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Weekly UpdatesInnovations in PND
Since the inception of PND in the early 1990s, economic growth has been extraordinary. The following measures, extracted from various Chinese web sources (and also generally visible), are indicative:
* PND's Gross Industrial Output (GIO) has grown from 6 billion RMB in 1990 to 210 billion RMB in 2005. PND's GIO from 2000 to 2005 nearly doubled, and average GIO growth rate is reported to be 16 percent per year from 1990 to 2005.
* PND's Total Export and Import Values exceeded 90 billion USD since 2005, with significant foreign trade surpluses that were used for further investment into new enterprises or enhancement of existing companies.
* Up to 2005, PND attracted more than 13,000 MNE's from more than 100 countries with total foreign direct investment (FDI) of 60 billion RMB.
* PND has taken a prominent position in all aspects of Shanghai's economic development. For example, in 2005, PND accounted for more than 25 percent of Shanghai's Gross Industrial Output, about 50 percent of Shanghai's total foreign trade, and about one third of Shanghai's FDI.
* PND has attracted 257 of the Fortune 500 companies since its inception. In addition, PND is the hub or headquarters for 102 MNEs, and the location of R&D centers for 126 foreign companies.
While PND's technological innovations have attracted numerous MNEs and an impressive level of FDI, the most innovative part in PND's planning is the incorporation of corporate social responsibility (CSR) into its urban planning and development process. At the July 2008 Shanghai Forum on 'Building a Harmonious Society and Corporate Social Responsibility', the Chinese Ministry of Commerce announced that Pudong, Shanghai had been selected as an experimental site for CSR promotion (Corporate Social Responsibility-Asia 2008). In a 2007 survey conducted among 600 PND companies, 83 percent of the companies surveyed claimed to have a solid understanding of CSR, and were in the process of incorporating CSR as part of their corporate governance structures. PND has published its goals regarding CSR which are to have 1,000 companies include CSR as part of corporate policy, 200 companies to achieve CSR standards and post-CSR evaluation results for 300 MNEs (Corporate Social Responsibility-Asia 2008). Since PND's future development and sustainability are closely related to the MNEs' fulfillment of their CSR goals, it is critical for the city's development, not only as an economic entity but also as a city where companies are encouraged and tend to 'pay' their CSR dues.
ZHANGJIANG HIGH-TECH PARK AND THE SMIC VILLAGE
Zhangjiang Hi-Tech Park (ZHTP) is located in the middle part of the PND with a planned area of 25 [km.sup.2]. Since its inception in 1992, Shanghai city planners have been eyeing the possibility of turning ZHTP into both the Silicon Valley and pharmaceutical hubs of China. As a result, in its initial planning process, ZHTP was designed to include a Technical Innovation Zone, a Biomedicine Zone, an Integrated Circuits Industry Zone, a Scientific Research and Education Zone, and a Residential Zone.
During the first seven years, ZHTP grew steadily and attracted a total of 850 million USD from foreign direct investment and 1.5 billion RMB from Chinese domestic investment. In August 1999, the Shanghai Municipal Committee and Municipal Government created a strategy entitled 'Focus on Zhangjiang' and identified integrated circuits, software, and biomedicine as the industries to play the leading roles within the park in terms of innovation. ZHTP has developed rapidly ever since. By 2002, ten years after the establishment of ZHTP and three years after the 'Focus on Zhangjiang' campaign, investment in ZHTP reached 4.72 billion USD from foreign direct investment, and 8.3 billion RMB from China domestic investment. In 2002 alone, ZHTP attracted a total of 2.78 billion USD, with 2.03 billion from foreign direct investment. One of the key investors was the Semiconductor Manufacturing International Company (SMIC) which invested 1.5 billion USD (or approximately 75 percent) of the total.
Innovations in ZHTP
ZHTP's website (http://www.zjpark.com, Chinese version) boasted that by the end of 2007 it had attracted 5,359 companies, with 108 of them registered as research and development centers and 306 as high-tech companies. ZHTP's track record on innovation also appears to be solid. By 2007, organizations within ZHTP had submitted a total of 9,142 inventions for worldwide patent application or registration, with 2,205 patents granted.
