Shenzhen: April 2008 Archives

09_krispykreme_lg_l.jpgThe blogger at Silicon Hutong doesn't think so.

Krispy Kreme has announced it has plans to expand from it's Hong Kong location into mainland China, with Shenzhen being the first mainland city to host the rich donut-maker. The China Economic Review reports:

"We are negotiating with the franchisor but nothing has materialized yet," said Jim (Krispy Kreme's Hong Kong CEO). "Shenzhen is a migrant city, many are from the north, and the people are more receptive to fried products."

Silicon Hutong, a well-respected blog which follows Chinese business news, thinks the move into Shenzhen shows that Krispy Kreme isn't serious about expanding into the mainland Chinese market:

...if Krispy Kreme really understood the way into China, they would start someplace where there are a lot of people who already like donuts, can't get them, and will form long, slavering lines outside their door each morning. If you're afraid of Shanghai, go with Beijing. Call me crazy, but tens of thousands of American and Canadian businesspeople, students, diplomats, and families seem like a built-in market for a store or ten, better (especially initially) than a million or two migrant workers and their factory bosses.

Silicon Hutong, which is an excellent business blog, shows a misunderstanding of Shenzhen when it characterizes it as home only to "a million or two migrant workers and their factory bosses." While there's no doubt the foreign market is larger in Beijing and Shanghai, China's expat and thriving business communities are no longer located solely in these two locales.

Shenzhen is home to millions of dollars in foreign exhibitions and trade fairs each year, has one of China's most thriving and prestigious sailing clubs, some of the highest real estate prices in China, and is home to one of the country's major stock markets. Its proximity to Hong Kong, Macao, Guangzhou, and Zhuhai, which are overflowing with the kind of expats Silicon Hutong talks about, makes it just as logical as a place to begin as Beijing or Shanghai.

The blogger also writes that KFC, McDonald's, Starbucks, Papa John's, and Pizza Hut are all examples of foreign brands that did it right. It's ironic that each of these brands are already located in Shenzhen, and are thriving. In addition, Shenzhen supports luxury malls along the lines of Shanghai's Plaza 66 and Beijing's Shin Kong Place with Armani, Gucci, and Louis Vuitton stores.

To be fair, "the Hutong" notes that there are things that Krispy Kreme could do better, such as put people on the ground in mainland China and develop relationships with local governments, rather than run their franchises from Hong Kong. But the argument against opening first in Shenzhen is another example of the tunnel vision that seems to affect expat residents of Beijing and Shanghai. People in these two cities seem to assume that the rest of China remains backwards and undeveloped, and are unworthy or unsuitable for high-level foreign brands. This shows a lack of understanding of the development that has been occurring in China's second tier cities, and is unworthy of an otherwise excellent business blog.

gzsz.jpg As a regular commuter between Beijing and Tianjin, I'm surprised there is not a much easier way to get between the two closely-linked economic hubs in northern China. Right now, to get to Tianjin one must either drive, catch a taxi (which I've once sadly had to do - it costs around RMB 400), or take the train. The problem is buying a train ticket to Tianjin is no different than if you were going to Shanghai; long line-ups, buying the ticket in advance, and going through the general inconvenience of train travel.

The good news is this will be changing, which I will touch on shortly. And if it changes the way the commuter trains work between Shenzhen and Guangzhou, I will have a smile on my face each time I make the trek.

A friend and I just wrapped up a two-day mini-holiday down in southern China, where many readers of this blog know I like to spend my free time. While I've caught the trains between Guangzhou and Shenzhen in the past, I haven't sampled the new bullet trains since they were unveiled last spring. And what a delight. We arrived at Guangzhou East Station at about 12:50pm and wanted the next train to Shenzhen. Well, the next train was 12:58. Should we rush, we wondered? When is the next one? 1:03pm. Then 1:10pm. Yes, the trains depart that frequently -- almost as frequent as Beijing's subway cars. By selecting the 1:10pm train, we had enough time to pop into Starbucks - conveniently located inside the Guangzhou train station - for a quick brew prior to the trip.

Like on a subway system, we pressed "Shenzhen" on an automated machine, popped in our cash, and out came the tickets. They are coded electronically, so we swiped them at the turnstiles and walked down a hallway and onto the train. It left one minute early, and arrived one minute early. We didn't talk to a ticket seller (although they are available if need be) and spent precisely zero minutes waiting for anything. It was a pleasure, reminiscent of Hong Kong's public transportation system (which, in my travels, is the best I have used).

Guangzhou, as the capital of Guangdong, and Shenzhen, which anchors many of the factories in Guangdong, are closely linked. Both cities are economic giants, and the traffic between them -- both commercial and private -- is substantial. Which is why the parallels can be drawn between those two cities, and the two in northern China: Beijing and Tianjin.

So my question is this: Why must it be so difficult to get around up here? Beijing has opened subway line 5, and more are in the works to be opened soon. I've caught line 5 once, and it is a pleasure. But I avoid lines 1 and 2 as much as possible. The dreary stations, the Soviet-era cars, the smells, the crowds, and the lack of ammenities is often even less appealing than sitting in bumper-to-bumper traffic sucking back exhaust on second ring road.

But back to the Beijing-Tianjin commute. Unlike the high frequency of trains between Guangzhou and Shenzhen, the Beijing-Tianjin trains leave, I would say, on average about once every hour and 45 minutes. To me, that's not good enough: Tianjin is home to an increasing number of residents who work in Beijing, Tianjin's new TEDA zone is designed as the north's answer to Shanghai's Pudong, and, according to real estate agents in Tianjin, more and more Beijing residents are showing an inclination to relocate to Tianjin because of its (slightly) cleaner air and slower lifestyle.

The future portends that both Beijing and Tianjin will be developing a much closer relationship. And the good news (at least for me, and other commuters) is a new uber-fast train between the two remains on schedule to open in August of this year. This, from a website called Railway Technology:

The link between Beijing and Tianjin will establish a fast corridor between the two major centres, which currently suffer from major road congestion and a slow railway service. The new railway, 115km (72 miles) long, will cut journey times to just 30 minutes, although at the same time the main express road is also being improved.

The new trains will, apparently, travel at speeds of up to 300 km/hr. Count me as one who's excited about this development. When I used to live in the Guomao area in Beijing, and commuted to Shijingshan, where China Radio International is located, it took me about an hour from door to door. Now I could be looking at the same length of a commute going all the way to Tianjin.

While I like the idea of a fast train, that is only half the battle; the ticket-buying process must be simple, the trains must leave frequently, the stations must have ammenities. Perhaps this seems like petty nagging from a spoiled foreigner, but they are important in the development of world-class transportation services.

They got it right down in Guangzhou and Shenzhen. Let's hope they get it right here, too.

About this Archive

This page is a archive of entries in the Shenzhen category from April 2008.

Shenzhen: November 2007 is the previous archive.

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