LI YANG Shang­hai’s fu­ture seen as pro­vid­ing ‘side­line’ ser­vices

China Daily (Canada) - - SHANGHAI -

Shang­hai used to be a na­tional in­dus­trial cen­ter in China. The man­u­fac­tur­ing in­dus­try made up more than 50 per­cent of the city’s econ­omy for many years.

The pro­por­tion fell to be­low 40 per­cent in re­cent years as the city re­lies more on ser­vice in­dus­tries, es­pe­cially fi­nance.

The 2008 global fi­nan­cial cri­sis proved Shang­hai can­not ne­glect its real econ­omy, es­pe­cially man­u­fac­tur­ing.

Pro­mot­ing tech­no­log­i­cal in­no­va­tion and ad­just­ing in­dus­trial struc­tures are cru­cial if Shang­hai is to re­gain its man­u­fac­tur­ing strength.

Shang­hai’s in­dus­tries should use ad­vanced tech­nolo­gies and fo­cus on pro­vid­ing ser­vices and so­lu­tions for cus­tomers.

For ex­am­ple, some world­fa­mous el­e­va­tor man­u­fac­tur­ers in Ger­many and Ja­pan make nearly 80 per­cent of their prof­its from after-sale ser­vices, so only 20 per­cent from equip­ment sales.

SAIC Mo­tor, one of the city’s largest au­tomak­ers, cre­ated the largest auto-lo­gis­tics en­ter­prise in China, which com­prises more than 30 per­cent of the do­mes­tic mar­ket. SAIC Mo­tor also founded China’s largest ve­hi­cle-mounted in­for­ma­tion ser­vice en­ter­prise. The two en­ter­prises now con­trib­ute to about 30 per­cent of SAIC Mo­tor’s profit.

Bao Steel in Shang­hai, China’s most ad­vanced steel­maker, built one of the largest smartin­dus­try op­er­at­ing com­pa­nies in China, which im­proves the au­to­ma­tion and in­tel­lec­tu­al­iza­tion of many man­u­fac­tur­ers.

The “side­line” in­dus­tries’ profit ra­tio is much higher than that of auto- and steel­mak­ers. Due to the ex­pe­ri­ence and large mar­ket share that SAIC Mo­tor and Bao Steel have in their re­spec­tive in­dus­tries, their side­line in­dus­tries have grown fast.

Many en­ter­prises in Shang­hai should go fur­ther and be­come not only re­li­able man­u­fac­tur­ers but also good ser­vice providers.

First, the gov­ern­ment needs more pref­er­en­tial poli­cies for not only high-tech en­ter­prises but also the in­no­va­tive ser­vice providers, even if their tech­nolo­gies are not cut­ting-edge.

Sec­ond, the gov­ern­ment should fur­ther dis­close some in­for­ma­tion on cus­tomers, in­dus­tries and mar­kets, which is im­por­tant in de­vel­op­ing ser­vice-type man­u­fac­tur­ing en­ter­prises.

Shang­hai can draw lessons from de­vel­oped coun­tries to man­age the in­for­ma­tion in a mar­ket way and let the in­for­ma­tion bet­ter serve the in­dus­trial de­vel­op­ment while pro­tect­ing pri­vacy and trade se­crets.

Third, Shang­hai’s gov­ern­ment should lead China in draft­ing stan­dards for the emerg­ing ser­vice-type man­u­fac­tur­ing in­dus­tries.

Ac­cord­ing to the Shang­hai In­sti­tute of Stan­dard­iza­tion, more than 90 per­cent of in­dus­try stan­dards ex­ist in man­u­fac­tur­ing in­dus­tries, and the lack of in­dus­try stan­dards is a big ob­sta­cle for the de­vel­op­ment of ser­vice-type man­u­fac­tur­ing in­dus­tries.

The top en­ter­prises in Shang­hai should take the re­spon­si­bil­ity in help­ing draw up in­dus­trial stan­dards.

Lastly, the gov­ern­ment should push the en­ter­prises to do more on the ser­vice end. The State-owned en­ter­prises are the main play­ers in Shang­hai’s man­u­fac­tur­ing in­dus­tries.

The gov­ern­ment can make in­put into the ser­vice-type man­u­fac­tur­ing in­dus­tries and the in­dus­tries’ de­vel­op­ment im­por­tant cri­te­ria for as­sess­ing the SOEs’ per­for­mances. Con­tact the writer at liyang@ chi­

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