, art and avant-garde music, so its activities are mainly focused on these aspects. So its cultural identification tends to be avantgarde, post-­ modern, contemporary art, experimental and cuttingedge design. The case of 289 Art Park is more complex and has a process of adjustment. Initially, the operator planned to take contemporary art as the theme of the 289 Art Park and had actually opened a 289 Gallery in the park. However, in the actual operation, the CCIP operator discovers the public-private cooperation model cannot afford to support such kind of fine art institute. Then the 289 Gallery space which had taken the best location of the park along the Guangzhou Avenue has been changed into a furniture sale center. Finally, only the small theater space and the Lingnan Intangible Cultural Heritage Museum have been retained. Accordingly, 289 Art Park takes the “citizen cultural space” serving for ordinary citizens as the cultural identification of the whole park. Therefore, the 289 Art Park case shows the dynamic nature of the park management strategy in the actual development. We can discover that both cases have left and established important public cultural space for and paid a lot of efforts in the “production” of cultural activities. And the difference in cultural activities operation mainly lies in the “cultural identification” and cultural production content. However, in the enterprise service activities, the two cases show a more significant difference. When OCT-LOFT first started the CCIP project attempt, it only developed 50,000 square meters of land as the present South District, with two

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of its biggest warehouses converted into OCAT (OCT Contemporary Art Terminal). In order to ensure that the park can successfully attract cultural and creative enterprises, the operator invited a group of famous designer studios and design companies from Shenzhen or Hong Kong at a very low preferential price as “anchoring strategy” to attract relevant creative enterprises. With the success and popularity of cultural activities production, OCT-LOFT built a series of high-quality and public cultural activities differentiated from those provided by Shenzhen Municipal Government. Added with the constant exhibitions of the OCAT Contemporary Art Museum, OCT-LOFT has constantly attracted cultural visitors to visit the park or attend those colorful activities there, which gradually made the park become an “alternative” culture and art activity “highland” of the young city born as a special economic zone—Shenzhen. OCT-LOFT has created a unique cultural image of fine art and design with its international cultural festivals, public art exhibition, lecture forums, cultural exchanges. Naturally, this top-down designed and ecologically managed CCIP has grown as an unparalleled creative cluster for cultural enterprises to join in competitively. For many years, enterprises have to wait on the list to reside in the park. However, the manager of the park has always been keeping in mind the strategic aim of promoting the cultural brand image of the Group and strictly controlled the selected standard of the tenant enterprises to ensure that the cultural theme and creative atmosphere of the park won’t be damaged. It can be said that even when OCT-LOFT was in the “seller’s market” where the demand exceeds the supply, the operator is still very clear about their operation target on the Group business strategy level, which could be generalized as to keep high quality in the cultural brand activities of the park, to protect the gradually grown “atmosphere” beneficial for the creative production and symbolic capital, to build the CCIP into a unique “cultural highland” of Shenzhen and to let creative enterprises with high-­grade cultural pursuit actively and competitively pursue the park (see Fig. 6.3). However, the 289 Art Park case has a dramatic difference in efforts and attitude on enterprise service. 289 Art Park is a joint venture of South Media Group and No. 1 Business Group, which means this CCIP has the motives to realize the demands of both parties in its strategic development. This kind of public-private jointly managed CCIP is not common in China and the intentional design of a “replicable” CCIP brand is even an unprecedented initiative. Although there are natural and rooted differences between South Media Group and No. 1 Business in terms of

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Fig. 6.3  Business activities of OCT-LOFT

corporate ownership and business operation, the cooperation lies primarily in their attempts to explore new economic growth points for their future development through this CCIP cooperation project. As a stateowned media group with 43 nationally issued media brands such as Southern Weekly and Southern Metropolis Daily, South Media Group has absolutely the strongest cultural resources in Guangdong Province. It is no exaggeration to say that South Media Group is the “Huangpu Military

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Academy” and creative talents highland in South China. Even Wang Ling, senior partner and chief product officer of No. 1 Business, is a former director of the activity planning department of Southern Metropolis Daily. In recent years, as the newspaper industry was greatly impacted by the Internet and digital media, there are many successful and well-known “cultural entrepreneurs” and cultural start-up founders who came from the South Media Group. With such high-quality and abundant cultural assets as cultural capital, how to “transform” them into economic capital to face the challenge of digital economy is the start point for the Group’s leader to try the CCIP project. And No. 1 Business Group, as an urban office space professional operator also, was planning to seize the trend of the rise of cultural and creative economy to add new business or strategic transformation opportunities for the group. Therefore, unlike the case of OCT-LOFT, the goal of the 289 Art Park is to be positioned as a profitable economic product for both the joint parties. Therefore, resident enterprise service would be viewed as the main business activity of the park, and actually it has become the most potential area of the new value creation in addition to property leasing. As 289 Art Park is located in the golden business district of Guangzhou, it enjoyed a convenient public transportation, like subway and bus station. So even before it was transformed into the park, some tech start-ups had already rented the old factory buildings for office, but at a comparably lower price than surrounding office buildings. After these old plants were regenerated into 289 Art Park, the rental incomes could be stable and anticipated. However, because the two cooperative parties reached the agreements on the premise of “replicable” CCIP strategy to guarantee the benefits, it is necessary to make long-term business planning for the 289 CCIP brand. As analyzed in detail in Chap. 5, 289 Art Park has a strong sense of cultural IP incubation. Actually, before the CCIP operative company was established, 289 Communication Company, the wholly owned subsidiary of South Media Group, had stepped into some early attempts in transforming those cultural assets owned by the Group into commercially operable “cultural start-ups”. They hope that once these cultural IPs are mature, they can open their branches in the future 289 branded park as influential cultural enterprises to help create the cultural atmosphere in different places and then attract the local creative talents or entrepreneurs to reside in. But first and foremost, these cultural IPs should reach cost-­ benefit balance by themselves as a cultural enterprise. From the perspective of strategic thinking, this is a bit like OCT-LOFT’s “creative field” or

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“creative atmosphere” building for the same aim to attract public and creative enterprises. The difference is that OCT-LOFT has been backed by the Group as a cultural branding project for the Group’s entire business. So OCT-LOFT only needs to achieve the object to attract the creative community and diversify the cultural ecology of the park. However, 289 Art Park shouldered more mission in making economic benefits, so its business model designer expected to fulfill the two targets in the practice of self-owned cultural IP operations. And what the No. 1 Business had developed in the field of enterprise service is even wider. As a private enterprise, No. 1 Business is not subject to the “political correctness” examination of capital investment like stateowned South Media Group, and they have more freedom and experiment space in the development of derivative industry around the park operation. In order to have a stronger competitive edge in the “space operation” market of CCIP in the future, they actively selected various well-known business brands throughout the country as partners to develop cooperative service business that revolved around the CCIP business. These investment-oriented industrial configurations include JI Hotel, My+ Apartment, Person Media, Drum Tower West Theatre and so on. Therefore, the 289 Art Park project cooperated with South Media Group was an opportunistic entrance for No. 1 Business to various derivative business developments and expansions. In addition to extending to those derivative service industries to meet the lift demands of tenant enterprises and its employees, No. 1 Business also made some attempts in creating “systematic industrial service products” named by the chief manager—Wang Ling—for which an independent company, No Second Temple, has been set up. According to Wang Ling, this company was designed to provide innovative value-added services to enterprises, including policy examination and approval, application for government fund, and establishment of a preferential supply chain on fiscal and taxation, legal advice, industrial and commercial services. And in addition, it also has another important function, which is to collect the basic information and data of those tenant enterprises in the process of those services. Then by the crucial information on developing situation of those start-ups, the No. 1 Business could be the first one to know its potentiality, then they can select the most excellent ones to do risk investment business. That’s another possibility the No. 1 Business planned to expand their business map on the platform of the 289 CCIP project (see Fig. 6.4).

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Fig. 6.4  Business activities and divisions of Guangzhou 289 Art Park

By comparing the specific activities of the two cases in terms of public cultural content production and community service, we can find that both of the CCIP cases have made great efforts on the two parts, and almost all of their routine activities are focused on the two areas. The planning and production of the public cultural content part could be seen as a public service provided by the park to the public and the society. It not only

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created the cultural value or social value but also promoted information exchange, cultivated the cultural atmosphere and activated social network among the creative community. Therefore, this part has been gradually accepted as a basic experience or approach in CCIP operation in mainland China. Especially considering the necessary policy examination and approval in land-use change from M1 to M0, it has been more and more emphasized and supervised by the government to do public cultural activities as some kind of “justice” in the land use. However, in the part of enterprise service, the two CCIP cases took apparently different attitudes. OCT-LOFT has promoted and sponsored some tenant enterprises to develop public cultural activity series such as “International Jazz Festival”, “Tomorrow Music Festival” or “Maker Fair”, but it has not formed extensive and systematic enterprise services which could be widely carried out for most enterprises. So it is more or less the deficiencies of OCT-LOFT, which had been complained by some of the interviewed enterprises. On the opposite, Guangzhou 289 Art Park made a lot of business exploration in this part. And the main motivation came from the private economy No. 1 Business as the joint partner of the park operation. 6.3.1.3 Value Creation of the CCIP The specific activities of a CCIP are the explicit actions we can easily observe, then the value creation and the value capture of the park would be the “implicit logic” that require us to make a sense from those activities. As we have analyzed in Chap. 2, the essential attribute of the park is a “hybrid creative economic product”, so its value creation includes not only economic value but also cultural value and social value. The three types of value are integrated in the process of value creation of CCIP. Among the three values, the social value of CCIP seemed comparably more apparent and natural. On the one hand, the reconstruction of the abandoned factories into CCIP full of cultural and creative atmosphere is beneficial for urban regeneration with the improved image and public activities in certain community; On the other hand, it retained the historical and cultural memory for the community and the city and created some sort of uniqueness and diversity for the more and more homogeneous urban space. Moreover, the cultural activities in the park can benefit the surrounding residents and urban creative class, and the cultural vitality of the city has been added some degree of a daily dynamic.

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Not like the obvious social value of CCIP, in the era of cultural economy, the creation of cultural value and economic value shows a greater correlation and diversifies possibilities. In the case of OCT-LOFT, it took the strategy to build the cultural symbolic value of the park by investing heavily in the fine art museum and high-quality activities as branding cost and cultural asset accumulation. The effect of this kind of cultural value creation could enhance both the reputation of the CCIP and the branding value of the OCT Group and thus obtain the corresponding economic value both from the stable leasing of the CCIP office and business space and more from the luxury housing product of the OCT Real Estate. Generally, the OCT-LOFT model is to put the quality of cultural value creation in the first place and then receive the main economic value creation indirectly from other businesses of OCT Group. And to make the story more logical and viable, we should know that the investment in the park’s renovation also came from the OCT Real Estate company. Finally, even the annual evaluation of the park’s performance doesn’t put the most important standard or weight on the economic benefit growth of the park, but has strict and quantitative requirements on the number of media reports on OCT-LOFT cultural events and the frequency of public cultural activities. So it would be reasonable to generalize that the main business of OCT-LOFT is the creation of cultural value. So the business model of OCT-LOFT can be named as “cultural highland” model. In the 289 Art Park case, the interaction between cultural value and economic value is relatively more complicated. That’s because the publicprivate joint operators designed the business model from a perspective of establishing a “replicable” park brand with the Guangzhou 289 Art Park as the first CCIP model. As I mentioned earlier, South Media Group has rich cultural assets, so the most crucial thing for this heavily challenged media giant is to take advantage of its abundant cultural capital to generate economic value. The project of 289 Art Park is one of the experiments under such kind of strategic thinking. That’s also why South Media Group made the decision to select No. 1 Business as the cooperative partner after negotiating with several powerful and branded developers, such as Vanke. Unlike those giant developers, No. 1 Business as a medium-sized space operator was on its uprising stage and more aggressive while less powerful in negotiation discourse advantage. And No. 1 Business has already finished a similar and successful old warehouse regeneration project, the experience from which contributed to the later systematic CCIP business model configuration. Therefore, South Media Group could fully apply its cultural capital

