China in Jan 2014.
China As I see it in Jan 2014
I am continuously amazed by China every time I visit the country – even though my trips are hardly an year apart. It is a very interesting country and I would like to share my views on how I see it.
Wuhan:
I would like to talk about Wuhan in this post - as the last 2-3 trips I have been to this city in Hu Bei province. It is considered as mainland china and this city doesn’t rank in the Tier-1 cities (Shanghai, Beijing, Shenzen etc.). Wuhan is one of the fast growing cities in China – as more and more businesses are shifting to Wuhan for the reasons of low costs for real-estate, labour cost, salaries. I stayed in a posh 5-star hotel called Ramada in Optics Valley. It is situated in the optics valley square and commands an excellent view of the malls and the parks around.
Infrastructure:
Wuhan, even though not a Tier-1 city, is very well planned with wide roads in the city squares. There is quite a lot of planning done in the newer areas of the city. You could see Solar and Wind power being used to power the street lights in the newly built roads – pretty good sign. Wuhan traces it’s fast path of development to less than 7-10 years. Considering the new developments are initiated less than a decade ago, it is remarkable how fast China is developing the rural landscape into one that of a modern, well f
Great demographics:
China is full of young people. It is more true with Wuhan as there are lot of universities around (close to a 100 universities). While on the street, you get to see mostly young couples all the time. This seems to be inline with what Wikipedia says about Chinese demographics with more than 50% of the population below 40 years. This is definitely great for a country – more earners and less dependants at a macro-economic level.
Woes of China:
China’s growth story is not without its own problems. There are a host of problems which haunt – even the newly developed cities - and the real success of China depends on how China can handle/solve those problems.
Pollution: I had been once or twice lucky to see a clear sky or a bright sky in Wuhan. Some of the days, it rained heavily – thus having poor visibility. Even on the days where there are no clouds, you could hardly see the sun – the orange ball (not yello) raising seen in the sky at 8.00 am in the morning. The pollution is so significant that there is a dense fog-like layer over the city all the time. Some of the Chinese wear masks on their nose to avoid the pollution. For an occasional visitor, it is amusing to see these men and women in mast as if they were going into surgical theatre, but a deeper look shows that the levels of pollution are really high.
Traffic Snarls:
Did I praise China in the above paragraphs for excellent roads and infrastructure? Yes indeed, but I didn’t mention that even the newly planned infrastructure (though very good) still falls short of the ever raising needs of the citizens of the city. This could be because of the huge influx countries like China and India have into their cities from the rural side. It is a significant challenge to create infrastructure when the demands are always surpassing the planning and execution.To go to the airport from the hotel takes more than 1.5 hours even though it is only 60 KM from the city square. Moreover, 1.5 hours is still optimistic. Cab drivers don’t want to take a bet on how much time they will need to get to the airport. On the same note, one morning I woke up and looked out of my window to realize a huge traffic jam around 7.00 am and cars crazily jamming the opposite lanes out of the frustrations. You wonder, is it really getting better?
Money-rich:
I am not sure if this should go into the positives section or into the negatives section. But, China has lot of billionaires and there are countless people who could flaunt their Audi’s, BMWs, RangeRovers in the street. Thanks to the riches, the city is filled with too many cars and the discipline to use the Sub-way is not really honoured. These rich people not only cause traffic jams, but make the prices of commodities, real-estate go up – thus making China more and more expensive.
The mall-culture:
China seems to be at the risk of losing it’s age-old traditions pretty rapidly. Even though communist by banner, China is highly capitalism oriented country (I know the politicians of China have their own term to describe their love for capitalism instead of calling it capitalism). You get to see lot of malls, super markets, crowded with people – especially young people all the time of the week. You get to see the same popular western brands (Nike, KFC, McDonalds etc.). Trying to get a Chinese porcelain doll OR a Chinese board game without entering into the malls is a difficult proposition. In the malls, you do get some of the native Chinese traditional stuff – but they are not only over-priced but also offered with very limited options and with a clear eye on the rich people and the tourists.
Chinese government should do more to preserve the traditional crafts, markets and provide a right blend of their cultural traditions along with the western world concepts like Malls, theatres, restaurant chains etc.
Commoditization of Software:
There is hardly any reason to talk anymore about the commoditization of hardware. China, Taiwan, Korea have to be credited with making the hardware a commodity in today’s world. Watch-out as China moves one step-closer to the commoditization of Software as well.
The company I visit in Wuhan is a very highly reputed Chinese company with it’s head-quarters in Shenzen, China. In the last 2-3 years, the company realized that Shenzen has become too costly for it’s operations and agreed to shift some of the units (several thousands of employees) to Wuhan – a low cost destination in the middle of China*. Only reason cited for moving the company from Shenzen to Wuhan is cost. In this trip, I realize that the company has again aligned with Government and shifted their offices out into the barren lands 20 KM away from their previous offices. At first glimpse, on the way to their office, one don’t believe that a company could be so far away from the city where hardly any humanity exists – as you see neatly well laid out new layouts but not many vehicles or humans commuting on the road. Finally when we land at the office, I was told that the company has built appartments next to their offices and it rents out the flats at a very low rate for (bachelor) employees who would like to stay closer to office. For the convenience of those employees, there is a shop with all basic ameneties (like groceries) near by and there is a bus-service once an hour to go the city. The whole scene remids me of a College with hostels far away from the city – so that students stay focussed on their studies ! Kudos - Higher productivity at the end of the day for the company I visited (by removing most of the distractions). Typical start-up culture but from a mamoth company. To my surprise, I was told that the company is still renting out the buildings currently and it plans to make it’s own buldings soon to avoid even those ultra low cost rentals needed for office space.
Even though the office is far out, I am sure the area would buzz with activity in 2-3 years – with lot of restaurants, shopping malls etc. It may not look like a remote area any more and then …. The company might again shift out even farther to lower the costs and maintain it’s competitiveness in a global market. Capitalism at it’s heart – but wait I am in communist country isn’t it?
Nevertheless, it is very clear that Software these guys work will become a commodity soon and the differentiation would only be price ! Could we compete?
This raises basic questions on capitalism and the way it is understood in some of the developing world. I only wish this is not a race-to-the-bottom. The good part is: Once commodotized, the developed countries have to get out of the current game and innovate more !
Wrapping-it up !
I would like to wrap-up by saying whatever happens in China finally affects many in the world. So, watch-out how China as a country develops and that could well hold major clues for the rest of our futures !
* The working culture of this company (including the workspaces for the employees) needs a completely separate blog and hence I would like to skip.