Shenzhen model for China

After arguing a lot for Shanghai over the years I visited Shanghai and Shenzhen
over one extended weekend.
Shanghai seems to have lost some steam. Not much is going on. Foreigners now
tend slowly to leave the city in favour of Hong Kong and Singapore (pollution +
more and more severe internet restrictions) but I had no statistics.
Shenzhen on the other hand is proud to continue to grow and being home for
many Chinese high-tech companies. The city is clean and no house is older than
20 years. Pollution seems to be low, no traffic jams and the shopping areas are
full, but not overfull, with nicely dressed customers.
The proximity to Hong Kong is an asset but I also heard thinly veiled criticism of
Hong Kong and everything Hong Kong represents in China. People in Shenzhen
are fed up being looked upon by Hong Kong sales people as second class citizens.
They now prefer to go shopping in Japan instead. Hong Kong has to face up to
realities was one comment. As Shenzhen today has more than 10 million
inhabitants, compared to Hong Kongs 7, I felt they might be on the look-out for
what will happen 2047 when the SAR model might be scrapped.
I had a long meeting with the leading think tank China Development Institute
(CDI) in in order to talk about CSR. This is what came out:
1. CSR was very much on peoples minds 10 years ago and has now been
integrated in the normal thinking. I know that people in China like the most
recent fads and old ideas are not of much interest but this argument was
not to my liking even if I can give it some credit regarding for example the
reporting requirements of the stock exchanges. My counterargument to
this was:
a) Yes if you google CSR + China/Shenzhen/Guangdong or whatever you
come to a lot of papers and events during the years 2005-08. That is a
pity as what is not spoken about is often forgotten. In Sweden we have
CSR events every month and new people turn up to listen and learn.
Also the CSR thinking is developing every year. China has not grasped
this as they do not take part in the international debate.
b) China has mostly seen CSR as a tool to facilitate sales to MNCs. China
has not understood the domestic need to improve. I took examples of
environment and anti-corruption, which cannot be addressed if
companies do not have an advanced CSR strategy, but got the feeling
we were not quite understanding each otherss.
c) When foreign demand now has decreased China has to send more
companies out to export. The CSR issue is more important than ever. I
am not sure Chinese officialsthey understanood how big problems
Chinese companies are meeting abroad.
d) I mentioned SASAC as the leading instrument for state owned
companies in China and their interest in CSR. To my surprise they had

problems in understanding which organization I talked about! Obviously

the SOEs are not dominating Shenzhen.
e)

f)
2. China needs innovation. This is what everybody is craving for now.
Anybody who has good ideas how to improve innovation is welcome. My
answer to this was: yes innovation is crucial but its nature is that you
cannot plan it from above, deep changes has to be done inside the society.
I then got a strange argument. An example of a company that has not
been successful in modernizing itself is Volvo that turns out the same style
car year after year. When I admitted that Volvo is from my country they
apologized for their sincerity.
3. Shenzhen has a lot of famous companies. We all know the successful ones
like Huawei, ZTE, Tencent, BYD but what about the Foxconn story? Foxconn
is a Taiwanese company manufacturing laptops, mobiles etc. for large
international companies. The answer was that yes, Foxconn like some
other Taiwanese and South Korean companies have Japanese inspired
military organisation and it is not to the liking of everybody, but they had
done a good job an employed many people. This was the second time I
heard that top Chinese thinkers refrain from criticizing Foxconn.
4. Will the Guangdong model survive when foreign companies withdrew
following the economic crises in 2008?. The answer was that Guangdong is
not one system, it is a ladder of different models where Shenzhen is on the
top. Some cities have relied on migrant labour for low end production.
They will have a problem. The migrant labour is not about to come back,
the pay difference has decreased and China is not going to allow whole
families to resettle. Therefore these cities have to move up the value
chain.
5. I had to go back to the car industry. Can BYD (Beyond Your Dreams) really
compete with the international giantswhole world in the area of electric
cars? Toyota and others are spending billions in developing new batteries!
The answer was that BYD has been successful on several export markets
(they had forgotten which) and batteries is their speciality so no worries
there.

Conclusions.
1. We have overlooked Shenzhen as we dont go there and Shenzhen itself
has a weak external profile as they have limited exposure and few
international contacts. This is after all the 22nd largest financial centre in

the world
(Stockholm is 36 according to WEF).
2. It is hard to get meeting with people in Shenzhen, as in other cities in
Cchina. If you are not an organisation that is well known you have to fight
for every contact. This works very much to Shenzhens disadvantage. Hong
Kong is in this case the extreme opposite.
3. To discuss in a way that can yield understanding requires rather long and
deep meetings. Panel debates when you deliver a couple of punch lines are
less efficient. The think tank I visited had few international contacts and
none with Sweden. It is a pity.
4. Needless to say the relations with Hong Kong were rather tense. For a
Shenzhen person Hong Kong is clinging back to old ways of thinking. To a
Hong Kong person Shenzhen people are laid-back and do not work what
amount of hard labor you must put in to be competitive.
Bengt Johansson, New Context AB
November 42, 2015