Ten things you should know about China

Ten things you should know about China
There's more to China than milk. In fact, the country is following the same trajectory that Japan and Taiwan have already pioneered, Vincent Heeringa observes.

We hear a lot about the industrial might of China, so it was fascinating to see it up close during a visit in June. It forced me to address some of my prejudices and rethink what role China might play in our entrepreneurial future.

I was the guest of German sciences company Bayer, which has a significant presence in New Zealand but is much bigger in China.

My impression of Chinese industry is based on a home full of plastic junk and my kids wanting to know why their undies are made in China. Yes, I know about Joe Bennett’s book, which brings out the humanity behind all those undies factories; and I do read The Economist, so I should know about China’s brisk march to modernity, but there’s nothing like seeing things for yourself. Here are 10 personal surprises about Shanghai – and one rather grand conclusion.

ten things you should know about china - vincent heeringa

1.    Shanghai streets are very clean. The air pollution is rank, the traffic is mental and locals joke about their rivers flowing with pork soup. But just as in Singapore, these people keep their footpaths pristine.

2. They do great pizza. And cocktails. And falafels. And burgers. And sushi. And steak. Who knew that the ‘Paris of the East’ would be so cosmopolitan? Duh.

3. They love their BMWs, Audis, Mercedes, Chryslers and VWs. But there’s not a Japanese car in sight. Maybe a Toyota and two Nissans. But that’s it.

4. On the (excellent) underground metro, I saw about four million mobile phones in operation. And one person with a book.

5. I saw two sports fields, both at a university. “We have lots of fields in Auckland,” I said. “But why?” asked my Chinese host.

6. R&D is the new religion. Bayer took us to Shanghai to witness the opening of its new polycarbonate research centre. It was originally planned for Taiwan but the lure of customers and more importantly, university-trained talent, was too strong. Right now, Japan and South Korea are Asia’s leaders in R&D spending. But China is catching up. It accounts for about 15 percent of total global R&D and overtook the USA in 2011 to become the leader in patent filing. As a proportion of GDP, China’s R&D expenses will increase from 1.75 percent in 2010 to 2.2 percent by 2020. As a colleague from Taiwan muttered while we drove slowly through the Bayer facility: “We used to beat them on innovation. But how do we compete with this?”

7.    Inner Shanghai is bristling with trees, a pre-Olympics beautification initiative. The city is a signatory to One Million Trees, a global initiative for mass planting.

8. Outside of the spectacular CBD is a vast, grey patchwork of dreary apartment blocks, motorways and shopping malls.

9.    Sustainability is hot. From protests about new chemical plants to the death penalty for perpetrators of food scandals, the pressure to create a greener future is simultaneously coming below and above. It’s fuelling greater innovation. At the gigantic Shanghai Chemical Industrial Park, south of Shanghai, emissions and safety regulations are so tight that Bayer is using its plant to model new emissions technology.

10. Housing and construction are high on the green agenda. Chinese buildings are poorly insulated and as part of a rewrite of building codes, new buildings must achieve 50 percent energy savings compared to 1980 levels. It’s fuelling innovation in construction, with an estimated 450 million square metres of retrofitting in the next five years.

All which made me think that it’s a mistake to think that China is stuck in a low-cost, plastic junk economy. It’s following the same trajectory that Japan and Taiwan have already pioneered.

Given that our economic future is so closely tied to that of China, perhaps it’s our high-tech, high-IP firms that could lead the charge? There’s more to China than milk.