MegaCities - Shanghai

Interview with Peter Borger

Borger: It already is, at least in terms of growth. During my career, I have worked in 11 countries on four continents, and I’m convinced that China’s development will leave its mark on this century. The megacity of the 21st century will be Shanghai, just as New York was the city of the 20th century. I’m saying that not just because I’ve lived and worked here for the past six years. I see it happening every day. China has mobilized all of its resources in its drive forward, and Shanghai is China’s most ambitious city.

How does this make itself felt?

Borger: What other place is creating several satellite cities within a metropolitan area out of thin air—with hundreds of thousands of residents? Or has planted 20 million trees within three years and built thousands of high-rises in only a few years? Even if this drive to be the tallest, biggest and best may not always make sense, the progress made is breathtaking. Decision-making processes are short, and the salaries are the highest in China, which attracts lots of young talent.

Which is surely one reason for Shanghai’s excitement about the future?

Borger: Exactly. Here’s just one example. The average age of the 3,000 employees at SSMC is 28, and 70 % of them have been to universities. Their commitment to learning and improving themselves is unbelievable: Almost everybody is trying to earn an MBA as a second degree in weekend and evening courses. For the first time, the Chinese have the opportunity to become entrepreneurs in their own country. And a lot of them want to use this opportunity. Earning and spending money has become a very high priority. And because life has gotten noticeably better for most people, they want to remain on this path—particularly because children who grow up to be well-paid adults are the best social support for their parents.

Does anything stand in the way of attaining these goals?

Borger: In Shanghai, the biggest problem is public transportation, which hasn’t kept up with the city’s growth. At least 150,000 new vehicles are added to the city’s streets each year. Two metro lines are not enough to provide relief. And buses and taxis jam up the streets even more. To help ease the situation, 11 new metro lines with 430 km of track will be built over the next five years. Another key goal is to relieve the pressure downtown. The satellite cities where people can both work and live are the right approach. Shanghai is also doing a lot to help the environment and provide a reliable power supply. And the telecommunications infrastructure is one of the most modern in the world. Ten million people in Shanghai already have cell phones.

Could the Shanghai hype burst the way that the Internet bubble did?

Borger: The city’s planning is well-conceived, and city officials generally implement the things they plan. One threat to China as a whole is the problematic state of the financial sector. It’s burdened by bad loans—to state-owned enterprises, for instance. But officials are well aware of these problems. They are frequently discussed, and solutions are worked out—like safety-net organizations and the sale of shares to private investors. China is still attracting 70 to 80 % of all foreign investment in Asia. Last year, this amounted to more than $53 billion. So I’m very optimistic about the future. Incidentally, we also offer financing packages through Siemens Financial Services for our projects.

How important is Shanghai for Siemens?

Borger: Our market share is higher here than in any other city in China. We have 16 joint ventures in and around Shanghai, and a total of 12,000 employees—more than half of our entire workforce in China. Our biggest and most modern cell-phone factory outside of Germany is SSMC in Shanghai. We’re involved in city projects, from the subways to the hospitals, from waste-water treatment plants to skyscrapers and power plants. Our president and CEO, Dr. v. Pierer, is a member of the advisory council for the mayor of Shanghai. In short, Shanghai is—besides Beijing—one of the centers of our activities in China.

Siemens is taking similar approaches in China and the U.S., where One Siemens packages the Groups’ offerings into comprehensive solutions. Which areas do you see as markets?

Borger: We’ve identified six clusters: harbors, airports, medical centers, high-rise buildings, petrochemical and automobile industry infrastructure. You can find just about all of them in Shanghai, where we’ve demonstrated in pilot projects just how well Siemens can perform. For example, 22 new hospitals will be built in China this year, four of them in Shanghai. Siemens offers strategic partnerships in every one of these areas.

How does a customer benefit when the buyer-supplier relationship is transformed into a strategic partnership?

We understand customers’ business processes—like how a hospital or airport is operated—so we can offer comprehensive solutions. Normal suppliers can offer only products that are already available. But if Siemens is your partner, you can take advantage of technologies that are being tried out in pilot projects. So something that has to run for 20 or 30 years is not out of date from the start, but outfitted with the very latest technologies. Of course, this requires mutual trust. Thanks to our years of commitment to Shanghai, we’ve won this trust. That’s a major competitive advantage for us.

Interview conducted by Ulrich Eberl