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advantage and successfully transform that into economic value even in the cooperative agreements with No. 1 Business, by which the South Media Group could enjoy double-level profits to ensure the economic benefits without investing any real money and could also take 51% shares with its cultural capital in media reports of 289 serial CCIPs. Besides the economic benefits from the rental incomes, South Media Group also incubated several cultural start-ups with its own creative talents and cultural resources, network or platform. These cultural start-ups were seen as cultural IPs which can generate potential economic value under different styles of business operations. Initially, such cultural IPs included 289 Pictures, 289 Craftsmanship, 289 Art Fashion magazine and 289 Gallery. However, the last one—289 Gallery—had already unluckily been closed because of its bad profit-making. These cultural IPs incubated by this traditional paper media giant before the 289 Art Park found its partner was another attempt to turn its present cultural capital into economic value. South Media Group had actually injected the starting fund into these start-ups. And then these start-ups or cultural IPs were taken as cultural and economic assets to be transferred into the joint venture company, which became a crucial part of “replicable” CCIP business model framework. In the cooperative agreements, these cultural IPs were thought that they could be expanded with business branches in 289 future CCIPs. Although these start-ups are developed independently after being transferred into the 289 Art Creation Company—the joint company—they still enjoy the extensive network resources, media power provided by South Media Group and more investment from No. 1 Business and partnered individuals. Business incubation of cultural IP could function as the initial cultural “anchor” in lower-level cities where the local cultural industries can enjoy more chances to be linked with the extensive cultural resources of the South Media Group and develop better. Therefore, these cultural start-ups were taken as the “replicable” “module enterprises” to be announced in some of the official press reports, which made the “replicable” CCIP brand more viable or understandable. In addition to cultural IP, these “module” ideas had been enlarged by No. 1 Business with more service businesses, such as JI Hotel, My+ Apartment, Person Media, Drum Tower West Theatre and other ancillary services. Originally, these “module” businesses are separate entities, which have been integrated on the interface of 289 CCIP brand and then shaped an interrelated economic ecology revolved around the CCIP business. Under different project conditions, these “module” businesses can be freely grouped, and with the benefit correlation of “module”

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business alliance under the umbrella of 289 CCIP, the cultural value and economic value have both been redefined and reproduced which presented larger power than before. According to the logic analyzed above, this 289 CCIP business model could be summarized as a “modular system” model. 6.3.1.4 Value Capture of the CCIP For the social value and cultural value, there haven’t been extensively accepted index to measure. And depending on various initiative objects, different parks or local governments may set different standards. Besides, since I defined the top-down built CCIP in mainland China as a “hybrid creative economic product” in this research, so when I discuss the value capture here I would took the economic value capture as the calculable and comparable one. In the real world, apart from those projects based on purely sponsor or non-profit fund, economic sustainability would always be the key issue. For an economic entity that needs to maintain continuous operation, economic benefits or incomes are crucial. Therefore, without the realization of economic value, the cultural value and social value will lose the long-term support and also fail in the end. The creation and capture of economic value are at the heart of another school’s definition of the business model (Evans et al., 2017; Kortmann & Piller, 2016; Peric et al., 2017). However, since value is an abstract concept, it can be demonstrated either by explicit expanding behavior or by economic data. Firstly, from the perspective of the area expansion of the park, the two cases show obvious differences in approaches: OCT-LOFT developed itself in a “nibbling” expansion way. The initial park area had only the present South District. Then it slowly spread to the North District and C District (see Fig. 6.5).

Fig. 6.5  Development and expansion model of OCT-LOFT

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The expansion of 289 Art Park is in an opposite way. Not as OCTLOFT enlarged its area close to the original one, 289 Art Park extended itself with different sibling 289 CCIPs in other cities, like 289 Digital Peninsula in Shenzhen and 289 Rice Boat Dock Park in Foshan. They are both separated and connected in a systematic business model under the “289 CCIP brand”. According to the local industrial characteristics and local government’s development planning, the operating team of 289 CCIP made different theme design and commercial support (see Fig. 6.6). Secondly, the establishment and development of any projects are inseparable from investment. Thus, the source and goal of the investment funds also determine the approach of value creation and the final value capture. OCT-LOFT was a great initiative of OCT Group for the purpose of enriching the original business map. As a series of themed entertainment park projects have enormously benefited the business of the real estate sector of OCT Group, a model of “Tourism + real estate” has been generalized by some scholars to explain the “OCT effect”. In order to transcend this labeled brand image as a mass entertainment and real estate developer, the Group actively explored development opportunities in the tide of creative economy to diversify the businesses and seek new possibilities of the

Fig. 6.6  Development and expansion model of 289 branded CCIP

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Group. It is with such a background and development origin that we can understand why OCT-LOFT can maintain the cultural quality and affordable rental to the cultural and creative enterprises. As the Group has obtained rich economic returns in the real estate project, and has harvested a lot from the mutual benefit of the cultural industry and other economic sectors, the new CCIP project didn’t put the short-term economic target at the first place. It’s more like an opportunity for the Group to make adjustments in the future developing strategy and consciously build the branding image. So at first the CCIP was not an independent economic entity, because its construction and operation capital came from OCT Real Estate Company and OCT Group headquarter, respectively. Among them, the renovation and daily operation expenses of the park are paid by OCT Real Estate, while the operation and management expenses of the OCAT Contemporary Art Museum in the park are supported by the Group. From the source of these investments, we can better understand the economic logic of OCT-LOFT project, which means the final value capture would also go largely in the OCT Real Estate economic rise and hence the Group business expansion (Fig. 6.7). In the 289 Art Park case and its brand expansion process, its funding sources appeared to be more flexible and diverse. As I analyzed in Chap. 5, 289 Art Creation Company—the park’s operation company—was established with a capital investment that amounted to 30 million RMB from No. 1 Business Group which held 49% shares, while 289 Communication

Fig. 6.7  Funding resources for construction and operation of OCT-LOFT

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Company—the wholly owned subsidiary of South Media Group—took 51% shares with its cultural capital investment valued at 200 million RMB in the form of a media promotional fee. The capital injected by No. 1 Business is used for the reconstruction and daily operation of the park, and the media promotion and propaganda capital injected by South Media Group is used for the publicity and press reporting of the park’s activities. And with the completion of the 300 million RMB A-round financing in No. 1 Business by the CPPE Funds, the 289 branded CCIPs actually have the third source of funds/investments (see Fig. 6.8). Lastly, the final and real economic value capture for every enterprise is the most crucial part. As far as the CCIP is concerned, the most direct economic return came from the space rental. Yet as we analyzed with this research, we discovered that the rental income is far away from the entire economic benefits of the CCIP business. Although rental income should be the basic and stable part of the whole economic returns, it would be

Fig. 6.8  Funding resources for construction, operation management and brand development of 289 Art Park

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unsustainable because the rental has its ceiling if the CCIP intended to keep its nature as “hybrid creative economic product” and not repeat the “gentrification” curse to go completely commercially. So every CCIP business should have its economic returns beyond rental from other correlated industries, only by which could guarantee the CCIP sustainable and create enlarged economic ecologic system. The two cases developed their creative economic ecology correlated with CCIP in different ways, which means that each CCIP operator should initiatively construct and create the economic ecology in the business model design. In the case of OCT-LOFT, from the economic point of view, the main investment in the park comes from the Group’s investment in the contemporary art museum, as well as the OCT Real Estate company’s investment in the park reconstruction. Therefore, the main value capture of OCTLOFT is not on the rental level, but on the Group level and for the OCT Real Estate benefits. Actually, the sustainable and stable development of the park greatly increased the cultural value of OCT brand, and the OCT Real Estate products could enjoy the premium and popularity in the market. In this bigger view beyond the CCIP operation, this park renovation cost and the operation cost of OCAT can be regarded as the brand promotion expenses paid by OCT Real Estate and OCT Group in a holistic development model. Besides, based on the successful model of OCTLOFT in creative space operation, the OCT-LOFT Cultural Development Group was established later by OCT Group to specifically undertake the development of characteristic town projects which were commissioned by many local governments nationwide. It could be seen as an indirect value capture from the CCIP project. Then in the case of 289 Art Park, the final value capture seemed even more diversified. For South Media Group, making full use of the media resources, cultural activities platform resources and social relations resources at hand could have its economic value capture even at the stage of cooperation with No. 1 Business with the precondition of bottom rental income from the No. 1 Business without any economic investment in the Guangzhou 289 Art Park project. Besides, with its 51% shares in the joint venture of 289 Creative Art Company, the South Media Group could enjoy the left profit share from the CCIP operation in 51%. On the other side, as a private enterprise, the No. 1 Business Group has a more flexible mechanism. For them, the economic value capture of the park should be largely extended out of the accountable rental. By their fiscal calculation model, the 15 years’ operation of Guangzhou 289 Art

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Park could only cover the investment and other costs put into it under the present cooperative agreements. So to ensure a stable balance between the investment and the income of the Guangzhou 289 Art Park project, and to enjoy the real profits from the cooperation, it has to expand the 289 CCIP project beyond the Guangzhou park; that’s why the systematic CCIP business model was necessary and how the “replicable” CCIP strategy was figured out. Similarly, the Guangzhou 289 Art Park was first reconstructed and operated as a successful model as OCT-LOFT functioned, and then this outstanding CCIP with powerful cultural and media group background and professional space operator attracted a lot of attention, both from the financial capital and from other local governments or state-owned enterprises. No. 1 Business received 300 million RMB financial capital from CPPE Funds which is a professional real estate fund and also has a state-owned capital background. And apart from Guangzhou 289 Art Park, No. 1 Business quickly developed new 289 CCIP projects in Shenzhen and Foshan in 2017 and another cultural district regeneration project in Zhongshan with more related economic value to be created and captured in the near future.

6.4   Generalizing the Features of Two Business Models of CCIP Through in-depth analysis and comparison of the two cases from different dimensions on business model, we have gradually sorted out that the two different parks have produced respective business logic due to their own operation objectives. The concept of CCIP originated from the “cultural industrial zone” or “cultural district”, which is the result of the urban renewal after the European and American countries entered the postindustrial society. For a period of time, this topic has been studied from the perspectives of urban geography, industrial economies or urban studies. So there are some theories to summarize such kind of phenomenon. For example, the theories of “creative milieu” (Landry, 2000) and “creative field” (Scott, 2006) have been put forward to explain why and how this kind of agglomerations effect, which is also attributed to the cluster theory advocated by Michael Porter in creative economy and urban space. Landry’s theory of “creative milieu” is aimed at building “creative city”. In his book The Creative City: A Toolkit for Urban Innovators, he defines the concept:

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Creative milieu is a concept of space that can refer to buildings, to a place in a city, or even to a whole city or region. It covers the necessary prerequisites to inspire an endless stream of creative ideas and inventions of all ‘soft’ and ‘hard’ facilities. Such an environment is substantial. It is an open international environment in which the key majority of entrepreneurs, intellectuals, social activists, artists, administrators, power brokers or students can operate. It is also a place where they can interact face to face, stimulate new ideas and create handicrafts, products, services and institutions that will in turn lead to economic success.1

Scott’s “creative field” theory is more focused on the study of industrial clusters: I … called the structure within the industry complex that promotes these kinds of learning and innovation effects as ‘creative field’, or a set of relationships that promote and guide individual creative expression. To some extent, this phenomenon is consistent with the networks of enterprises and workers that make up any complex, as well as with the multiple interactions between these different decision-­making and behavioral units. At another level, it is partly composed of infrastructure and social indirect capital (such as local schools, universities, research institutions, design centers, etc.), which makes these networks more innovative. However, at another level, it is an expression of culture, practices and institutions in any agglomeration of production and work.2

According to the main ideas of “creative milieu” and “creative field” theories, we can draw some keywords: infrastructure, knowledge production institutions, social networks, flexible organizations, trust relationships, agglomeration structure, culture, practices and institutions. However, only pointing out these keywords or concepts are not enough in the practice and it lacked the know-how. As we mentioned in the literature review, many international scholars are calling for the specific and empirical study of CCIP operation and management. Among them, the most pivotal thing is: if these kinds of cultural and creative agglomerations bring economic and cultural benefits, then what can we do to actively construct a top-down CCIP to achieve the goals of promoting the dual development of culture and economy? It is because that this “top-down” planning and design of CCIP has become an important cultural and  Landry, C. (2000). The creative city: A toolkit for urban innovators. London: Earthscan.  Translated by the author back into English from a Chinese translation version. 汤茂林译, Allen J. Scott著, 2007。创意城市: 概念问题和政策审视。《现代城市研究》, 2007 年第 2 期. 1 2

