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Shanghai Strategy [Copy link] 中文

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Post time 2005-8-11 11:56:49 |Display all floors
Ted Naganawa
www.TedStrategy.com
Chicago, USA

(A little over 6 months since "Shanghai Reality" that claire kindly posted for me under "Living in Shanghai," I'd like to add the following observations.  Thank you.  Ted)


With a population of 17.1 million and a land area of 6,340 sq km, Shanghai is a pretty big city.  It contains 2.5 times the population and nearly 6 times the size of its perennial rival Hong Kong, and it is instead comparable with Taiwan (22.8 million), Australia (20.9 million), and Chile (16.1 million) in terms of population, and the US state of Delaware (6,447 sq km) in size.

Still, Shanghai is the smallest among China’s 31 provinces, autonomous regions, and municipalities (Delaware, too, is the second smallest), with 0.066 percent of China’s vast territory, and by population, it ranks 25th, making up only 1.32 percent of this most populous country on earth.  

By contrast, Shanghai’s population density is the nation’s highest, 2,699 per sq km, and so is its per capita GDP, US$5539 during the first half of 2005, while its overall GDP is the seventh largest among the 31 regions, or 5.36 percent of the national GDP, amounting to 625 billion yuan (2003) after the sixth largest Henan (704 billion yuan or 6.04 percent, but with 5.5 times the population of Shanghai).

The most controversial measure for Shanghai is its per capita GDP, because it is a whopping 13 times that of the poorest province, Guizhou, but only one-fifth of Hong Kong.  The gaps on both ends are actually bigger than these numbers suggest, however, and how to solve this dilemma (catch up with Hong Kong without expanding income disparities within the Mainland) should be the centerpiece of Shanghai’s future strategy.


Upside

In the first half of 2005, Shanghai’s GDP advanced to US$48.5 billion, or an annualized US$97 billion.  Yet, Hong Kong’s GDP is still 70 percent larger, whereas Hong Kong’s population is only two-fifth of Shanghai.  By industry, agriculture is nonexistent in both cities, while manufacturing accounts for 50 percent in Shanghai but a mere 4 percent in Hong Kong, and in exchange, the service industry is 88 percent of GDP in Hong Kong but 45 percent in Shanghai.

Within the service industry, the size of the financial sector must be the concern of many people.  Hong Kong’s financial sector is generating about US$20 billion so far this year, or 13 percent of GDP and 14.8 percent of its sizable service industry.  On the other hand, Shanghai’s financial sector is half of that, US$10 billion, but comprises 10.5 percent of GDP and 47 percent of the service industry.  

It appears that Shanghai’s service industry is financial sector-oriented, but it is unsure whether the financial markets are centered on Shanghai or Shanghai is centered on the financial sector.  In either case, we could probably argue that Shanghai is a financial center, although their meanings are quite different.

Externally, in foreign trade, Shanghai should be way ahead Hong Kong already, right?  Not really, since Shanghai’s exports, US$140 billion during the first six months this year, are 5 percent larger than Hong Kong’s, while Hong Kong’s imports are also US$140 billion and it is 28 percent larger than Shanghai’s imports, US$109 billion, so overall, Hong Kong’s total foreign trade is still larger by 9 percent (including re-exports in and out of both Hong Kong and Shanghai).     

The gap in foreign direct investment (FDI) is even wider.  At the end of 2003, Hong Kong had about US$380 billion outstanding position, although net changes were marginal in recent years.  On the contrary, foreign money is tumbling into Shanghai, US$6.5 billion in 2004 and US$3.9 in the first half of 2005, but its outstanding position was still US$46 billion at the end of 2003, one-sixth of Hong Kong’s in aggregate, and one-fifteenth on a per capita basis.

Of course, Shanghai will continue to receiving more FDI, going forward, and eventually catch up with Hong Kong, but even with 15 percent annual growth in incoming FDI, it will be only around 2018 when Shanghai finally reaches Hong Kong’s level today, with 10 percent in 2021, and with 5 percent in 2026.  And this is only for the aggregate outstanding position.  For its per capita amount to catch up with Hong Kong, it will take a good while, depending on population growth.  


