Shenzhen's Greater Plan: No Manufacturing, No Problem.

There has been a recent plethora of news regarding the effects of the global recession on the Chinese export industry, especially in Shenzhen. Many articles have been devoted to bigger factories that used to produce toys, furniture, other consumer products while employing thousands and thousands of workers closing down. One even says it will cost the Pearl River Delta area "millions of jobs".

In reality, this situation has been going on for a while now. The downturn in the US economy many months ago changed the dynamics of manufacturing. With changes in regulations and demands, rising RMB vs. the Dollar exchange rate and other factors, previous factories that employed 100-200 workers couldnt maintain cash flow and pay for their workers.

While talking to managers at plants, some said that it was better for them to go idle than to manufacture something because the things they made was almost always at a loss. Other factories didnt even have the convenience of deciding to manufacturer or not. Once booming factories couldn't get any new orders from their clients in Europe and the US. No orders = no work = no jobs = plants closing down. Fast forward to the present and we see factories with 2000 workers collapse. That's intense. I've seen recent stats that more than 50% of all toy companies in Shenzhen have closed down.

The thing is, as much as this economic downturn in the globalized economy has hurt a lot of export-driven businesses, and its workers in Shenzhen, it's really helping Shenzhen transform itself to what it wants to become. For the past 2 years since I've been living here, there has been a constant trend and push by local officials to develop Shenzhen as a city dominated by high-tech research rather than lower value-added manufacturing. It wants to go from labor intensive, basic and easy things like the toy industry to industries higher on the totem pole of innovation.

As much as Shenzhen was able to get its start from being that factory town "across the border" for Hong Kong businessmen, its goal is to move away from that persona into an international city of something other than toys, eye glass frames and furniture. It wants to be a city on the same scale as Beijing and Shanghai, or better than Singapore.

So while Shenzhen has slowly tried to shed its own manufacturing persona (these are well documented and that I wont go through), it has done many things to promote innovation, whether its opening a office in NYC or being ranked a leader of innovation in Asia in a recent study. Other things include:

• Establishing favorable policies for high tech industries - this includes lower taxes and cheaper office buildings (among others)
• Attracting more and more Chinese people back from overseas, whether its recent graduates or seasoned professionals and intellectuals.
  
• Maintaining a high education work force. Supposedly more workers in Shenzhen have advanced degrees than any other city in China. I'm sure most of these are in fields of engineering, mathematics, ect.
• Increasing its financial clout. Shenzhen has developed the Nasdaq-style exchange for SMEs (adding to its current Shenzhen Stock Exchange) while more and more investment banks and financial companies are established here.
  
• Promoting greater cooperation with Hong Kong (which is definitely an international city). This work might culminate into a "mega city" metropolis of 20 million people that combines both cities.
• Investing in an amazing, state of the art Terminal C at Shenzhen Airport.
• There has been recent emphasis on art, music and culture in the predominantly money-hungry and business rich environment.
• Focusing on the legal industry. Peking University recently opened a regional campus in Shenzhen as the 1st American-type law school in China. They even invited Justice Anthony Kennedy from the US Supreme court to give the Keynote at the dedication ceremony.
  

Shenzhen already can be considered one of the most expensive Chinese cities and its development for the future looks bright. Even with the global economic downturn, UPS has just started construction on its new Intra-Asian hub in Shenzhen and it has been ranked 10th on the list of "most powerful emerging cities in the world."

I don’t think anything will stop the development of Shenzhen into the international power city it wants to become. As long as there are no unforeseen problems with the unskilled laborers who have been getting laid off at factories. If you want to get in on the Shenzhen story, better buy a house now before the prices start going up again.

China Related Links

I've recently come across many interesting, in-depth articles related to both Shenzhen and China. While I would love to post reactions to all of them, there are just too many interesting things to say. See for yourself.

A Massive Migration - describes the life of the typical migrant worker with interviews, statistics and current developments of migrant issues

The New American - An interesting yet sometimes ignorant Esquire magazine article relating to entrepreneurialism in China for young American expats.

Shenzhen Starts Spreading the News - An Australian perspective on the development of Shenzhen, its future and entrepreneurialism.

Silent Busts - An Economist article analyzing collapsing Chinese companies in recent months and the insufficient Chinese bankruptcy laws that govern them.

Keeping it Green - An Newsweek article focusing on the environmental success of the Beijing Olympics and how the city can keep recent gains regarding environmental quality.