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economic policy of local governments, this research set the actual operation and management of CCIP as an important problem. Based on the specific analysis and comparative study of two representative cases, this research tries to summarize two business models of CCIP. However, before I go to summarize the specific operation models of CCIP, there are several basic premises or consensus in both cases that should be emphasized here again: 1. The reason why a CCIP is different from a traditional industrial park is that it is not only industrial and economic but also post-industrial and cultural. Especially in the classical type of CCIP which is rebuilt from the old factories this chapter focused on, there is still a public policy problem of land-use change. The change from industrial land to commercial land requires the approval and right confirmation of the government. Once it gets the approval of land-use change, it is thought as beneficial for the new industrial development and the cultural development. Then it means this special traditional industrial space enjoyed the policy subsidy and thus belongs to some kind of “semi-public goods” in space nature. Therefore, it is generally accepted as a sort of justice for a CCIP to produce economic value, cultural value and social value in mainland China policy context. 2. From the economic point of view, the classic CCIP is different from the spontaneous formation of regional creative industry agglomeration. In most cases of the transformations from the old factory buildings, these CCIPs are generally located in the center of the inner city, which are usually the golden urban district enjoying high land price. Therefore, even if the government supports and provides some special funds to subsidize the rental of resident start-ups or directly subsidize the operation of the park, in the long run the park operators must find a systematic business model to produce enough value to maintain the sustainable development of the park. The business model here is likely to exceed the limited space operation of the park, but also to have strong economic logic with the CCIP space operation. As the park operator has different industrial background and different cities have respective industrial development advantage or planning, the corresponding CCIP business model should also be differentiated, which demonstrates a strong demand to concern the CCIP business model design with a kind of ecologically

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creative economy or a mutual-beneficial economic network among correlated industries. 3. From the perspectives of culture and society, the transformation of old industrial buildings into CCIPs embodies a strong characteristic of “post-industrial society”. First of all, because the city has gone through the industrialization stage, the vacant industrial space after the industrial transfer would be possible; secondly, the rebuilt and renovation rather than destruction of those old urban buildings and spaces reflect the strong “nostalgic” cultural trend and the emphasis of urban memory and historical value in the post-­modern society. This is a heterogeneous way of spatial production with the characteristics of symbolic economy and spatial economy (Lash & Urry, 1994). Operators must have a unique understanding of the location of CCIP in terms of symbolic aesthetics and spatial operation. And that’s a very prominent difference between CCIP and traditional industrial park. Pratt (2011) strongly opposes the misappropriation of “clustering paradigm” to explain the cultural industries agglomeration: “Because its implicit orthodox economic theory context of ‘cluster’ tends to ‘ignore’ a lot of facts about the industry”. Bilton (2011) also pointed out that “creative managers must play multiple roles and be able to tolerate and motivate groups to form a culture of multi-task performer”. The above three premises must be highlighted as the basic context of CCIP because the pure economic-oriented operation and management approach which is exclusively emphasized in “organizational capitalism” is no longer able to explain the business mechanisms of successful organizations in the era of creative economy.3 In a new context of “post-Fordism” globalization, organizational structure and management practice require the capabilities of “improvisation and flexibility”.4 It may spill over from the theoretical assumptions of organizational closeness and pure economic rationality in the Fordism production. On the opposite, the management in post-Fordism and post-industrial has been showing an open attitude with infinite possibilities and has an apparent tendency  Lash, S., & Urry, J. (1994). Economics of Signs and Space. London: Sage.  Translated from a paper of Chris Bilton published in Chinese translation. 姜东仁、杨皓 钧译, Chris Bilton 著, 2011。创意产业: 管理的文化与文化的管理。收录于李天铎(编)文化 创意产业读本:创意管理与文化经济。台北: 远流出版社。 3 4

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in realizing the overall benefits in cooperation and mutual support with other organizations. With such a context and background of economic and management changes in the post-­Fordism era, we can focus on the rich differences between the two CCIP cases in the business model to generalize the features of the two business models and the logic behind in a broader perspective.

6.4.1  The Business Model of OCT-LOFT: “Cultural Highland” Model The so-called cultural highland refers to a place with high cultural symbolic value and recognized as the most energetic and colorful cultural and creative cluster in the city. It is favored by the creative community, and plenty of radiant cultural and creative activities are happening or carried out here. Taking the term of “highland” to name the OCT-LOFT model is because Mr. Liu Hongjie, the general manager of the park, uses it directly in the interview: No matter how numerous commercial activities would happen here cannot shape the concept of a spiritual highland.5

As Landry (2000) pointed out very acutely in his book The Creative City about the characteristics of the formation of “cultural industry zones”: Any facilities that related to culture are now called as ‘cultural districts’. From the museum district in Amsterdam to the inner port of Baltimore, culture is only consumed rather than created. It’s used as a tool of branding.

Taking advantage of culture as a tool to develop place branding has often been criticized. This is another important issue that will not be elaborately discussed here. Yet, I suggest not to make preconceptions on this judgment. If the process of cultural branding didn’t damage the culture or original community but create new cultural places for the public or the creative community, then we should think it positively. For example, the 5

 Landry, C. (2000). The creative city: A toolkit for urban innovators. London: Earthscan.

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“European Capital of Culture” project which was originated from “European City of Culture” project since 1985 has been generally viewed as a good cultural policy to regenerate city and has played a great role in city renaissance. And among these “cultural capitals”, Glasgow was usually referred to as a very representative case in which proves that culture and economy could be mutual beneficial on the urban level. Such kind of strategy has been applied in the OCT-LOFT case. Similar to the logic of “capital of culture”, OCT-LOFT operator intentionally took the concept of spiritual “highland” to identify itself. Since the “spiritual” production in CCIP was specifically about cultural production and cultural cluster, we can adjust the word to “cultural highland” to name the OCT-LOFT business model. “Cultural highland” business model takes the “cultural content production” of CCIP as the branding strategy for the Group which could make the symbolic value of the Group increase, and then the Group could capture the economic value from the holistic businesses beyond the CCIP rental income. In the case of OCT-LOFT, the rebuilt and operation capital came from OCT Real Estate Company. After the OCT-LOFT Cultural Development company was established to integrate the operation and management of the park, it was still affiliated to OCT Real Estate Company, and the renovation cost to the expansion of the park still came from the real estate company: this clearly reflects the “cross-subsidized” logic between the OCT Real Estate Company and OCT-LOFT.  Besides, the OCAT Contemporary Art Museum which was set as a cultural anchor to this “cultural highland” was totally funded and controlled by the Group headquarters. On the one hand, it serves the OCT-LOFT as a magnet to attract visitors and as a symbol of cultural landmark; on the other hand, OCT Group had set a series of OCAT branches in Shanghai, Beijing, Xi’an and Wuhan, which helped promote the main museum—OCAT Shenzhen and the CCIP—OCT-LOFT. In this way, the “cultural highland” model is actually a very costly model. It means that the operator has to invest a great amount of money both in the transformation of infrastructure facilities and in the operation of professional, academic and non-profit cultural activities before making any economic returns. Moreover, it’s not a short-term or temporary investment, because when the target is to build a “cultural highland” of the city, the operator or the Group in the background is playing the role of producing public cultural product or content for the citizens. To keep this cultural image or to keep the symbolic value of the Group, the cultural

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quality of those cultural activities or exhibitions should be carefully planned and designed. With this logic, it is almost unimaginable or unpractical to cover such a high cost by simply relying on the single rental income of the CCIP. Therefore, the key factor of this model is that the “cultural brand” created by the CCIP as a cultural highland must have enough spillover effect. In the OCT-LOFT case, the spillover effects are manifested in two aspects: firstly, the cultural content and the cultural activities produced by the CCIP are not only influential on the CCIP community level but also attractive on the city level or even on the national or international level, representing the frontier of the city’s cultural ecology and compensating the scarcity of the present urban public culture; secondly, the cultural brand connotation should not only benefit the park itself but also benefit the Group or correlated industries that could “subsidize” these cultural creation and continuous cultural welfare production. This “cross-subsidy” between the park and related industries shaped the basic economic logic of the “cultural highland” business model. In the OCT-LOFT case, the most directly related industry is the real estate industry of OCT Group, which promoted itself as the “Creator of High-quality Life”. Before 2012, when the average apartment price in Shenzhen was less than 20,000 RMB per square meter, the real estate products developed by OCT in Shenzhen had reached 60,000 RMB per square meter, especially the high-end products, such as Swan Castle Villa, Portofino Town Apartment and Villa, which have been seen as the traditional Shenzhen rich area, and its average price has risen to 150,000 RMB per square meter at present. Even second-hand housing around the Ecology Square of OCT, which has been built for more than a decade, is about double the average price on the market. However, although OCT-LOFT takes the “cultural highland” identity creation as its main strategy and the key factor of a systematic business model, we cannot neglect that CCIP itself is also an economic “product”. From the economic point of view, CCIP constructed by top-­down is actually an operational real estate project in its basic nature, which means it has to operate the space renting and serve the correlated industries at the same time. Not as No. 1 Business, OCT Group has seldom experience in office space renting, but it still has its own advantages and managerial methods in the CCIP space operation. As we analyzed above, the establishment of OCAT as a non-profit public and academic art institution is to provide the park with a “cultural infrastructure” and “symbolic capital”. It’s attractive

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not only to the public but also to the creative class because it’s a convincing reason that OCT Group is serious about art and culture. Then the CCIP operator took use of “anchor” effect here again to invite some star designers and influential design organizations in the design circle to move their studio or office into the CCIP as the first batch of tenants with a relatively preferential rental price. Important design organizations and designers have a strong influence and their appeal in both the industrial value chain and their cluster in a CCIP has some kind of “magnetic effect” or automatic advertising effect, attracting relevant enterprises in the design industry or other creative companies to follow. And in the production of the cultural activities and the cultural contents of the park, it’s necessary to notice that the CCIP manager seemed to have enough consciousness in “creative management”. They kept communicating and learning from the creative talents and creative enterprises with formal or informal interactions with each other. After they finished the newly developed North District according to the market demand, they didn’t use all the reconstructed space for making money, but added a new creative theme to the CCIP—avant-garde music. They invited more wellknown creative brands to move into the park, such as Old Heaven Bookstore. The bookstore was especially famous with one of its creator— Ah Fei—who is also a music radio host. The OCT-LOFT space for the bookstore fulfilled his idea to create a composite space of bookstore, coffee bar, music video store and live house. In some daily talks and informal interaction, Ah Fei proposed his idea to hold a Jazz festival in the CCIP. With the sponsor of the CCIP, the first Jazz festival was very successful and influential. Then the OCT-LOFT International Jazz Festival and Tomorrow’s Music Festival have been developed as the traditional and popular cultural activities of the park. Besides, Little Thing Magazine started their business from the OCT-LOFT Creative Market and then was also “invited” into the park with a street shop space, which helped the magazine creator successfully open their dream composite store of magazine selling and vintage grocery. The cultural brand Little Thing was given the chance to grow and it also injected special and alternative retro culture into the park, which was a classic win-win cooperation. In fact, OCTLOFT’s cultural content production and cultural activities have entered a richer and more frequent stage after the expansion of the North District with these more diverse cultural brands into the park. This developing or growing process of the CCIP seems to be very random or uncertain, yet it was pivotal to the vitality of the park and is where

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the creative management differentiates from the traditional management. It is a profound reflection of the argument that Bilton (2011) has been repeating: I understand the danger of replacing the general principles with a new set of theories, but it is true that the management of creative industries do not apply to the models of other industries. And we must be equally careful not to mistake all creative industries with the common denominator.

In terms of creative management in the “cultural highland” model, the operator always holds a humble attitude of learning from and cooperation with the creators in the park and keep “absorbing” well-known and potential creative enterprises around the city by preferential office rental price. In fact, the park is a continuous development and growth of “unfinished” platform, and its management is a dynamic and adaptable process. In Bilton’s words, “managers must be good at improvisation and flexibility”.6 The cultural production of the park included not only absorption or expansion of new cultural enterprises but also the “creative production” of cultural activities. The former relies on keen observation and broad vision or active networking (e.g., creative fairs); the latter, to some extent, is no less than a cultural creation. As Bilton (2011) put it: Because the creative process is highly variable and relies on multiple personal contributions and external changing factors, it is difficult to apply a preplanned approach. Instead, managers must observe unexpected situations in the creative process and draw up strategic guidelines based on the events and personnel at that time.7

And in an interview with OCT-LOFT International Jazz Festival founder Ah-Fei, also the manager of Old Heaven Bookstore, talked about the experience of interacting with the park’s managers:

6  Translated from a paper of Chris Bilton published in Chinese translation. 姜东仁、杨皓 钧译, Chris Bilton 著, 2011。创意产业:管理的文化与文化的管理。收录于李天铎(编)文化 创意产业读本:创意管理与文化经济。台北:远流出版社。 7  Translated from a paper of Chris Bilton published in Chinese translation. 姜东仁、杨皓 钧译, Chris Bilton 著, 2011。创意产业:管理的文化与文化的管理。收录于李天铎(编)文化 创意产业读本:创意管理与文化经济。台北:远流出版社。

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They were very good at learning and fully respected my professional advice, and trusted me when I proposed to run the festival. After the first festival as a trial, they found that the results were far better than they expected, so they invested more resources in the second festival.8

Here is a clear picture of a “learning-experimenting-evolving” management dynamic experienced by the park’s managers, as Zhang Han, the park’s deputy general manager, points out in summarizing their management strategies: The main thing we did as the manager is to create a creative ecology where culture can be created, growing and rooted.9

In this process, although creative management has its randomness because of spontaneous interactions, it doesn’t mean that there isn’t a certain kind of structural control. For example, in the commercial rental management of the park, the park operator has a set of standards in the strict control of restaurant consumption business, from the amount to the genre, from the visual design to the location planning. The amount of the restaurant or similar catering consumption cannot exceed the 10% of the whole area of the CCIP, and the location of these consumption businesses were also meticulously planned by the CCIP operator. Along the line of the visitors’ flow, they rented out some consumption or shopping spaces for designer café, designer noodle shop, jazz bar, antique bar, galleries, bookstore, vintage grocery, music restaurant and so on. And even the Starbucks at the main entrance of the CCIP, the manager insisted that the external decoration style of this internationally chained brand should go post-­industrial taste with the holistic atmosphere of the CCIP. No matter the dynamic management in a “loose” manner and the structured management in a “control” manner, they are unified in a common goal: to create and maintain the cultural brand of the park. Therefore, combining the economic logic and specific management operation behind the “cultural highland” model of OCT-LOFT, we can get the following diagram of the business model (Fig. 6.9).

