XU YING

ADAPT or Die” brutally sum- marizes Darwins theory of evolution. The three words aptly describe an underlying evolutionary concept: with a change of environment, living things must change along with it or face extinction.

Like living organisms, businesses and industries must change with the economic environment in which they live, or else face irrelevancy and/or bankruptcy. Nowhere has the economic environment changed faster in recent years than in China.

China Today looks at the fortunes of one province in Southwest China that is trying to – and succeeding in – reinventing itself in line with the changing times.

Welcome to the Jungle

Baiyun District in Guiyang, capital of the mountainous Guizhou Province, is one of Chinas biggest aluminum industrial bases. Like many traditional industries in China, the districts businesses have been under pressure to transform their business practices to adapt to a changing economy.

Unlike humans, who have no control over their evolution, businesses have the luxury of being able to reinvent and redesign themselves at will.

How to actually go about redesigning businesses to achieve industrial revitalization and upgrading has been a major topic of conversation and policy debate in Guizhou over the last few years. This debate has been necessary – until recently, Guizhous industries had been weak performers on the national stage. Growth was lackluster.

The inception of Guizhous industrial base actually occurred back during Qing Emperor Guangxus reign (1875-1908). The first industry on record here was a small iron workshop.

It was not until the 1970s that Guizhous modern economic foundations took shape, with the establishment of three military industrial bases covering aviation, aerospace and electronics. The industrial sector developed in the following decades, but not as impressively as in most parts of the nation –Guizhous industries lacked scale and have not benefited from a systematic plan for development.

Weak industries are one thing, but lessons from other parts of China suggest that beefing up existing industries is not necessarily a sure-fire path to prosperity. The key lies in which specific industries to develop and how to ensure businesses can hold their own in the hyper-competi- tive market.

In Baiyun District, authorities have been enacting measures to ensure the right industries grow, and to increase their ability to compete on the national stage. Such measures include expanding production output, supplementing industrial chains, encouraging innovation and ensuring adequate capital is available for promising businesses. Whereas in the past the only prosperous company in the district was the state-owned Aluminum Corporation of China Guizhou Branch, nowadays swathes of businesses are flourishing along with the old, stateowned mainstay.

Thanks to the successes of these new businesses, Baiyun Districts per capita GDP has topped the provinces chart for several years.

The success of Baiyun District has become a model for the whole province in speeding up industrial upgrading and transformation. Efforts have been taken up another notch since the province held the first Industrial Development Conference in October, 2010.

In a subsequent economic work conference held at the end of 2011, the provincial government reaffirmed its commitment to “seeking prudent but steady growth and escalating industrial transformation,” which it sees as critical to the goal of building itself into a leader in Chinese industry.

One Size Doesnt Fit All

Development must take into account indigenous, “on-the-ground” features. A“one size fits all” approach, even at the national level, is rarely the path to development success.

For Guizhou, a wholesale economic restructuring has been deemed necessary. Concrete objectives of this restructuring include changing development targets from growth-oriented to quality-based, shifting the focus of local industries from rough processing of raw materials to higher-end processing with developed industrial chains, and recapitalizing and expanding provincial enterprises.

Guizhou is focusing on industries in which it has “comparative advantages”thanks to abundant local resources such as electricity and coal. It is also supporting sectors for which the province enjoys a strong reputation: tobacco, alcohol and equipment manufacturing.Other traditional industries to be made more competitive include building materials, chemicals, metallurgy, nonferrous metals and forest products.

Local authorities also plan to develop strategic emerging industries, the likes of which include high-tech materials, equipment manufacturing, energy-saving and environmentally friendly products, software and service outsourcing.

How to transform comparative advantages into competitive advantages in the marketplace is now the core task of local policymakers. Realizing the shift will rely on expanding the size of Guizhous industries, creating hubs and completing industrial chains to achieve “economies of scale” – lower average input costs that accrue to larger enterprises.

In light of local conditions, every city in the province has set its own, unique schedule of priorities. The capital Guiyang, for instance, has thrown its weight behind equipment manufacturing, the phosphorite and coal chemical industry and pharmaceuticals, hoping to push their annual output to RMB 100 billion in the coming years.

Zunyi Prefecture is creating a cluster of industrial parks to woo investments in targeted sectors. Xingyi City has a plan in place for the development of light industry and economic zones along railway freight transport routes. And Bijie City is taking measures to upgrade its traditional industries – energy, coal and tobacco – while also fostering emerging industries like equipment manufacturing, new energy, new materials and biomedicine.

Guizhous industrial endeavors are acknowledged and assisted by the central government. In 2010 the provincial government signed the “Strategic Cooperation Agreement on Accelerating Guizhous Industrial Development” with the Ministry of Industry and Information Technology (MIIT), under which the province was granted RMB 728 million for the revitalization and technical updating of key industries, the elimination of outdated industrial capacity, the commercialization of scientific research results and the development of small and medium-sized enterprises.

Chinas national goals to strategically phase out “dirty” industries and replace them with environment-friendly ones are also being championed in Guizhou. High-polluting and high energy-consuming projects are turned down, and the red carpet is rolled out for investments that involve cutting-edge science and technology and meet standards of environmental protection.

People Power

To promote agricultural development alongside industrial development and to instill new vigor into rural areas is another strategic step for Guizhou. The rapid development of industries has empowered the countryside and brought more wealth to farmers. As increasing numbers of large enterprises spread their operations throughout the province, former villages are converted into towns, and farmers are becoming higher-paid blue-collar workers.

Xiaoba Town of Bijie City, for instance, was formerly a rural backwater. After a truck manufacturer opened a plant here, other related businesses followed suit, bringing jobs to the local community and transforming the cityscape. Nearly 2,000 former villagers are now better-off urban residents and enjoying all the amenities that city life brings.

This new spate of industrialization has triggered a rethinking of the role of personnel in business. Talented individuals are increasingly recognized as the core asset of a business, rather than just another input into the production process. Chinas experience suggests that having the right localized talent is crucial to the establishment of an industry and the incubation of a new market. It is thanks to the competence of local technicians that Guiyang is now taking on hi-tech projects like the production of sapphire substrate, a material used in the components of white and blue LEDs.

While trying to attract investment and seek financing abroad, Guizhou is also taking on the expertise of outsiders to develop its cities. Guizhous development has never been so closely linked to the whole country and the world as it is today. Through such events as the provinces successful hosting of the China(Guizhou) International Wine & Spirits Expo and Investment Fair and the Ninth National Traditional Ethnic Minority Sports Meet, Guizhou has been displaying its unique charm to the country and the world.

Recent statistics show that investment in Guizhous industries is soaring. Overall investment volume reached RMB 117.64 billion in the first half of this year. The province-wide proportion of light industry to heavy industry shifted to 14:86 from 6:94 last year. These data demonstrate Guizhou is on the right track.

Only three years have passed since Guizhou implemented its strategy of“empowering the province through industrial development.” Chinas economy is changing, but nowhere as rapidly as in Guizhou.