China Sneezes, Latin America Catches a Cold - An article describing the interdependncy of the world economy and how China's slowing economy will shake Latin America

The NBA Pushes on in the Chinese Market

The NBA is making a bigger play within the China market. It has announced a venture to build/renovate/create 12 NBA-caliber arenas in China over the next 20 years. There are only 2 NBA-caliber arenas in China currently, the Wukesong Basketball arena in Beijing (host of the Olympics basketball events) and the arena in the Macau Venetian hotel.

As reported on ESPN.com:

The NBA has formed a joint venture with Anschutz Entertainment Group to design and develop about 12 multipurpose arenas in major Chinese cities.

"We think of this over the next 20 years, not the next year or two," he said, adding some would be new arenas and others would be created by renovating existing facilities.

"You're going to see a combination," Leiweke said. "Most of them will be built and designed from the ground up."

"Where feasible, the arenas will be developed in conjunction with surrounding cultural and entertainment districts potentially comprised of restaurants, retail outlets, cinemas, hotels, residential areas, sports training facilities and smaller live entertainment venues," the NBA said in a statement.

The NBA already has a considerable footprint in marketing itself in China.

• Basketball is officially the most popular sport in China.
  
• US Basketball team members at the recent Olympics made a big marketing push in China to promote the NBA & USA Basketball
  
• It also has 3 Chinese-born players in the league, Yao Ming (Rockets), Yi Jianlian (Nets) and most recently, Sun Ye (Lakers) - all in big markets.
  
• "The NBA currently has relationships with 51 Chinese telecasters, including a partnership of more than 20 years with national broadcaster CCTV," the NBA says. This means NBA games are on all the time on Chinese TV.
  

Healthy Eating in Shenzhen

Ever since I returned to Shenzhen from my incredible Olympics trip to Beijing, I have put myself on the Mike-diet/exercise plan. It is a strict regiment combining working out, health living and healthy eating. When I implemented my plan back in college, it worked wonders. I lost weight and increased my muscle mass - perfect for spring break at the beach.

One of the most difficult things to keep up with during my diet is eating healthy. Back in college, although John Jay dining hall and all the other Columbia University places for food wasn't overwhelmingly great, they still provided a lot of options for low-calorie diets. I could go in, pick up some grilled chicken at the salad bar with some egg whites. In restaurants, there were always options for meals that were more healthy - low in cholesterol, low fat/oil and low calories.

Food in China is much harder to deal with. Unless I cook the meal myself, I really don't have too much confidence in the contents of food... healthy-eating wise. Don't get me wrong, Chinese food is clean, really delicious and cheap, but on the oil usage side, it leaves something to be desired.

With the price of food skyrocketing in recent months, its only logical that small restaurants would want to conserve costs in every way possible. This presents even more problems with a healthy-eating lifestyle.

Here are some of the issues I've been experiencing.

• Often times dishes are covered in oil and are high in salt content. Salty foods makes you want to eat more rice = hidden calories
• Lots of dishes are smothered in thick, rich sauces. While these sauces taste awesome, they are another source of hidden calories.
  
• The price of pork has increased by more than 50%. This means restaurants use more fatty pork in their dishes than they would traditionally to reduce cost.
  
• Restaurants sometimes use old cooking oil that has been used in friers. As with the same problem in McDonald's fries, repeated use of the same oil is unhealthy.
• Eating at Chinese restaurants can be problematic with regard to portion. After having a little bit of a lot of different dishes in a potluck/communal way, its really difficult to measure how much you are eating.
  
• Only relatively healthy American establishment is Subway. Since I live more than 5 miles away, it's not a viable option.
  

The only main restaurant I order food from is a local Korean restaurant. The selections are cheap and diverse while carolie and fat content stays low. Kimchee soups only cost 20RMB with starter dishes and rice. Not a bad deal. Other than the Korean restaurant, I usually cook at home. While I make just about the same things as local restaurants make, I can better control the quality. By using olive oil (100RMB/liter), less salt and sauces, it's the best way to eat healthy in Shenzhen.

Here are the main foods that I rely on available at the local supermarkets:

• Boneless chicken breast is available everywhere. Although Chinese people generally love pork, for some reason, stores sell chicken breast too. For about 6RMB, I can get a healthy portion that I cook on the George Foreman grill after marinating it in soy sauce.
  
• Canned tuna is widely available as well, but a little expensive compared to the US. Individual cans go for about 11-14RMB at the foreign foods aisle.
  
• Salads are big for me. Since veggies are relatively cheap, its a good way to eat healthy. The only thing is dressing selection is limited. This means, I buy dressing every time I'm back in the USA.
  
