The successful development of a provincial region is complex due to the number of innovations that need to be introduced. That is why the example of Kunshan, located in southeastern Jiangsu, is so revealing. In just ten years, the city’s population has grown from 600,000 to over two million (Kirby et al., 2013). The purpose of this essay is to critically examine the article by Kirby et al. to analyze the reasons for the success, strategies and problems of Kunshan.
In the first place, the city’s success could not have been achieved without the participation of such a person as Guan Aiguo, the Secretary of the Kunshan Communist Party. Fortunately for the residents, Guan is distinguished by his political involvement and entrepreneurial spirit. Kirby et al. (2013) characterize him as an entrepreneurial bureaucrat who combines critical elements of the political system and the economy. The main reason that brought Kunshan to the current level of prosperity is that a person with ambitions and a desire to change people’s lives took such a high post. Guan has focused on entrepreneurship in the development of the city. According to him, the interaction between the state and the market resembles a theater, in which the first manages the stage, and the companies act as actors (Kirby et al., 2013). By clearly sharing government officials and economists’ roles, Guan focused on attracting investment and innovation.
Combining these factors allowed him to achieve tremendous success, placing the city at the top of the country-level cities of China ranking. The growth and development rate led to the formation of the so-called concept of the “Kunshan Way”. A characteristic feature of this theory is the independent development of entrepreneurship. However, such an approach would not have been possible without the active support of state bodies and the Party, as well as a strategic location (Kirby et al., 2013). If it were not for the site in the Yangtze River Delta, most likely, such a stunning success would not have been possible. The combination of an important strategic location right at the intersection of many trade routes, and effective government policies that actively support entrepreneurs, have allowed Kunshan to develop at an enormous pace.
An additional development factor in this context is the active use of attracting foreign investment for business development. This approach’s trend dates back to the 1980s when the Special Economic Development Zones Authority began to promote this concept for China’s faster development (Kirby et al., 2013). As practice has shown on the examples of cities such as Shenzhen, Shantou, and others, this method guaranteed active development, allowing these cities to be called the national economy engines. However, despite the introduction of two similar projects, Kunshan did not fall under either of these programs. Therefore, taking into account the available experience, establishing their own development zone was one of the most logical decisions in local conditions. The practice has shown that the decision to develop a close relationship with Taiwan was also beneficial. The history of economic interaction between China and Taiwan is quite rich. However, the main factor in choosing this particular state was the coincidence of the principles of Kunshan and Taiwanese entrepreneurs’ leadership. Since the city already had a highly effective, service-oriented leadership network through the government’s efforts, dealing with Taiwan was much easier.
Such strategies were also part of Kunshan’s industrial modernization programs. Although the number of established industries such as electronics, precision machinery, Kunshan continues to support innovation. This approach is mainly implemented by investing in new, relevant sectors as part of the industry development strategy. These include the use of new energy sources, such as solar, new materials, including biomedical ones, and the production of flat panel displays (Kirby et al., 2013). These areas are currently experiencing rapid development, so their support can guarantee the city’s continued prosperity. To prepare in advance for such a development, the city begins to gradually increase its share in the information technology market and closely monitor the competition. The use of modern technologies, including the energy and material listed above, makes it possible to effectively modernize the current industry during the preparation of a new activity field.
However, Kunshan still has several problems that can either threaten future development or are already present at the moment. For example, the danger is posed by a massive flow of migrants, almost twice the number of the city’s indigenous population (Kirby et al., 2013). While these people constitute an efficient workforce, their presence poses challenges for healthcare and other essential services. Besides, at the moment, the city is highly dependent on Taiwan. Cooperation with this state has allowed Kunshan to achieve tremendous growth rates; however, such a connection can be extremely fragile and dependent on political ties. To reduce the existing risks from these problems, the government can turn to the domestic market. Although the bulk of the success has been obtained by attracting migrants and foreign investors, they can try to switch to using the country’s internal resources at the current development level. This will help solve both the problem of excessive temporary residents and extreme dependence on Taiwan, thereby contributing to Kunshan’s further success.
Thus, Kunshan is a unique project to establish a local special economic zone by the local government. Implementation of such an approach would have been impossible without the government’s active participation and the favorable geographical location of the city. Kunshan’s success is due to several factors at once, which have thrived to form a whole new direction, which serves as an example for other cities. Despite the existing problems and difficulties, Kunshan has massive potential for further development, making it even more interesting to study.
Reference
Kirby, W. C., Bynum, N., Manty, T. Y., & Zendell, E. M. (2013). Kunshan, Incorporated: The Making of China’s Richest Town. Harvard Business School Case, 313-103.