Shunde used to be a typical agriculture-based county. Fish pond and sugar cane fields dominated the landscape, and although Shunde was wealthier than other areas in the country, it was still a rural backwater. In 1978 the total industrial and agricultural output value of the county was 847 million yuan. The annual per capita disposable income of farmers, who accounted for more than 80% of the population, was only 100 yuan. Economic foundation was weak, industry was limited to basic agricultural processing and basic machinery industry serving the agricultural sector, and there was little talent in other manufacturing sectors (for more information refer to ‘Shunde and the Global Economy’).
Shunde today, however, has risen to become an important industrial city in Southern China. Its home appliances and machinery industries are renowned all over the country. In 2017, Shunde’s total output GDP exceeded 300 billion yuan, and annual per capita disposable income of urban and rural residents reached 50,000 yuan and close to 32,000 yuan respectively. The phenomenal transformation witnessed in the past 40 years is closely related to the open and innovative talent policies implemented.
Background to Shunde’s enterprises and talent policies
Shunde’s economic achievement in the 1980s was largely attributable to the development of Town-and-Village Enterprises (TVEs), which were businesses started by local enterprising cadets and nominally owned by the towns and villages where they are based. TVEs were behind in technology and lack of money. Their survival was contingent on using entrepreneurs’ keen business sense to exploit market gaps. TVEs competed on the basis of productivity and keen market sense and believed in technology-driven competitive advantage. Driven by this market-oriented mechanism, the desire to move up the technology ladder, utilize new technology to develop new products, improve product quality and expand market share became second nature to the TVEs.
Technology-driven transformation needs technology talents to carry out its daunting tasks. In the 1980s, Shunde’s government and entrepreneurs adopted a two-pronged approach to cultivate talents. The first approach was to attract technically-competent migrants. By 1991, almost 10,000 migrant engineers and technicians moved to work at Shunde, providing a solid human resource base for Shunde’s manufacturing enterprises to expand. The second approach was to nurture local talents through education and training through a variety of ways and channels. During the 1980s, there were only 5,526 polytechnic students with formal qualifications. In 1980, the whole county had close to 2,000 enterprises, yet there were only 14 university level degree holders and 37 technical school graduates. There were no qualified engineers. In 1990, the number of degree holders (including teachers and doctors) increased to 15,260, an increase of 34.7 times compared to 428 in 1982. Most of these people worked in TVEs from the manufacturing sector.
Shunde’s shortage of engineering talent was so acute in the 1980s that it gave rise to the phenomenon ‘Saturday Engineer’. During the weekend, many engineers from SOEs at the neighbouring Guangzhou City would moonlight at budding start-up TVEs in Shunde to serve as their technical advisor.
In 1987, the Shunde government introduced four policies that proved transformational to Shunde’s economic development. The measures, which were related to personnel management, institutional setup, staff compensation and product pricing, cut down government interference and granted more autonomy for enterprises to run their businesses. This company rights devolution not only matched businesses’ manpower requirements to their growth requirement, granting companies much more flexibility to recruit talent, it also allowed differential compensation schemes to be implemented based on an individual’s contribution to corporate growth, enticing the nominally government-owned TVEs to transform themselves into fully market-oriented businesses. The policies enabled enterprises to be better placed in giving tangible and intangible support to encourage innovation and raise morale. This reform was revolutionary in China and many cities and towns followed it.
By 1992, Shunde had already established a relatively modern and robust industrial sector. Industrial output reached 16.01 billion yuan in 1991, more than twelve times compared to 1978. The entire county had 18 and 262 enterprises with annual sales of over one billion yuan and one hundred million yuan respectively. 25% of China’s electric fans, rice cookers and water heaters came from Shunde, and Rongsheng’s refrigerator sales ranked first in China. At that time, Shunde’s enterprises churned out a new product every two days and Shunde became the country’s home appliance innovation centre and an important manufacturing city in Southern China.
In 1992, Shunde implemented another transformational reform. The comprehensive administrative reform focused primarily on property rights reforms of the TVEs. It encouraged companies to orientate their entire operation towards market discipline and put firm competitiveness as the core competitive advantage. As a result, a solid foundation for the economy was built.
A market-based economy requires enterprises to make business decisions based on market signals and needs. Investment decisions should be based on market demand, technology investments made based on these decisions, and relevant technical personnel hired to use these technologies. A popular catchphrase among Shunde entrepreneurs in the 1980s and 1990s was ‘use money to attract talent, and talent to earn money’. Shunde entrepreneurs believed that the market was the key driver for technological innovation, and that speedy adoption of science and technology was the key to a vibrant company. They also believed that technology is useful and meaningful only when it can translate into new products in the market. Increasing product variation and improving product quality therefore became the main goal, and engineers and technicians became the backbone of each company. This Shunde growth model brought positive results for companies that lacked talent and were financially weak.
Many companies in Shunde had an internal ranking and promotion system that was not based on the government certification system, but instead based on company requirement and performance. This merit-based system rewarded talents and encouraged them to work even harder for their company’s future.
