Half an hour before an interview that I’ve flown 8,000 miles to do, the driver of the Toyota SUV that’s taking me there pulls to the side of a dusty and crowded highway. He’s yelling in Cantonese into his cell phone and madly sketching Chinese characters onto the touch screen of his GPS navigator. The PR woman seated beside me is lost, too. “The GPS isn’t working,” she says. “Too many new roads.”
I can’t blame the driver, the PR woman or the GPS—which, it occurs to me, was probably made nearby, since we are in Shenzhen, the Chinese mega-city that is the hub of the global electronics manufacturing industry. They simply can’t keep up with China’s growth.
You can’t appreciate the scale of a place like Shenzhen until you’ve seen it for yourself. Think of high rises, really high rises, stretching into the distance for as far as the eye can see. Factory after factory, in all directions. Cranes everywhere. Roads too new to have signs. Of course the old roads don’t have signs either.
On the factory gates are the names of companies you’ve probably never heard of: TianMa, NeoPhotonics, TCL, Skyworth, Fangda, Dawning, Tencent, Shima, Microtec, Ohimo Eyewear, Glory Medical, NCBC, Sisemi, Trony. They make things for the companies you know: Apple, Dell, Sony, Hewlett Packard and Nokia.
Shenzhen is a city of about 14 million people, bigger than New York or London, that most of us couldn’t place on a map. The most amazing thing about Shenzjen isn’t its size, though. What’s amazing is how quickly Shenzhen has grown up. Back in 1980, when the city (which is just north of Hong Kong, by the way) was designated as a special economic zone by Deng Xiaoping it was a fishing town of about 30,000 people and the tallest building was a three-story guest house, according to the South China Morning Post, which, by coincidence, published a weeklong series about Shenzhen during my visit.
Shenzhen is the creation of an economic miracle. The government invited in capitalists, cleared land for factories, brought in masses of rural migrants and housed them in vast dormitories. Their jobs pay $200 a month or less but they are so desirable that the authorities built a wire fence, 85 kilometers long, to keep out illegal immigrants. From the factories sprung other opportunities. Today, there are enough middle managers, engineers, shopkeepers, developers and entrepreneurs so that the average per capita income in Shenzhen has grown $10,628 a year, the highest of any city in China. The city has its own vast shopping malls, theme parks, luxury hotels and a stock exchange.
“Pursuit of money has pushed aside Maoist principles,” said one headline in the newspaper series. You don’t say! Still, there was a wistful tone to some of the coverage. An early settler named Fang Xioa, who worked as a salesclerk at a state-owned department store and then got rich trading IPOs, said that her husband, who also made money in the market, then left her for a young mistress:
We have been overwhelmed by numerous unexpected freedoms and opportunities since the economic reform launched. But many have also lost their inner peace and traditional values amid dazzling fortunes.
Right now, there are more pressing concerns than the loss of inner peace in Shenzhen and the rest of Pearl River Delta. No. 1 is the global recession. China’s growth is slowing, and several people told me during my brief visit that they are worried about the stresses that a downturn will place on the ruling Communist Party, as workers lost their jobs and become disgruntled.
Over lunch one day at the Hong Kong Jockey Club, one of the city’s most prominent PR women drew the Chinese characters for the word harmony on a scrap of paper. Turns out that one of the characters represents “grain” and the other represents “mouth.” So long as people are fed, she explained, there will be harmony in China. But already hundreds of thousands of people in the Pearl River Delta have lost their jobs because global demand for electronics, cars and toys is declining. Taxi drivers and bus drivers have gone on strike, and thousands of people in one city (elsewhere in China) attacked government offices and burned cars to protest the confiscation of their land.
The Chinese government is responding with a carrot, a stick and, most interestingly, some small steps towards openness.
The national and provincial governments are rolling out economic stimulus packages. The government is holding down fuel prices, helping the newly-employed collect back pay and putting off wage increases to keep more people on the job. That’s the carrot.
The government is also demanding law and order. “We have to strengthen public security forces in rural areas, carry out crackdowns on crimes in high-risk places and punish those who endanger our social stability,” said a top party official. That’s the stick.
As for the openness, the state-owned media is reporting more on land, labor and social problems because acknowledging bad news is a way to contain it, according to Reuters:
Propaganda authorities have issued a writ authorizing news organizations to report on unrest, rather than allow rumours to take hold among a public worried about the impact of the global financial crisis on the country’s economy.
This partly reflects the difficulty of suppressing negative news as rumors spread quickly across the Internet. China’s digital media businesses are flourishing.
I asked a young marketing executive for a Chinese company whether the country needed to become more open, to deal with corruption, debate the government’s economic policy or, for that matter, learn from experiences in the private sector. He responded that he thought it would be difficult to take China’s companies to the next level so long as the society that stifles argument and dissent. Marketing, he added, is one area where China’s companies lag well behind because the state-run education system discourages creativity or thinking outside the box.
Big companies, he noted, have been built in China but the economy has yet to create a global brand. I thought about that for a moment, recalled all those unfamiliar names on the factory gates, and realized he was right. (No, Lenovo is not a global brand.)
By the way, after 40 minutes of driving around and a couple of fruitless attempts to ask people for directions—apparently no one can keep up–I made it to the interview. Given the slowdown, maybe the government should hire some people to put up street signs.
P.S. I had an email after this posted letting me know that Ritz Carlton is opening a hotel in Shenzhen next year.