Last week, 2012 Special Seminar on Learning the International Experience of Industrial Transferring and Upgrading was opened in GDUFS. The Seminar was sponsored by Provincial Party Committee Organization Department and co-organized by Guangdong Research Institute for International Strategies of GDUFS. It is reported that this is the first senior seminar on the international experience of transferring and upgrading and an important move of GRIIS as a high-level "think tank" making plans for the open economy of Guangdong.
The world situation is complex this year with the debt crisis spreading. The domestic economy is also under the pressure of slowing down, with rising raw material costs, shortening labor and appreciation of the RMB.
Accelerating transferring and upgrading is not only an economic issue, but also a social and political issue.
Previous leaders of Guangdong made the wise and courageous statement that Guangdong should be of international sight as a frontier of reform and opening-up. How to plan the development from an international perspective at this critical moment? What could we learn from the developed countries as well as the newly rising economies? What are the new thoughts for the reform on the major fields? How to clarify government and the market and support the small and medium enterprises?
It is a catalyst to the industrial transferring and upgrading of Guangdong
Transferring and the Major Points
Guangdong should discover the "internal advantage" in the future
Industrial transferring and upgrading is a systematic issue. The decision makers of Guangdong should first know what and how to transfer and upgrade.
Nanfang Daily: What are the emphasis and breakthrough point of industrial transferring and upgrading of Guangdong and China?
Wang Jun(vice President of the Academy of Social Sciences in Guangdong Province): The GDP per capita of China was around 5500 US dollars last year, reaching the standard of medium income level and the latter stage of industrialization. The main driving force is from investment. With the problem of rising labor cost and the acceleration of aging of population, it is predictable that a basic feature for transferring is the replacement of labor by capital.
Without doubt, enterprises are at the principal status in the process. I think that the government should build a mechanical environment favorable to the sustainable development of the real economy and narrow the profit margin gap between industries. The local governments should build this environment on the one hand, and on the other, promote the reform of the state-owned enterprises' income and reduce the income gap between the state-owned enterprise and private enterprise.
The government should build a mechanical environment favorable to cooperative innovation and attract more entrepreneurs to invest in innovation rather than renting. For example, if theentrepreneurslose money in innovation, nobody is willing to innovate. It should be instead a method of making profits so entrepreneurs will have to be make innovation.
Jin Joo-Hoon (the vice president of Korea Development Institute): From the developing countries’ point of view, it is an effective way to accelerate the upgrading of SMEs by having large enterprises with advanced technique and modernized management train them.
In 1990s, South Korea again encountered with the pressure of transferring and upgrading with the decreasing competitiveness of labor-intensive industries. Fortunately, Korean industry circles gave quick response to the environmental change and the society reached a consensus to strengthen the research and promote development of the technology industry. The measures taken to increase the expenses on research and development were proved to be a great success.
Li Ke(renowned economist in East Asia, author of the bookIndustrial Transferring and Upgrading of Chinese Economy): Nowadays, lots of countries and regions keep enforcing the transferring and upgrading of specific industries and promoting professionalization and quality improvement, so that they can develop the economy and increase the actual income.
It is worth mentioning that the theories of “sunrise industries” and “sunset industries” have already been proved to be untenable. Actually, most industries are with potential and prospect as long as they keep upgrading and updating. Guangdong, for example, has been creating internal comparative advantages to achieve rapid economic development since the reform and opening-up. The future development of Guangdong still depends on creating new internal comparative advantages, especially improving the core competence of economy and having a greater say in the global market network.
Arousing the Motivation of Enterprises for Innovation
As the organizer and director of industrial reform, the government should pay attention to its role and realize the importance of making prompt decisions and dealing with boundaries.
Nanfang Daily: What is the role of government in the transferring and upgrading of industries?
Li Ke: First of all, the government should learn about the boundaries between “dos” and “not dos”.
On one hand, for the development and innovation of enterprises, the government should establish and improve the respective institutional environments. Only in this way can enterprises be willing to make medium and long term investments on improving their quality and core competence. Additionally, the government should also aim at offering effective and continuous assistance to enterprises, especially SMEs, in terms of finance, technique, management and globalization.
On the other hand, the government should avoid interfering too much into the practical economic activities, which should be settled by enterprises and the market. Transferring and upgrading of industries will be achieved not only by the government’s administrative power solely, but also the motivation of enterprises, which is the major factor.
Zuo Liancun(vice president of Economic Association of Guangdong, professor of GDUFS): It is the government’s responsibility to enhance the infrastructure construction. As is generally recognized, the tertiary industry in India is formidable. However, the secondary industry in India is limited by the unsubstantial infrastructure construction. Consequently, it leads to the deformed development of India, where ratios of tertiary industry are too high while secondary industry development is in stagnation. What’s worse, without the support of secondary industry, tertiary industry is also stepping into stagnation.
Lack of Talents is the Bottleneck
The Government Should Hammer at Cultivating Talents
The unbalanced quality of labor force in the region of Pearl River Delta is a crucial problem. As an important step of the industrial transformation, we should spare no effort in attracting and cultivating talents in the region of Pearl River Delta.
Nanfang Daily: There is a paradox in the present employment market in China—we are lack of employees while more and more students with high education can not find job. What kind of talents strategies should be adopted for the industrial transferring and upgrading of Guangdong?
Li Ke: There is a huge problem in the present talents structure in China. China owns a large number of skilled workers, which is the base we start upgrading the industries. At present the labor costs are comparatively low and are more competitive than the developed countries. However, if the future salaries keep increasing and industrial structure isn’t upgraded, neither the increase of the laborers income nor the economic growth won’t be sustainable. Therefore, China is in great need of advanced talents.
Jin Joo-Hoon: China has to take advantage of their own talents to obtain considerable development, instead of depending on foreign enterprises. Korea has stopped receiving support from the government since the second stage of industrial transformation and turned to work on talents cultivation. Most Koreans regard a country without talents as a country without hope.
Zuo Liancun: When India initially earned its independence, the illiteracy rate was very high. However, due to the “computer revolution” policy in the period of Rajiv Gandhi, the government cultivated a huge quantity of outstanding talents in science and technology. Now, India is renowned for its talents in the computer field. We can learn from the experience that the government should hammer at making attractive policies and offer more working positions to change the direction of talents flow.
