The Possiblity of Shanghai
This posting is going to be a little different than those I have made before. For those who are new to my blog site, welcome. This posting is mostly for you.
As mentioned, I want to share the research that I did in Shanghai with as many interested individuals as I can, in the hopes of contributing to something significant in the end. For those who haven't read how this research was carried out in context, please feel free to visit http://theroadnottakenbytim.blogspot.com/ starting from "The Rest of November" onwards.
So, without further ado, here it is: The Possibility of Shanghai.
...
The Possibility of Shanghai
Upon embarking on what would be a 3 month long adventure working at a language school in Shanghai, China, I decided I would do more with my time than just sight-see. Once there, surrounded by the entrepreneurial spirit of the people I had become acquainted with, I was encouraged to pursue my own investigation into what business opportunities there really are for me, an aspiring industrial designer. My research led to some revealing and insightful discoveries of current domestic and international attitudes towards the industrial development of the “new” China.
I have had a passion for personal transportation and ideas relating to environmental sustainability, specifically the challenge of commercializing alternative energy technologies, since grade school. Thus, most of my research focused on this topic. Shanghai, being the new hub of East Asian automotive manufacturing, and part of a country that can still afford cheap production costs, only seemed like a logical starting point.
My journey started with fifteen pages worth of contact information I put together while there, of firms with some relation to the automotive industry. Although I had few leads on who to talk to, and in some cases did not even know what some of the firms did (due in part to a language barrier), I was nevertheless fortunate to secure meetings with vice-presidents, managers, and senior designers of domestic Chinese and foreign firms, who for the most part were happy to engage in lengthy discussions, some of which I will expand on here. Because these meetings were made with relatively little prior contact, many of the questions I asked were impromptu and varied from meeting to meeting. My intention was to open up discussion to its fullest extent to provide for a meaningful dialogue on both sides.
My first meeting, and probably most important of all that I managed to arrange, was one on one with Dr. Ma Jun, the Vice Dean Deputy Professor of the Automotive College of Tongji University, and a subsequent meeting including the Production Technics Department Manager of Shanghai Volkswagen (SVW) Powertrain Co., Ltd. These two meetings sparked the imagination of our minds, and energy to follow through with this research.
Tongji University, being one of the nation’s largest universities, receives substantial funding from the Chinese government for the development of new energy technologies, automotive manufacturing policy and development feasibility research, in China. In the words of the College of Automotive Studies information booklet, the college “is an important base in China that offers academic courses, conducts innovative research and provides technical support for the automotive industry”. SVW, a subsidiary of SAIC (Shanghai Automotive Industry Corporation) Group – is part of China ’s largest automobile manufacturing chain, and one of the world’s Fortune 500 companies. Like many other German companies, SVW had an early start in supporting the industrialization of China and as such maintains a lot of influence within the industry. The collaborative efforts of these groups, Tongji University and SAIC, along with their guanxi (relationships) with provincial governments, make them some of the bigger players in China’s rapidly growing economy.
In my meetings at the univeristy, mega projects, those on the scale of hundreds of millions of dollars, with massive production targets, were the major topic of discussion. Can an entire factory chain dedicated to the low cost production and exportation of remanufactured automotive parts be made? It’s possible. Can research and development facilities for testing hydrogen fuel cells and other forms of alternative energy propulsion methods be produced? It’s possible. Is there the ability to experiment on the use and acceptance of new energy/automotive products in the Chinese market, before selling elsewhere? It’s all possible.
The university, as I learned, is an interested financial and manufacturing backer for new venture ideas that relate to the development of the Chinese automotive industry (mainly in the areas of new energy technologies and automotive part remanufacturing). A common arrangement would see products sold through one of their affiliated companies (such as SVW), but the possibility of forming new joint venture partnerships (a common method of conducting international business in China) is also there. The major point stressed in our meetings, was that business and social relationships are interconnected in China. Those that are serious enough to make a commitment to China with the long term in mind, can look forward to a loyal, long-lasting relationship for years to build upon. This is essentially the idea of guanxi. The rest of my meetings echoed a similar sentiment.
The former Senior Design Manager of the SAIC (Shanghai Automotive Industry Corporation) Interior & Exterior Section of the Product Engineering Department, a native of England, also expanded on the topic of guanxi and the drive to undertake venture projects. Matched with the ability to “find the contacts” needed through these relationships, it seems most anything is indeed possible.
