The Talent Difference Between China's Tier 1 And Tier 2 Cities. Let's Get All Snobby About It.
China Vortex did an intriguing post a couple of months ago on why China's Tier 2 cities will always be second tier (and I just found this completed but unpublished post today). The post is entitled, "China’s Biggest Challenge for Developing the West," and it essentially argues that the Tier 1 cities, essentially Shanghai and Beijing, draw the best human talent, will continue to draw the best human talent, and thus will remain as the only true Tier 1 cities. I seventy-five percent agree and twenty-five percent disagree.
CV's post starts out talking about how Beijing has done a lot to encourage development in China’s west, particularly Sichuan province. It goes on to say that from "a business and consumers’ point of view, the region holds tremendous promise," but this is not enough and it remains far behind China's east coast.
CV sees human talent holding Sichuan back:
In two words, it’s human talent. “Interesting places attract interesting people” is one of my favorite mantras. When I go to a place, I like to find interesting people, regardless of their profession, and listen to what they have to say. I look for different angles and insights from individuals which I cannot easily find elsewhere. Most of the time, I think of these people as very smart generalists.My experience is that Shanghai and Beijing is full of interesting intelligent and very talented people, which is why I’m attracted to these two cities in China. They are evolving rapidly, which means that these cities have not yet congealed around certain professions in the way American or European cities, or even Hong Kong, have. They are full of surprises, and most of the time, these are pleasant surprises.
My theory is that these two cities draw the best Chinese talent away from the rest of China, leaving the other cities to struggle with the people they can convince to stay there, who usually are not as smart and talented. So, when Chinese or expats talk about Tier 1 cities (Beijing and Shanghai), they could just as easily be talking about quality human talent.
CV goes on to say that even though Sichuan has consumers and can "have good manufacturing up to the middle of the value-added chain," it "cannot catch up with Beijing and Shanghai at the top of the value chain." CV is of the view that unless places like Sichuan can "figure out a way to keep the best human talent in Chongqing, the wealth and knowledge gap between the western part of China and the Tier 1 cities will continue to widen. Instead of climbing to the top, they will peak out around the middle and won’t make it into the ranks of world-class cities." It takes more than buildings to make a city world class and only Beijing and Shanghai have world-class potential:
What the Chinese government, and most other governments, fail to understand is that it is not buildings, boulevards and museums which make cities world-class, it is very literally human talent. In spite of China’s huge population, I have only seen two cities, Beijing and Shanghai, which have the potential to make them world-class.
Lest the 1.2+ billion people in China living outside Shanghai and Beijing take offence at CV's Obamaesque take on their cities, CV makes clear that most cities in the United States are not worth a world class glance either: While some Chinese may take this as a slight, it’s worth remembering that the US, which has only 1/4 the population of China, but has a longer history as an economic superpower, has only three cities which can be classified as “Tier One”: New York, Los Angeles and Chicago.
CV makes some good points, makes some bad points, and is so vague at times as to be unclear. His good point is that right now Shanghai and Beijing are the only two cities in China that have the "certain je ne sais quoi" necessary to be considered either world-class now or with the potential to become world class later. Of course, what is meant by world-class? How is that defined? And once defined, is it necessary for a city to be world-class to achieve great success and wealth? I do not think so.
I do not know what constitutes world-class (one guy's world class is another guy's ....) so I will not even try on that one. But, I will note that the cities in the United States that have really thrived over the last ten to twenty years and will almost certainly continue to thrive over the next ten to twenty years are not the three "world class cities" CV lists above. Yes, Shanghai and Beijing are China's two world class cities right now, but right now is not necessarily permanent.
As Richard Florida would say, Who's your China city?
http://www.chinalawblog.com/cgi-bin/mt/mt-t.cgi/2602
The Talent Difference Between China's Tier 1 And Tier 2 Cities. Let's Get All Snobby About It.:
Comments
The China Vortex article is extremely lazy - almost as if the writer struggled for something to write about and add content to his blog.
