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A tale of two cities
: Bangalore and Shanghai are like 'yin' and 'yang', with their pros and cons. Singapore should find ways to leverage that
Business Times, Singapore, 01 November 2004
By RAJU CHELLAM
'IT WAS the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity . . . ' This famous quote is from A Tale Of Two Cities, which was Charles Dickens' twelfth novel and was based on events that took place during the French Revolution of 1789. The first full print
of the novel appeared in November 1859.
The best of times: Bangalore is emerging as the software capital of the world while Shanghai is already the hardware factory of the world.
Exactly 145 years later, the high-tech world is looking at the unfolding tale of two cities, Bangalore and Shanghai. Like Dickens' introduction to his novel, it is the best of times for Bangalore and Shanghai. The two cities are like yin and yang. They are as different from each other as they are similar. And they are in a great rush to catch up with the First
World.
Bangalore is emerging as the software capital of the world and Shanghai is already the hardware factory of the world. The first is in the throes of development, while the other seems to have gotten there already.
Here's a personal insight:
When you land at Bangalore's antiquated airport, you can feel the charms of an era gone by when Bangalore was a more relaxed city and was considered suitable for pensioners to retire in. The drive from the airport to the heart of the city is nerve-wracking, with potholes on the
roads, cows straying in, sidewalks dug up, people milling around alongside, and
three-wheelers jutting into any available space between two vehicles.
When you land at Shanghai's new Pudong airport, you're greeted by an expanse of steel and concrete beams that hold the almost kilometre-long structure's roof. China opened the airport in 1999 to take the pressure off Shanghai's older and smaller Hong Qiao airport. After clearing
customs, you take a lift to the third level to ride on Shanghai's showpiece: the Maglev train.
The 10 billion yuan (S$2 billion) Maglev is the first-ever magnetic levitation project system in commercial use in the world and whisks you from Pudong airport to the Shanghai Lujiazui financial district in under eight minutes at a top speed of 431kmph. The 30km ride costs 50 yuan and a train leaves either station every 15 minutes. A cab ride, on the other hand, costs 110 yuan and takes 50 minutes during non-peak periods.
Shanghai gives a superb first impression, while Bangalore offers a different appeal. Almost everybody in Bangalore speaks English - unlike in Shanghai - and one out of three is employed in the infotech sector. Almost half-a-million people work in the IT outsourcing sector alone in Bangalore, which has 1,400 infotech companies registered there, 506 of them MNCs. The government of Karnataka state (of which Bangalore is the capital) wants
Bangalore to gross US$10 billion in software exports by 2007 - up from about US$6 billion this
year.
As for Shanghai, in 2000 it earmarked 100 billion yuan - 25 per cent of the total proposed industrial fixed investment between 2000 and 2005 - to prop up its IT sector. Shanghai wants the IT sector to contribute 15 per cent to the city's GDP by 2005, up from about 7 per cent now.
Both cities are in a hurry to modernise. The competition comes not just from other cities around the world but also from within their countries. According to BusinessWeek, India produces 316,000 science and engineering graduates a year and China 337,000.
By comparison, Singapore churns out 5,600 a year, Israel 14,000, Taiwan 49,000, and South Korea 97,000.
Is there any way a country like Singapore can compete with India and China?
Of course. Here's how:
R&D: Singapore spends 2.2 per cent of its GDP on R&D. That compares with Israel's 4.7 per cent, South Korea's 2.9 per cent, America's 2.7 per cent, Taiwan's 2.3 per cent, China's 1.2 per cent, and India's one per cent. Our edge in R&D vis-a-vis India and China gives us a window of opportunity - and we'd better make good use of it before it closes.
Professionalism: Singapore provides a strong sense of professionalism and security - both literal and virtual - that businesses across the region look for, says Paul Thorley, CEO of Capgemini Asia-Pacific.
Strong laws: Both China and India respect and admire Singapore's strong legal system, its stringent enforcement of IP (intellectual property) rights, and its no-nonsense approach to the rule of law. Singapore could be a conduit for high-tech companies in India and China to secure IP protection and file for patents.
Leverage: Singapore could leverage our industrial design and marketing skills with India's software skills and China's manufacturing process.
Here's an example: Philips designs products in Singapore, packs it with software developed in Bangalore and gets it manufactured in Shanghai. Its latest 23-inch mirror TV that sells for $4,000 is designed in Singapore and made in bulk in Suzhou, for instance.
Window: To the West or to Asean. Singapore has already signed FTAs with the US, Japan, the European Free Trade Association, Australia and New Zealand. This could be a major pull for high-tech companies in the two most populous countries. Singapore could open doors to markets that may otherwise be closed.
The writer was recently in the two cities on a media tour of Philips' research facilities.
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