Shanghai the face of the new China: Shanghai is quickly taking the mantle as China's most international and cosmopolitan city. It's also increasingly easier to do business there - Cover Story - Brief Article

Business Asia, Dec, 2001 by Tamsyn Smith

THOSE WANTING to see the new China can forget Beijing -- Shanghai is the new public face of the Asian giant.

Officially "unveiled" to the world at last October's APEC Leaders' Meeting, the glittering metropolis of Shanghai and its remarkable transformation over the last 10 years embodies China's drive to become a recognised and respected member of the world community -- and the lengths it will go to achieve its goals.

Take the recent APEC meeting as one example. Heightened security fears in the aftermath of 11 September notwithstanding, the Chinese Government went to extraordinary lengths to make sure Shanghai's "coming out" party was a complete success.

More than US$36 million ($70 million) and a year's worth of planning went into the event alone, with massive public works initiated (including the installation of 132 new public toilets and 2000 new road signs). To ensure smooth traffic for delegates, the city's 13 million residents were given the five days of APEC off, and told to stay away from usually busy areas.

All roads leading to the APEC conference were closed, as was all traffic on the normally crowded Huangpu River. 10,000 security personnel were on hand to look after the 1000 or so delegates. And up to a year earlier, booklets titled "100 APEC English Sentences" were being distributed at all Shanghai schools.

It's this type of industriousness that has helped transform Shanghai into a fast-paced and cosmopolitan city in a little under 10 years. Massive sky-scrapers dominate the skyline, while swank eateries and cafes appear at almost every turn.

So intent are the Chinese in making Shanghai a business and cultural hub that they're actively seeking foreign help. The Shanghai Development Advisory Group was formed in 1988 to seek international assistance in transforming the city, which in turn advises the Government and the mayor on economic development.

The current group includes chairman Chey Tae-won of South Korea, AIG chief Maurice Greenberg, Anderson CEO Joseph Berardino, Coca-Cola chairman Douglas Daft and Fiat chairman Paolo Fresco. They have played a part in redeveloping the city where China's communists met for the first time in 1921.

The latest step was recently revealed in plans to turn Nanjing Road, the first commercial street in China, into a world-famous international street in the next eight to 10 years.

The redevelopment is expected to cost about 18 billion yuan ($4.1 billion), which will be financed via investment from international firms. Currently, an average workday sees as many as one million people walking on Nanjing Road, while on holidays this number could reach two million. It is hoped the remodelling will attract those with more purchasing power to boost revenue from the road, which presently sits at about 14 billion yuan annually.

28 multi-national companies have been invited by the Shanghai Municipal Government to discuss the Nanjing Road Development Plan with the city's mayor, Xu Kuangdi, including Warner Bros, News Corp, Audi, Citigroup, and Eastman Kodak Co.

Appearances aside, Shanghai is also one of the easiest Chinese cities to do business in, according to Austrade senior trade commissioner in Shanghai Peter Osborne.

"Shanghai is the most international of cities in China ... it's the place where the Chinese Government tries new measures," Osborne says.

Such "new measures" became increasingly trialed as China fulfilled its 15-year desire of entry to the World Trade Organisation (WTO).

The terms of admission included China allowing foreign competition in industries such as autos, banking, insurance and mobile phone services. This has resulted in a re-writing of national legislation, which has been trialed in Shanghai for the past 12 months.

The measures have involved training government staff on WTO implementation, particularly in the area of customs service, which Osborne says has become greatly streamlined.

"It's a sign of things to come across the whole of China," Osborne says.

Changes are even being made in that most sacrosanct of institutions -- the ruling Chinese Communist Party. On 1 July this year, during the 80th birthday celebrations of the Communist Party, President Jiang Zemin made the groundbreaking announcement that for the first time in the history of the People's Republic, private entrepreneurs would be permitted to join the Party.

The invitation to join is a major indication of the deep shifts that are occurring in the political and economic methods of the country.

Despite the steps towards more freedom for foreign businesses, Austrade's Osborne says China is still essentially a planned economy. The strict control of the Party is more obvious in smaller cities, where government bureaucracies can be a hindrance, but Osborne says it is all about being aware of the role the Communist Party plays in business.

"You're not only doing business within the company ... but there may be some political issue at stake," he said.

With Shanghai, China has proven the speed and efficiency at which it can undertake massive projects, but the human costs of such labours are far from known.