 From my interview with Old Heaven Bookstore founder Ah Fei on Aug. 9, 2017.  From my interview with vice general manager of OCT-LOFT Ms. Zhang Han on Sep. 14, 2017. 8 9

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Fig. 6.9  The “cultural highland” business model of OCT-LOFT

6.4.2  289 Art Park: “Modular System” Business Model Although the second case study started and revolved around Guangzhou 289 Art Park, the replicable “289 branded CCIPs” were taken into the holistic research of the economic logic behind this creative business model. As we discussed in the last section, the South Media Group “realized” the economic value of the intangible assets by taking the numerous media resources and cultural resources as the share of the joint venture with No. 1 Business. By the cultural capital, South Media Group could share Guangzhou 289 Art Park’s rental income without any money investment in the CCIP reconstruction. It looks unfair, but those cultural start-ups, such as 289 Pictures, 289 Craftsmanship and 289 Art Fashion magazine, which were designed as the “replicable module businesses” in the holistic business model were also born from the cultural capital provided by the South Media Group.

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In the process of public-private cooperation on 289 CCIP project, although South Media Group and No. 1 Business Group take the joint venture of 289 Creative Art Company as the cooperative entity, the real cooperation between the two companies is in “module” way. Firstly, the state-owned South Media Group put in its cultural capital which the private enterprise invested in economic capital, whether in the physical reconstruction or in the cultural start-ups; secondly, the South Media Group would take away a certain part of the first-level rental income from No. 1 Business regardless of whether the rebuilt CCIP could be rented out or not. And in addition to the “have-to” paid rental, South Media Group would share 51% of the left rental returned from the CCIP renting; thirdly, No. 1 Business could share the 289 CCIP brand ownership, which means that No. 1 Business could develop other 289 branded CCIPs with other partners, and South Media Group would not be necessary to take part in. Baldwin and Clark (1997) defined “modularity” as the practice of system designing, which means that small and interacting subsystems are designed as a modular system, but they are independent of each other. Through literature review, Rogers and Sparviero (2011) pointed out that modular systems have the following characteristics and advantages over integrated systems that require subunits to work together: First, a modular system requires interfaces or ‘rules of the game’ to determine how modules work together. When a system is not self-generating, the system architect plays a leading role in creating interfaces and outlines standards for collaboration and compatibility. All module designers need to be aware of the system’s inter-operability rules so that modules can collaborate with each other … . The second characteristic of modularity is that design, innovation and production can be outsourced to specialized module organizations … cooperation between production organizations can be achieved through minimized management and cost. (Brusoni and Prencipe, 2001) Third, most importantly, modular systems have a faster rate of innovation than integrated systems of the same size. At the system level, faster innovation rates come from parallel innovation efforts by module-makers. (Baldwin and Clark, 1997)

Modularity approach and complex products and system are theoretical and methodological frameworks closely related to complex economics. When Rogers and Sparviero (2011) studied the innovation model of the music industry in the digital age, they introduced the difference between

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complex economic theory and neoclassical economic theory, analyzed the application in the field of communication and then made a case study on the music industry. Their main argument for the application of complex economic theory to the study of communication and the media industry is that traditional economists tend to view policy and regulatory schemes as external factors in their models, independent from individual and corporate choices. Under the assumption of market equilibrium, the standardized company is the analysis target of the neoclassical model, in which production is regarded as the center of economic analysis. In contrast, complex economics is not a single and integrated theory. It is best to be defined as a set of research programs, among which “system” is the core of complex economics. Beinhocker (2007) provides five main principle concepts to distinguish complex economics from early economic research methods. In short, these include: First of all, the economy is open, dynamic, non-linear and will never be able to achieve a static equilibrium; Second, these social systems exist through interactions between agents who make up them and these agents use inductive empirical methods to make decisions which are usually based on incomplete information, then learned and adapted through practice; Thirdly, the network provides an interactive model for agents. Fourthly, there is no difference between micro-economy and macro-economy, and the macro-economy is closely related to the behavior and interaction of each agent. Fifthly, evolution is a process of differentiation, selection and expansion, which would lead to the order of the system and the complex growth.10

Inspired by Rogers and Sparviero’s (2011) research to analyze the music industry and communication theory with complex economic theory, I think it is also very appropriate to use this theory as the similar methodological framework to analyze the development and business model of 289 Art Park. 289 Art Park seems just a CCIP transformed from several old printing plants of South Media Group. In fact, such a “micro” project is closely related to the macro-economy transformation and economic policy encouragement under the current new economic structure adjustment of China, especially with the impact of the Internet economy 10  Rogers, J., & Sparviero, S. (2011). Understanding innovation in communication industries through alternative economic theories: The case of the music industry. The International Communication Gazette, 73(7). P610-629.

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and the wave of innovation and entrepreneurship on all walks of life. It involves the cross-­border transformation of a large state-owned media group who took advantage of huge media and cultural assets to enter the commercial real estate industry, while No. 1 Business is also successful to transform its main business from a simple space leasing service into a professional brand operator of CCIP. The senior managers of the two sides jointly designed the complex products and system of the “replicable” “289 CCIP brand” through the ingenious “modularization” method, which managed to expand the system products very rapidly. In just one year after Guangzhou 289 Art Park opening, they successfully entered the markets of Shenzhen and Foshan and created two 289 branded projects—289 Digital Peninsula (Shenzhen) and 289 Rice Boat Dock Park (Foshan). And No. 1 Business also relies on the 289 CCIP platform as a premium strategy in following cooperative negotiations, investing a series of related service businesses, such as hotels, apartment, small theaters and We Media platform projects, which could be seen as the extensive exploring and construction of correlated “subsystem” module combination under 289 CCIP brand system, for the purposes of enhancing the competitive power of the 289 CCIP brand and bargaining power in CCIP business market. The swiftness of creation and innovation is the most important advantage of “module” system innovation as we analyzed above. Based on the theory and practice analysis, we can conclude the “module” business model of the 289 Art Park case with the following diagram (Fig. 6.10).

6.5   The 4C Model Generalized from the Above Two Business Models As all creative products, the success of a specific CCIP is hard to be replicated completely. However, for the business model of a “classic” CCIP as complex “mixed creative economy product” constructed top-down, we can abstract a design framework of the business model from the “common ground” of the two case comparison. The main elements of the framework come from the several consensus points on the business model (Zott, Amit & Massa, 2011), which is also the four main comparison constructs I applied to the two cases in the above sections of this chapter. Here, I put the key elements of those four constructs/dimensions into the research literature on cultural and creative industries agglomeration and could find

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Fig. 6.10  “Modular system” business model of 289 Art Park

that they are constantly echoed in different researchers’ theories. In the end, we can get a more in-depth and accurate explanation of these four main elements and their mutual relations in the framework of designing a business model of CCIP. 6.5.1  The System Involved with CCIP: Identifying Context and Industrial Correlation When a top-down planned CCIP as a product initiates, carefully analyzing its political and economic environment of the city and the industry they want to develop further is the connotation of identifying context. Unlike the traditional industrial agglomeration, most of the CCIPs are spontaneous agglomeration in economic geography (Kong, 2009; Mommaas, 2009), which involves the social environment and the development of regional politics and economy. In the post-industrial development sense, CCIP is also the symbol of the “second turn” of China (Bottelier, 2007) and a new type of urban governance model (Zielke & Waibel, 2014). As the concept of “governance” implies, it involves relationships and interactions between the public sector, private investment companies and creative

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entrepreneurs. Therefore, as the investor and operator of CCIP, it’s necessary to plan and position the park on a case-by-­case basis from the perspectives of the stage of urban development, their inherent advantages of certain industries and the expectations or holistic urban development planning of the government. By considering those “contexts” and implied advantages or limits, on the one hand, the CCIP can establish a close cooperative relationship and win more policy-oriented financial support from the government; on the other hand, combining with the reality of urban economic development and the original accumulation of knowledge in a specific industry will be more conducive to the formation of creative economic ecology and knowledge exchange network on the platform of CCIP. Tsang and Siu (2016) took PMQ and Easy Pack creative district of Hong Kong as the study cases and then put forward a 3C model for the sustainable development of cultural and creative industry agglomeration. The 3C include cluster, community and creativity. They argued that only the positive correlations among these 3C could promote the “long-term agglomeration in one place and the sustainable production of new ideas” of the creative practitioners, thus ensuring the sustainability of cultural and creative agglomeration. Not as Kong’s (2012) research of Singapore CCIP observed the work and business of artist group, Tsang and Siu (2016) shifted their focus to designers, arguing that designers have more particular commercial needs with CCIP than artists. Even so, Tsang and Siu’s (2016) research on cultural and creative agglomeration still targeted the creative enterprises and creative workers who clustered in the park, rather than the management organization or operator of the CCIP. The goal of 3C theory is to ensure the sustainability of creative production. Undoubtedly, creative production is very important, but the relationship between the creative production by the artists or designers and the circulation of cultural economy in the post-industrial era seemed more complicated. Venkatesh and Meamber (2006) redefined cultural production by arguing that cultural intermediaries and consumers actually also constitute the essence of contemporary cultural production. Their convincing research helped us to broaden the understanding of cultural production. Therefore, to simply focus on the creative producers who clustered in the park is far from enough in the understanding of CCIP. However, it is often believed that the logic of the economic value followed by the managers of CCIP will inevitably erode the logic of the cultural value chased by the creative workers in the park. Thus there is a

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classic contradiction of binary opposition. This contradiction was usually thought of as the reason for various degrees of gentrification in the original creative clustering area, which often led to a great loss and challenge in the existence and benefits of real artists or creators. This phenomenon was regarded as doomed to happen as the shade of cultural or creative cluster or CCIP in Western economies. Under the mainland China context, the CCIP development also has witnessed and experienced the same dangerous and adverse stage, which had caused large public resource waste and harm to creators and finally the nature changes of the CCIP into a shopping or consumption cluster. All of those failures and loss led to many profound reflections from CCIP operators and local governments and then the conscious adjustment of the business model design of CCIP as a great and noteworthy trend. From the two cases of OCT-LOFT and Guangzhou 289 Art Park, we find that the primary role of the park’s operator or manager is very close to a broker and coordinator, as proposed by Gretzinger and Royer (2014). They are the intermediaries or bridge between the investor (usually their parent company) and the park’s tenant enterprises clustering in the park. In both the successful and sustainable cases, the closed commercial loops of the park as a creative economic product is not completely realized at the single spatial economic level with the CCIP rental as the only value capture approach, but involved either the cultural brand building and promotion in the OCT case or the business transformation of both South Media Group and No. 1 Business Group. Based on the perspective of complex economics, this chapter puts forward an important dimension of CCIP’s operation and management model. It strongly calls for a systematic correlation with other industrial economies or business expansions in the CCIP business operation. In the logic of “cross-subsidy” among systematic products, the value of culture can be created and captured continually, and the economic value of related industries can be promoted because of the addition of cultural value. Only by the complex economic theory can we better understand and sustain the operation of the park as a “mixed creative economic product” and develop the creative economic ecology in a holistic system perspective, which should be viewed as the rooted motivation of creative economy and CCIP business.