• The availability of cheap sandwich meats have been a recent phenomenon. Pastrami, ham and beef ham cost about 7RMB for 10 circular slices. Place that in some mutigrain bread with some mustard and it kind of feels like the US.
• For drinks, I stick with Dole OJ (16RMB fora typical jug), water and the recent introduction of Coke Zero to the Chinese market.

Changes to the One Child Policy

I just got back from Shenzhen after an eventful weekend in and around Chengdu. I went with a friend to her cousin's wedding back in her hometown. We hung out with her huge extended family and had a wonderful time. Even better, this trip has given me a lot of interesting topics to write about for my blog.

One of the more interesting topics I stumbled across was a new regulation regarding the 1 child policy. Officially adopted in the early 1980s as a way to control population growth in China, it stemmed from the fundamental belief that society is a big stakeholder on everyone's life. Given China's huge population, in a person's life, not only does he/she need food and shelter, but also the opportunity to go to school, find a job, have health care, ect.

It's not only a family decision to have a child, but a big part is society's ability to support this person throughout his/her life. In a country dominated by overpopulation and not enough resources even more people is a big problem. While there were some exceptions made for ethnic minorities, people in rural areas and people living in mountainous habitats, the rule was otherwise strict. Violators faced fines and other actions, sometimes including sterilization (reported).

Due to the importance placed on having a son, the government also placed strict laws against families finding out their baby's sex until he/she is born. This would prevent families wanting to abort the pregnancy after finding out they are having a girl instead of a boy. Although this policy can be circumvented through some back-door guanxi at the hospital, it's proven relatively effective.

The 1 child policy also changed the basics of family dynamics in China. As an only child myself, I didn't have any brothers or sisters. My mom was the oldest of 3 while my dad was the 2nd of 5. My grandparents were both the youngest of 7. Traditionally big families all over the country were now only allowed one child. No more brothers and sisters just cousins. In a country where family is really important, this is a big deal.

There have also been bigger problems that have come out of the 1 child policy. In a disturbing report by Al Jazeera, child abductions have been more and more frequent.

I personally agree with the 1 child policy. Although western "human rights activists" oppose it, the 1 child policy has been one of the reasons China is not at a 2 billion population right now. While having a child can be considered a right, the ability for this child to live in society is just as important or even more important.

It seems like the rules have been modified a little bit. From my conversations with numerous people on this trip, it is said that if a couple are both the only child from their respective families, this couple can have 2 children. I don't know if this is absolutely true across the country, but my friend confirmed this fact. (She and her husband just had a baby girl 5 months ago).

Although this doesn't seem to be much of a concession, it feels really big. It gives couples more opportunity to have the boy they sometimes greatly desire. It also signals a shift in the belief that China's society can support more people in the future given its economic development. Maybe its also the need for more young people in the future to support the aging population. Whatever it is, it's a big change.

2008 Beijing Olympics: Volunteers EVERYWHERE!

Immediately after the closing ceremonies, there were nonstop coverage by the Chinese media on the end of the Olympics. As every event completed its final game or match, the final medals had been handed out and the crowd had left, only the volunteers were left.

After a month's long work as an Olympic volunteer it was a perfect time to relax and unwind at the venue they had worked so hard in. People were running around the bases in the baseball stadium and taking pictures in the beach volleyball sand in Chaoyang Park. Everyone was enjoying a job well done and a successful Olympics.

The number of volunteers that were employed during the Beijing Olympics was unbelievable. Not only were there thousands of official volunteers selected by the city, there were also local mobilization of citizens. At all of the major tourist sights, in the subway stations, on the streets, in the small neighborhoods and everywhere in between, there was someone to help out. All of these people were constantly looking over Beijing - making sure it was safe, friendly and welcoming to both the athletes, coaches and tourists from all countries.

As my mom’s friend in the China All Women’s Federation said: Just give these volunteers a T-shirt and arm band and they’ll mobilize together. These old people in the neighborhoods constantly gossip and know just about anyone. Terrorists? Yea right.

Here are some of the volunteers I came across:

At Wangfujing - these people know 4 different languages

A girl got lost in the metro station! Here come the volunteers.

China Mobil Volunteer station near the Beijing Military Museum


Old People hanging out


Young People hanging out


Everyone's an volunteer.


China Mobile Volunteer Stand near the Guo Mao area

Craigslist Enters the Shenzhen Online Community

While browsing online yesterday, I noticed something new to the Shenzhen online landscape.

For people who don't live here, most people go to Shenzhenparty.com for just about everything including applying for jobs, parties, classifieds and apartment hunting. It is the most dominant site in the area. While there are some issues with its graphics, interface and user-friendliness, it is a useful platform that just about everyone embrases.

