Opinion, Khmer Times, 27 April 2023 (Link)
“Why
Shenzhen model is attractive?”
Shenzhen is attractive not just for developing
countries overseas but also for many local administrations in China until
today. Many Chinese local governments still send their officials to learn from
Shenzhen experiences.
The simplest explanation is that peoples are attracted
by the economic miracle that Shenzhen has shown during the 40 years of reforms
and development.
Original condition of Shenzhen was very poor, and
infrastructure was nonexistent even the most basic ones such as traffic light.
In 1978,
Shenzhen had only 174 factories, with a total industrial output value of less
than USD 10.25 million.
After 40 years of development, Shenzhen had become one of China’s most
important high-tech research and development (R&D) and manufacturing bases.
As of 2018, over 11,000 high-tech enterprises called the
city home.
Shenzhen has
seen its GDP grow 20.7 percent on average annually over the past 40 years.
Shenzhen is now
China’s third-largest city by GDP after Shanghai and
Beijing. In 2022, Shenzhen’s GDP stood at RMB 3.24 trillion (USD 478.58
billion), while Shanghai and Beijing had 4.47 trillion (USD 660.18 billion) and
RMB 4.16 trillion (USD 614.47 billion) respectively.
Shenzhen has
developed into a service-driven economy and the Guangdong-Hong Kong-Macao
Greater Bay Area (GBA)’s technology and R&D hub. Some of the largest names
in the technology industry are headquartered in Shenzhen like Huawei, Tencent,
ZTE, and DJI.
Manufacturing
remains an important backbone to Shenzhen’s economy. Manufacturing accounts for
the largest industry by employment, with over four million people employed in
the sector at the end of 2020, out of the total population of 12.5 million.
Shenzhen is
China’s largest exporting city, ranking first among China’s
main cities for 29 years in a row. The Port of Shenzhen is the fourth-largest
in the world, with annual throughput reaching 28.77 million TEUs in 2021. Sihanoukville port had an annual throughput of 732,287 TEUs in 2021.
These are
inspiring stories that attracted Cambodia’s attention in the latter’s endeavor
to develop Preah Sihanouk Province.
“What does Shenzhen look like nowadays?”
The city is
spacious. It is a newly built and well-planned city.
Green is almost
everywhere. The SEZ legislation in 2005 required that the non-construction land
ratio shall not be less than 49%. This is in line with the key strategies in
the third SEZ Master Plan (2010-2020) which focused on high-tech and innovative
industrial platforms, environmental improvement and urban regeneration.
The streets
are wide and decorated with green walkways. Beautiful flowers with varying
colors highlight street intersections. There are hardly any cars parking on the
streets as mostly they are kept underground.
There are
many public spaces, gardens and basketball courts.
The city is also smart. 5G technology is disseminated
across the city. People can simply track the duration of their traffic light
through navigation apps in their mobile phones. The society is almost cashless
as people rely on mobile phone for daily transactions.
A look at various industrial zones tells us more how
advanced and developed Shenzhen is across the spectrum.
The
Mawan Smart Port boasts the first fully automated
terminals in China that became a reality in 2021. The port’s digitalization
began in 2017 relying on homegrown technologies such as Container Terminal
Operating System. The port is run by China Merchants Group (CMG) with history
that can be traced back to 1872, or 151 years as of today. CMG is one of
China’s centrally administrated state-owned enterprises, founded and
headquartered in Hong Kong. The company is also a listed company in Hong Kong,
and has a comprehensive portfolio not exclusive to port management but also
finance and real estate.
Shenzhen is home to many high-tech companies. Beside
the common technological trademarks of Shenzhen like Huawei, ZTE or DJI (drone
company), Shenzhen also has plenty of
companies with less than a few decades of history, but they are the companies
that have developed advanced technologies to compete in global market against
much older giant multi-national corporations.
For example,
the thirty years old Hytera company is competing with Motorola on digital mobile radio
(DMR), and the company was among the high-tech enterprises
banned in the United States together with
Huawei, ZTE, Hikvision, and Dahua in 2020.
A much
younger UBTech company was created in 2012 and is specialized in humanoid
robots. The company even created Artificial Intelligence (AI) curriculum for
elementary schools and their office put on display robots made by those
elementary pupils.
This company
is located in Nanshan intelligence or smart park that the Shenzhen government
created to host young hi-tech start-ups. The office space rental costs RMB 60
(USD 8.71) per square meter whereas the market rate in Nanshan area outside the
intelligence park would cost around RMB 200 (USD 29.05) per square meter, more
than three times. Everything in Nanshan intelligence park belongs to the
Shenzhen government. The government provides incentives to companies with several
young PhD holders who are developing new technologies. Those companies can
initiate projects that can be selected for seed funding around RMB 4 to 5
million (approximately USD 580,000 to USD 730,000) even if not all of those
projects succeed.
