Education and technology transfer in Shenzhen Special Economic Zone, China - Gerard Postiglione
I. The Special Economic Zones (SEZs) and Technology Transfer
In 1979, China decided to establish four foreign investment enclaves in southern China. Five years later, Chinese leader Deng Xiaoping toured the four SEZs, proclaimed them a success, and called upon the nation “to learn from Shenzhen,” the largest of the SEZs (Da Gong Bao, 1984: 1) Since that time, at least 21 coastal cities have been declared open as preferred cites for foreign investment. More recently, Hainan island, formerly a part of Guangdong province, was designated a special economic region with its status being upgraded to that of a province. Also, China has opened the coastal regions of Fujian and Guangdong provinces, the Liaodong peninsula in the northeast, the Shandong peninsula, and the Yangtze delta area to attract foreign investors (SCMP, 1988:7). A large number of regions will follow this pattern, including Zhong Guan Village, an area of Beijing with a concentration of high technology work units, often referred to as Beijing’s Silicon Valley.
Among the stated goals of the SEZs are to generate foreign exchange, to create employment, to attract foreign investment, and to facilitate the transfer of technology (Xu Dixin, 1984). Of the four SEZs, only Shenzhen was mandated to establish a large comprehensive zone involving across the board development of industrial, commercial, property and tourist undertakings. The other zones were, to varying degrees, hedged in by policy directives which called for limiting zone size and for gearing zone objectives to local resources (Falkenheim, 1986).
The major vehicle for development of these zones is the joint venture. This is an arrangement in which the foreign side provides the foreign exchange and technology, while the Chinese side provides buildings, site, equipment, and renminbi (local exchange). The joint venture company is managed jointly, and profits and losses are distributed in proportion to the participants’ equity shares in the venture. Aside from the chance to learn the new technologies and management techniques from the foreign partner, the Chinese partner enjoys other advantages as well, including flexibility in hiring personnel, pay scales for personnel, import and export control, management of the firm’s investment, purchasing, and sales policies.
Although a number for impediments, many relating to foreign investment, have inhibited the attraction to China of foreign technology, there are equally important non-investment related problems. Even when high technology transfer to China does occur, there are serious difficulties in the assimilation, innovation, and dispersion of that technology. To relieve the investment related problem, new regulations grant a privileged position to export oriented and high technology foreign enterprises (United States Congress, 1986). Solutions to the non-investment related problems rest almost totally with education. It is these that will be a major concern of this paper.
II. The Shenzhen SEZ
The Shenzhen SEZ is the most ambitious of all the zones. In 1980, Shenzhen was designated a special economic region of China by the Central Committee of the Communist Party and China’ s State Council. In 1979, its population was 23,000 in what was then rural Baoan county. The new zone was to be the largest special economic zone in the world, 327.5 square kilometres in area, stretching 49 miles in along the border of Hong Kong’s New Territories, and incorporating one-third of the area of the newly designated Shenzhen municipality. The population of the zone is 400,000 of whom almost half are temporary workers (Shenzhen TEQU, 1985). In the draft ten year development plan, technology intensive industrial development is stressed (Wen Wei Bao, 1983:2). The average annual rate of projected economic growth through the year 2000 is 31%. By the year 2000 the population growth is expected to reach one million.
The number of specialized personnel transferred to Shenzhen up until 1985 was 10,000. Also, as many as 100,000 construction workers have come from other parts of China. The total work force is over 154,4000, which does not include over 118,000 temporary construction workers. By the end of 1984, there were 3,495 contracts with foreign businesses and direct investment exceeded US$2,200 million. In 1984 alone, 1,183 contracts were signed exceeding US$600 million in direct investment. However, only a minor portion of the investment (10.3%) is foreign, with the largest portion (89.8%) coming from Hong Kong and Macau. In 1984, the output of joint ventures, cooperative enterprises, and wholly owned foreign enterprises in Shenzhen accounted for 53% of the total output. Moreover, overseas investment, equipment, and technology imported to Shenzhen are mostly used in technology-intensive and knowledge-intensive products, i.e., electronics, light industry, petrochemicals, precision machinery, and building materials.
After Shenzhen was declared a special economic zone, many Hong Kong industrialists who found themselves hard pressed by labour shortages and rising wages in 1979 and 1980, saw the SEZ as a way to cut costs through the decentralisation of low-skill, labour-intensive processes in Shenzhen. However, Shenzhen industrialists are clearly not interested in attracting only simple and assembly types of industry. Instead, Shenzhen wants more sophisticated industries (Sit, 1986). One investor’s handbook, in referring to types of industries, stated that the zone did not want “those involved in assembly and processing activities.”
The Shenzhen SEZ Development Company, one of the three major promotion agents of the SEZ, listed nine high-priority promotion items for 1984, all of which belong to the high technology electronics industry. Another agent, the Shenzhen Municipal Electronics Company, listed 31 items in the handbook for promotion. All except two required an ultimate investment of over US$10 million, one even of US$200 million. The size of the capital and preference for high technology production (Sit, 1986:240). In 1978, there was only one electronics assembly factory in Shenzhen employing about 300 workers. By 1983, there were 60 establishments employing over 15,000 workers.
