A MAKEOVER IN PROGRESS

Shang­hai’s restruc­tur­ing and trans­for­ma­tion into a tech­nol­ogy and in­no­va­tion hub is a nec­es­sary one that is al­ready bear­ing fruit, say ex­perts

China Daily (Canada) - - SHANGHAI - By WANG YING in Shang­hai

wang_y­ing@chi­nadaily.com.cn

Af­ter ex­pe­ri­enc­ing rapid growth for sev­eral years, Shang­hai now faces chal­lenges to keep up the mo­men­tum due to sky­rock­et­ing cost, lim­ited re­sources and a bot­tle­neck in eco­nomic de­vel­op­ment.

One of the ma­jor turn­ing points was when the global fi­nan­cial cri­sis broke out in 2008 — Shang­hai saw its GDP growth fall be­low the na­tional level for the first time since 1992, and for seven con­sec­u­tive years af­ter­wards, the city’s GDP re­mained lower than the na­tional av­er­age. This was still the case in 2014 de­spite China ex­pe­ri­enc­ing a slower GDP growth of 7.4 per­cent.

In re­sponse, the mu­nic­i­pal gov­ern­ment has in re­cent years launched a se­ries of mea­sures to pro­mote restruc­tur­ing, in­clud­ing the es­tab­lish­ment of a “Four New Econ­omy” (new in­dus­try, new busi­ness pat­tern, new tech­nol­ogy and new mode) in 2013, and the trans­for­ma­tion of Shang­hai into a tech­no­log­i­cal in­no­va­tion cen­ter that can ex­ert global in­flu­ence by 2020.

These mea­sures mir­ror those that were im­ple­mented in the early 1990s when Shang­hai’s lead­er­ship sim­i­larly de­cided to ex­plore new strate­gic in­dus­tries be­fore form­ing eight new ones af­ter the mil­len­nium.

Li Yaoxin, chair­man of Shang­hai Mu­nic­i­pal Com­mis­sion of Econ­omy and In­forma­ti­za­tion, lauded the ini­tia­tives taken to fur­ther Shang­hai’s growth, call­ing the mea­sures far-sighted and brave.

“Restruc­tur­ing is ur­gently needed for Shang­hai, oth­er­wise the city’s ex­ist­ing pros­per­ity will dis­ap­pear for­ever,” said Li.

Rui Mingjie, a pro­fes­sor from Fu­dan Univer­sity, notes that the restruc­tur­ing process has been made more chal­leng­ing as it is tak­ing place in con­junc­tion with the grad­ual de­ple­tion of China’s de­mo­graphic div­i­dend and re­sources, and the loss of pric­ing com­pet­i­tive­ness of China-made prod­ucts. Rui said that the only choice Shang­hai has is to em­brace in­no­va­tion.

But be­fore it can suc­cess­fully do so, Rui said that the city will need a com­pre­hen­sive sys­tem that gath­ers the best re­sources from the world over, and the es­tab­lish­ment of this sys­tem will re­quire close co­or­di­na­tion be­tween the lo­cal gov­ern­ment, re­lated gov­ern­ment or­ga­ni­za­tions and world-class tal­ents.

The essence of the “Four New Econ­omy” con­cept lies in that prod­ucts would only be re­searched and de­vel­oped based on de­mand to en­sure ef­fi­cient pro­duc­tion and avoid over­sup­ply. Un­der the new guide­lines, the gov­ern­ment will “give way” to en­ter­prises and re­search the prob­lems that com­pa­nies face in their oper­a­tions be­fore cre­at­ing so­lu­tions ap­pli­ca­ble to the whole city, said Li.

To achieve its goal of be­com­ing an in­ter­na­tional cen­ter for econ­omy, fi­nance, ship­ping and trade, the Shang­hai Mu­nic­i­pal Com­mit­tee of the Com­mu­nist Party of China (CPC) ap­proved a pro­posal on May 25, 2013 to turn the city into a hub for tech­no­log­i­cal in­no­va­tion. Ac­cord­ing to the pro­posal, the city will com­plete the ba­sic frame­work by 2020 while the core func­tion of the tech hub will be formed by 2030.

The pro­ject is ex­pected to fo­cus on the con­struc­tion of a soft en­vi­ron­ment and mech­a­nisms, the in­dus­tri­al­iza­tion of sci­en­tific re­search find­ings, the ag­gre­ga­tion of in­no­va­tion tal­ents, and help de­velop ma­jor in­no­va­tion projects that serve na­tional strate­gies, the China Se­cu­ri­ties Jour­nal re­ported.

But Rui noted that the pur­suit of form­ing a tech­no­log­i­cal in­no­va­tion cen­ter and a “Four New Econ­omy” will in­evitably face dif­fi­cul­ties in terms of tech­nol­ogy lim­i­ta­tions and avail­abil­ity of tal­ents. Although Chi­nese re­searchers pro­duce the world’s sec­ond largest amount of science the­sis and patents, they lack hav­ing a say in global aca­demic mat­ters be­cause very lit­tle of the re­search find­ings are ac­tu­ally turned into prod­ucts, an im­por­tant in­dex used to mea­sure a coun­try’s sci­en­tific power, added Rui.