Shenzhen government
also created Shenzhen Virtual University Park (SZVUP) in 1999 to
attract famous universities with high technologies and their professors to set
up their virtual campus in Shenzhen, in the model of one campus for multiple
universities.
This is how
supportive the Shenzhen government is.
Equally
important, this also shows the significant amount of disposable resources that
the government can provide.
Local
entrepreneurs said that in Beijing, companies must listen the government.
However, in Shenzhen, the government listens more to private companies.
Shenzhen government has done all it can to make sure that Shenzhen becomes the
paradise for local and international companies. The government always tries to
be supportive and facilitative rather than regulatory. The government provides
platform for growth and building of business networks including overseas.
For example, Mindray company, which produces medical equipment from primary care to comprehensive
diagnosis system with high-end technology, relies on government’s support in
linking the company with overseas market. The company is so young, founded in
1991 or 32 years old, but it is competing with traditional grand players of the
world in this specialized field in terms of cost-efficiency and quality.
Beside big companies and
technologies, we cannot overlook the importance of high-skilled and highly
committed human resources.
In Shenzhen,
there are many young and energetic workers in their 20s or 30s. During lunch
break in the intelligence park, we can see those high-tech workers come out
with their T-shirts, jeans and sportive sneakers, instead of business attires,
filling the streets of the industrial parks that take the inspiration from the
Silicon Valley.
When some
restaurants in Guangzhou are closing at 9:00PM, in Shenzhen high-tech zones,
11:00PM is the normal day rush hour.
This is very
much in line with the Chinese slogan used in the early days of opening-up and
privatization, which says “time is money; efficiency is life.” The tech savvy
and highly competitive workers have the hungry mentality like the “gold rush”
era, and they are willing to work extra miles to achieve their economic
betterment.
“What does Cambodia want from Shenzhen model?”
Putting the
development of Preah Sihanouk Province into the context of 40 years development
of Shenzhen SEZ, the former has just remained in its nascent stage but not that
it has not had its own igniting effects. The impacts from the Belt and Road
Initiative (BRI) and the huge influx of Chinese investment capital and tourists
in the late 2010s were the important stimulus that has revitalized a stronger
desire for development. The negative impacts from overly and unplanned
development had compelled the government to intervene with a clearer planning,
and thus the development of the Master Plan following the Shenzhen model.
Comparing
with the development of Shenzhen, Cambodia does not have ideological
restriction in introducing Shenzhen model because Cambodia has been a market
economy since the beginning, and its investment regime has been one of the most
liberalized in the region.
At this stage
of development, it can be observed that there should be three important reasons
for Cambodia to adopt Shenzhen model.
Firstly, it
is about inspiration. It is not about ideology but rather on inspiration and
pragmatism. Cambodia was attracted to the success of Shenzhen’s development and
wants to apply Shenzhen’s elements of success in the development of Preah
Sihanouk Province. Cambodia has the benefits of latecomers by learning from the
lessons of Shenzhen and can get itself better prepared and coordinated towards
sustainable development. In this sense, it is fair to say that the government
is intending to adopt a macro-economic intervention, planning and regulation of
the development instead of a fully laissez-faire attitude. Nonetheless, it
remains to be seen how much the government intends to intervene in the
long-term process of development. Whether the government is acting as a
regulator, a supervisor, a planner or a partial stakeholder of the development,
this would entail further discussion within key government agencies, depending
on political will, institutional capacity and committable resources. Division of labour among different layers of
government institutions and identification of their core competence and
responsibilities are also subject for
future discussion.
Secondly, it
is about the sources of investment. By linking with Shenzhen model, Cambodia is
trying to inform Chinese investors that they can expect a similar environment
like Shenzhen should they need to find a new or additional investment
destinations. Shenzhen needs Hong Kong investment and it has greatly benefited
from the immediate geographical distance and blood lineage of Chinese in Hong
Kong. Similarly, Shenzhen may act as Cambodia’s gateway to Chinese investment
if Cambodia can firmly commit to business and investment-friendly environment
that has supported Shenzhen’s miracle.
Thirdly, it is about the source
of innovation. Access to modern technologies and innovation are the important
inspiration for Cambodia to link with Shenzhen, which has great track record in
absorbing modern technologies as well as in integrating technologies within the
city’s development. Again, like the case of Shenzhen, such development takes
time. How much is modern, or how much is called advanced technologies, this is
a matter for further discussion. In the early stage, Cambodia may need
appropriate and relevant technologies, not immediately high-end technologies,
to uplift its industrial model from labor-intensive into a higher value-added
and skill-based industrial model in a gradual manner.