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6.5.2  Specific Behavior of CCIP: On Culture and Community As a quasi-public space which could enjoy government welfare policy, the CCIP should pay attention to the functions of both cultural production and public cultural services, whether for the sake of justice or for the creative atmosphere building (Yuan, 2017). Different from the traditional economic entity, the managers of the park are more a broker and a coordinator (Gretzinger & Royer, 2014). Then “How to manage the social capital and symbolic capital in the cluster” (Gretzinger & Royer, 2014) to promote creative production is a significant aspect of the management of the park. In this study, those creative markets, cultural festivals, free lectures and other public activities planned and sponsored by the CCIP operator have successfully built the park as a unique culture production base and a cultural highland of the city. With the time passing, it helped to accumulate the cultural assets and symbolic capital of the park. However, the extensive cultural production is not limited to the cultural activities organized by the park. It can also be the cooperation and co-creation between the park operator and tenant enterprises or artists in the park, or the city’s cultural federation, art associations and other organizations, so that the city’s cultural and art communities would automatically take the CCIP as the exclusive space to get together and hold events. And the cultural activities and content of those urbanlevel productions are also related to the park, adding the symbol capital of the park. Of course, the CCIPs in the same city would be competitors with each other for those high-level cultural events, but only the one with extensively recognized cultural capital could win the exclusive chance. Therefore, the operation of cultural activities’ quality should be paid enough efforts and taken as crucial work by the park operator. In this part, it embodies the dynamic nature of creative management between “control” and “loose” (Bilton, 2006) as we analyzed in the two case studies above. Many researches on CCIP emphasize the network relationship between creative groups and the interaction between creative communities in the park (Florida, 2002; Lloyd, 2010). Currid (2007) and Lloyd (2010) even believe that the formation of creative communities is the most important factor of a dynamic cultural-creative agglomeration. And creative enterprises can also benefit from the “theoretical, technical and social” spillover effects based on the interaction of creative networks in the park (Cooke, 2001). Of course, there are also empirical studies suggesting that this is an

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idealized assumption in some parks (Bayliss, 2007; Lysgard, 2012). A study by Zheng and Chan (2014) on Shanghai CCIP points out that the interaction between so-called creative communities is limited to those original acquaintances or friends already having connections before they clustered in the same CCIP. When the networking issue is proved to be very important in CCIP while it’s carried out inadequately in reality, what we should do is to strengthen the operation in creative community. In the case of OCT-LOFT, the manager had the professional consciousness of constructing creative ecology because of the operational experience in successful cultural themed entertainment park. So they truly knew how to seek co-creating partners from the creative community related to the CCIP platform. For example, they discovered potential creative talents from the OCT-LOFT creative fair and support them to open creative studios or shops in the CCIP and invited some heavyweight designers from the professional group to reside into the CCIP and encourage them to do cross-border businesses such as café bar and noodle shop as creative consumption in the OCT-LOFT to attract visitors or provide service for the worker in the CCIP.  In the 289 Art Park case, No. 1 Business has adopted a more business-oriented approach to provide more convenient and networked services to the enterprises in the park with a newly established “No Second Temple” company. Based on the essential information collected from the business service, the operator of the CCIP managed to construct a community-based interactive network for possible closer connections or business cooperation in the future. In conclusion, this study proves that the construction of creative community cannot rely on the weak tie of accidental “encounter”, but requires the park operator or manager to take the initiative to configure corresponding behavior or activities to promote the community connection, interaction and cooperation. 6.5.3  The Implicit Sides of CCIP Business Model: Value Creation and Value Capture In fact, whether it is to observe the correlated business system or the specific activities of the park, the implicit motive behind that is to discover how the CCIP create and capture the value. As long as the park was constructed with enterprises as the investors, then the anticipated value is not only the cultural value and social value but also the economic value. However, as we have analyzed in previous chapters, the economic value of CCIP can

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account not only to the space rental income but also from broader correlated businesses. Then the CCIP would be more possible to realize its public-private dual attributes as “mixed creative economic product”. The value creation and value capture should be understood as the core of a business model. They constructed the rooted logic of a sustainable CCIP, yet they need to be realized through specific activities taken by the park managers in the process of operating the park. And as we saw in the comparison of the two cases, different economic system logic would ask for different external activities in operations. For example, OCT-LOFT devoted almost all its efforts to the cultural production in organizing cultural activities, public art exhibitions, designer lectures, music festivals and so on. That’s because by investing and creating cultural and symbolic capital of the CCIP, which could be sharing with the OCT Group in its increased brand value, the sustainable economic value of OCT-LOFT in the long run would be captured from premium profitmaking in other businesses of the Group—especially in the OCT’s other real estate businesses. The case of Guangzhou 289 Art Park has made value creation and value capture in terms of both culture by incubating cultural assets through IP and the community by the value-added services and supporting service business. The operators of 289 branded park had explored a series of related industries revolved around the CCIP platform. With the “modular system” business model, 289 branded CCIPs formed an economic ecology, in which separate but correlated businesses could be combined in different ways in different 289 CCIPs according to the specific urban context and different cooperative resources. In this regard, when an operator plans the business model of a CCIP, there could be different ways and strategies of value creation and realization for consideration. But no matter in which way, the park operators should keep the awareness that “culture” and “community” are the two essential attributes, which are also the two important aspects of the park’s operation. Only by taking concrete actions in “cultural production” and “community networking” can values be truly generated. Because actions are concrete and value creation is abstract, solid lines will be used to represent the determinant relationships among actions and related factors, while dashed lines will be used to represent the path of abstract value generation and capture in the following business model diagram. Based on the above analysis of several important dimensions of the operation and management strategy of CCIP, we could draw a diagram on the design framework of the business model of CCIP (Fig. 6.11).

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In terms of 4C model, we can draw the following comparison table on the differentiations of the “cultural highland” model represented by OCTLOFT and the “modular system” model represented by Guangzhou 289 Art Park (Table 6.2).

Fig. 6.11  4C model for the business model design framework of CCIP: black solid arrows represent the systematic relation design; blue solid arrows represent the observable activities for value creation; black dotted arrows represent the implied process of value capture Table 6.2  Comparison of two case models Constructs

Cultural highland model

Modular system model

Context

1. The context city doesn’t have an 1. The context city has a great abundant cultural accumulation or history and cultural tradition, and popular cultural center, or lack the civil culture is developed and cultural diversity. colorful. 2. The CCIP has to actively create 2. The CCIP could take advantage their own cultural assets by of the existent cultural assets. building cultural infrastructures and producing high-quality cultural activities. (continued)

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Table 6.2 (continued) Constructs

Cultural highland model

Culture

The cultural content production of CCIP would be the main work of the CCIP operator.

Modular system model

The cultural content production of CCIP could cooperate with mature and influential cultural associations in the city. Community The construction of CCIP creative The establishment of CCIP creative community would be attributed to community would be guided by the the intended management of creative operator of CCIP and be taken as ecology, which allows the network an important source for CCIP and exchange to grow by itself. business exploration and correlation. Correlation The CCIP is created as a cultural The CCIP business is embedded in brand model to increase the cultural a systematic business ecology, in value and symbolic value to the which CCIP business would be businesses correlated. divided into different “modules” and can be replicated with different business module combinations according to differentiated and new contexts.

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CHAPTER 7

Research Implications and Conclusions

7.1   Research Implication As discussed in the literature review, the concept of CCIP is in the process of being constantly defined and redefined. It is a developing phenomenon in persistent iteration. Because of the strong “top-down” policy tendency of the creative industry concept in the late twentieth century, the development of CCIP in mainland China also reflects the obvious characteristics in policy advocacy and enterprise practice, and yet research and theory are lagging behind. The research on CCIP has its specific and unique complexity, as it is related to the culture, economy, urban development, creative community and other important aspects of contemporary social development. Moreover, it has showed a trend of continuous integration among different issues, making this topic both complex and fascinating. As far as we are concerned, economic geography (Cooke, 2001; Putnam, 1993; Scott, 2000, 2005), urban studies (Lazzeretti, Boix, & Capone, 2008; Santagata, 2002; Valentino, 2003) and cultural sociology (Comunian, 2011; Currid, 2009; Glaeser, 1999) have made great contributions to this topic. However, the research of CCIP in specific political, economic and cultural context and its corresponding business models are still scarce. Thus from the perspective of practical guidance for the investors, operators and policy-makers, it is obviously lacking. In recent years, a limited number of important journals published several papers from the management perspective to

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study the cultural and creative industry agglomeration. Through empirical case studies, some scholars pointed out that the informal network structure in agglomeration is relatively weak for the sustainable generation of agglomeration advantages, so the cluster must have formal institutional management organizations to promote such value creation (Gretzinger & Royer, 2014). This study was pioneering in proposition for the researches from the management level on CCIP, yet it didn’t give any schemes in the specific operation tools or guidance. Gu (2014) affirmed that with different social, political and cultural contexts in mainland China, the development of CCIP is quite different from the original creative industry parks in the West, which originated from the new Bohemian culture of the post-­ industrial cities. She observed that most of the CCIPs in mainland China were developed by real estate developers in the form of cooperation with the local governments, but she also failed to do any in-depth case studies to explore how such “cooperation” was achieved and how the CCIP is operated from the management perspective. Along with the CCIP research literature development and to compensate the lack of CCIP research, this study first of all made a comparatively explicit definition on a specific type of CCIP which is named as the “classic” CCIP (cultural-creative industries park) in this research. The word “classic” here refers to the original type of “cultural and creative agglomeration”, which was formed from the artistic and creative space transformation of old industrial workshops or industrial historical sites in Western post-industrial cities. The “park” in CCIP refers to the “top-­ down” planned cultural and creative agglomeration with specific geographical boundaries. This kind of “classic” CCIP is the major type in the CCIP catalogues filed by the government at present, but this concept has not been proposed as the park classification by the policy before, so it is difficult to get accurate data on the scale or number of this type of CCIP. However, since Mr. Wang Yang, former Secretary of Guangdong Provincial CPC Committee, put forward the policy of “replacing the second industry with the third industry”, CCIP has developed rapidly and become an important strategy of urban renewal, which has reached a consensus of scholars at home and abroad (Gu, 2014; O’Conner & Liu, 2014; Zielke & Waibel, 2014). Secondly, this study also summarized the generative nature of the “top-­ down” styled CCIP, which is with obvious “post-industrial” spatial attributes and has the characteristics of post-Fordism economic production. There are two main doubts/biases about the “authenticity” and essence of

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this top-down planned CCIP. The first doubt is that the “authentic” cultural and creative industries cluster should be self-generated, and only the “bottom-up” CCIP should be taken as real creative cluster (Keane, 2012); the second bias is that CCIPs in mainland China are ultimately engaged with cultural real estate, so culture in this sort of CCIP is not really valued and finally it’s the real estate developers who really achieved economic benefit (Gu, 2014). In fact, the first kind of suspicion is to negate the rationality of human beings and the historical practice of “culture-oriented urban renewal” which has been carried out in most Western cities since the 1980s. It is a fundamentalist way of thinking. The second kind of suspicion seems to be more in line with the reality, but it failed to tell the whole story of CCIP development in mainland China with enough cases and lacked the necessary analysis of those successful ones. It is exactly in rethinking the doubts of the relationship between culture and commerce in CCIP business that this study put forward the argument that the sustainable development and expansion of CCIP must be attributed to appropriate business models. Under this logic, I defined the “classic” cultural and creative industry park as a “mixed creative economic product”. Different from the previous literature which defined the cultural and creative industry agglomeration model as “a special economic organization” (Smith, McCarthy, & Petrusevich, 2004), I argued that because of the obvious policy-promoting as well as the general tendency of enterprise investment and operation, CCIP has become an important and popular phenomenon in the current China’s major cities. As some Western scholars have observed, cultural and creative industry parks and agglomerations should be understood as “a mixed form of cultural governance” (Mommaas, 2000) and generally tend to combine private practice and public sector interventions in some way. And even if the “bottom-up” agglomeration wants to have sustainability, it also needs to develop a set of governance mechanism to realize its original economic demands with spontaneous agglomeration (Gretzinger & Royer, 2014). Therefore, how to implement “governance” between the public and private sectors is a focus issue. For the majority of enterprises in mainland China who have established and managed CCIPs, it would be very crucial to have such a “governance” perspective and perceive, which is bound to be included in the successful management or operation of the parks. But governance won’t occur automatically, it must involve the initiative behaviors or actions of the relevant stakeholders. With regard to the CCIPs in