Downside

While the upside is still substantial, the downside is not limited, either.  Shanghai’s service industry comprised 48.4 percent of its economy in 2003, and it ranked number three after Beijing and Tibet, compared with the (simple) nationwide average of 39 percent.  

Particularly, Shanghai’s financial industry is as large as 10 percent of the city economy, only second to Beijing’s 15 percent, while the national average is just 4 percent.  In addition, the real estate industry occupies 7 percent of Shanghai’s economy, the highest in China, versus 3 percent nationwide.  

These concentrations of the service sectors, primarily high-end services, are the main drivers of Shanghai’s highest per capita GDP, nearly 50 percent larger than second highest Beijing, and five times that of the national pre capita GDP.  But that’s not where a sense of inequality ends

Shanghai received 10 percent of the total FDI in China during 2003, the fourth largest, after Jiangsu (20 percent), Guangdong (15 percent), and Shandong (11 percent), although the top three’s population is far bigger than Shanghai’s 17.1 million; Jiangsu 74 million, Guangdong 79.5 million (as large as 100 million in some estimates), Shandong 91 million.  Consequently, Shanghai’s per capita FDI, too, is the highest in China.

But, Shanghai’s per capita FDI is not only the highest but also way ahead of the rest of the country; twice that of Beijing, close to 3 times Jiangsu, four times Guangdong, six times Shandong, almost 50 times Chongqing, more than 100 times Inner Mongolia, and a staggering 500 times more than Xinjiang.

So, how should Shanghai close those gaps both inside and outside at the same time?  In fact, the gap with Hong Kong may not be a big deal, although Hong Kong’s per capita FDI is 15 times that of Shanghai.  The question is how to close the other gaps, especially with 20 other provinces Hubei and down (where more than 800 million people or nearly or two-thirds of China’s population happen to live), which are actually larger than Shanghai’s gap with Hong Kong, 15 times or more in per capita FDI.

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Post time 2005-8-12 06:38:30 |Display all floors

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Post time 2005-8-12 11:45:45 |Display all floors

Competition between the 5 supercenters in the New Middle Kingdom!

The Battle begins to develop New MIddle Kingdom into a "Middle Class" bloc.

There are five major Supercenters in the New Middle Kingdom. We start from the "wealthiest" and go down to its weakest.

The Pearl River Delta - this consist of Hong Hong, Guandong.
Population = 90 + million
GDP = Rmb 4.2 trillion.
Business: Textile, garment, toys, construction material, petrochemical, logistics, electronic, electrical, auto parts, household consumeables, constuction materials, white goods, and motor vehicle assembly.

The Kuala Lumpur-Singapore-Thailand supercorridor.
Population = 90 + million
GDP = Rmb 3.4 trillion
Business: Car assembly (2.6million unit), Petrol chemical (2.0mbd oil equivalent), Textiles, electronic, auto parts, tropical commodities, ship repair, logistics, and oil rig construtions.

The Shanghai-Zhejiang-Jiangsu
Population = 120 + million
GNP = Rmb2.9 trillion
Business: Ship building, car assembly, aerospace, autoparts, Petrochemical, Textiles, garment, nick nacks, household consumeables, aircraft industry, logistics, electronics and white goods.

The Beijing-Tianjin supercenter
Population = 60 + million
GNP = Rmb 2.0 trillion
Business: Car assembly, electronics, software, National MNC HQ, logistics, Federal government capital, think tanks, high technology centre, auto parts assembly.

The Chonqing supercenter.
Population = 40 + million
GNP = Rmb 0.65billion
Business: Car assembly, aeropace, nuclear sciences, military-industrial establishments, petro chemical, auto part.

Wow!

Let the laggards now chase up with the leading regions!~


cheerios!

Game master
Lord of the code.

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Post time 2005-8-12 11:56:10 |Display all floors

And the developed region of the New Middle Kingdom.

The benchmark would be the "developed regions" of the New Middle Kingdom.

Kanto-Kansai region
Population=  60 + Million
GNP= Rmb 25 trillion
Business: Car assembly (15 million units), ship building, computers, high end electronics, R&D centers, Precision Engineering, Turbines, auto parts, robotics.

Seoul-Pusan region
Population = 30 + million
GNP = Rmb 5.7 trillion
Business: Car Assembly (4 million units), ship building, textiles, petrochemical, electronics, computer, R&D center, Precisiin Engineering, auto parts.

