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.