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mainland China, the biggest risk lies in the operation and management organization of the park. Because from the application for examination and approval of the land-use change to the investment in the old industrial plants renovation, all of which would be the sunken cost of initiating a CCIP business, so the park operators must have clear operating strategy and business model to ensure the sustainable development of this special “creative economic product” in the long run. From the case of Guangzhou 289 Art Park, we can find that to make the long-term profits without harming the CCIP public attribute, the operators designed a systematic business model in the form of building “replicable” 289 branded CCIP in different cities. In this sense, taking the business of operating a CCIP as the design, creation and management of a “creative economic product” is a proper generalization in line with the real developing situation of CCIP in mainland China. This concept is also a breakthrough of the existing literature on CCIP or creative cluster, which can also practically provide a reference for the development of CCIP, creative cluster or cultural district in other regions around the world. Finally, if CCIP wants to realize its essence as “cultural agglomeration”, it must carry on “control” on the quality of culture production in the CCIP and try everything to protect the cultural quality from damage caused by the single economic logic of rental income. Hence, the park operator must make out a holistic business model for more sources of economic sustainable development. Especially, if considering that the regenerated old factories are usually located in the center or golden district of the city, the “cultural quality” or the public welfare nature of CCIP can very easily be submerged under the savage rent-seeking logic or profit-­ making logic of greedy capital. Only by the “cross-subsidy” economic logic realized or embedded in the larger economic ecosystem that the CCIP can truly develop sustainably and keep its public welfare nature. Enlightened by the earlier analysis, the economic logic of CCIP in mainland China cannot be fully explained only by the “space production” logic of Lefebvre, or “space economy” theory of Lash and Urry (1994). There is no doubt that it is closely connected with cultural capital and symbolic capital, or created the “cultural landscape” of the post-industrial society in the sense of Guy-Ernest Debord, but we especially cannot neglect that it is also a comprehensive economic phenomenon deeply entangled and intertwined with digital economy or lately invented “creative economy”. Under the revolutionary and so-called disruptive innovation economic tide, on the one hand, a number of innovation or

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entrepreneurial SMEs emerged and they need to find a more creative office space with cultural and creative agglomeration atmosphere to promote knowledge exchange and innovation development, while on the other hand, different sectors in the traditional economy have encountered different degrees of challenges and have to transform the original business in the new economy environment or development context. This strategic transformation trend as a feedback to the impact of the changing environment should be observed from two directions, which included the transformation of traditional industries to a “cultural and creative economy” and the transformation of traditional cultural and media economy to a digital creative economy, or with their cultural assets capitalized and turned into economic value. It is precisely because of the existence of such a unique economic background at the current times and the necessities for structural transformation for innovation-driven economic developments in contemporary mainland China that CCIPs have played an important instrumental role as a comprehensive “transformation tool” both in the enterprise strategic development and urban regeneration of mainland China. That’s also why the government have placed so much financial support and policy encouragement on CCIP construction. This “hidden” and shared knowledge should be taken as the starting point of the CCIP by the operator to develop a more proper business model, which would help them to more easily win the land-use change approval and some supporting resources from the government. This also echoed the argument that the cultural and creative industry park is “deeply embedded in the social environment and political economy” (Davis, Creutzberg, & Arthurs, 2009). Beyond the definition and explanation of CCIP in mainland China, this study took a step forward on how to design a proper business model of CCIP.  My primary point is that the sustainable development of CCIP must be included in a systematic business model with correlated businesses as the “cross-subsidy” strategy. In order to maintain the original creative ecology and cultural quality of the CCIP, as well as a series of park quality, such as the innovation network service constructed for small- and medium-sized enterprises and knowledge exchange service, the CCIP must have a holistic business model that can cover the cost beyond limited rental incomes. That is to say, in addition to the endogenous and exogenous environmental factors for the creative enterprises clustering in the physical space, the park itself as a “mixed creative economic product”, in general, should also have its exogenous embedding system for the strategic and systematic development to finally capture the authentic cultural value and economic value.

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7.2   Practical Implications This study not only filled the vacancy in the theoretical study of cultural and creative industry park (CCIP), but also provided some strategic approaches and model reference for the practice of CCIP management. Based on the two case studies and case comparison, I finally proposed a 4C model as the design framework of a CCIP business model. 7.2.1  Practical Implications of 4C Model The 4C model is not only the thinking strategy diagram for the operators to design a holistic business model of CCIP, but also has abstracted several important and necessary aspects of CCIP as a “mixed creative economic product”. 4C (see Fig. 6.13) emphasizes that a cultural-creative industries park should first consider the context from the beginning of its planning. It suggests that the park operators should select the theme and position of the park according to the cultural and industrial development status of the city and self-owned resource advantages. The process of examining the context of the park generation is equivalent to making the decision on the product positioning and market segmentation of traditional products. However, unlike traditional products, as a special “creative economy product”, the economic income of the park was strongly suggested to be embedded in a systematic business model, which is exactly what the correlation dimension proposed by the 4C model. It is at this point that CCIP as a “product” shows its uniqueness from traditional products. Usually a product is simply produced for trade or sale on the market. But in the age of creative economy, especially with the highly integration and mutual benefit between culture and technology, the business model for creative economy products is no longer a simple one-time “exchange” logic. In the business of CCIP, if the park is just to “sell” the leasable space of the park, it would often lead to the unbalance of the park’s public-private dual nature and often the so-called gentrification damage. Especially when the refurbished old factory is located in the heart of the city, the gentrification phenomena are particularly prone to take place which would go opposite from the approval condition given by governments in constructing them. The result would be not only failing to promote the agglomeration and development of small- and medium-sized creative and entrepreneurial enterprises, but also destroying the naturally generated creative ecology under the CCIP development. Therefore, as

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this research conclusion argued, the operator needs to embed the business of CCIP into a larger and systematic business model, so that the CCIP property rental can maintain a relatively acceptable and stable level. Within the holistic and systematic business model, the operator can take “cross-­ subsidy” strategy to capture the economic value from “elsewhere” beyond the CCIP. As a “product”, the contents of CCIP operation primarily contain two parts as I pointed out before. One is cultural production as a quasi-public product and the other is community building to push networking and generate social value or economic value. These two parts are the major activities conducted by the park. But on which part to make more efforts depends on the motivation, strengths and resources of the operator and on the specific approach designed by the systematic business model. As a “creative economic product”, CCIP is not only a business of land lease but also a new “infrastructure” or urban space of the city. In particular, the transformation of the “classic cultural and creative industry park” from the original old industrial plant to commercial land needs the government’s administrative examination and approval, with the precondition that the park can promote the development of creative industry and urban culture. From the perspective of the policy support in land-use change, CCIP in mainland China should regard “public welfare” as an important characteristic and mission of the park. From the economic logic of CCIP, the particularity of cultural production is that it includes not only the creation of cultural content, but also the distribution of the content and the culture consumption finished by the public or the audience. Therefore, the public cultural activities and cultural products produced by the park should not only be seen as an “obligation” for the public service, but also as a necessary implied business strategy to attract public participation and cultural visitors to help promote the cultural brand of the CCIP with the word of mouth. As the spatial aggregation of cultural and creative enterprises, a cooperative symbiosis based on the CCIP networking is often anticipated in the classic cluster theory. Generally speaking, the literature on cultural and creative agglomeration considers that the creative network formed in the creative communities in the park is an important “spillover” effect of agglomeration. However, this study argues that this “spillover” effect seldom happens accidentally. In a top-down constructed CCIP, it’s necessary for the park operators to make conscious management to help shape the

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network, which is beneficial both for the enterprises in the park and the business of the park. This is fully reflected in both cases. Therefore, the 4C model gives important practical guidance to the operators of CCIP. From the four dimensions in the model, we can better understand the principles of operating a CCIP. Although a lot of CCIP business models based on various scenarios and the principle dimensions could have been generated, “cultural highland” model and “modular system” model are the two business models that still can inspire us in some practical operation situations. 7.2.2  Practical Significance of Two Business Models 7.2.2.1 “Cultural Highland” Model The “cultural highland” model abstracted from the case study of OCT-­ LOFT can be used as the case reference by practitioners when a city or district lacks enough cultural production center or when the cultural resources and cultural production venues are limited and the cultural diversity is insufficient. The model requires operators to have accumulated some experience in cultural and creative industries operation or to have a wide range of cultural and creative community resources and to have found feasible approach to “subsidize” the non-profit but high-quality production of culture. This model is generally used by a business group with relatively strong capital background, looking forward to create the “cultural brand” for the group through the operation of the CCIP, so as to increase the market competitive advantage of the group and benefit other related businesses. Normally, the major activities and operations logic of the park are as follows: Through the long-term operation of the self-built cultural venues, cultural spaces and the production of high-quality public cultural activities, the park has been able to attract the public and creative people to get there and communicate these cultural content all the year round, thus creating a unique “cultural brand” of the city so that it could be accepted or recognized as the city’s cultural landmark or “cultural highland”. Managers consciously excavate the new creative brands or talents in the city, inviting new creators to join in to keep the creative power of the park vigorous. In short, the park’s operator is primarily a “gatekeeper” of a creative agglomeration space, preventing commercial or consumption business from damaging the cultural and creative atmosphere of the CCIP.

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This model may be criticized for the possible relation with real estate businesses. But as long as the non-utilitarianism of cultural production in the park is ensured, the quality of the park can be maintained and public cultural services can still be rewarding to the urban brand. However, to achieve this “ideal” balance between culture and economy is usually not easy. It requires determination and long-term goal of the park operators and the senior management of the group to invest cultural production. But the reality is that the pursuit or pressure of short-term goal or profit-­ earning is often a challenge. Short of vision or lack of capital tends to make the operation of the “cultural highland” difficult to continue. Nevertheless, OCT-LOFT gave us a very positive and inspiring example. 7.2.2.2 “Modular System” Model The “modular system” model concluded from Guangzhou 289 Art Park case makes the operational efforts not so much on “culture” but on “community”. Although cultural space and cultural activity production are also the basic configuration and element of this model in daily operation and management, the integration of urban cultural associations and cultural groups to produce cultural content or activities in the CCIP is a representation of the “module” and systematic thinking. But by this approach, the city must have rich historical and cultural resources, diverse cultural production and dynamic cultural groups as the precondition in borrowing existent urban culture energy to the CCIP. The key point of “modular system” model is to diversify the operation approaches revolving around the enterprise community in the park and to extend the businesses of CCIP as many as possible to satisfy their various needs. For example, 289 Art Park’s operator, No. 1 Business Group, is very good at integrating the businesses of performance, living, dining and fitness into the CCIP business. It actually takes the CCIPs of 289 branded series as an allied “interface” to weave all the businesses into a cross-­border economic ecosystem through “modularization” cooperation. These businesses could be recombined in heterogeneous local 289 projects, which greatly promoted the core competitiveness power of the CCIP as a “replicable” brand. No. 1 Business reached the cooperation and investment agreement with popular hotel brand, small theater and leasing apartment brand. At the same time, it has successfully won the investment from CPFFE, a professional real estate fund. With the strategic cooperation with South Media Group, it achieved cultural and business transformation. In a word, No. 1 Business has completed the “modularized”

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systematic integration both in cultural capital and in financial capital, accelerating the expansion of the 289 branded CCIP projects with the agreements of 289 Digital Peninsula in Shenzhen and 289 Rice Boat Dock Park in Foshan that reached in only one year after Guangzhou 289 Art Park. For practitioners, the required competencies are comprehensive and diversified, particularly the abilities to figure out strategic cooperation approaches across borders, to reinvent organizational structures, to incubate potential businesses and to communicate with local governments. However, compared with the “cultural highland” model, the “modular system” model has certain logical and resource limits on the input of cultural production, because there would be seldom high-profit industries in the “modularized” group to “cross-subsidize” the non-utilitarian, non-­ profit production of culture. Therefore, such a park may meet the needs of ordinary citizens with mass culture, but for the creative and innovative cultural production that requires high investment, there would be in some degree of lack. So whether the cultural atmosphere of the park can meet the changing cultural demands of the city, whether it can provide the consistent innovative inspiration for enterprises in the park and whether the other 289 branded CCIPs could be as successful as Guangzhou 289 Art Park still remain to be tested by future practice.

