LI YANG Shanghai’s future seen as providing ‘sideline’ services
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@ chinadaily.com.cn