Eye on Shanghai

The East India Company’s opium wars in the second half of the 19th century forced open the Chinese market, laid the foundation for one of the world’s greatest cities, and created a bridgehead into one of the world’s greatest civilisations.

Behind you is something more recent, barely 10 years old — a Manhattan-like skyline. The impudent skyscrapers of Pudong (the east bank of Shanghai) were created out of a decrepit fishing village.

Across the river is Puxi (west Shanghai), which tells us the story of modern China. Among many other things, Shanghai gave birth to the Chinese Communist Party and the tumultuous events that followed.

Pudong represents the power of a rising China and the vision of its builder, Deng Xiaoping, who returned China to the centrestage of the world’s economy and politics.

Could’ve been Kolkata … if we went back to the future
WHY the lump in the throat? Indian envy about a rising China is unavoidable. But the lump is more about the realisation of how far India has fallen behind its giant neighbour.

The lump also has something to do with the recognition of what Kolkata, Mumbai and Chennai — the three great port cities founded by the British Empire — could have been if India had not missed its date with destiny.

Walking in the leafy European quarters of old Shanghai — narrow roads, low-rise buildings, open courtyards and cosy street corners — you can’t but end up remembering the nicer parts of Kolkata, Mumbai and Chennai.

There was a time in recent history when all of these cities were more globalised than Shanghai. But over the years we have put these cities at the mercy of petty bourgeois politicians, choked them with the rhetoric of socialism and reduced them to unlivable dumps.

If a city speaks for a nation, this one screams out loud
AS India becomes aware of China’s dramatic growth since the late 1970s and the miraculous revival of Shanghai over the past decade, New Delhi is finally beginning to talk of making at least one of India’s great cities into a Shanghai. Not a day too soon.

New Delhi has learnt to put aside the impulses of envy and recognise the virtues of imitation. The Chinese have no shame in learning from others. India too must follow suit.

The first step is to recognise the value of any city — a window to the outside world, a generator of new ideas, a creator of wealth for all, a counter to the deadweight of regressive tradition and, above all, the source of free thinking.

Shanghai, for that matter Kolkata, Mumbai and Chennai, were exactly that in the 19th century. Shanghai and its freakishness under colonial occupation for nearly a century earned it many epithets — ‘‘Paris of the Orient’’, ‘‘whore of Asia’’.

Under no one’s full control, Shanghai brought together White Russian tarts, Christian missionaries, European bankers, traders and sea-farers, Chinese revolutionaries, new intellectuals from all over Asia, Jews running away from Nazis, crooks of all kinds and criminal gangs. In the process, it became one of the world’s most exhilarating cities in the early 20th century.

ABOVE all, it was a free city. It brought the Western and Chinese civilisations face to face. In Shanghai, neither prevailed. The same could be said of Kolkata, Mumbai and Chennai, which synthesised Indian and Western ideas. The Indian cities, of course, were more orderly thanks to the British control of their hinterland.

These cities liberated China and India from rigid hierarchies of the interior and drew the people to everything audacious, from lifestyles to politics. As China and India became inward-looking in the name of socialism and self-reliance, these cities began to lose their vivacity.

In China, Deng firmly reversed course in the late 1970s. But it was only in the 1990s that the Chinese leadership decided to revitalise Shanghai. And how!

If China could do it in two decades and Shanghai in one, why can’t Kolkata, Mumbai and Chennai be transformed into world class cities?

Roads to FDI, debutante Shanghai beats Mother India
WHILE ambition is long overdue, the scale of the effort that awaits potential city-builders of India is awesome. Just consider the following facts about Shanghai and Pudong.

In 2002, Shanghai’s total trade was around $ 112 billion, about the same as India’s trade turnover in the same year. Its GDP is around $ 75 billion.

It is the dragonhead of China’s unstoppable economic growth. It has nearly 30,000 companies with foreign investment.

Nearly 30 per cent of its population has access to mobile phones and uses the Internet. Its investment in infrastructure is mind-boggling. Elevated roads and expressways criss-cross the whole city.

Shanghai has the world’s seventh largest sea port, with a throughput of 230 million tonnes in 2002. Its glittering new Pudong airport, when completed in phases, will have a capacity to handle 120 million passengers a year and be among the world’s 10 largest.

A 42-km magnetic levitation rail line is being built between the airport and the city centre.

Even as skyscrapers dominate the city, green space will reach 35 per cent of the total area of Shanghai in 2005.

With prosperity has come the commitment to arts and culture. Shanghai is emerging as the fashion centre of east Asia. Its municipal government even supports think tanks on international affairs.

Free the city from provincialism
HOW can India build one or more Shanghais? Who will pay for it? To begin, it demands a mental leap — the courage to think big. India’s self-image as a third world nation all these years has pushed its cities into the fourth world.

What India needs now is, first, a strong political commitment to transform its big cities. Underlying that will be fundamental rethinking about the role of cities in national development. India must stop seeing urban renewal and rural growth as mutually exclusive. In China they have been complementary — one feeds on the other.

Second, the time has come for India to liberate its cities from the clutches of state governments. If panchayats can be granted greater autonomy from state governments, why not the cities, which contribute so much to India’s wealth?

