Turning the right wheels for further economic growth

Contrary to expectations, there was an uncanny silence in the normally bustling streets of Ningbo, a city in Zhejiang province, during my trip in early February. Barring the stray dogs looking for crumbs, there was an all-pervasive silence in the air, apart from thin wafts of smoke emanating from incense burned for welcoming the god of fortune in the Year of the Pig. Perhaps it had a lot to do with the Spring Festival holidays.

It certainly was not the atmosphere I was expecting ahead of my meeting with Ren Lianggang, general manager of P&T Medical Equipment Co Ltd, a leading manufacturer and exporter of medical products like automatic and ultrasonic sterilizers.

"Business has been good last year as we have been getting steady orders from overseas clients," said Ren.

He, however, said that the key was to keep the business going on a steady basis. "It is a tough task as we have to maintain the competitiveness of the products in a rapidly changing global business environment." Retrenchment of employees by some export-orientated manufacturing units due to dwindling orders are also posing concerns for Ren and other firms.

"The competitiveness of some factories comes from cheap labor. We are not too perturbed as our products cannot be easily replicated by others. I think we should be fine," he said.

Ren's optimism also hinges from the fact that Ningbo became the 15th Chinese city to have a GDP of over 1 trillion yuan ($147 billion) for last year, making it the second city in the club from Zhejiang province.

But Ningbo is not content to rest on its laurels and looking to up the ante. The export-oriented city, which has been upgrading its manufacturing sector and enhancing its competitiveness, has identified the biopharmaceutical industry as its next sunrise sector.

"We will focus on using the existing facilities to develop the medical equipment manufacturing industry," said a spokesman of the Ningbo Municipal Economic and Information Technology Committee. "We will also rely on our strengths in chemical engineering to develop the chemical materials and medicine production businesses."

Ding Changfa, an associate professor of economics at the Xiamen University, feels that Ningbo should capitalize on its strengths, rather than compete with other regions.

"Ningbo should not compete with Hangzhou, the provincial capital, in industrial upgrading or with Shanghai for modern service industry or headquarters economy. Instead it should find its own position and advantage, like in high-end manufacturing," said Ding.

"Take the case of Shanghai. It has excessive technology and capital that needs to flow outside the city, while technology education is what is lacking in Ningbo. Ningbo should focus on introducing more education resources so that it can benefit from Shanghai's technology, culture and education resources," he said.

Xu Sutao, deputy general manager of Greatwall Strategy Consultants, feels that "Ningbo must aim for the bigger picture, such as turning industrialization to intelligentization and accelerating the growth pace to Industrial 4.0."

Apart from upgrading its industrial structure, Ningbo also needs to evolve as a city of higher strategical importance, said Xu.

"The development pace in urbanization has fallen behind it's economic growth," Xu said. "It should turn from just being a city to a regional center. Only through urbanization at a higher level, can it embrace a brighter future."