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Guangdong firms urged to follow industry trends

By Liang Qiwen (China Daily)
Updated: 2008-05-28 09:30

Guangdong's business owners must change their conservative working style if they are to keep pace with industry trends, experts said yesterday at the first Cantonese (Guangdong) Entrepreneurs' Conference in the provincial capital.

In the 1980s and 90s, Guangdong built its success on labor-intensive original equipment manufacturing.

"But this industrial model has been outdated," Wang Xianqing, a Guangdong business professor, said.

"Many other places on the mainland have now caught up with and even overtaken Guangdong."

As a result of higher priced labor and land, the overall cost of manufacturing is soaring, Wang said.

Also, the new labor law, the appreciating yuan, and tighter rules on the protection of intellectual property rights are all forcing companies to change their working methods and focus much more on technology and innovation, he said.

Yong Heming, vice-president of Guangdong University of Business Studies, said that due to cultural and historical factors, most Guangdong business operators are steady and conservative, but lack ambition and aggression. This means they are slow to react to changing industrial trends.

"They see only short-term profits, but don't pay enough attention to long-term business promotion strategies," Yong said.

"They don't want to take risks to expand their business scale; they prefer to run their businesses in isolation, rather than cooperate with their competitors."

Between 2000 and 2005, China's stock market recorded more than 100 mergers and acquisitions. Just one of them involved a company from Guangdong province.

Zhou Zhaoqing, a researcher specializing in Pearl River Delta studies, said: "Actually, Guangdong has a very important competitive advantage, which is its proximity to Hong Kong and Macao."

In the future, Guangdong's business owners should reform their management skills, update their production processes, cooperate more with industry rivals and learn from the success of Hong Kong and Macao business operators, Zhou said.

Before transforming their industrial modes, however, business operators must first change their old-fashioned ways of thinking, he said.

However, with its solid economic foundation, built up over the past two decades, Guangdong's industrial sector can overcome all these difficulties, Zhou said.

Li Yangchun, vice-president of Guangdong federation of industry and commerce, said one of the key functions of the entrepreneurs' conference is to provide a platform for the province's business owners to get to know each other and discuss ways in which they can cooperate.

More than 1,000 business leaders and politicians are taking part in the two-day event.