Of course, Beijing and Shanghai draw the best talent in China. They have done so for the past 100 years, and much longer if you just look at Beijing. These cities have the best universities in China, and therefore attract the best talent at a very young age. A city like Chengdu will probably not attract a Microsoft Research center like Beijing, but they already have an Intel assembly plant. Cities like Chengdu and Chongqing have and will continue to find their own niche in the Chinese economy.
This phenomenon is nothing new -- and there is a limit to how many "world class" cities a country can have.
Posted by: dataman | November 18, 2009 4:25 PM
Typical experience of the "haves". We're the best and we look down on everyone else, and we can't possibly understand why anyone would live anywhere but our home. It's a rather Shanghainese attitude, frankly.
Second-tier cities' greatest strength is the opportunities available. There are plenty of things that simply don't exist yet and are waiting for someone to implement them.
Posted by: Craig | November 18, 2009 8:51 PM
There is a huge difference between the US's tier 1&2 cities vs China's tier 1&2 cities.
And Chinese executives aren't always keen to go into these cities themselves, they know that the governance is much, much worse than BJ or SH. Not to mention the power grid, infrastructure and economics.
Young talent wants to have a lifestyle outside of nightly majhong, polka dancing in the park and cricket fighting. KTV is passe with the young crowd as well. They want international fare, not their parents' lifestyles. Only SH and BJ offer that consistently. And more interaction with a large foreign community that is not 1. drunk english teacher bums 2. castoff elderly old hands who can never go back to the west or 3. Western families who got "stuck" in a second tier city and simply hole up with the handfull of other expat families, jetting off to Thailand, HK or home at every opportunity.
And many Americans really don't like LA at all. Chicago has crap weather and a midwestern lifestyle, that leaves NYC. Boston, Portland, Seattle, SF, Denver, SLC, Albequerque, Austin etc. tend to attract young, creative Americans.
LA is for drugged out, siliconed, ultra-self absorbed fools.
Posted by: dude | November 18, 2009 11:33 PM
Not sure what the criteria is for a world class city, but when it comes to technology, San Francisco Bay Area ranks among those that should be included as a world class area, due to it being the center for many of the high technology innovations of the past 50 years From HP garage days to Intel, to Apple.
Posted by: blcsfo | November 18, 2009 11:50 PM
I would also say that NYC is something that no mainland China is or will be in the near future and that HK used to be, a truly "world city" with not just a few people but communities from nearly every country on the planet. Every city, including SH, is still not only China focused and China centric but Han centric.
Posted by: dude | November 19, 2009 8:16 AM
Um, that China Vortex post is more than a year and a half old, 20 months to be precise. I know this because it's almost exactly as old as my younger daughter.
I would swear that you've even commented on the China Vortex post before as well, but my Google skills are failing me.
Is Chinalawblog currently on auto-post or something?
Posted by: JT | November 19, 2009 9:37 AM
Yeah, he (CV) sounds like a snobby elitist.
Talent and companies do tend to cluster, typically not in the so-called Tier-1 cities. For example, if you were crazy enough to start a hard disk drive company, in the US you would find the talent in Minneapolis, San Jose, and Longmont Colorado. If you wanted to do semiconductor equipment, you'd find the best talent in the SF Bay Area and Austin TX.
In music (classical western & chinese), Chengdu is definitely tier 1 (Sichuan Conservatory of Music) along with Beijing and Shanghai. In the US, the most famous conservatories are in Philly and NYC.
Final example: machine vision is another high tech, creative area; the talent is spread out, primarily in the US, Canada, Germany, and Japan. I can't think of a major US or German firm located in a "Tier-1" city; the closest would be Cognex (Natick, MA) and Microscan (Renton, WA). The Canadian ones are either near Vancouver BC, Montreal QB, or Waterloo ON.
Posted by: Tony | November 19, 2009 10:16 AM
I think it's important to point out that the type of talent Beijing and Shanghai attract is quite different. Beijing tends to attract the creative types, artists, musicians, journalists, and the like, plus people connected with the tech industry. Shanghai draws more of the business and fashion crowd. It isn't too dissimilar from the LA/Bay Area dichotomy.