7.3   Conclusions and Future Research Directions From the perspective of business model of CCIP, this paper studies the basic or rooted economic logic of the “classic” styled CCIPs which are transformed from the old factories in the post-industrial central cities of mainland China—Shenzhen and Guangzhou. It is first proposed that this “top-down” constructed type of cultural and creative industrial agglomeration is a “mixed creative economic product” in the specific context of mainland China. Through two representative case studies on OCT-LOFT and Guangzhou 289 Art Park, there come out “cultural highland” model and “modular system” model, respectively. And then by case comparison, I developed a 4C model (context, culture, community, correlation) for CCIP business model design as a strategic thinking framework. First of all, this model can give practitioners a concise guidance on strategic thinking. Before creating and operating a CCIP product, managers need to consider the economic development, the social and cultural context, the features of cultural production, the model of interaction and the

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cooperation with and service for the tenant enterprises in the park. And the most important is to think about how the park operation could be embedded in a systematic economic linkage from the perspective of complex economics, which would finally ensure the long-term cultural production quality and creative atmosphere of the park. Second, on the theory contribution of this study, it’s a timely response to the appeal of the cultural and creative industry agglomeration academic research for more detailed and concrete case analysis and goes further to propose more accurate definitions for different types of CCIPs and a holistic business model perspective. Under the specific political and economic context of mainland China, the study defined the “classic” cluster of cultural and creative industries which is reconstructed from the transformation of old factories. With this differentiation of a specific but most normal type of CCIP, it is more possible to lead the study of CCIP to refining and detailing and then pushing the development of cluster theory and CCIP research; Third, this study also argued that the “cross-subsidy” between culture and real estate should be regarded as feasible if it’s designed in a holistic strategic development model. But there is still the premise that culture is not a temporary “entrance” or “tool” for real estate developers to win land usage change approval from the government, but should be a long-­ term strategy for real estate developers to develop their own cultural brand as a win-win promotion strategy. The case of OCT-LOFT in Shenzhen shows that pure and academic high-end culture and fine art have been subsidized by OCT-LOFT Rea Estate Company. To cultivate the creative ecological environment and allow the creative atmosphere and creative community to grow by itself could really generate recognizable “symbolic value”. Therefore, the “cultural highland” model requires a high-level cultural vision and strong cultural creation beliefs, and meanwhile the managers need to know how to do creative management and establish creative network in practice. This model puts forward higher requirements for the culture understanding and vision of creative managers. Fourth, this study comprehensively applied the theories of urban space, industrial agglomeration, public policy and so on. But finally it converged to the perspective of business model in creative management. From that perspective, the study points out that the essence of the contemporary cultural-creative industries park in mainland China is a “mixed creative economic product”. This product is not a functional product of industrial society in the classical economics sense, but a systematic or module

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product in the post-industrial society from the perspective of complex economics. Moreover, this study tends to use the theory of complex economics to re-understand the “creative economy” in a larger scale. This concept of creative economy should surpass the concept of creative industries put forward by Britain in 1997. It is not the “cultural economy” that has been studied in the West since the 1980s, but a more complex new economic pattern entangled with the rise of the digital economy, cultural creativity and technological creativity. Culture has spread and dispersed to all traditional industries. And all trades and industries are actively seeking the chance of transforming with the help of cultural creativity and technological innovation. As Lampel & Germain (2016) called for, we need a broader understanding of the creative economy. This study has made detailed and empirical case studies of two cultural-creative industries parks in mainland China. It is proven that the two parks are closely related to other industries in holistic or systematic business model. Either explicit or implicit, without the economic value capture from those correlated industries with CCIP, it is difficult to imagine that the park can maintain high-­quality cultural production for more than a decade as a “cultural highland” of the city or achieve the “replicable” goal to extend to other cities. Therefore, this study also contributes to expand the broad understanding of cultural and creative economy in both academic and practical sense. Meanwhile, it also brings some enlightenments to the strategic transformation of enterprises in the challenge and chance from the new creative economy. Fifth, this study is also meaningful and helpful for the government to develop appropriate cultural policies. At present, the government generally regards CCIP as the driving force to promote the development of creative economy. This popular proposition occupies a central position in the cultural industry policies of local governments in mainland China, especially in the national or regional central cities. Most of the park policy content is to provide rental subsidy to a certain scale of park-based enterprises, and the thinking model is based on the classical economic theory that attaches great importance to “production” in the value chain. In the literature of creative economy, researchers have pointed out that cultural production system is more complex than industrial production period, including creation, marketing and consumption (Venkatesh & Meamber, 2006), or includes three subsystems: creative system, managerial subsystem and communication subsystem (Solomon, 2003). Inspired by these arguments, the CCIP also has its own logic different from traditional

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industrial cluster. Correspondingly, the government should rethink about the former incentive policy on CCIP. For example, the production of public cultural activities in the park has some intersection with public cultural activities or services provided by the government. So some scholars put forward that the government could regard the park as a new public cultural service space in the context of creative cities and make some more specific incentive standards on more differentiated public goods production, by which it not only would enrich the public cultural content of the city but also favor the creative cultural atmosphere building of the park (Yuan, 2017). Finally, the deficiencies of this study and the recommendations of the follow-up study could be summed up as follows. Firstly, the research context of this study is set in the political and economic environment of contemporary mainland China, thus the land policy, cultural industry policy or the relationship between state-owned and private enterprises has certain particularities. Therefore, scholars from other regions can also take the actual situation of their own country to make corresponding case studies to enrich the literature of cultural and creative agglomeration research. Secondly, this study holds a relatively prudent attitude on the extensive naming of “cultural-creative industries parks” in mainland China, so the CCIP type selected as the research object is strictly locked in the type of “classic” CCIP which is reconstructed from old factories with certain geographical and spatial boundaries. I would keep my own doubt or opinion on the old policy of naming neighborhoods, individual office building and newly established architecture as cultural and creative parks in current policy context of mainland China. But how to define different types of creative cluster space still needs more detailed, focused research to enrich and improve. Thirdly, the practical implication of this study mainly lies in the 4C model as the strategic design framework of business model and the experience of two successful or feasible models, respectively. The so-called successes are largely proved by the final achievements of their original goals set at the beginning when the investors and operators of the two CCIPs are enterprises, which decided that the profit-making would be the final or implied target in the holistic business model. When the investors and operators are not enterprises but the government, would there be other targets, as well as other models? It also needs more case studies to fulfill. Fourthly, what kind of public-private cooperation can be reached if the government would be a direct partner or operator in running the CCIP? Or how to develop a special PPP model in CCIP business or

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economy? All of those related topics are worth of forward exploring and deepening. Lastly, the two cases of Shenzhen and Guangzhou selected for this study are both from the first-tier central cities in mainland China. For those CCIPs in noncentral cities, is there any other possibility or model? It also would be left to the future research and exploration.

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Index1

A Abandoned factories, 20, 22, 27, 65, 110 Activity system, 203 Adorno, 12, 13 Agglomeration management, 40 Ambiguity, 15, 36, 50 Amit, R., 34, 201, 203, 225, 252 Amsterdam, 39, 243 Analytical generalization, 49 Art exhibition, 76, 92, 122, 209, 218, 226, 258 Art institute, 68–70, 86, 225 Art scene, 31 B Baldwin C.Y., 250 Barcelona, 22, 31 Baumol, William J., 25 Beijing 798 Art District, 51, 65, 68, 85, 112

Beinhocker, E.D., 251 Benjamin, W., 12 Bianchini, F., 22 Bilton, Chris, 98, 165 Bohemian taste, 21 Bottom-up, 4, 24, 27, 28, 33, 36, 39, 40, 51, 65, 112, 150, 156, 206, 265 Boundary, 15, 49 Bourdieu, P., 28, 84, 87 Brand promotion, 73, 82, 238 Brand value, 6, 62, 67, 68, 160–164, 170, 205 Broader understanding of the creative economy, 274 Broker, 40, 240, 255, 256 Business model, 3–8, 32–44, 50, 51, 64, 86, 87, 119, 127, 128, 131, 136, 140, 146, 150, 174, 179, 188–190, 194, 196, 200–260, 263, 265–270, 272, 273, 275 Buzz, 31, 80

 Note: Page numbers followed by ‘n’ refer to notes.

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INDEX

C Camagni, R., 26 Case study, 7, 12, 39, 43, 49–51, 53, 54, 109, 195, 198, 219, 225, 249, 251, 270 CCIP business model design, 8, 50, 241, 272 Central state-owned enterprise, 7, 75, 119 Chen Yifei, 61, 77 CITIC Poly (Tianjin) Private Equity Fund (CPPEF), 126 Clark, K.B., 250 Classic CCIP, 6, 37–41 Classic Cultural-Creative Industries Park (CCCIP), 33, 37, 50 Cluster managers, 40 Cluster theory, 20, 22–24, 26, 31, 33, 146, 150, 239, 269 Community, 1, 8, 20, 23, 27, 28, 31, 42, 61, 62, 76–78, 87, 91, 93–96, 100, 104, 118, 138, 149, 174–178, 180, 181, 182n73, 199, 202, 225, 229–231, 243, 245, 254, 257, 258, 260, 263, 269–273 Comparison, 5, 8, 49, 50, 197–201, 239, 252, 258, 259, 268, 272 Complex economics, 250, 251, 255, 273, 274 Complex economic theory, 251, 255 Complexities, 6 Concentric circle model, 13 Consistent evolution, 50, 52 Construct a logic, 49 Constructs, 8, 34, 50, 201, 205–239, 252 Content IPs, 163, 175 Context, 4, 5, 8, 11, 13, 14, 16, 19, 24, 26, 29, 30, 32, 33, 35, 37, 39, 41–43, 49, 50, 66, 69, 110, 112, 136, 139, 145, 152, 154,

162, 182n73, 198, 202, 204, 206, 217, 220, 222, 224, 241–243, 253, 255, 258–260, 263, 267, 268, 272, 273, 275 “Control” and “loose” management, 98 Convergent, 5 Copyright industries, 19 Correlation, 8, 147, 219, 224, 232, 233, 254, 255, 260, 268, 272 “Cost disease” theory, 25 Creative agglomeration, 24, 36, 39, 42, 51–53, 65, 66, 93, 94, 112, 114, 150, 168, 202, 240, 254, 256, 264, 267, 269, 270, 275 Creative atmosphere, 43, 85, 92, 98, 100, 116, 117, 119, 150, 185, 216, 226, 229, 256, 270, 273 Creative Cities, 23, 239, 243 Creative cluster, 5 Creative ecology, 21, 52, 75–86, 94, 104, 105, 119, 123, 155, 179, 202, 248, 257, 260, 267, 268 Creative economic-ecologic circle, 155 Creative economy, 28, 51, 52, 123, 130, 135, 140, 151, 155, 156, 179, 199, 202, 222, 224, 228, 235, 239, 242, 252, 255, 266, 268, 274 Creative Economy, 23 Creative industries, 1–3, 5, 14–16, 18, 20, 33, 51, 54, 62, 264 Creative Local Production System, 36 Creative management, 85, 120, 135, 156–166, 246–248, 256, 273 Creative milieu, 27, 37, 82, 84, 94, 100, 116, 239, 240 Creative network, 37, 80, 94, 115, 118, 119, 174, 202, 212, 256, 269, 273 Creative space, 20, 27, 41, 53, 128, 135, 214, 238, 264

 INDEX 

Creativity, 1, 2, 14, 15, 19, 21, 23, 27, 28, 30, 38, 39, 68, 83, 106, 115, 120, 132, 135, 138, 155, 158, 165, 179, 181, 188, 205, 254, 274 Cross-disciplinary, 2 Cross-subsidy, 43, 255, 266, 267, 269, 273 Cultural, 2, 38 Cultural agglomeration, 39, 43, 62, 65, 112, 199, 266 Cultural assets, 15, 78, 84, 87, 105, 113, 119, 123, 153, 161, 163, 168, 171, 174, 189, 190, 215, 223, 228, 232, 252, 256, 258, 259, 267 Cultural Capital of Europe, 38 Cultural consumption, 21, 31, 146–148, 179 Cultural consumption space, 146–149 Cultural content industries, 19 Cultural creation complex, 146 Cultural-Creative Industries, 1, 5, 11–20, 149, 150 Cultural-creative industries park, 1, 3, 5, 20, 33 Cultural-creative park, 5 Cultural economic geography, 26 The Cultural Economy of Cities, 25 Cultural highland, 51, 76, 85, 86, 107, 117, 123, 145, 226, 232, 243–245, 247, 248, 256, 259, 270–274 The Cultural Industries, 13 Cultural industries district, 5 Cultural industry space, 146–149 Cultural-led regeneration, 20, 21 Cultural participation, 146 Cultural real estate, 153, 172, 174, 195, 215, 217, 265 Cultural resources, 76, 167, 189, 217, 219, 227, 233, 249, 270, 271