Third, reconsider land use patterns and leverage the land value in the cities. India can raise a considerable part of the resources necessary for building new infrastructure and resettling the displaced by better use of land alone.

Fourth, encourage foreign direct investment. In Pudong alone, the cumulative FDI until 2002 was nearly $ 43 bilion. That is more than India has managed to contract in years.

INDIA certainly does not have some of the advantages that a communist government in China had in creating systems for rapid urban development. But how long are we going to offer democracy as an excuse for keeping our cities backward?

China has creatively overcome many obstacles inherent in the ideology of communism to make a modern marvel of Shanghai. If there is a will, India too can find the way — to Shanghais of its own.

…BEFORE IT IMITATES INDIA
From Bangalore, IT’s long march

Indian infotech firms, writes Pallavi Aiyar, are writing the program for China’s software industry

‘‘I am always being asked whether we feel guilty for helping the Chinese software industry catch up with India,’’ smiles Prakash Menon, general manager, NIIT China Ltd. ‘‘My reply is the Chinese are not hanging around waiting for Indian companies to hold their hand. They will catch up with us in any case. So ultimately it’s a choice between being left out in the cold or engaging with them.’’

And given this choice, an increasing number of India’s IT heavyweights are choosing to engage, signalling a change in attitude from a few years ago, when the dominant perception of China was that of sinister rival rather than lucrative opportunity.

Infosys, Tata Consultancy Services, Wipro Technolgies, Satyam Computer Services, NIIT and Aptech have all set up shop amid the gleaming highrises that dot the cityscapes of Shanghai and Beijing. According to Gartner, a technology research firm, Indian companies could account for as much as 40 per cent of total Chinese software exports by 2006.

‘‘We are expecting China to emerge as a major global software outsourcing hub,’’ says Vineet Toshniwal, head of sales and marketing for Greater China, Infosys. ‘‘The Chinese government is willing to do what it takes to develop the industry and Infosys wants to be in the top three-four IT companies in China when that happens.’’

INFOSYS opened its Shanghai office a year ago. It already employs close to 200 people, servicing the needs of five MNC clients. It was these needs that provided the immediate impetus for the company’s foray into the Middle Kingdom. ‘‘For global clients, being in China is almost mandatory and we want to service our clients wherever they are,’’ explains Toshniwal.

Moreover, a presence in mainland China is an advantage for those who have their eyes set on the remunerative Japanese and other regional markets. Thus Wipro plans to recruit Japanese managers in addition to Indian ones, to work alongside Chinese programmers in the coming year.

BUT a more subtle factor is also at play in the migration of Indian interests across the Himalayas. China provides the most viable alternative to India as a source of low-cost and abundant human resources.

According to a KPMG study for NASSCOM, India will face a shortage of some 250,000 IT professionals by 2009. ‘‘Where else can we find an alternative pool of talent? Only China can compete with India in terms of the costs, quality and skills of its human resource base,’’ says Toshniwal.

In quantity, however, this base currently lags behind India. China has about 22,000 IT workers, to India’s 850,000. Moreover conventional wisdom has it that a primary reason for the Chinese software industry remaining minnow-like, compared to its southern neighbour, is precisely the lack of suitably skilled professionals.

The scarcity of English-language skills and a less than creative educational system mean high quality Chinese IT workers come at a premium. While an entry-level programmer might make $ 100-125 a month in India, a Chinese equivalent would earn $ 140-150. The difference for top-end jobs is even greater.

‘‘China is now where India was in the early 1990s,’’ says Toshniwal. But crucially, industry insiders predict the mainland will catch up fast — within the next three to five years, after which costs will decrease and skill-sets increase.

Indian IT training companies like NIIT, which set up its first China centre in 1998, are playing a major role in helping China fill its manpower gap. NIIT has 125 centres in China, in 25 provinces. Every year, it lures over 20,000 eager young Chinese, anxious to acquire an Indian IT stamp.

ACCORDING to Menon, most Chinese students are outstanding at being able to execute and replicate processes once these have been clearly defined. In contrast, Indians, he says, are better at planning and strategy. ‘‘The Chinese are really good at tangible processes. Things that they can take apart and put together again. Intangibles are much harder to learn quickly and copy.’’

As such, Indians, more culturally attuned to the business practices of the West and enjoying a liguistic advantage, have better soft skills.

NIIT now faces the challenge of transferring these soft skills to Chinese students. ‘‘The Chinese government has told us that they want us not only to produce soldiers but also generals,’’ explains Menon.

Thus only a month ago NIIT floated a new programme focused on project management and software analysis. The first batch consists of 25 students but depending on initial success, class sizes are expected to grow significantly.

CHINA’S revenue from software exports was at $ 700 million in 2003. India’s earnings from IT exports in the year 2003-04 were a weighty $ 12.5 billion. On the surface, the difference seems vast. In practice, says Toshniwal, ‘‘Once the Chinese get the human resource base, they will take off like a rocket, because they have a complete industrial ecosystem in place, unlike us.’’

World class infrastructure, manufacturing might and technological depth combine to spell massive domestic demand for IT on the Chinese mainland. This domestic market, believes Menon, can eventually present huge opportunities for India. As he predicts, ‘‘The East meeting the East is going to be a much bigger story in the next 50 years, than the West meeting the East.’’