Also, the key to attracting talent is capital. Talent flocks to Beijing and Shanghai because that's where the money's at, or at least more of it than smaller cities. When wages, demand, and ticket prices are higher, the best and the brightest will flock to these places, while those of lesser abilities tend to shy away and go after the low hanging fruit.
Posted by: Ben Ross | November 19, 2009 6:03 PM
@dude
uhh...what's wrong with a Midwestern lifestyle? Maybe you have a deep seeded hatred of friendly people who greet strangers while taking walks, or maybe Chicago's nightlife doesn't have the zest of say...Albequerque.
One thing I've noticed in living in Chicago for the past 2 years is that most of the people who don't like it have never been here (visiting for the weekend to see the Sears Tower and Navy Pier doesn't count).
Posted by: Ben Ross | November 19, 2009 6:07 PM
Some good points have been posted here, and I have to agree that the tier-1 cities have historically always had a strong "draw" - Beijing for being the political center and Shanghai for finance/commerce. And the younger generation flock to these tier-1 cities because that's generally where the best (paying) jobs are.
However, rapidly rising real estate prices are making it increasingly difficult for "outsiders" to settle down and start a family in these cities, unless they come from well-off families (which many do). But for those who don't have other financial assistance and are not making top money, they have little hope of being able to purchase a house in a tier-1 city in the near future.
I predict that rising real estate prices, along with accelerating development in western areas and lower-tier cities, is what eventually causes the influx into the tier-1 cities to slow.
Posted by: Gerald | November 19, 2009 8:02 PM
Something I notice 2nd tier cities benefit from is the reflux of talent in their 20s that sought a career in Beijing, Shanghai or Shenzhen returning when in their 30s to start a family in a more family-centric city. This is certainly the case in Dalian. This creates a pool of experienced talent priced much more cheaply than were they to stay in the tier 1 cities.
Posted by: Dalian | November 19, 2009 9:15 PM
Every staff recruitment process in China blows me away with some of the talented candidates I get to meet. Yes, Beijing and Shanghai are particularly strong. However, other major cities have their fair share of very strong candidates. Then, as with any staff member, you integrate them and train, train & train to ensure they fully understand your business and can contribute. What is distinct about Beijing / Shanghai candidates is their level of international savviness. Other cities have great potentials who, in a China context have outstanding operational skills, but are not yet there in convincing overseas HQ that they are as good as they genuinely are... that's the key difference.
Posted by: Chris | November 19, 2009 11:38 PM
Hold on a second, I'm struggling to understand. Are Tier 1 cities supposed to be better, or worse than Tier 2 cities?
It's true, SH has the best handbags and nightclubs. And the people in BJ are certainly very self-conscious about their image in the world as well.
On the other hand, Sichuan is top tier for friendly people, relaxed lifestyle, delicious food and beautiful girls. No wonder the Tier 1 people take their money to Tier 2 cities to play.
I just hope China doesn't play out to the same tragic ending as the States, where the Tier 1 influence gradually expanded and deflated the human quality in the rest of the country. Nowadays, I expect to see & hear many Yankees in Colorado. We might as well face reality. Fortunately Sichuan may still have a couple of decades left before it, too, fills with derisive snobs.
Posted by: Nate | November 27, 2009 11:40 PM
An old man sat just outside the village gates, smoking his pipe and pondering things old people do when a traveler came by and asked him, "Old man, how are the people in this village?" the old man replied by asking how the people of the traveler's last village were to which the villager replied, "They were all liars and backstabbers with not a single good soul amongst them." The old man smiled and said, "We have the same people in this village."
A few days later, while the old man was again sitting outside the gates pondering things only an old man could ponder, another traveler approached him and asked him what kind of people lived in this village. The old man asked, "What kind of people lived in your previous village." to which the traveler said, "They were all great, loving people, who were social and friendly." The old man smiled and said, "We have the same people in this village."
...Look out Shanghai and Beijing, 2nd-Tier is coming! You shouldn't worry that the people here can do your job and do it cheaper, nor the fact that your company's expenses including rent and property is 1/2 the price...I'm sure your job isn't at risk :)
Posted by: Dustin | January 19, 2010 2:00 AM