In recent months, Shenzhenstuff.com has developed a nice, more interactive site in the Shenzhen online community with it's Ning platform for social networking. This site has personal profiles, fictures, blogs, news and message boards. It has become a hit for both expats and English-loving local Chinese. While sometimes it is more of a place for weird white guys to hit on random Chinese girls, it does create a interesting interactive community.

Recently in response to this more interactive community, Shenzhen Party has started its own Ning-created network to comepete with Shenzhen Stuff.

The newest addition has been the addition to Craigslist. Originally started in NYC, it has now spread to China to 6 cities - Guangzhou, Shenzhen, Hangzhou, Beijing, Shanghai and Hong Kong. Although Craigslist: Shenzhen has very posts and relatively few users currently (it's only been online for a few months max), it creates an interesting new addition to the Shenzhen's expat market. I wonder if Craigslist has or will be opening up a Chinese language version of its services soon. That would be a much better investment with a possibly much greater pool of potential users.

Shenzhen Opens Office in NYC to Promote Trade & Relations

In a recent press release published online by Marketwatch, on Oct. 27, 2008, Shenzhen will officially opened a office in New York City.

The City of Shenzhen, China announced today that it will be hosting a luncheon ceremony on October 27 at the Marriott Marquis in New York, to celebrate the opening of the New York Representative Office of Shenzhen and to discuss key economic developments as well as business opportunities between Shenzhen and the U.S.

The opening ceremony will not only include government officials and representatives of Shenzhen and the Chinese consulate in NYC, but it will also include prominent leaders of major electronics and financial firms based in Shenzhen.

What seems most likely is the continued expansion of ties in the financial and high tech industries. Shenzhen has already planned a NASDAQ exchange for small and medium sized companies that can supplement the already existing Shenzhen Exchange. It is also focused on decreasing the number of value-added companies (that produce toys for example) and promote the high tech industry. This would push it away from just a factory town to a city of innovation, design and creatvity.

Great move by Shenzhen. Silicon Valley anyone?

Chinese Health is Trending Towards Obesity

China is getting fat and less healthy. It's true.

I first wrote about this problem more than a year ago with my analysis of McDonald's in China. Others have also ventured into this realm.

A USA Today article written more than a year ago, Obesity of China's kids stuns officials, described the shocking changes in Chinese children.

New figures from the Health Ministry show that urban Chinese boys age 6 are 2.5 inches taller and 6.6 pounds heavier on average than Chinese city boys 30 years ago.

The average 6-year-old in Beijing or Shanghai weighs nearly 47 pounds and is 3 feet, 10.5 inches tall, ministry figures show. The average American of the same age weighs just over 50 pounds and also is 3 feet 10.5 inches tall, according to data from the U.S. Centers for Disease Control and Prevention.

Chinese children have a lot of factors working against them in the battle against bad health and obesity:

• Children are traditionally considered more healthy (and better) if they are fatter.
• Due to the 1 child policy, Chinese children are often spoiled by parents and grandparents - meaning more trips to fat-happy places like McD's.
• The demands on a child's academics is such that some kids start going to after school classes when they are as young as the 3rd grade. More classes = No playing outdoors after school.
• When students do have time on their hands, its often spent online playing games like CounterStrike, WoW or chatting on QQ. This not only results in muscle atrophy but also a decreased people-skills ability.
  
• There are very few, if any, outdoor clubs and organizations to join. In the US there are basketball, soccer, football teams, little league, boy & girl scouts. In China ... I've never heard of any.
• When kids get into high school, academics is still the end all be all preparation for the College Entrance Examination (高考）. School sport systems are very rare and active lifestyles really disappear.

Even after kids grow up, there are many other things working against them.

• More meat and dairy products are available due to increased economic development. Many Chinese enjoy strictly eating meat almost exclusively. This is even worse when meat is usually prepared with a solid layer of oil/grease.
• When graduates enter the workforce they usually find white collar jobs. Instead of physical labor, people sit next to their computer day in and day out.
• With more and more cars on the road, people are travel less by foot or bike and more by car.
• It is very difficult to eat healthy.

Due to all of these factors (and others), it is not surprising that Chinese people are getting less healthy and more obese.

I can state from personal experience that this is occurring. My cousin in Harbin is 18 and is starting college next year. He grew up as the "little emperor" and was a cute, chubby kid. My extended family obsessively fed him while focusing stringently on his future academic prospects. He was decent at school, but he was aided with constant help and review classes beginning at age 10.