Since as early as the 1980s, the Shunde government has played a crucial role in bringing in migrant talents. It proactively investigated businesses’ human resources requirements and instituted measures to attract migrant talents from other parts of China to resettle in the city. Operating within the migration policy frameworks of the central and provincial governments, the Shunde government was able to attract the migrants needed for its economy, help them settle, enrol their children to school, provide medical care and assist in helping their spouse find a job. The conducive environment designed to accommodate migrant talents was the main reason why the plan was successful.
Shunde’s economic transformation and the change in talent demand
In the last century, Shunde’s manufacturing sector growth depended on increasing input and business size to drive economies of scale and gain market share. However, continuous economic development resulted in higher labour and production costs that cut its competitive advantage compared to neighbouring areas. There was a need to adopt a different growth strategy and transform its industries to become highly value-added. The new strategy was to strengthen competitive advantages of existing industries and develop new high value-added industries.
Shunde’s earlier migrant talents attraction drive concentrated on attracting engineers and technicians to run operations and improve efficiency. For Shunde to develop new high value-added industries, talents in new technology and higher education must be brought in to jumpstart the more innovative economy. As a result, the Shunde government expanded its successful two-pronged talent attraction policy. On one hand, it created more ways and channels to nurture local high-end talents (for more information refer to ‘Shunde’s Education System’), and on the other it added more incentives to support the resettlement of high-end migrant talents.
At the end of 2011, Shunde held its first talent attraction conference. The ‘Talent driven growth strategy’ was officially launched and the ‘1 + 10’ talent policy introduced. The ‘1’ referred to the policy document aimed to accelerate the talent building and attraction strategy (hereby known as the ‘talent drive decision’), and the ‘10’ referred to 10 specific policies that support this decision. The introduction of the strategy and policies allowed Shunde to attract a fresh wave of people whose skills were needed for Shunde’s new economic development.
In 2015, Shunde’s economic and industrial transformation required even more high-calibre talents. Shunde government released an updated set of thirty policies to attract talent. The new policies address issues ranging from attracting and nurturing talents and talent teams to building a supporting system for migrant talent start-ups. They aim to provide a more comprehensive support system for the new talents in all aspects of their life. Compared to previous talent policies which aimed to only make settling down easier, the new policies include helping them set up their business in Shunde.
Currently, only less than half of the population in Shunde are native Shunde locals; more than half are ‘New Shunde people’ who come from other regions in the country or from other countries. Shunde has been successful in integrating migrants as one of their own and this reflects Shunde’s open and inclusive culture. The harmonious relationship enjoyed between locals and non-locals is the reason why Shunde remains bustling and innovative. Shunde has managed to retain its own culture while at the same time integrating the culture of others, and this inclusiveness makes Shunde’s new policy of attracting migrant talents even more enticing.
Attracting talents in the midst of competition
In recent years, Shunde put forward a set of standards to identify talents in education, industries, medical and healthcare system. In these three identified priority areas, talents are divided into six groups. Assessment of talents who are eligible for further incentives are based on professional qualification and not on geographical, racial or other irrelevant factors.
Past awards and achievements, job description as well as company-based positions and academic qualifications provided the information needed for incentive provision. Presently, Shunde has already introduced a series of talent policies for migration and housing, enrolment to school (for their children) and other matters. Implementation of these policies is straight-forward. After the strict qualification verification, migrant talents will enjoy all incentives accorded for their moving to Shunde, and a migrant talent privilege card will be given to them to facilitate their enjoyment of all special privileges in financial and public services.
In 2017, some cities began to adopt similar incentive policies to attract high-end migrant talents. However, even with more intense competition for talents, Shunde still enjoys an edge due to its more experienced execution. The introduction of the 2018 affordable housing scheme, for instance, demonstrates its ability to move one-step ahead over other cities.
Shunde has a strong talent-attraction principle of ‘settle in Shunde, serve Shunde, and contribute to Shunde’. However, for high-end migrant talents deemed critical to Shunde’s economic development, the residency requirement is handled with flexibility. It has never demanded the talents to serve and contribute to Shunde by leaving their original work unit and moving to Shunde. It just devised some means for the talent to contribute to the district through various creative schemes. This flexibility in attracting talent is a hallmark of Shunde.
Shunde today faces both opportunities and challenges from industrial upgrading and the formation of the Greater Bay Area (GBA). Attracting high-calibre talent is critical in meeting the challenges and tapping the opportunities. The cities of the GBA are located at different positions of the smiling curve, complementing one another. The GBA itself is an important manufacturing hub for China and the world due to its strong industry foundation and complete supply chain. Hong Kong provides excellent modern world class service when it comes to logistics, finance and professional service. Relatively backward cities in the GBA can make use of the arrangement to attract successful industries from developed areas, while developed areas can transfer its low value-added activities to cheaper nearby locations in the GBA to maintain the competitiveness of its companies and concentrate on developing high-end industries.
Today, the city is facing the opportunities and pressures of industrial upgrading and integration of GBA, which requires more talent input. It is inevitable that the economic performances of cities in the GBA will differ, but Shunde’s performance relative to others will depend on the rate of inflow of high-calibre talents. Its longstanding inclusive and supportive philosophy and policies for migrant talents will surely give it a competitive edge.