Taipei-Kaoshiong region
Population = 15 + million
GNP = Rmb 2.0 trillion
Business: Computers, Petrol chemicals, textiles, electronics, semiconductors, R&D center, Precision engineering, auto parts.


Wow!

Can match any bloc in the world!!!!!


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Post time 2005-8-12 14:01:28 |Display all floors

Reply: Shanghai Strategy

It is quite stupid to compare GDP per capita between Hong Kong and Shang Hai.

HK is isolated from rest part of China, it keeps the pay rate and retail price as high as western countries without compitition from rest part of the country.

A truck driver in HK would say fvck off if he get paid 3000RMB per month, but a truck driver in SH couldn't say that because another truck driver from Anhui, where is only few hundreds KM away from SH, would jump in for 1500 RMB per month only.

One of my relatives, a high school teacher, only got paid 1000 RMB per month in a remote small town in NE China. When he got a school teacher's job in Shanghai, he was, and still is, very happy with his 4000 RMB per month.

Many years ago, the first time I went to HK, it cost me 20 RMB for a bowle of noodle, but it cost only 3 to 5 in Shanghai and rest part of China.

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Post time 2005-8-12 14:04:20 |Display all floors

greendragon

The two lists are important and i salute the efforts taken to compile them, for if i take all of the places mentioned in both lists but drop the SEasian corridor, then Shanghai sits at the CENTRE of the circle covering all the places you've named.

As the dragonhead of China, Shanghai will then be the new nucleus of this circle of growth.

Something as a nucleus spells neural network.  If Shanghai supremacises her telecommunications network and quickly moves herself as the preeminent knowledge development centre of Asia, then her role at the centre of this super-ring can create this century's greatest economic model.

She now has modern megapolis infrastructure, telecoms, ports, warehouses, financial hub, suburb manufacturing; she soon will spearhead services: tourism, entertainment, education.

By virtue of her being THE centre of this circle, Shanghai can be the stepping stone not just to other great cities in China but also to the other great cities of the rest of Asia;  for that, a couple of things are needed:  just as Singapore's Changi very quickly became the cross-country aerohub of SEAsia, Shanghai must too be the locus or hub for connecting- flights for the WHOLE of Asia that is within that circle.  People can be persuaded to stay a bit longer, and go into the CBT to make some money; perhaps Pudong airport terminal itself can become a virtual transit 'office' for such business travellers.  Connectivity and choice of mobility are the two key factors in this example.

Shanghai can also portray herself as the cuisine centre of Asia;  yes, there are many who have done so elsewhere - Hong Kong, Beijing, Tokyo etc but i am talking about something else : a new series of programmes that fuse the concept of hotelling with resort-living with food-tasting with 365-day expositioning.

And by resort-living, let me add: China's OWN Disneyland.  I don't mean mickey mouse, donald duck or pocahantas imported straight from LA;  i mean the monkey god and all the other richly-tapestried marvels of China's age-long classical literature - brought to technicolour life by the genius of..

China's computer ANIMATORS.

... which leads to Shanghai becoming the computer animation hub of Asia, more than the anime makers of Japan, the computer gamers of Korea, the microprocessor producers of Taiwan-of-China.....

...hybridised with Shanghai as a knowledge centre; replete with maple-leaved foliage of a new mega-sized intellectual centre that fuses all the best thoughts and ideas of the West with all the best thoughts and ideas of China, Korea, Japan, even India and Russia....which leads to..

Shanghai as a design centre for Asia:  from modern skyscrapers to functional homes, from ceramic products to garments, from stationery to aircraft, she can be the home to the world's best architects, fashion designers, packaging creators..the works...

...propelled by a new stock exchange that is the oasis of capital generation for entrepreneur and technology companies to rise from their limitations to achieve greatness in this century..

So it only remains to ask:  why not turn the Bund in the evening into China's greatest open-air shopping area - not just the brightly-lit shops and restaurants, and the closed banks, but also street upon street, multicoloured lit stalls for people to buy all sorts of things, bric-bracs and toys.

There are so many ideas out there, morph and modularize them, and Shanghai Strategy can be China's theme song to revive the world's economy in one masterstroke.

mark wu

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