My cousin never really played any sports nor did he even go out to hang out with friends. (I honestly dont know if he has any friends). The only things he does is stay home, go online, study and eat. The expectations on him by his parents and grandparents are to study. I dont know if he even does chores around the house.

What began as a promising kid is now a rather fat, unmotivated, friendless and people-skills-less person who grew up like many other kids in China. I honestly dont know how he's going to survive in modern society.

Of course, China isn't standing still waiting for this problem to expand. There has been not only government initiatives to step obesity but also private sector developments. Re-examinations of the educational system and parental responsibilites are also occuring.

• Fat camps have popped up all over the country for obese children. TV programs similar to the US "The Biggest Loser" are also appearing on TV.
• Chinese people, while getting more lazy and less active are still relatively more active than counterparts in other countries. The use of public transportation and walking in China helps this cause.
• Chinese people for some reason enjoy climbing up and down mountains as weekend functions of fun. That definitely helps.
• Some more affluent Chinese families are promoting a more healthy and active lifestyle for their kids. This includes more traveling, more exercize and joining clubs
• Basketball is increasingly popular meaning more people are excercizing everyday.
  
• Preventative health is big in China. People often eat vitamins and stay away from pain killers and antibiotics.
• In my opinion, however, the biggest development has been the huge expansion of exercise in cities among the urban population.

Hopefully all of these factors can help the Chinese people develop in a healthy and sustainable way.

China Mostly Immune to Global Financial Crisis

For the past few weeks, I've been engrossed with the current US election. As a person who has volunteered for campaigns, canvassed in low income neighborhoods and helped register people to vote in the US, it has been an interesting election season so far.

The main issue this year has been the economy and the current financial crisis affecting the world. As a friend who works for McKinsey Consulting told me more than a year ago... "it'll be really really bad. Just wait, Mike." I guess he was right. Another one of my friends who used to work for Lehman in Hong Kong is looking for a new job.

(Yep, the Dow Jones just went under 10,000. This is getting even more crazy.)

What's great news in China is that the main Chinese banks are largely unaffected by the crisis plaguing the rest of the world. It seems that Chinese leaders didn't really understand financial derivatives back a few years ago. Since they didn't understand them, they didn't invest in them. This act of conservative and cautious investing has greatly benefited the Chinese economy. Even though the Chinese stock market has taken a hit - as have just about everyone, the "robust" Chinese economy is said to be able to muscle through while the rest of the world struggles. - CNN.

I guess I'll just have to put my Bschool plans on hold and stay in China for a little longer. It's really the only place where there are jobs.

Expat Exodux = Easy to find a Job in Shenzhen

In the past few months, there has been a huge exodus of foreigners from Guangdong province. Due to the Olympics, China employed a lot of regulations that could help control the flow of foreigners into China. Not only was it much more difficult to obtain a visa but it was almost impossible to get a visa in Hong Kong.

Also, foreigners who were living in China and working on Tourist visas were shooed away. This usually stemmed from police approaching expats on the street to see adaquate identification. For people who were employed, he/she faced increased scrutiny in applying for a work visa. While most of these regulations were a surprise to expats, they were all on the books but werent really enforced until recently.

All of these efforts led to a huge decline in the expat community in Guangdong. As a friend of mine described to me, supposedly as much as 90% of the foreigners in Guangdong had left before the Olmypics started. That's just crazy.

Just walk around the Shekou area and you can see the effects. Once filled with foreigners from all over the world, Shekou is now mostly empty. Business is down for both restaurants and bars. I went there on a night out with friends this past Wednesday and there were barley anyone there. Woah.

Another side effect of this exodus deals with jobs. Many foreigners working in Guangdong were employed as project managers for various trading or manufacturing companies - usually under tourist visas. Since most of these people have left China, it has created a vaccum of talent for people seeking jobs. It is now incredibly easy to find a project management job in Shenzhen that pays a very attractive salary. I would assume this is the case as well in other cities like Beijing and Shanghai. It was always easy to find English teaching jobs in Shenzhen, but it's definitely even easier now.

As the US economy tanks and the world economy goes into a recession of sorts, I see China becoming an increasingly attractive place for young people to come to. Recently, another 100+ newly college-grad English teachers have deceded on Shenzhen through the CLTC Program's deal with the Shenzhen Government Education Bureau. Students are arriving every semester to study Chinese at different universities all over the country from places like the USA, Europe, South America, Mexico, Korea and Japan. Even people who have gone back to the USA are returning to China for round 2.

If you want that job, get over here early.