Model Space

Sector

AI ecosystem

Chinese name

模速空间

Programme

Day 2 · 12 Oct 2026 · Shanghai

Model Space (模速空间) is not a company but an AI district built by the government itself. Since September 2023, Shanghai's Xuhui district has brought together more than 300 companies developing large AI models and applications, and gives them not only office space but also computing power, data, capital and customers. Anyone who wants to understand how China builds its AI sector can see the model in miniature here: a local government acting as landlord, investor and matchmaker at once.

What exactly is Model Space?

Its official English name is the Shanghai Foundation Model Innovation Center. The Chinese name abbreviates 大模型孵化加速空间, the incubation and acceleration space for large models, and plays on the city's nickname: 魔都, the magic city, becomes 模都, the city of models. It is operated by Shanghai Large Model Ecology Development, a subsidiary of West Bund Group. That state-owned company is redeveloping Xuhui's bank of the Huangpu, a former industrial waterfront for coal, sand and oil where old bunkers and tanks now house museums.

The Ministry of Industry and Information Technology recognised Model Space as one of China's first fourteen incubators with its top 'excellent' rating. The China Business Mission 2026 delegation had it on day 2 of the programme, as a first step into Shanghai's AI landscape.

From an empty floor to 300 companies

Speed is the method here. After the ChatGPT breakthrough, Xuhui had about 13,000 m² of bare space fitted out in 38 days in the summer of 2023. At the opening on 28 September 2023, 21 companies moved in; within a hundred days there were more than fifty. In April 2026 the city reported more than 300 large-model companies, with over 1,700 AI companies across Xuhui.

The space grew too. According to Jiefang Daily, more than 50,000 m² is now in use, with 100,000 m² as the target. In July 2025 ten branches opened elsewhere in Xuhui, each with its own niche, from a university campus to AI for healthcare. On 29 April 2025 President Xi Jinping visited. His line there, "artificial intelligence is a young undertaking, and an undertaking for young people", has been the project's watchword ever since.

A caveat belongs here. Almost all figures come from the district or state media, and definitions shift: 'resident' and 'affiliated' companies are often mixed up. The revenue growth of more than 1,200% the district cites for its residents combined has not been independently checked.

What the government provides

An ordinary incubator rents out desks. Model Space built public platforms for what an AI start-up needs most. According to the Shanghai government, a scheduling platform allocates the capacity of more than 50,000 AI chips from nine providers, a data platform offers more than 180 TB of open training data, and the financing platform has attracted more than 100 billion yuan in funds, including the 60-billion-yuan National AI Industry Investment Fund.

The management team likes to call itself the 'golden waiter' (金牌店小二): it helps with subsidy applications and with the registration China requires before a generative AI model can go public. Xuhui has 98 registered models, about 60% of Shanghai's total. There is also a monthly Pitch Day for investors. The second edition, on 23 October 2026, focused on AI in manufacturing, with seven start-ups from energy to space, and was co-organised with Shanghai Guotou Xianxing, which manages three parent funds worth more than 90 billion yuan.

Who is there, from listed firms to one-person companies

The cluster's flagship is MiniMax, which builds models for text, video and voice and is known for its video tool Hailuo. It listed in Hong Kong in January 2026, just over four years after it was founded. According to its interim results of 26 August 2026, revenue in the first half of 2026 rose 283% to 116.6 million US dollars, with a net loss of 358 million dollars. Rapid growth and heavy losses go hand in hand, as at most model builders worldwide.

Around MiniMax sits a broad group. StepFun raised more than 5 billion yuan in a single round in early 2026, the largest amount in China's model sector over twelve months according to Xinhua. Infinigence builds computing infrastructure. The parent company of LiblibAI, which generates images and video, raised almost 300 million dollars in 2026.

New in 2026 is the OPC, the One Person Company: a single founder who uses AI agents to do the work of a small team. In the first half of 2026 Xuhui set up five OPC communities with 2,500 workstations and more than 200 companies between them. The same wave runs through π Space in Jing'an, where one-person companies make AI video and micro-dramas. In August Model Space also opened a 'third space', an open venue between office and home with zones for pitching, making and trying things out, coffee by day and a bar at night. In October it was a focal point of the second West Bund International Tech Consumer Carnival.

What it means for Europe

Model Space has no European office or European partner programme. The link runs through its residents, which often build for the global market from day one: MiniMax reports more than 300 million users in over 200 countries and regions. For European companies there are three concrete openings:

• Bring your own use cases. Model Space actively matches residents with real applications at customers, which China calls 'scenarios', and a European industrial customer is a sought-after testing ground.
• Buy or co-develop specialised AI, for example for energy, materials or drug discovery.
• Learn how a government provides computing power and data as a utility, a question Europe is asking itself with its own AI factories.

Against that stand the rules. The European AI Act has imposed obligations on providers of general-purpose AI models since 2 August 2025. Personal data falls under the GDPR, while China has its own rules for data leaving the country. US export controls limit access to the fastest AI chips, and anyone co-developing should settle intellectual property up front. For those next steps, see more on doing business in China.

An incubator that behaves like software

The Chinese press describes Model Space in version numbers: 1.0 with public services in 2023, 2.0 with global ambitions and branches in 2025, 3.0 with one-person companies and a third space in 2026. That rhythm is the real lesson. The concept shifts as soon as the technology does, from model builders to agents and robots. In what China calls the 'war of a hundred models', many residents will disappear or merge. But anyone looking for a Chinese AI partner will find a large part of the value chain here within a few hundred metres, with a government happy to make the introductions itself.