Wednesday, September 16, 2009

Dalian, the Bangalore of China

Malaysian economic managers need to read this AFP report to get a reality check on how urgent it is that we need to crank up our economy. I need to do some nagging here even if it is to state the obvious. Dalian, China has enough HUMAN CAPITAL conversant in the ENGLISH LANGUAGE for the city to become an outsourcing hub for multinational companies.

So, while some members of the Cabinet like the Prime Minister and the Minister of International Trade and Industry are urging foreign direct investors to give Malaysia a second look, the Deputy Minister merangkap Minister of Education has decided that PPSMI be abolished in stages. This rojak approach to economic management (yes, education IS part and parcel of economic management...although many Cabinet members may believe that education is only about politics) will have a deleterious effect on Malaysia's economic competitiveness in the medium to long term. Mark my words.

Anyway, read this to get an idea of why I feel exasperated with the language policy reversal:

Once a simple port city on China's northeast coast, Dalian is now the hub of the country's booming outsourcing and IT industries, with dozens of the world's top high-tech firms on site.

In little more than a decade, the city -- located where the Bohai and Yellow Seas meet -- has become home to seven massive business parks, spread out along 30 kilometres (20 miles) of rolling green hills.

About 70,000 people work here for more than 700 companies, more than half of which are foreign-owned or contain foreign capital, according to officials, who say that more than 2,000 companies could be set up here by 2013.

"Dalian has become China's number one spot for outsourcing", both in terms of call centres and management facilities, said Chuck Shi, deputy director of the high-tech zone.

The Chinese port city is following in the footsteps of Bangalore, which became India's high-tech hub and the world's back-office for outsourcing and off-shoring, with 650 foreign and domestic IT firms on the city register.

The result of Dalian's focus on IT has been that economic growth has topped the already impressive national average in recent years, and the city for the second time recently hosted the World Economic Forum's "Summer Davos in Asia".

"The theme of this year's meeting was the resumption of growth. We've faced up to that test pretty well. We posted 11.6 percent growth in the first half," said the city's Communist Party boss, Xia Deren.

The city's main high-tech complex, Dalian Software Park, is home to about 470 companies, 40 of which are on the Fortune Global 500 list.

  • Bird's eye view of the city of Dalian, host of the World Economic Forum's summer meeting. Dalian is now the hub of China's booming outsourcing and IT industries, with dozens of the world's top high-tech firms. Photo courtesy: AFP.


General Electric was the first foreign company to set up shop, and others quickly followed: US computer giants such as Dell, Hewlett-Packard and IBM; Finnish mobile phone maker Nokia; and Japanese electronics firm Sony, to name a few.

In 2007, Dalian scored a major win by attracting Intel, the world's leading producer of semiconductors. The US giant has invested 2.5 billion dollars in a wafer factory here -- its first such facility in Asia.

Xia said at the time that Intel's move could help "kickstart the development of the northeast" Liaoning, Jilin and Heilongjiang provinces, which used to rely on heavy industry that underwent restructuring in the 1990s.

The transformation of Dalian from a naval construction site and a petrochemicals hub to a high-tech centre came in large part thanks to one time mayor Bo Xilai, who later became China's high-profile trade minister.

But even if the decision was political, the money has all been private.

The next phase of the Dalian Software Park -- four times bigger than the current complex -- should be completed within 10 years, with a total of about 15 billion yuan (2.2 billion dollars) invested.

Some of the city's more than 20 universities -- many of them specialising in science, technology or foreign languages -- are expected to set up there, giving Dalian an extra competitive advantage.

The port is hoping to draw even more call-centre and outsourcing business from both South Korea and Japan -- each a stone's throw away -- by offering a highly-trained workforce with top-notch language skills.

Curtis Eubanks, chief of British Telecom's call centre here, told AFP at the 10th anniversary of the park last year Dalian was an unbeatable location.

"Dalian has an impeccable reputation in this area. Amassing such a talent pool in other countries, or even elsewhere in China, would be more difficult and more expensive," Eubanks said.


Raison D'etre said...


Long ago when MSC was in the pipeline, I had imagine Cyberjaya would be something akin to this outsourcing hub.

Wonder what happened to all the fine vision from Tun Dr Mahathir, eh?

Yes, I share your exasperation with MY's reversal of the PPSMI whatcammacallit.

Others are moving forward, but we are pulling inside our tempurung thinking that whatever we have inside would suffice.


walla said...

If they had been conversant in english or other trading languages, all of our sixty thousand unemployable graduates could have been absorbed into our local outsourcing and call-center industry.

The training and exposure they would then be receiving would have stood good stead for them to later venture out on their own with greater confidence anywhere in the world.

Since many of these unemployable graduates actually hail from the rural areas whose language difficulty is one of the reasons for the policy reversal, one is therefore left to ask whether clearer heads had prevailed when making the decision which will have far-reaching consequences on national development in all the years to come in our quest to reach developed nation status.

