• October 22nd, 2020

Opinion - An EPZ lesson for Namibia from Shenzhen

Michela Pakarae 

The Chinese metropolis Shenzhen is often perceived as one of the most advanced urban places in China because of both its technology and dynamics. 
This perception is grounded in the story of the ‘fisher village’ that was transformed into a Special Economic Zone within a few years to metropolitan town of high-rise buildings, shopping malls under the leadership of Deng Xiaoping from 1978-1989. He has been credited with creating reforms that were relatively free of the bureaucratic regulations.
Since then, Shenzhen has been shaped by the inflow of millions of migrants from all over China, created a city of 20 million inhabitants.

Key result areas:

For so long, Shenzhen was called the backyard of Hong Kong because it offered cheap labour to Hong Kong-owned factories – but alas – in 1979, the establishment of Shenzhen Special Economic Zone (SEZ) gave the industries and companies in Hong Kong opportunity to have a lower labour cost, resulting into migration to Shenzhen. The migration helped Hong Kong-owned factories reduce labour cost and tax amidst increased employment. Research shows that from 1981 to 1993, Shenzhen Gross Domestic Product stood at 40% per annum, 30% higher than the national average.

Exports played a very critical role in Shenzhen’s development in the start-up stages. Shenzhen was one of the first cities that enforced the “open-door” policy and post-reform and embraced an export-intensive economy. Shenzhen benefited most among other cities from the reform. Chinese Economics Reform was the turning point of the fate of Shenzhen. Because the city’s advantageous location adjacent to Hong Kong, Shenzhen learned a lot from the success of Hong Kong as a port city and its development under the British government.
The establishment of the Shekou port in 1989 not only connected Shenzhen to Hong Kong but also later to the rest of the world. Over time, a large number of goods was produced in Shenzhen, and Shenzhen started to make a huge profit through the exports. 

Information Technology
Shenzhen remains the pioneer and best performers in IT industry among these cities. The reason behind this was that the IT industry in Shenzhen was bred under the environment of SEZ, the diversity brought by many immigrants and the strong support by the government.
The immigrants not only brought the labour force but also diversity through their different ideas. There were also intellectual elites among this group of immigrants. 

The local government continued to bring in foreign investment and increased fiscal revenue from land sales in a bid to improve a wide range of supporting infrastructure and primary city functions. In 2002, Shenzhen established a modern traffic network. There were 54 landline phones and 120 mobile phones for every 100 people. At the same time, public facilities had been well-built.
More important, Shenzhen citizens were made up of people from across China and the world who were enterprising, adventurous and open-minded, and that shaped a culture of innovation, inspiring waves of people to start-up businesses and undertake entrepreneurial adventures.  

Entrepreneurship Financing 
Shenzhen is a top innovation hub for start-ups, their development is mainly a result of financial help from the municipality, in part, as well as through self-financing. Shenzhen is the most entrepreneurial city in greater China and its start-ups are well geared to deliver innovative ideas with high growth potential with 16% of the population engaged in start-ups, a threefold rise since 2009. 
Sources of financial support
Start-ups traditionally require several things to be successful, that is, funding, customers, products, competition and the right team. Shenzhen offers all of these elements today. Aside from huge government funding and subsidies for the internet and technical start-up scene, there are also a lot of venture capitalists offering to fund for start-ups. Most of the funds also come from self-financing.

Cues for Namibia
Namibia needs to find ways to increase domestic production to enhance exports and increase the self-sustainability of the nation.
While Shenzhen developed from a village community to the metropolis that it is today, the city’s reform policies played a vital role in the development of Shenzhen. Namibian reform policies should be geared towards self-reliance in terms of goods and services and technological development.
Effective policy implementation coupled with active stakeholders is key to a successful economy. The coastal ports and more specifically Walvis Bay harbour has the potential to become Africa’s largest South-Western port and one that accommodates most land lock African countries. 
Furthermore, Shenzhen’s investment in infrastructural development enabled them to attract foreign investment and foreign multinational companies to set up in Shenzhen. 
Shenzhen’s success rests on the basic theory that trade makes everyone better off. Globalization is a developed way of multiple trades. This is the approach that every developed country has taken and many developing countries are experiencing adopting it now. That is what we should learn from the development of Shenzhen and in the future, that is what other developing countries should try to imitate. 

*Michela Pakarae is an economic researcher and Analyst at Entrepreneur Africa. She can be reached at pakarae69@gmail.com

Staff Reporter
2020-07-14 09:05:36 | 3 months ago

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