A representative from Shanghai Automobile Import & Export Co., Ltd (SACO) “an affiliated foreign trade company to SAIC Group… [with business including] the export of vehicles, automotive parts and accessories, and other mechanical and electrical products; the wholesale, retail, maintenance and repair of imported vehicles, as well as the import of technology, equipment, CKD parts and raw materials for [the] automotive industry” (SACO Profile Booklet) further taught me of the importance of the SAIC Group. The SAIC Group is a parent corporation that controls a large portion of transportation development activity within China. SACO alone, being the Group’s major exporter of OEM (Original Equipment Manufacturer) parts, works with more than 20 of SAIC’s subsidiary companies to manufacture and assemble auto parts. In 2005, SACO had RMB 200 million (US$25 million) of registered capital, exporting RMB 960 million (US$120 million) of product in 2004, a 100% increase from just four years prior. The SAIC Group has 49 similar subsidiary companies, of which only a hand full are joint ventures with foreign companies.
A meeting with the International Business Department Manager of Shanghai Huizhong Automotive Manufacturing Co., Ltd. provided another example of the scale of the undertakings of these companies. Shanghai Huizhong exports automotive parts through the SAIC Group to 80 countries worldwide, with a production volume of no less than 50,000 units.
The Research & Development Manager of Shanghai Valeo Automotive Electrial Systems Co., Ltd., a native of France, expanded on the topic of SAIC Group. Like the automotive industry’s own central government, the SAIC Group has the authority in China to approve or disapprove foreign companies from entering or taking part in the Chinese market. Even decisions over what products may or may not be marketed is largely determined by the Group.
Despite the seemingly heavy-handed control of the corporation, a meeting with the Vice General Manager of Shanghai Shuanghua Automobile Air Conditioner Parts Co., Ltd (Shanghai Youshen International Co., Ltd), in one of Shanghai’s newest office buildings in the PuDong district, revealed the eagerness of members of the Chinese automotive industry to help companies gain approval by the Group. Part of the reason relates to the increased demand for Chinese manufacturing and assembly. Shanghai Shuanghua alone grew to 80% of its current annual 2 million unit production by its third year of operation, in 2000. Since then, the company has grown to include a marketing division, which now sells 70% of their product to North America and Europe.
Though most of my research focused on these kinds of business opportunities, I could not overlook the concern for human rights in China. A meeting with the Commercial Department Supervisor/Export business of Shanghai Koito Automotive Lamp Co., Ltd. gave me a glimpse into the working conditions of their engineers, and a meeting with the Production & Technic Department Manager of Shanghai Ogihara Dies Co., Ltd. revealed the working conditions of their labourers.
My degree in Industrial Design and 7 years of professional and educational manual workshop experience, provided a broad knowledge of North American manufacturing facility standards, with which I felt able to critically inspect these workplaces. My end analysis showed both environments to be safe, clean, well organized, and the workers content. While I acknowledge these are only single observations, and cannot be used to represent the general manufacturing working conditions of Shanghai, let alone China, it was a relief to take note of.
Upon leaving Shanghai, my general impression of the greater Shanghai manufacturing community, both Chinese and foreign, was one of an ability and desire to make possible business that would otherwise be difficult to set up elsewhere, possible. They are risk-takers and willing to take on the challenges of new venture business. The fact that I alone was able to meet with some of these people surely says something about the ability to shrink the corporate ladder. For entrepreneurs and idealists, this is wonderful news. Despite China’s reported poor regard for the environment and human rights, China, if not at least Shanghai, has the potential and eagerness to really take some innovative steps towards setting an example of how to obtain sustainable economic and environmental development for the rest of the world. All they really need, and seem to be asking for, along with the common request for technological and financial support, is to be heard and seen.
My final meeting, and probably the best example of this need, came only a few days before returning to North America. A PhD student from the School of Economy & Management at Tongji University who had helped me set up my first meeting with Dr. Ma Jun, asked to meet with me individually. Over lunch, I he told me of his own plans to make Shanghai better known for its possibility. Since that time, he has managed to enlist a business consultation company in Shanghai to provide an entrepreneurial training program for companies wanting to operate in China that desire the necessary cultural skills and market information to engage in successful enterprises there. The hope is that by providing this service, foreign companies in Shanghai will be better prepared to take on these projects of possibility.
While this research summary only touches the surface of what is truly possible there, my hope is that it provides inspiration to others who have the same entrepreneurial spirit and just cause. In late March, I plan to attend the Ever Monaco Ecological Vehicles and Renewable Energies International Exhibition and Conference to further share this information and what I have found since my time in Shanghai.
For those who have any questions or comments about my research, including references, please leave a message on this site, or contact me directly at tsingh@ualberta.net.
