Shunde finds key to industrial success

PUBLISHED : Tuesday, 05 October, 1999, 12:00am
UPDATED : Tuesday, 05 October, 1999, 12:00am

It has been an era of remarkable achievement for Shunde, the once sleepy rural community of one million people 30 kilometres south of Guangzhou.

Over the past 20 years, the city and its surrounds has transformed itself from an agricultural producer of rice, silk, flowers and sugar into a fledgling industrial prefecture and one of the four little 'tigers' of the Pearl River Delta.

Now the Guangdong government has declared Shunde's market experiments a success and designated the city a 'modernisation' experiment for the entire province.

Shunde officials have warmly embraced the challenge, vowing to fully modernise the city's economy by 2005 and double last year's gross domestic product of 25.9 billion yuan (about HK$24.17 billion) and per capita GDP of 24,769 yuan by then.

According to mayor Feng Runsheng, Shunde's advantage started with the municipal government's early understanding that development of township and village enterprises (TVEs) offered the county its best opportunity to industrialise its economy.

By 1990, Shunde boasted 19,540 TVEs, with the largest 28 collective corporations accounting for industrial output of 3.3 billion yuan, or 72 per cent of the county's total.

The government, however, never grew complacent and constantly worked to improve oversight and management, with the general understanding that by distancing government from enterprise administration, businesses would grow more responsive to market demands and hard budget constraints.

The real breakthrough came in 1993, when the government realised that, without reform of its shareholding structure, Shunde would face a string of debilitating enterprise failures.

Of 1,000 TVEs at the municipal and township level, 259 held debts totalling 820 million yuan, with unpaid bank loans for the entire sector amounting to 2.1 billion yuan.

Starting in 1993, government departments were streamlined while enterprises were allowed to adopt a shareholding structure that essentially paved the way for leaner and stronger management.

By 1995, the transformation was essentially completed and last year Shunde clocked unprecedented industrial output of 65 billion yuan.

'Before the reform, we were masters of the enterprises, now we are their servants,' Mr Feng said of the process of economic restructuring.

However, it was those changes that allowed the formation of Shunde's leading brand names, which include a stable of national household appliance contenders such as Wanjiale, Meidi and Galanz.

'Shunde products occupy more than 20 per cent of the national market in eight sectors,' Mr Feng said.

These include air conditioners, refrigerators, washing machines and microwave ovens.

The rise of household appliance manufacture has also attracted US$3 billion in overseas investment.

Arrivals include the likes of Toshiba, National, Sharp, Sanyo and Bosch setting up shop within Shunde's jurisdiction.

Mr Feng, who is not shy of making a pitch for the city, went on to say that Shunde's streets were safe for foreign capital and capitalists to go about their business, free from fears about crime.

'In the past 20 years, I can say there has not been one incident of kidnapping or blackmailing of investors from abroad,' he said.

There were four factors that were a gauge of the success of a city's economic development, the mayor said.

These were rising tax collections and the presence of five-star hotels, McDonald's hamburger restaurants and golf clubs.

Shunde boasted them all, Mr Feng said, which meant 'the standard of living here is pretty good'.