In principle and practice, the Shenzhen SEZ is socialist. Socialism and high technology have combined to influence the nature of work and labour markets, expansion of the educational system, and the content of education. Unlike Hong Kong where workers had much manufacturing experience, Shenzhen has had to condition a new work force.
III. Education and Technology Transfer in Shenzhen
China’s major problem has been tied less to acquiring technology, than it has been with assimilating, innovation, and effectively diffusing that technology (United States Congress, Office of Technology Assessment, 1987). The problem of assimilation is linked to the issue of technology. In the past, merely purchasing technology has avoided much of the foreign dependence, but, it has fostered a kind of self-reliance that has stifled solutions to the problems of assimilation and diffusion. Ironically, in the case of China, “the risk of dependency increases as the problems of assimilation remain unsolved” (Zhang, 1985:62). The problem of assimilation of technology may be looked at as composed of three areas: production (using the imported technology); manufacturing (replicating the import); and, design (capability of redesigning the technology). It is in the last of these that China is the weakest. Although other parts of the problem are structural, i.e. choosing the right technology to buy, balancing the purchase of expertise and software with hardware, getting managers to focus on absorption rather than production quotas and output, etc., it is the capability of redesigning the technology that is, most important at present. Its major solution rests with providing the most appropriate education.
With few exceptions, the Shenzhen education system follows the nation-wide policy of expanding vocational-technical education at the secondary school level (Postiglione 1988, 1988a, 1989). Aside from ensuring a good investment climate, the greatest need of Shenzhen’s high technology environment is to raise the level of the technical qualifications of its people. It has made clear its direction toward high technology production by such things as the establishment of a massive Science and Industrial Park project. If the Shenzhen SEZ continues to insist on only allowing high technology projects and discouraging assembly industrial processes, then it will have to show that it is able to support such operations with a highly skilled work force. Although it is making a strong effort, mainly through the use of adult education and continuing education to supply trained personnel, this could not possibly provide the type, level, and quality of training needed. Shenzhen will only be able to maintain the supply of highly skilled personnel, as it has in the past, through the movement of individuals from other parts of the country. For example, it has already imported over 10,000 professionals from other parts of China. However, this is not nearly enough to deal with the problems of assimilation, innovation, and diffusion of technology. According to Wang (1987):
The Shenzhen education authorities view an increase in the provision of vocational- technical education as one of the most important parts of their education development plans. However, a shortage of resources has kept the pace slow. In 1985, there were only 9 vocational-technical middle schools, offering 11 specialization, with 1,086 students. The ratio of vocational-technical school students to upper middle secondary students is 1:3. Post-secondary specialized colleges receive graduates from the vocational-technical middle schools in ratio of 2:3 to the academic upper secondary schools (Chen, 1985:217). At the policy level these vocational and technical schools are seen as preparing people for work in a special economy, and at the same time providing continuing education. Conditions in the schools need to be improved, and the “fenpei” system, whereby students are assigned to work unit, needs continued deemphasis to allow for more choice on the part of graduates seeking employment.
Although Shenzhen follows the main policies espoused by the Central Government, its special conditions differ from those in other parts of the country and, therefore the Shenzhen education authorities have identified ways that their vocational- technical secondary education must align itself with the special conditions of the zone. For example, a rapidly expanding economy calls for a number of new specialisations. Every year there is an increase of a hundred factories, and therefore, at least a thousand technicians and managers are needed each year In recent years, the practice has been to appoint someone to work and train them later. The problem exists in all of the vocational work areas. Because of the nature of the special economic zone, unlike other parts of China where less intense competition exists, the vocational-technical schools in Shenzhen must be competitive.
Skills change quickly and need to be constantly updated. Student aspirations in the rest of China only also differ from those in Shenzhen. Thirty to forty per cent of students graduate from lower secondary schools in the country as a whole. However, in Shenzhen the figure is 85%. Very few students want to go to vocational technical schools. There are other problems as well, many of them shared with other parts of China, such as a lack of trained teachers and a shortage of school resources (Chen, 1985:218).
The Shenzhen education bureau contends that half of the work force are engaged in some kind of continuing education. These courses are run by a variety of institutions, including the work units themselves. The level of training may not be very high. Nevertheless, according to the city’s Bureau of Adult Education, 149,223 people were enrolled in 186 specialisations at the higher education level and secondary adult education level in 1986. In 1985, more than half of the total number of workers and staff were enrolled in some kind of adult education. (Ren Min Ri Bao, 1986) By 1990, the Shenzhen Bureau of Adult Education plans to have all leaders of large and medium sized enterprises and community authorities trained with at least a junior college education. The reasons, for the heavy reliance on adult education are obvious. Without a large educational infrastructure, it would take too long to run great numbers of students through the system in time to meet the needs of the rapidly expanding economy.
Shenzhen is a potentially interesting region for the study of the Informal and Non-formal education and the popularisation of science and technology. The following five features combine to form a set of circumstances supporting further study of this region:
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