The MOE must have made the reversal looking at just the rural problem without asking the questions of what is the current already-minute competitive advantage on hand in the whole country and where are the local sources of knowledge that is needed to compete in the near future.

In the former, there are many schools whose students have already invested much effort to learn and use english. In the latter, there is no growing local sources of knowledge for nation-building because we don't do credible or commercialisable research such as found in prolific diversity in the english-speaking world.

Putting the two together would have pointed out that a dual (or three) track system would have wiser. In fact the only course of direction to take, evidenced by the success of other economies which have done so with lesser sentimental frippery.

Now we have one for all but all will only end up having none from the only relevant frame of reference out there - the world - simply because the output from our reversed system will soon be the input to provide future education, thereby perpetuating our global weakness.

Left unattended, a self-inflicted wound will indubitably lead to gangrene, and amputation.

If we look back all the past thirty years or more of government policies, there is a strong and probably supportable suspicion about something best left unsaid directly. However it will inescapably bring up memory of an old adage:

"You cannot make the weak strong by making the strong weak."

To say the least, it is most counter-productive to national progress to let concern for the weakest link in a chain override all other parts. The motor will sputter and the whole vehicle including its weakest links will stall by the roadside as others zoom past while one is still trying to crank up the engine with a spanner of ancient vintage.

And that's the real metaphor in 1MalaysiaF1 for you.

Dalian is a lovely and throbbing sea-fronted international metropolis. It has an interesting history. Being the only locality there on which was fought a war by two foreign powers, remnants of russian and japanese architecture deck some parts of the city.

In its suburbs lie those acres after acres of modern and well organized technology and industrial parks which make the most pointed statement about global-level progress repeated in many other places throughout that most populous country.

There is a visible shift in focus from heavy industries to the soft brainpower industries of today. The pragmatism and single-minded will persists from government down to industry.

walla said...

At one sumptuous vegetarian lunch, the head of one local logistics company took a customer call from overseas and proceeded to speak with offhand ease in japanese. What would have been historically expected to be a negative has been deftly turned into something effervescently positive. Energetic and intelligent, that young lady exuded intelligence in a way which makes one understand why the japanese, master globalists themselves in the last century, were quick to admit admiration for the speed and completeness in which the Chinese entrepreneurs and industrialists have been able to catch up on the global game. Because their worldview has remained intact all along from generation to generation across the centuries.

Geography was not a problem because culture was not a question because the politics was pragmatic because the individual spirit was progressive.

The city itself is just a short hop by plane from Beijing which is just a short trip by train from Tianjin. The whole area formed by that triangle in this north-eastern region of the country receives much FDI, notably from South Korea and Japan, and increasingly from the americans across the ocean.

Also a tourist attraction local and inbound, Dalian is a weekend getaway for many who have made their pile enough to buy the many modern condo's which are a reflection of the country's rapid re-ascension.

China has four seasons; the two mild ones provide welcome relief from the heat of the summer and the cold of the winter. Yet its peoples have been seen to work right through all four seasons as though nothing disturbs their desire to progress themselves. You can see the same earnest hard work in the way the indonesians go to work at the break of dawn. Time is seldom wasted. One wonders if China has only one mild season how many percent more would have been her GDP growth rate per annum.


walla said...

Which remains for us to ask ourselves why it has disappeared from the mainstream here that magic phrase used so many times in the past - "masterplan"?

What is our industrial or national development masterplan today? Why has that word disappeared?

To hazard a wild guess, it has disappeared as folklore because we have strategised ourselves into a hapless and helpless corner. There aren't any more grand ideas we can push in order to excite the people and ignite investment activity because we have literally finished off all our comparative advantages in living memory when we started with a growing economy while others were still fighting their bush-fires. Now our learning and performance curves are declining while theirs are upclimbing.

To a large part, our national wealth and economic well-being depend on foreign investments. If they have the cherry pickings of places like Dalian, why should they park themselves here? Some of the old ones have left as too some of our own local companies.

If people think that we are a nation of slow learners but quick burners, they cannot be faulted for taking their training manuals elsewhere.

In a world where the only KPI is win over lose, winners who fall asleep will quickly become losers.

We may try to take some modicum of comfort in our present rankings. But any investor worth his salt will be wise not to depend on rankings alone. He will call for those factors which directly affect his business. One common factor is brain power. Brains mean knowhow. Knowhow means learning. Learning means language.

Once investments pick up in knowhow industries, then we will have a knowledge-based service-oiled high-income economy. Which will sprout metropolitan lifestyles on which we can then incubate by cross-pollinating network interfaces the very software and intellectual money-spinning activities that will create the new business models which will succeed in this new century of changing consumer profiles. If you have seen Spielsberg's Minority Report last night, it may come to that - all about computing power and virtuality in daily life.

One may however depend on luck for good fortune but to put it mildly there is high likelihood it would be a safer bet to be so extensively good in something that all in the world will come looking for that accumulated expertise. Knowledge, will and skills provide surer tracks to excellence and opportunities.