Hangzhou Expands ‘Tech Dragons’ Roster, Betting on XR to Fuel Growth
Hangzhou, the city that birthed e-commerce giant Alibaba, is cultivating a new generation of technology champions, symbolized by a newly expanded group of seven companies dubbed the "Seven Dragons." The recent inclusion of an augmented reality firm underscores the city’s strategic pivot into the high-stakes extended reality (XR) sector, signaling a broader ambition to move beyond its established dominance in online retail and artificial intelligence.
The informal anointing of AR glasses maker Rokid into a prestigious group of local tech firms previously known as the "Six Little Dragons" marks the key development. This expansion follows Rokid's rising profile and a surge of interest in AR-plus-AI smart glasses in 2025, solidifying its place alongside peers in robotics, AI, and brain-computer interfaces.
Momentum for the shift grew after Rokid's founder and CEO, Misa Zhu, delivered a high-profile speech in February using his company's AR glasses to read his notes. In a direct challenge to US rivals, Zhu claimed the demonstration put Rokid’s technology nearly a year ahead of a forthcoming product from Meta Platforms Inc., drawing immediate investor attention to Hangzhou’s burgeoning XR ecosystem.
For investors, the rise of the "Seven Dragons" highlights a concentrated push by Hangzhou to build a diverse deep-tech economy. Supported by significant government subsidies and a maturing local supply chain, the city is positioning itself as a central hub for China's ambitions in the metaverse and spatial computing, creating a fertile ground for firms in the capital-intensive sector.
Dual-Track Leaders Emerge
At the core of Hangzhou’s XR landscape are two champions pursuing different paths: Rokid in augmented reality and Pimax Technology in high-end virtual reality. Founded in 2014, Rokid has evolved from smart speakers to become a key player in the global consumer AR market, reporting revenue of over 1.5 billion yuan ($211million) in 2024 and reaching a valuation of 2 billion. The company’s founder has deep roots in the city, strengthening its ties to the local innovation environment.
In contrast, Pimax Technology, established in 2015, has carved out a niche in the premium VR market. Its Pimax Crystal headset boasts an industry-leading 5760×2880 resolution and a 140-degree field of view, targeting professional simulation and high-fidelity gaming. The company is one of the most internationalized of Hangzhou’s XR firms, with over 60% of its revenue generated overseas. Pimax’s growth has been aided by tangible local government support, including a 6 million yuan subsidy that its CEO said arrived before the team had even relocated, along with a 10 million yuan credit line.
A Deepening Ecosystem
Hangzhou's XR industry is more than a story of two unicorns; it is a rapidly expanding ecosystem with over 70 related companies in the city’s Future Sci-Tech City alone. The supply chain is robust, covering everything from core components to complete devices. Key players include optical parts manufacturers like Sunny Optical Technology, whose VR/AR-related business grew 42% year-over-year in the first half of 2024 to account for 18% of its total revenue.
In the critical near-eye display segment, companies like Lingxi AR are mass-producing advanced AR optical waveguide modules with a yield rate of over 85%. The city also hosts the global AI R&D headquarters of smartphone maker Vivo, a 2.15 billion yuan facility set to be completed in 2026. Vivo recently entered the mixed-reality market with its Vision headset. Other major tech firms like Oppo and Huawei Technologies Co. also have significant R&D operations in Hangzhou, contributing to infrastructure development in areas like 5G and edge computing that are vital for XR applications.
Systemic Government Backing
The industry’s rapid development is underpinned by systematic government policy. At the provincial level, Zhejiang's "Metaverse Industry Development Action Plan (2023-2025)" set a target to build a 200 billion yuan industry and cultivate 10 leading enterprises by 2025. This top-level directive has been translated into concrete local initiatives.
In 2022, Hangzhou’s Future Sci-Tech City launched what it called the nation's first dedicated "XR Industry Action Plan." The plan offers powerful incentives, including up to 100 million yuan in R&D subsidies for unicorn companies and a 1 billion yuan industry fund to catalyze private investment. Furthermore, the district has established over 100,000 square meters of dedicated XR industrial park space, offering qualified startups three years of free rent and access to shared facilities like optical and motion-capture labs.
Challenges on the Horizon
Despite its rapid progress, Hangzhou’s XR industry still faces headwinds. A technology gap remains in key areas such as micro-displays and spatial tracking algorithms compared to international leaders. The ecosystem also suffers from a lack of "killer applications" to drive mass adoption, while high product prices continue to limit consumer uptake.
However, the outlook remains positive as technology matures and policy support continues. The convergence of 5G networks, advancing AI capabilities, and innovations in optics is steadily improving the user experience and enabling new applications. With its leading firms and comprehensive industrial layout, Hangzhou is well-positioned to transform XR from a niche sector into another pillar of its evolving tech-driven economy.