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July 17, 2017

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Pitfalls in the cities’ fight for top academics

A FRIEND called me the other day and said in a melancholy voice that she was leaving Shanghai, the city she has called home for more than two years.

With a master’s degree and a husband working as pharmaceutical sales representative, she could have led a decent life even in this increasingly expensive city. Somehow she felt compelled to leave, citing exorbitant home prices, a tightening of hukou, or household registration, and curbs on home purchase by non-local citizens unless they contribute to the local social welfare fund for at least five consecutive years.

Having already received a job offer, she is planning a move to Wuxi, a prosperous city in the Jiangsu Province.

My friend is among hundreds of thousands of people who are on their way out of Shanghai and, for that matter, other first-tier Chinese cities including Beijing, Guangzhou and Shenzhen.

Second-tier cities like Wuxi look set to benefit from this exodus of a young working-age population from the big metropolises. According to media reports, a handful of second-tier cities have announced favorable policies aimed at attracting young talent and involving them in their drive for a brighter future.

For example, out of roughly 7.5 million college graduates this year, cities like Wuhan, Xi’an and Changsha — capitals of Hubei, Shaanxi and Hunan provinces respectively — have reportedly offered rent and home purchase allowances to the best students. Also guaranteed is a local hukou and all the benefits that come with it: public healthcare, education and so on.

A commentator opined in a recent issue of Beijing Youth Daily that this “clamor for talent” filled him/her with a sense of déjà vu.

Déjà vu or not, the current situation does remind us of a similar drive seen a couple of years ago. Then, many cities adopted favorable policies to lure or retain migrants as factories were hit by a severe shortage of labor.

From brawn to brain

Nowadays, it seems that the fight for the brawn has turned to a fight for the brain. Many things have changed in the intervening years. China, on the whole, has steadily evolved into a knowledge-driven economy, with innovations in the Internet, cloud computing and big data calling for more brain power.

Cities eager to move up the value chain are fully aware of the importance of top talent in their ascent. Those who are left behind in the race face being down and out — hence the charm offensive.

Nonetheless, the success of the charm offensive hinges upon factors far more complex than pecuniary or material benefits. In response to the much-publicized race for talent, many Netizens posted vitriolic comments on news websites to the effect that this may likely result in thousands of more mortgage slaves.

Their sarcasm is justified. It points right at the danger of misinformed decision-making that has doomed many past hunts for talent to fail. Recent history is littered with examples where third- or fourth-tier cities ambitiously targeted talent but failed to provide them with any proper jobs or social welfare.

In an era when first-tier cities still represent the commanding heights of high-tech innovation, second- or third-tier cities obviously have to stand out in a remarkably convincing way to entice interested individuals. Diversified competition seems to be the right strategy. Entrepreneurs snubbed by the snobbery of big cities might thrive in a less cut-throat, but a more start-up-friendly environment.

The best example is Jack Ma, founder of Alibaba, who went to his native Hangzhou and built up a business empire once thought impossible. Hangzhou, as a result, became a mecca of Chinese e-commerce. Inspired by the story of Ma, leaders from second-tier cities are doling out largesse to student entrepreneurs, hoping that the next Jack Ma might come through the ranks.

Chances are that many will fail, or even if they succeed, it is modest success. A story run by TMT Post, an online and mobile media platform focusing on China’s start-up scene, quoted venture capitalist Yan Yan in saying that many VCs or PEs would rather splurge money on start-up projects in Beijing or Shanghai because even if they lose money, they have a bigger likelihood of becoming profitable once the business model is replicated in other parts of the country.

Not yet as steeped in the entrepreneurial culture as their Silicon Valley and Israeli counterparts, officials from second-tier cities have to learn to espouse a higher degree of tolerance for failure.

Of course, creating an innovation-friendly climate is only one step towards the bigger goal of luring talent. Cities, after all, are not beehives filled with ant-like workers. Rather, they are inhabited by real people who expect some basic conditions to be met for their residency: clean air, safe food, public security, a sound healthcare and education system, efficient government and last but not least, a fair chance for all. It’s hard to imagine a city can entice and retain talent just through generosity if it is environmentally undesirable, riddled with nepotism, hobbled by a lack of entrepreneurial spirit and highly discriminating in the provision of public services.

The race for talent is essentially a call for cities to shape up, to endear themselves to outsiders and above all, to discover what elements are missing that prevent them from getting there.


 

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