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Hitachi Research Institute

President Column

Commentary by our General Manager, Keiichi Shimada

President Column #19: An Artificial City After 30 Years

  It was 2010 when I first visited Naypyidaw, the capital of Myanmar. It was the fourth year since the capital had been moved from Yangon, and the country was still under the rule of a military regime. I flew into Yangon from Singapore, where I was posted at the time, and it was a long journey, requiring approximately nine hours additional travel by car from Yangon. Although there was an airline route from Yangon to Naypyidaw, I was warned by a local person to avoid domestic air travel due to frequent mechanical problems and the risk of a crash, so I opted for the land route, deciding that life was more important than saving time. Due to poor road conditions and the car breaking down more than once along the way, the normally seven-hour trip ultimately ended up taking nine hours. Despite the relocation of the capital to Naypyidaw, Yangon still remained Myanmar’s economic hub, and many businesses continued to maintain their business bases in Yangon at the time. For a business to deal with administrative procedures including import and export procedures, however, it was necessary go all the way to Naypyidaw, so the agent business for clearing bureaucratic procedures flourished. On Monday, the agents headed for Naypyidaw after collecting volumes of procedure documents from business offices in Yangon, and they made the return trip back to Yangon on Friday after completing procedures.
  Naypyidaw at the time gave the impression of being an “artificial city.” Only a few pedestrians could be seen walking the street even in the middle of the day, and the city had only the slightest sense of a “lived-in” environment. Many government agencies were located there since it was the capital, but abnormally long distances between government offices made getting around without a car an ordeal, even when simply traversing the distance from an entry gate to an office building. In contrast, the hotels in the city for some reason had the atmosphere of hotels found in a tropical resort and the entire city seemed to lack balance.
  In the evening on the day of my arrival, I felt something akin to “déjà vu” in the atmosphere of Naypyidaw’s streetscape. After some reflection, I realized that it reminded me of Shenzhen in China when I first visited that city in 1986. While Shenzhen now is counted as one of China’s four major metropolises, it was only after Deng Xiaoping’s Southern Tour Lectures in 1992 that the growth of the city began to accelerate in earnest. In the wake of the Tiananmen Square incident, overseas investment in China had slowed, and conservative factions began to become more vocal in domestic politics. Although Deng had completely retired from politics, he felt a sense of crisis over the stagnation of reforms and traveled widely to cities and regional areas including Wuhan, Shenzhen, Zhuhai, and Shanghai from January to February 1992. He gave a series of talks in which he criticized the conservative factions of the party and urged acceleration of reforms. During his visit to Shenzhen, Deng Xiaoping spoke about how the development of the city was the result of work based on reality, and defended the role of the special economic zone, which had been under attack from the conservatives. Shenzhen’s development thereafter accelerated by leaps and bounds.
  Although there were some large factories scattered here and there in the city when I visited in 1986, Shenzhen still had a meager population, and only the building of the hotel where I stayed boasted a strangely luxurious structure. Like Naypyidaw in 2010, it was a city lacking in equilibrium. There was only one counter at the immigration office for traveling from Shenzhen to Hong Kong, and to this day I remember waiting in a long queue for a very long time holding my large suitcases.

  In September 2017, I had the opportunity to visit the same Shenzhen after the lapse of about 30 years. There was not the slightest trace of a suggestion that this had been an “artificial city” three decades prior. It had successfully evolved into a thoroughly modern city bristling with skyscrapers at a scale on par with those of neighboring Hong Kong. Huawei, a company launched a mere 30 years ago in 1987 from a small office in a building in Shenzhen, has grown to be one of the world’s major smartphone distributors, surpassed only by Samsung and Apple. Tencent, an enterprise established about 10 years thereafter in 1998, achieved rapid growth centered on the messaging app WeChat and, at present, is the second-largest enterprise in Asia following Alibaba by market capitalization.*
  Supported by its manufacturing industry, Shenzhen has enjoyed sustained growth for many years and is now also referred to as the “Red Silicon Valley.” However, its underlying framework has developed somewhat differently from that of Silicon Valley, the trendsetter on the west coast of the United States. In Shenzhen, there is a building called “Makerspace,” which brings together under one roof a diverse array of enterprises from venture capital to manufacturing functions. There are businesses that not only offer funding to entrepreneurs with superior ideas and vision but also create actual prototypes within the same building. And when a product is ready to move on to mass production, Makerspace will even introduce component suppliers or manufacturers to undertake mass production.
  High added value is becoming an important economic issue in China, and the central government is pinning its hopes on Shenzhen to become not only a hub for innovation but also a role model for other regions of the country.

  We have no way of knowing what Deng Xiaoping envisioned for the future of Shenzhen during his Southern Tour Lectures, but the development of Shenzhen today may be continuing to greatly surpass anything Deng Xiaoping may have imagined. I am keenly interested in following up on the development of Naypyidaw, another artificial city in Asia, to see what form it will have taken 30 years from now.

Note: Market capitalization is as of September 2017

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