Exporting the Shenzhen Model

The Shenzhen Model not only shapes neidi development, but also the form and content of China’s recent push to expand and develop its international presence. Friend Jonathan Bach directed me to the article, African Shenzhen: China’s Special Economic Zones in Africa by Deborah Brautigam and Tang Xiaoyang. The article contextualizes contemporary Chinese investment in Africa, concluding that:

“These zones are using an unprecedented business model in Africa. Although there are exceptions, most economic zones in Africa, especially sub-Saharan Africa, have historically been developed and operated by governments, and the results have often been disappointing (FIAS 2008: 31). In China’s own zones, government agencies were also responsible for their development, with generally good results. However, the new Chinese zones in Africa are not being planned by government bureaucrats and given to Chinese firms to implement. Instead, they are designed and established by Chinese enterprises spontaneously according to their assessment of business feasibility. The Chinese zone developers are expected to bring future-oriented design, high-standard infrastructure and world-class professional management to help industrial investors survive the harsh market environment in Africa and facilitate their growth.

In some parts of Africa, clusters of dynamic industrial development have arisen spontaneously, as private initiatives. If the expectations for the Chinese-run zones are realised (and the jury is still out on this), these cooperation zones could form a synergistic third model, combining the market forces of existing clusters with the systematic organisation of the top-down model. If so, this would help the business sustainability of the zones. The scale and experience of the developers mean that they are less vulnerable, and better connected to networks of capital, ideas and support than Africa’s existing clusters.

These developments may yet come to naught, given the obstacles that have beset past efforts to develop economic zones in Africa. They face significant challenges of inclusion, communication, and integration with local economies. Yet the timing is right for some African countries to catch the new wave of investors coming out of China. If even some of these experiments lead to a genuine transfer of knowledge and opportunity from China to Africa, much as happened with Japan and south-east Asia in the 1970s and with Hong Kong and Mauritius in the 1980s, employment could see significant gains and, in some spots, long-delayed industrial transitions may yet be realised (CHINA’S SPECIAL ECONOMIC ZONES IN AFRICA 51-2).”

To get a sense of why export Shenzhen and not Chongqing, check out the urban distribution of China’s top 679 enterprises. Not unsurprisingly, Beijing’s national state-owned enterprises dominated the list and Shanghai came in second. However, Chongqing had a mere 18 companies in the top. In contrast, Shenzhen came in third, with 52 top company headquarters. Moreover, the Shenzhen companies tended to be in the hi-tech, financial, or service sectors, representing the highest growth in new, rather than traditional industries and are precisely the companies investing in Africa.

Shenzhen-based Huawei‘s global expansion continues to accelerate, for example. Founded in 1987 by Ren Zhengfei, is the largest China-based networking and telecommunications equipment supplier and the second-largest supplier of mobile telecommunications infrastructure equipment in the world (after Ericsson). Likewise, Shenzhen-based Tencent made Forbes Magazine’s list of Asia’s Fab 50 companies and although the company is not yet in the China 500, it is the country’s largest and most-used Internet service portal. Other top Shenzhen companies include: Ping An Insurance (finance), ZTE Corporation (telecommunications), Vanke (real estate), and OCT Group (real estate).

And yet. These rankings indicate increasing inequality between regions, also explaining the ongoing appeal of Maoism.

One thought on “Exporting the Shenzhen Model

  1. Pingback: China and Africa: Exporting the Shenzhen Model · Global Voices

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