Have a wonderful day.
As mentioned, I want to share the research that I did in Shanghai with as many interested individuals as I can, in the hopes of contributing to something significant in the end. For those who haven't read how this research was carried out in context, please feel free to visit http://theroadnottakenbytim.blogspot.com/ starting from "The Rest of November" onwards.
So, without further ado, here it is: The Possibility of Shanghai.
...
The Possibility of Shanghai
Upon embarking on what would be a 3 month long adventure working at a language school in Shanghai, China, I decided I would do more with my time than just sight-see. Once there, surrounded by the entrepreneurial spirit of the people I had become acquainted with, I was encouraged to pursue my own investigation into what business opportunities there really are for me, an aspiring industrial designer. My research led to some revealing and insightful discoveries of current domestic and international attitudes towards the industrial development of the “new” China.
I have had a passion for personal transportation and ideas relating to environmental sustainability, specifically the challenge of commercializing alternative energy technologies, since grade school. Thus, most of my research focused on this topic. Shanghai, being the new hub of East Asian automotive manufacturing, and part of a country that can still afford cheap production costs, only seemed like a logical starting point.
My journey started with fifteen pages worth of contact information I put together while there, of firms with some relation to the automotive industry. Although I had few leads on who to talk to, and in some cases did not even know what some of the firms did (due in part to a language barrier), I was nevertheless fortunate to secure meetings with vice-presidents, managers, and senior designers of domestic Chinese and foreign firms, who for the most part were happy to engage in lengthy discussions, some of which I will expand on here. Because these meetings were made with relatively little prior contact, many of the questions I asked were impromptu and varied from meeting to meeting. My intention was to open up discussion to its fullest extent to provide for a meaningful dialogue on both sides.
My first meeting, and probably most important of all that I managed to arrange, was one on one with Dr. Ma Jun, the Vice Dean Deputy Professor of the Automotive College of Tongji University, and a subsequent meeting including the Production Technics Department Manager of Shanghai Volkswagen (SVW) Powertrain Co., Ltd. These two meetings sparked the imagination of our minds, and energy to follow through with this research.
Tongji University, being one of the nation’s largest universities, receives substantial funding from the Chinese government for the development of new energy technologies, automotive manufacturing policy and development feasibility research, in China. In the words of the College of Automotive Studies information booklet, the college “is an important base in China that offers academic courses, conducts innovative research and provides technical support for the automotive industry”. SVW, a subsidiary of SAIC (Shanghai Automotive Industry Corporation) Group – is part of China ’s largest automobile manufacturing chain, and one of the world’s Fortune 500 companies. Like many other German companies, SVW had an early start in supporting the industrialization of China and as such maintains a lot of influence within the industry. The collaborative efforts of these groups, Tongji University and SAIC, along with their guanxi (relationships) with provincial governments, make them some of the bigger players in China’s rapidly growing economy.
In my meetings at the univeristy, mega projects, those on the scale of hundreds of millions of dollars, with massive production targets, were the major topic of discussion. Can an entire factory chain dedicated to the low cost production and exportation of remanufactured automotive parts be made? It’s possible. Can research and development facilities for testing hydrogen fuel cells and other forms of alternative energy propulsion methods be produced? It’s possible. Is there the ability to experiment on the use and acceptance of new energy/automotive products in the Chinese market, before selling elsewhere? It’s all possible.
The university, as I learned, is an interested financial and manufacturing backer for new venture ideas that relate to the development of the Chinese automotive industry (mainly in the areas of new energy technologies and automotive part remanufacturing). A common arrangement would see products sold through one of their affiliated companies (such as SVW), but the possibility of forming new joint venture partnerships (a common method of conducting international business in China) is also there. The major point stressed in our meetings, was that business and social relationships are interconnected in China. Those that are serious enough to make a commitment to China with the long term in mind, can look forward to a loyal, long-lasting relationship for years to build upon. This is essentially the idea of guanxi. The rest of my meetings echoed a similar sentiment.
The former Senior Design Manager of the SAIC (Shanghai Automotive Industry Corporation) Interior & Exterior Section of the Product Engineering Department, a native of England, also expanded on the topic of guanxi and the drive to undertake venture projects. Matched with the ability to “find the contacts” needed through these relationships, it seems most anything is indeed possible.