291

Cultural start-up, 54, 108, 153, 155, 160, 161, 174, 175, 188, 228, 233, 249, 250 Cultural value, 13, 103, 107, 140, 151, 204, 206, 214, 219, 231, 232, 234, 238, 241, 254, 255, 257, 267 Culture, 2, 3, 5, 8, 12–14, 16–19, 21–25, 27, 31, 38, 39, 41, 52, 59–61, 68, 70–73, 76, 79, 81, 82, 85–105, 104n25, 114, 115, 120, 123, 128, 130, 134, 138, 141, 142, 144, 145, 149–151, 155, 159, 161, 167, 179–182, 184, 189, 196–198, 202, 204, 207, 209, 213, 216, 217, 219, 220, 224–226, 229, 231, 232, 234, 236, 240–246, 248, 255, 258–260, 263, 265, 266, 268–273 Culture commercialization, 12 Culture district, 5 Culture highland model, 8 Culture industries, 5, 17–18 Currid, E., 31, 94, 256, 263 D De-hierarchization, 78–85 Diachronic cognitive framework, 43 Diamond and water, 4 Digital content industry, 19 Digital creative industry, 19 Digital, Culture, Media and Sport (DCMS), 14, 15, 30, 135 Dynamics, 31, 42, 83, 115, 203 Dynamism, 6, 19, 28 E Economic logic, 25, 60, 74, 106, 113, 127, 191, 195, 202, 204, 219, 221, 224, 225, 236, 241, 245, 248, 249, 266, 269, 272

292 

INDEX

Economics and Culture, 13 Economic value, 4, 13–15, 22, 23, 25, 30, 43, 86, 139, 140, 159, 185, 195, 204, 206, 231, 232, 234, 237, 238, 241, 244, 249, 254, 255, 257, 267, 269, 274 Elite Bookstore, 82 Emerging industries, 19, 135 Ethnography, 50 Evans, S., 204, 234 Evolution, 11, 41, 43, 52, 80, 127, 130, 155, 167, 176, 198, 199, 251, 266 External economic theory, 22, 23 F First-tier cities, 6, 18, 200 Florida, R., 23, 32, 256 Formal institutional management organization, 40, 264 4C model, 8, 252–260, 268, 270, 272, 275 Frankfurt School, 12 G Gentrification, 21, 28, 38, 43, 66, 127, 150, 224, 238, 255, 268 Geographic agglomeration, 25, 26, 28, 40 Geographic proximity, 23 Glaeser, E.L., 30, 263 Governance mechanism, 40, 265 Government approval, 38 Gretzger, S., 40 Grounded theory, 50 Gu, X., 6, 7, 33n3, 35, 38, 41, 49, 50, 54, 56, 103n23, 104, 125, 128, 134, 137, 141, 144, 148, 149, 154, 161, 165, 167, 169–171, 175, 180, 195–198, 207, 264, 265

Guangzhou Civil Space, 169 Guangzhou Red Brick Factory, 51, 132 Guanxi, 159 H Hannigan, J., 20, 21 Happy Valle, 60, 66, 217 Hermeneutics, 50 Hesmondhalgh, D., 12 Hong Kong, 16, 17, 19, 24, 28, 29, 59–60, 72, 81, 82, 92n14, 93, 95, 127, 181, 192, 199, 215, 218, 226 Horkheime, 12, 13 Howkins, J., 23, 32, 78, 78n8, 86 Huashan Cultural and Creative Park, 199 Hybrid creative economic product, 40, 231, 234, 238 Hybrid organizations, 201 I Industrial economics, 20, 22–24, 26, 31, 32, 113 Informal network, 40, 264 Infrastructure, 27, 37, 38, 78, 107–110, 191–194, 205, 240, 244, 245, 259, 269 Inherent cooperation mechanism, 40 Innovative economy, 22 Instrumentalization, 22 Intangible culture heritage, 142, 220 Integration of resources, 40 Intellectual property (IP), 1, 3–8, 13, 15, 20, 25–44, 50–54, 59, 61–66, 70–77, 79–83, 86, 87, 92, 94, 95, 97, 99, 100, 104–112, 114, 115, 120, 122, 123, 127–132, 134–141, 139n15, 145, 146, 148–150, 153, 156–165, 170–180, 188–191, 193–197, 199–260, 263–275

 INDEX 

Interface, 42, 147, 203, 205, 233, 250, 271 Istituto Marangoni, 55, 85 Iteration, 42, 52, 127, 197 J Jazz festival, 76, 246 K K11 Art Mall, 124 Key elements close-loop model, 178 Kinokuniya bookstore, 82 Knowledge economy, 26, 28 Kong, L., 32, 253, 254 L Lampel, J., 274 Landry, C., 23, 239, 243 Land-use rights, 41 Lazzeretti, L., 29, 263 Learning by doing, 36 Lingnan Intangible Cultural Heritage Museum, 142 M Maki, Fumihiko, 124 Managerial analysis, 40 Manchester Northern Quarter, 22 Marshall, 22 Marxism critical theory, 12 Massa, L., 34, 71, 201, 252 Miege, B., 12 A mixed form of cultural governance, 39, 265 Mixed use, 21 Moderator, 40 Modularity, 250 Modularity approach, 250 Modularization, 252

293

Modular system model, 8, 259 Modular systems, 196, 234, 250, 258, 259, 270–272 Module, 156, 196, 233, 250, 260 Mommaas, H., 2, 20, 29, 39, 253, 265 Mount Vernon Cultural District, 29 N Neoclassical economic theory, 251 Network system, 40 No1. Business Group, 54, 126, 226, 238, 255 North Rhine, 22 No Second Temple, 177, 178, 210, 211, 229, 257 O OCAT, 68–71, 76, 86–88, 90–93, 120–122, 203, 208, 209, 218, 219, 226, 236, 238, 244, 245 O’Connor, J., 7, 36, 43 OCT Group, 7, 55, 59–61, 64–75, 77, 78, 85–105, 107, 109, 112, 119–122, 124, 136, 179, 195, 200, 207, 211, 212, 214, 215, 217–219, 221, 232, 235, 238, 244, 245 OCT Real Estate Company, 66, 67, 74, 86, 109, 120, 213, 215, 236, 244 Old Heaven Bookstore, 78, 102, 246, 247 1.0/2.0/3.0 versions, 42 Operative real estate, 153 P Pearl River New Town, 132, 165, 182 The perspective of operation and management, 4, 36

294 

INDEX

Phenomenology, 50 Place promotion, 39 Platform, 42, 54, 62, 68, 84, 94, 104, 106, 111, 112, 116, 131, 136–138, 141, 147, 149, 151, 155, 158, 161, 162, 173–175, 180, 188, 189, 195, 196, 204, 215, 221, 229, 233, 238, 247, 252, 254, 257, 258 PMQ, 24, 199, 254 Policy-makers, 12, 13, 19, 21, 22, 28, 37, 127 Policy-oriented, 37, 254 Porter, 36, 40, 51, 204, 239 Post-Fordism, 242, 243, 264 Post-industrial, 3, 6, 21, 33, 41, 61, 71, 77, 91, 198–200, 239, 241, 242, 248, 253, 254, 264, 266, 272, 274 Product, 6, 12, 13, 18, 22, 23, 25–44, 60, 62, 64, 71, 73, 80–82, 91, 94, 103, 104n25, 106, 116, 118, 119, 122, 123, 125, 129, 131, 136, 138–141, 144, 146–149, 151, 152, 159–164, 168, 174, 176, 177, 179, 185, 189, 195, 196, 203, 205, 210, 211, 214, 217–219, 221, 225, 226, 228–230, 232, 238, 240, 242, 244–247, 250, 252–256, 258, 260, 264–274 Profitability, 38, 44, 158, 174–175, 180 Property developers, 41, 42 Provincial state-owned enterprise, 7, 128, 131, 135, 141, 164, 167, 212, 221 Public policies, 39 Public welfare, 38, 44, 107, 201, 202, 204, 206, 221, 224, 266, 269 Q Qualitative study, 7

R Real estate operation model, 42 Rebranding, 14 Red Tape Studio, 22 Relational perspective, 40 “Replicable” CCIP model, 54 “Reproducible” CCIP, 8 Retreating from secondary industry to third industry, 33 The Rise of the Creative Class, 23 Rogers, J., 250, 251 Rotterdam, 39 Royer, S., 40, 255, 256, 264, 265 S Salon Zukin, 20 Santagata, W., 28, 29, 263 Scott, Allen J., 25 Sea World Cultural and Arts Center/ Design Society, 124 Second shift, 41 Shanghai Tianzifang, 51, 61, 65, 112 Sheffield Cultural Industries Quarters, 22 Shenzhen Biennale, 71, 71n3, 93, 218 Shenzhen/Hong Kong Urbanism/ Architecture Bi-city Biennale, 92, 92n14 Shenzhen OCT-LOFT, 43, 50, 55, 76n5, 77n6, 77n7, 85, 86, 95n16, 95n17, 200, 207, 224 Singapore, 19, 24, 81, 254 Social capital, 26, 40, 178–180, 256 SoHo, 20, 27, 51, 59, 65, 77, 198, 199 Soja, Edward W., 31 Songshan Cultural and Creative Park, 199 The Southbank of London, 38 South Daily, 137, 141, 151, 163

 INDEX 

Southern Metropolis Daily, 130, 131, 136, 137, 139, 151, 152, 159, 163, 167, 175, 227 South Media Group, 125, 126, 128, 130, 131, 134–137, 139–141, 145, 151–153, 155–171, 174, 175, 178–181, 183, 188–191, 195, 196, 207 Space operation, 7 Space proximity, 26 Sparviero, S., 250, 251 Spill over, 26, 242 Splendid China, 60, 66, 217 State-owned Assets, 59, 164–166, 171, 171n58 Storper, M., 26 Strategic alliance, 131, 223 Strategy framework, 7 Sustainable business model, 204 Sustainable developing, 4, 6 Sustainable development, 6, 7, 16, 38, 44, 63, 81, 127, 141, 153, 158, 189, 190, 195, 204, 217, 224, 241, 254, 265–267 Symbolic capital, 40, 226, 245, 256, 266 T Telok Kurau, 24 Theoretical framework, 40, 49 The third space, 31 3C model, 254 Three-old transformation, 190 Throsby, David, 13 Tilburg, 39 Top-down, 4–6, 24, 27, 28, 33, 36, 40, 53, 64, 66, 73, 75, 86, 87, 105–107, 112, 119, 120, 123, 130, 140, 150, 156, 197, 199, 206, 218, 226, 234, 240, 245, 252, 253, 263, 264, 269, 272

295

“Tourism plus real estate” model, 60 Tsutaya Bookstore, 82 289 Art Communication Company, 137, 144, 145, 160–164, 166, 174 289 Art Fashion magazine, 153, 160, 163, 168, 210, 249 289 Art Park, 6–8, 38, 50, 53, 54, 56, 109, 125–198, 200, 203, 207, 208, 210, 213, 215, 219–226, 228, 229, 231, 232, 235, 236, 238–239, 249–252, 255, 257–259, 266, 271, 272 289 branded parks, 51, 151, 152, 161, 179 289 CCIP brand, 6, 8, 131, 208, 223, 228, 233, 250, 252 289 Craftsmanship, 56, 137n7, 153, 160–163, 168, 174–176, 185, 188–190, 196, 211, 214, 249 289 Digital Peninsula, 126, 131, 152, 173, 179, 195, 198, 223, 235, 252, 272 289 Pictures, 56, 137n6, 137n8, 138, 138n9, 140, 153, 157n42, 161–163, 168, 174–176, 188, 249 289 Rice Boat Dock Park, 131, 195, 198, 223–224, 235, 252, 272 U UNCTAD, 15 UNESCO, 15, 207, 216 Urban cultural complex, 131, 176, 179 Urban Cultural Space Professional Operator, 7–8 Urban decay and rejuvenation, 27 Urban geography, 20, 239 Urbanism Architecture Bi-city Biennale (UABB), 71n3

296 

INDEX

Urban planning, 20, 27–30, 35, 60, 199 Urban regeneration, 4, 20, 21, 23, 27, 28, 30, 33, 267 Urban renewal, 50, 52, 134, 140, 151, 153, 161, 198, 204, 214, 239, 264, 265 Urban space, 3–5, 20, 41, 53, 128, 130, 131, 134, 207, 231, 239, 269, 273

W WeChat Official Account, 147 Westergasfabriek, 39 West Kowloon Cultural District, 28, 29 Window of the World, 60, 66, 217 “Win-win” strategy, 43 Witte de Withstraat, 39 Working hypotheses, 49

V Valentino, 28, 263 Value capture, 206, 213, 257–260 Value creation, 4, 34, 40, 201, 202, 204–206, 228, 231, 232, 235, 258, 259, 264 Vanke, 137, 153, 159, 167, 195, 232 Variables, 50

Y Yin, R.K., 49 Z Zhang Yonghe, 70 Zott, C., 33, 34, 201, 203, 225, 252