The United States, on the other hand, can boast to be dom­i­nant in science and in­no­va­tion be­cause their re­search find­ings have been widely ap­plied to prac­ti­cal de­vel­op­ments.

Ex­perts agree that Sta­te­owned en­ter­prises have a key role to play in this area. While new col­lege grad­u­ates in China have many in­no­va­tive ideas re­gard­ing start­ing a busi­ness, only 1 per­cent of them ac­tu­ally man­age to do so, mainly be­cause of fac­tors such as lack of ex­pe­ri­ence, lim­ited cap­i­tal, as well as high costs and risks.

“We have seen great en­thu­si­asm in peo­ple from all walks of life in want­ing to start in­no­va­tive en­ter­prises, but it worth not­ing that the fu­ture of a tech­no­log­i­cal in­no­va­tion cen­ter will mostly rely on en­trepreneurs, es­pe­cially State-owned en­trepreneurs,” Rui said.

Rui pointed out that Chi­nese com­pa­nies such as tele­com gi­ant Huawei and the Shang­hai Automotive In­dus­try Cor­po­ra­tion are some of those that have man­aged to achieve pos­i­tive growth be­cause of a fo­cus on tech­nol­ogy. Huawei has been known to in­vest heav­ily in R&D while the lat­ter has started work on de­vel­op­ing its own self-driv­ing car.

The Shang­hai Tower, China’s tallest build­ing, was also a re­sult of tech­no­log­i­cal break­through. Xu Zheng, chair­man of Shang­hai Con­struc­tion Group, the con­trac­tor for Shang­hai Tower, said the en­ter­prise spent mil­lions to do re­search on build­ing in­for­ma­tion mod­el­ing (BIM) six years ago. The Shang­hai Tower is the first ap­pli­ca­tion of this tech­nol­ogy by Shang­hai Con­struc­tion Group.

“Shang­hai Tower is the last piece in the trio of sky­scrapers in Lu­ji­azui’s skyline. To con­struct a 632-me­ter-tall build­ing with a to­tal gross floor area space of 576,000 square me­ters, we have re­lied a lot on state-of-art tech­nol­ogy,” Xu said. “We have stored ev­ery de­tail of the com­pli­cated de­sign into an iPad, and more than 3,500 work­ers can work to­gether at peak con­struc­tion pe­ri­ods, thanks to the three-di­men­sional dig­i­tal tech­nol­ogy of BIM.”

As part of restruc­tur­ing ef­forts, the mu­nic­i­pal gov­ern­ment has set up a prob­lemfind­ing mech­a­nism to help com­pa­nies fac­ing a bot­tle­neck in their oper­a­tions as well as un­veiled guide­lines en­cour­ag­ing in­dus­tries to co­op­er­ate with one another. All these moves have yielded pos­i­tive re­sults, as the growth rates of many com­pa­nies have dou­bled or even tripled, in con­trast to the tra­di­tion­ally sin­gle-digit growth fig­ures, said Li.

For ex­am­ple, in the online au­dio and video sec­tor alone, the mar­ket value achieved ex­ceeded 13 bil­lion yuan ($2.04 bil­lion) in Shang­hai, ac­count­ing for a quar­ter of the na­tion’s to­tal. More than 1,000 online fi­nanc­ing en­ter­prises have been set up in Shang­hai and their to­tal rev­enue in 2014 soared 30 per­cent to nearly 26 bil­lion yuan. Nearly 22 bil­lion yuan was gen­er­ated through third­party pay­ment. Shang­hai’s In­ter­net of ve­hi­cles mar­ket has also now reached a mar­ket size of 15 bil­lion yuan, 30 per­cent of the na­tion’s to­tal.

Made-in-China in­no­va­tions have also re­cently re­ceived recog­ni­tion on the world stage, pro­vid­ing much cause for cel­e­bra­tion and in­di­cat­ing that the city’s ef­forts have not gone un­no­ticed. An in­tel­li­gent lamp pro­ject called “Prona” has been ac­tively pro­moted by the lo­cal gov­ern­ment af­ter it won the Red Dot De­sign Award, widely re­garded as the Os­cars in the de­sign in­dus­try.

PHOTOS PRO­VIDED TO CHINA DAILY

The Shang­hai Tower, China’s tallest build­ing, is the last piece in the trio of sky­scrapers in Lu­ji­azui’s skyline. Be­side it on the left is the Jin­mao Tower, while the Shang­hai World Fi­nan­cial Cen­ter stands on the right.

The Shang­hai Tower is a re­sult of tech­no­log­i­cal break­through by Shang­hai Con­struc­tion Group.

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