Through the wall-sized windows behind his slick, black desk, Ma overlooks steel-and-glass office towers that house similar companies, including an online-music outfit and a "virtual university" where colleges from around the country have conference centers and research labs. This small enclave of white-collar knowledge workers is a model the rest of Shenzhen must rapidly emulate if it is to continue to prosper, says Ma: "In Shenzhen, we really have to move faster than before, and take the right direction." His vision?and his sense of urgency?is shared by city officials, who have launched an effort to move the local economy to a higher plane. The government is promising tax breaks and land concessions to tech firms, and has said it expects to invest $1.25 billion over the next five years to support high-tech start-ups and research projects. "Shenzhen is at an important strategic turning point," the city government said in a policy statement issued earlier this year. "We must not waste time and opportunities in establishing a new, high-tech development strategy."
Those words may have globe-rattling implications. If Shenzhen can leap from assembling basic products with low-wage, poorly skilled labor to nurturing the innovations of lavishly paid talent, it could blaze a trail for the rest of corporate China, which must increasingly develop its own brands, designs and technology to rival those of America, Japan and Europe. It would not be the first time Shenzhen has led the way. The city, located in southern China's Pearl River Delta, has been at the forefront of China's free-market reforms for 25 years. In 1979, late Chinese leader Deng Xiaoping designated Shenzhen as one of the county's first special economic zones (SEZs), offering privileged terms to foreign companies wanting to invest there.
That experiment was a remarkable success. Eager to tap Shenzhen's low costs?especially for labor?foreign companies rushed into the SEZ, led by factory owners from nearby Hong Kong. The result was a decades-long boom, with Shenzhen's economy expanding at an average rate of 28% a year from 1980 to 2004, according to Hong Kong-based consulting firm Enright, Scott & Associates. Exports from Shenzhen reached $101.5 billion in 2005?13% of China's total. Today the city is home to some of China's most important electronics manufacturers, such as telecom-equipment firm Huawei Technologies and mobile-phone maker ZTE. (Electronics products make up about 60% of Shenzhen's industrial output, according to Enright, Scott & Associates.)
The economic miracle has had its limits. Parts of the city are industrial and drab, and in recent years petty street crime has become so bad that some Hong Kong residents no longer shop there for cheap household goods and knock-off designer clothes. But with per capita GDP of almost $7,500, Shenzhen is among the richest cities in China. Today's downtown is a jumble of traffic-clogged streets, luxury hotels, Hugo Boss and Louis Vuitton stores, and foreign eateries like Pizza Hut and Taco Bell. At the Portofino housing complex on the city's outskirts, golf carts carry residents from their lavish condominiums to the development's pricey European restaurant.