A representative from Shanghai Automobile Import & Export Co., Ltd (SACO) “an affiliated foreign trade company to SAIC Group… [with business including] the export of vehicles, automotive parts and accessories, and other mechanical and electrical products; the wholesale, retail, maintenance and repair of imported vehicles, as well as the import of technology, equipment, CKD parts and raw materials for [the] automotive industry” (SACO Profile Booklet) further taught me of the importance of the SAIC Group. The SAIC Group is a parent corporation that controls a large portion of transportation development activity within China. SACO alone, being the Group’s major exporter of OEM (Original Equipment Manufacturer) parts, works with more than 20 of SAIC’s subsidiary companies to manufacture and assemble auto parts. In 2005, SACO had RMB 200 million (US$25 million) of registered capital, exporting RMB 960 million (US$120 million) of product in 2004, a 100% increase from just four years prior. The SAIC Group has 49 similar subsidiary companies, of which only a hand full are joint ventures with foreign companies.
A meeting with the International Business Department Manager of Shanghai Huizhong Automotive Manufacturing Co., Ltd. provided another example of the scale of the undertakings of these companies. Shanghai Huizhong exports automotive parts through the SAIC Group to 80 countries worldwide, with a production volume of no less than 50,000 units.
The Research & Development Manager of Shanghai Valeo Automotive Electrial Systems Co., Ltd., a native of France, expanded on the topic of SAIC Group. Like the automotive industry’s own central government, the SAIC Group has the authority in China to approve or disapprove foreign companies from entering or taking part in the Chinese market. Even decisions over what products may or may not be marketed is largely determined by the Group.
Despite the seemingly heavy-handed control of the corporation, a meeting with the Vice General Manager of Shanghai Shuanghua Automobile Air Conditioner Parts Co., Ltd (Shanghai Youshen International Co., Ltd), in one of Shanghai’s newest office buildings in the PuDong district, revealed the eagerness of members of the Chinese automotive industry to help companies gain approval by the Group. Part of the reason relates to the increased demand for Chinese manufacturing and assembly. Shanghai Shuanghua alone grew to 80% of its current annual 2 million unit production by its third year of operation, in 2000. Since then, the company has grown to include a marketing division, which now sells 70% of their product to North America and Europe.
Though most of my research focused on these kinds of business opportunities, I could not overlook the concern for human rights in China. A meeting with the Commercial Department Supervisor/Export business of Shanghai Koito Automotive Lamp Co., Ltd. gave me a glimpse into the working conditions of their engineers, and a meeting with the Production & Technic Department Manager of Shanghai Ogihara Dies Co., Ltd. revealed the working conditions of their labourers.
My degree in Industrial Design and 7 years of professional and educational manual workshop experience, provided a broad knowledge of North American manufacturing facility standards, with which I felt able to critically inspect these workplaces. My end analysis showed both environments to be safe, clean, well organized, and the workers content. While I acknowledge these are only single observations, and cannot be used to represent the general manufacturing working conditions of Shanghai, let alone China, it was a relief to take note of.
Upon leaving Shanghai, my general impression of the greater Shanghai manufacturing community, both Chinese and foreign, was one of an ability and desire to make possible business that would otherwise be difficult to set up elsewhere, possible. They are risk-takers and willing to take on the challenges of new venture business. The fact that I alone was able to meet with some of these people surely says something about the ability to shrink the corporate ladder. For entrepreneurs and idealists, this is wonderful news. Despite China’s reported poor regard for the environment and human rights, China, if not at least Shanghai, has the potential and eagerness to really take some innovative steps towards setting an example of how to obtain sustainable economic and environmental development for the rest of the world. All they really need, and seem to be asking for, along with the common request for technological and financial support, is to be heard and seen.
My final meeting, and probably the best example of this need, came only a few days before returning to North America. A PhD student from the School of Economy & Management at Tongji University who had helped me set up my first meeting with Dr. Ma Jun, asked to meet with me individually. Over lunch, I he told me of his own plans to make Shanghai better known for its possibility. Since that time, he has managed to enlist a business consultation company in Shanghai to provide an entrepreneurial training program for companies wanting to operate in China that desire the necessary cultural skills and market information to engage in successful enterprises there. The hope is that by providing this service, foreign companies in Shanghai will be better prepared to take on these projects of possibility.
While this research summary only touches the surface of what is truly possible there, my hope is that it provides inspiration to others who have the same entrepreneurial spirit and just cause. In late March, I plan to attend the Ever Monaco Ecological Vehicles and Renewable Energies International Exhibition and Conference to further share this information and what I have found since my time in Shanghai.
For those who have any questions or comments about my research, including references, please leave a message on this site, or contact me directly at tsingh@ualberta.net.
Have a wonderful day.
posted by Tim at 7:44 PM
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