What Huawei wants to escape is not only high housing prices

 

Date：[2024/1/11]
 

The recent reflection on the rumor of Huawei fleeing Shenzhen has generally focused on the negative impact of high housing prices on the Shenzhen real economy. In fact, the rumor of Huawei fleeing Shenzhen reflects a more profound proposition, which is the current problem of hollowing out urban industries.
If the Shenzhen municipal government does not timely state its intention to provide Huawei with more preferential policy support, Huawei's escape from Shenzhen may not be a rumor. But what about other high-tech R&D and manufacturing companies in Shenzhen besides Huawei? Can they also receive special care from the Shenzhen government? It is obvious that the government's statements in times of crisis cannot fundamentally save Huawei's escape choices based on market logic. In fact, don't let Huawei run away. This is not just a fear in Shenzhen, but a problem that many local governments are very anxious about right now. Faced with Huawei preparing to flee, what Shenzhen should truly reflect on is not only the issue of high housing prices, but also the key issue of urban "industrial hollowing out".
Although Shenzhen has recently led the country in the growth rate of housing and land prices, the housing and land prices in areas such as Beijing and Shanghai are not at a low level. So why is there only a rumor of "Huawei running away" in Shenzhen? On the contrary, Guangzhou, where housing prices are also high, is increasingly attractive to Huawei like enterprises, which at least indicates that the level of housing prices is measured relative to the quality of the development platform provided by the city for enterprises and the cost of living that matches the employment population.
As early as 2008, the growth rate of manufacturing output value in Shenzhen began to show a significant decline, with an average annual decline of 3 percentage points. In 2014, there was even zero growth, which was a precursor to the hollowing out of the industry. However, it did not attract local attention and continued to soar with high consumption and high housing prices. The so-called Huawei's escape from Shenzhen is just a microcosm of many retreating companies. However, Huawei's reputation is too great this time, and it can only stabilize the confidence of other companies by debunking rumors. Every relocated enterprise also pays a high price in the process of transfer. If it were not for the high housing prices and talent shortage that forced it, normal enterprises would not easily choose to "flee". The lack of sufficient industrial land supply, coupled with rapidly growing housing prices, makes it difficult for talents to easily choose to settle in Shenzhen, ultimately forming the two major bottlenecks of high housing prices and talent shortage that currently affect enterprise development.
In the early years, there was also a situation in Silicon Valley of the United States where high-tech companies relocated their research and development to Japan, but that kind of relocation was based on normal industrial changes rather than simply forcing companies to leave due to cost. The migration of old enterprises to development areas with lower labor and land costs, while emerging industries can bloom and bear fruit on the original site of old enterprises, is a virtuous cycle. But it is obvious that Shenzhen is not fully prepared at present, and the only thing it can do is to hold onto the old enterprises and prevent them from leaving. This is a typical industrial hollowing out, which refers to the decline of specific industries based on specific regions. The development of new industries cannot compensate for the decline of old industries, resulting in extreme economic contraction in the region.
Calm down and take a look at the unique charm that Shenzhen can attract businesses to settle down today: Apart from high housing prices and high costs, there seems to be not much to offer. The symbol of the special zone that "time is money, efficiency is life" has long been submerged in the lack of progress relying on high housing prices and enjoying the headquarters effect of famous enterprises. Rather than saying that the skyrocketing housing prices led to premature decline in Shenzhen, it is more accurate to say that Shenzhen itself did not reflect on and take remedial measures in a timely manner, which led to the withdrawal of enterprises.
If a company really wants to escape, it won't be possible to stay by pulling and forcing. It is recommended that cities such as Shenzhen take a long-term view and strive to build R&D clusters for emerging industries, rather than simply introducing a large and well-known enterprise; Secondly, in addition to outdated assistance methods such as tax policies, it is necessary to provide more powerful supporting public services for enterprises and industrial clusters, and bear more of the development costs of think tanks for assisting enterprise research and development. If you want to keep your desired company, you need to provide high-quality services and environment that are unique, rather than high housing prices and high consumption that are unique.
Keywords: Huawei Escapes Shenzhen, Manufacturing Industry, Housing Prices, Foxconn, Li Ka shing Think Tank, Development, Silicon Valley, USA, Yu Jiaxin