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       Volume 10 |Issue 02 | January 14, 2011 |

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Where there's a Will, there's Money

China's prosperous Guangdong province has embarked on the next phase of economic development with focus on creating a knowledge-based economy


The sound of hammers banging on wooden planks greets visitors at Sunbird Yacht Company in Zhuhai, a coastal city in China's southern Guangdong province. Inside, several workers are fixing windows, cabinets and modern communication equipment to the freshly minted frames of yachts that will soon be dispatched to various places inside and outside the country.

“This one will be sent to Seattle (in the US),” Victor Cheung, the tour guide and translator, says pointing to one of the many yachts sitting on an elevated metal platform. After taking a few steps, he points towards another luxury sailing vessel. “This one was ordered by a businessman from Inner Mongolia,” he says.

Then there is another one, which at 88 feet is going to be the biggest yacht ever built in China. “It costs 25 million yuan (US$3.7 million) and is being made for someone in Beijing,” Cheung says without elaborating, citing privacy reasons.

The company is now planning to build a 150-foot-long yacht worth around 100 million yuan ($14.9 million). “This will be one of the biggest yachts in the world,” Bai yin Li, vice president of Shenzhen stock exchange-listed Sunbird Yacht tells AsiaNews.

Sunbird is one of the emerging companies in China that largely caters to people with deep pockets, both in the domestic and international markets. It manufactures products with advanced design and technology that not only offers greater performance, comfort and safety but also fits in with the lifestyle of today's rich.

Hi-tech companies like these are exactly what the Guangdong government is looking for to fuel the province's future growth.

Guangdong, which borders Hong Kong and Macau, is a prosperous province and is also known as the economic powerhouse of China. It has been at the forefront of the country's economic boom and has been growing rapidly ever since opening up its economy to the world some three decades ago.

In these 30 years, the province's economy has been growing at an average annual rate of 13.6 per cent. In the first eight months of 2010 alone its GDP stood at 2.73 trillion yuan ($408 billion) – higher than the annual GDP of many countries in Southeast Asia. If it moves ahead at the current pace, its economy is expected to overtake that of South Korea by 2012.

Statistically speaking, this is an astonishing feat. But this growth was attained largely with the help of labour-intensive manufacturing units that churn out inexpensive goods like apparel, footwear and toys. Now, the province fears these very industries that shaped its economy may impair future growth.

Guangdong very well knows that it cannot always rely on the old model of driving the economy with the help of cheap labour. The province has felt the shortage of blue-collar workers this year and had to raise the wages partly due to pressure from workers and partly to attract migrant workers to this province. It also knows labour will eventually become more expensive over the years as more than 20 million of its migrant workers start seeking jobs near their hometowns which are also booming these days. This will only push labour-intensive manufacturing industries based here to other Southeast Asian countries like Vietnam, Cambodia and even Laos. Such a situation will not only adversely affect the province but the entire country.

Lin Xiong, chief of publicity department of Guangdong Provincial Committee recently told an Asian media delegation that “a structural change is necessary for sustainable economic development of the province”. In other words, the province needs a new growth model based on which it can start the next phase of economic development.

To make this happen, the provincial government intends to “relocate all labour-intensive industries to other places.” “This will provide space for knowledge-based industries,” Lin says. The catch-line here is: the government intends to attract hi-tech industries and turn the province into a centre for innovation.

This, no doubt, is an ambitious plan as it requires huge investments and a highly skilled work force. But the early works going on in many cities in the province show that transformation envisioned by the government is already taking shape.

For instance, in Zhuhai, where the yacht-building company is located, an aviation park has been established to attract aircraft manufacturing companies. The park also aims to be one of the largest aircraft maintenance bases in Asia Pacific and provide a platform to hold biggest aviation exhibitions in the world.

Nearby, there's a shipbuilding company, a deepwater marine engineering equipment manufacturing base and a hi-tech zone, which not only houses software developers but also renowned universities and is a hub for research and development activities.

A little further, a new town, called Henqin New Area, is being created, which will turn into a regional business service base with clean-tech clusters of ultra-modern convention and exhibition facilities and upscale hotels. This place – located just a stone's throw away from Macau and several kilometres from Hong Kong – wants to capitalise on its proximity to these bustling cities and boost MICE (Meetings, Incentives, Conventions and Exhibitions) related tourism activities.

Then there is Guangzhou Development Zone, which has so far attracted 3,700 high-tech enterprises and 285 research and development institutions. And in Foshan, another city in Guangdong province, an industrial design city has recently been set up where more than 60 design companies are already engaged in the creative work of designing home and electronic appliances, vehicles, multi-storied buildings, furniture, communication terminal, and medical and industrial equipment.

Clearly, the global economic recession has not dampened the ambitions of the government. In fact, it is utilising this period to create a strong base. Side by side, it is also using this time to nurture talents and promote entrepreneurship.

In Guangzhou, the capital of Guangdong province, the government has invested 16.5 billion yuan ($2.4 billion) to build a technology industrial park to promote independent innovation and development of high-tech industry. Here, every leading talent can get a fund of 15 million yuan ($2.2 million) under the talent attraction programme.

Now, even small towns, like Guzhen in Zhongshan city, are jumping on the bandwagon of grooming talents by opening incubators and providing seed money equivalent to 20 per cent of the total investment cost to start-up companies. “We also provide subsidy on rents to start-up companies and have invited instructors from Hong Kong to train our students,” Su Enming, mayor of Guzhen town tells AsiaNews.

The Guangdong government believes that all these efforts will work as a catalyst in creating a knowledge-based economy, which relies more on creativeness and innovation rather than the sweat of blue-collar workers.

But the problem, not only in this province but in entire China, is that very few people respect innovations and creations as copycats with prying eyes walk around like predators ready to make an attack on anything new that is launched in the market.

For instance, the Landmark Shopping Centre in Zhuhai is filled with replicas of Louis Vuitton, Adidas, Nike and even the latest models of Blackberries and iPhones. These fake products look so much like the original ones a buyer cannot easily differentiate between the two goods.

Many foreign countries complain that China's counterfeiting activities cause billions of dollars in losses to their businesses. And the US Trade Representative Office has listed China as one of the worst global intellectual property rights violators.

But only in October, the Chinese government said it will launch a six-month-long national campaign to crackdown on copyright violations, which will target everything from fake high-tech goods to other consumer items.

What will be the outcome of the six-month-long campaign is still unknown but any delay in nabbing the violators may one day backfire, as China itself is now the fourth largest country to apply for patents after the US, Japan, Germany and South Korea.

The delay may also stifle domestic innovation and discourage companies like Sunbird Yacht Company, which has registered 25 patents. This will ultimately derail the government's plan of creating a knowledge-based economy.




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