Despite the initial conceptualization of ZHTP by the Shanghai Municipal Government, the implementation of all policies, strategies, and innovations has been entrepreneurial in nature since the ZHTP was primarily developed by entrepreneurs at various levels who adopted innovative strategies related to large-scale technology investment, global perspectives on production, and the suburban residential development needed to attract high-tech employees from across the globe. Investment Shanghai (2005) reports that, out of the 60,367 employees working in ZHTP, 1,405 (2.3 percent) have doctoral degrees, 6,832 (11 percent) have master degrees and 28,748 (48 percent) have bachelor degrees.
Industrial Clustering: a unique feature in ZHTP's Innovations
Smith (2008) points to 'monumentality' (or vast scale) as an important feature in China's urban design that tends to trigger innovations among cities and EMRs. In fact, ZHTP has established large clusters in China's high-tech industries. Presently ZHTP is the 'Silicon Valley of China' as it has the most advanced technology and complete industry/supply chain in China. There are 228 software companies and a workforce of more than 9,000 employees in the Park. In addition, ZHTP also boasts a host of Optical Electronics and Bankcards firms (ZHTP's Shanghai Bankcard Industry Park now leads the way as China's bankcard and information security R&D centre) and has a significant part of Shanghai's National Semiconductor Lighting Industry Base, with 31 optical electronics-related companies established in the Park.
In addition, ZHTP is the Pharmaceutical Hub in China, with major R&D institutes in biotech and pharmaceuticals, such as the National Human Genome Center, the National Center for Drug Screening, the National Center for New Drug Safety Evaluation & Research, the National Center for Traditional Chinese Medicine Innovation, and the National BioChip Engineering Research Center, among others. Although primarily public sector initiatives, these entities foster co-development with well-known global and domestic pharmaceutical enterprises.
In Medical Devices, ZHTP's Modern Medical Device Park has also begun to attract major players. By 2010, the park expects to add a number of research and development companies, 10 pillar domestic enterprises, and 50 small or medium sized medical device companies. Annual production value in the Modern Medical Device Park is projected to surpass 10 billion RMB annually.
ZHTP has also become the Incubation and Entrepreneurship Center in China. The first incubator was developed there in 1995 and ZHTP now has an area of 340,000 [m.sup.2] devoted to incubation, with 382 start-ups and 182 high-tech enterprises. One successfully incubated company is Shanda Networking Co. Ltd., which now has more than half of the total online entertainment market share in China.
According to the available and somewhat incomplete statistics, there are approximately 3,500 Chinese scholars and students who have returned from overseas to start businesses or work in ZHTP. By 2005, companies in ZHTP established by these returning residents had reached 459, or about 10 percent of all companies in the Park.
THE SMIC VILLAGE--A CORPORATE VILLAGE INSIDE A CITY
The stories of PND and, particularly, the ZHTP seem straightforward until one examines more deeply the innovations that have been initiated to maintain an organization's workforce and competitive advantage based upon human resources. One particular MNE--the Semiconductor Manufacturing International Company (SMIC)--is the third largest integrated chip (IC) maker in the world and merits special attention. Since its inception, SMIC has implemented many innovations in ZHTP whose impacts are profound across cities in China and among companies in various extended metropolitan regions (EMRs).
Social Innovations in SMIC
Since its inception, SMIC has implemented creative policies that are innovative not only in the local electronics industry but that have affected thinking among other MNEs operating in China. The most important policies implemented by SMIC include the SMIC Living Circle and the SMIC School.
The SMIC Living Circle
Aware of the need to attract the best high-tech employees on a global basis, in 2001 SMIC spent $US100 million on building a 'Living Circle' while its manufacturing plants were still under construction. While the majority of apartment complexes in Shanghai are high-rise units with limited size and without any green space or other supporting functions, the SMIC Living Circle was built with park space, sports facilities, a village center with grocery stores, banks, restaurants and other small shops, a bilingual K-12 school, and even a church near the village. There are villa-type units as well as high-rise apartment units in SMIC Village for company employees to purchase. The company claims to sell these housing units at cost and company employees receive a discount of 15 percent when shopping in company-owned stores within the village.
Unlike traditional cities or industrial clusters that have grown from a particular industry, such as mill towns, railway towns or automobile towns that required decades for their formation, the SMIC Village was built side by side with SMIC's world headquarters and manufacturing plants in Pudong over just a few years. Presently there are 900 housing units in the SMIC Village to support a total SMIC Shanghai workforce of 6,400 employees, with additional units still under construction.
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