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
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.
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.