More than 30 years have passed since Aug 26th 1980, the birth of Shenzhen and a milestone in China’s reform and opening up. Now, Shenzhen has grown with spectacular achievements, or let me say in a Chinese way – “San Shi Er Li”. Shenzhen development bank, now known as Ping’an Bank, the very first listed bank in China; Huawei, the only unlisted Fortune 500 company and maybe the most famous Chinese company in the world; not to mention Tencent, Vanke, Pingan, the list goes on. There are just too many honors for Shenzhen to cover them all.
However, after more than 30 years, the Chinese development model is beginning to show its age. A normal event, perhaps the most extraordinary part is that it didn’t happen until now. The economy is slowing down, consumption isn’t growing, and the domestic market seems trapped in a whirlwind of investments that is causing exponential growth in supply of manufactured goods.
So how can we make sure China and Shenzhen will still stand at the top of the world for the next 30 years? An obvious and often cited answer is already engraved in what we are discussing today – internationalization.
However, it is easier said than done. The country has not been able to project a reassuring image to the world. China’s ascension was more endured than managed, as if Beijing’s model was actually the result of national interests masquerading as globalization, and not the herald of universal values. China’s leadership knows this aspect well. The diffusion of a new “soft power” is instrumental, concentrating on the Pacific rise in an attempt to calm Washington, neighboring countries, and overall international opinion, but recent attempts have been futile and China has become increasingly involved in embarrassing and disconcerting controversies. Paradoxically, foreign governments are enjoying good relations with Beijing, perhaps not outstanding, but still oriented towards fruitful collaboration for everyone. It’s a strong sign of China’s indispensability. Missing instead is the social element, the kind of prestige that can bring better quality of life, the success of products and fashion, the kind of charm that should be evoked by a country with China’s history and culture. The common perception is instead of a country clinging to its uniqueness, just when it should be getting itself more involved in the international arena. This perception of China has been deteriorating, but the economy has the power to change this trend. Foreign investment can earn benevolence, exporting China’s younger, more dynamic side, open to a more contemporary China. Thousands of young entrepreneurs can be groomed to venture abroad, not just to gather resources, delocalize towards countries with plentiful labor, or find more agricultural terrain; a managerial class is emerging after years of study and apprenticeship. They are familiar with finance, fluent in English, and comfortable in international assemblies and board meetings. They are often able to combine corporate requirements with the social responsibilities of the company. They are conscious of environmental impact and the dignity of labor. By virtue of their intellectual structure and direct experience, they are far from the giant state-owned enterprises, from predatory capitalism, from indifference towards local affairs. China can draw intellectual and material resources from these new elements. Upon them, China can establish more extensive and respected international cooperation, with an eye on the books as much as on respectability. Too often China has entrusted itself to political delegations to dialogue with other countries, without reaching the hearts and minds of its best people.
So many have said, “As a private equity professional, I want to add some personal input to Shenzhen’s future development to become more international.”
Shenzhen has a strong industrial base. With electronics, fashion, and jewelry being some of the strongest. We have taken a look at many companies in these industries in Shenzhen, and they are very dynamic and prosperous. It is not so far-fetched to think that Shenzhen could become a worldwide centre of fashion and hi-tech in the future. With development and interaction with the rest of the world, Shenzhen could become like Silicon Valley or Boston in the USA, Bavaria in Germany, or possible Bangalore in India or Bologna in Italy, or even something like Paris or Milan.
To reach this goal, Shenzhen needs two main resources – finance and talents.
Shenzhen has probably the most local PE/VC funds in China, but to attract fresh international knowledge and experience there needs to be more. One solution could be to set up an international offshore fund including international funding partners to help the best Shenzhen companies to go international through M&A and organic development. Also, with the proximity to Hong Kong, Shenzhen has the largest chance and incomparable advantages to be the pioneer of RMB internationalization. Qianhai District is definitely an important move and we should grab this opportunity. On the other hand, I like to dream big. I propose to expand the Chinext board to list foreign hi-tech firms. It could be a long shot but we have already witnessed so many miracles in Shenzhen, why stop now?
The other resource is talents, which leads directly to education. Shenzhen is not famous for education, but education is something that can really provide Shenzhen with sustainable development. It would be great to expand programs at Shenzhen Universities to draw international and offshore Chinese talents, both at the professor and student level. Shenzhen needs to develop an international PR and Advertising campaign on all major international media to promote Shenzhen as one of the world’s key hi-tech hubs, fashion, and financial centers.
I can’t wait to see and embrace Shenzhen’s bright future. Go Shenzhen! Good Luck!