Oral History: Factory Flight

My emotions were mixed on reading recent news of a major factory relocation by leading car maker Geely (HKEx: 175), reflecting a larger transformation of China’s cities from centers of industry to ones of commerce and modern living spaces. On the one hand, I felt some nostalgia knowing that yet another factory would be leaving one of China’s big cities, slowly stripping away a flavor so closely associated with Chinese urban landscapes. But on the other hand, these urban factories are part of history and really have no place in 21st century cities, where they are a major source of noise, congestion and pollution.

The announcement that caught my attention appeared last month, when Geely said it would shutter 2 of its massive car assembly lines in its home province of Zhejiang, one in the city of Taizhou and the other in Linhai. The 2 complexes were huge, occupying an area of more than 1 million square meters combined.

High costs were mostly likely behind Geely’s decision to relocate to nearby industrial parks, as land prices and other costs in Chinese cities have skyrocketed in recent years amid a development boom. But Geely also pointed out it was being asked to leave by the city government, which wanted to clear out the space for cleaner, more productive uses.

Geely’s move is being repeated around China, as part of the country’s broader urban transformation. Here in my adopted hometown of Shanghai, Baoshan Iron and Steel (Shanghai: 600019), one of the city’s industrial icons for decades, is also slowly vacating its home of decades in the Baoshan district. The company is in the midst of building a massive $11 billion manufacturing plant in the Guangdong city of Zhanjiang, and aims to move nearly half of it production to that facility and other less crowded coastal areas by 2015.

It’s appropriate that I’m writing about this quiet but massive industrial migration while sitting in a trendy coffee house that’s part of a massive complex that used to be Shanghai’s largest slaughterhouse in the Hongkou district. The coffee house is one of many fashionable shops and offices to set up in the converted massive round building now known as 1933, which feels like a cavernous stadium filled with concrete ramps and pillars that were once used for herding around thousands of cattle.

I can easily imagine how the building must have felt during its prime, its halls filled with the sound of mooing cows and the odor of manure. Such a scene seems quaint and even nostalgic now, evoking images of the raucous Shanghai of the early 20th century that was one of Asia’s leading cities. But that image isn’t really appropriate for the Shanghai of today, which hopes to become the New York or London of the east.

Images aside, sprawling factories have mostly negative effects on their immediate area, as well as their host cities overall. I can just imagine the awful smell and sanitation problems that came from the original slaughterhouse that is now 1933. Discarded cow carcasses and manure undoubtedly created a health hazard and major pollution when they were dumped into the nearby Huangpu River or left in the open to decay. And yet despite all that, this massive building that was capable of slaughtering 300 cattle, 500 sheep and 300 pigs a day was located just 3 kilometers from the Bund.

As a longtime China resident who first visited the country in the 1980s, I have personally witnessed this transformative factory migration that happened decades ago in the west. I visited many of these urban factories during one of my first jobs reporting on China’s electronics industry in the late 1980s and early ‘90s.
During that time I frequently traveled to factories making everything from resistors to TVs and integrated circuits, most located within a kilometer or two of their city centers. During that time I often visited Shenzhen, just across the border from my base in Hong Kong. The special economic zone was just starting its breakneck development back then, and was convenient due to its abundance of factories within a half hour driving distance of the Lowu border station.

Another strong impression from that time comes from a 1990 visit to Shanghai, shortly after Pudong was declared as a special economic area. I remember the sense of strangeness I felt as I visited factories housed in old buildings whose ornate interior woodwork and dirty but intricate floor tiles hinted at their status as homes of rich businessmen in a previous era. Another excursion on that trip took me to a large electric piano factory in Pudong, which back then was still largely undeveloped.

Such factories were still prevalent in Shanghai as recently as a decade ago, and are still relatively common in many smaller cities today. Those factories are often reluctant to relocate to more outlying areas, which would create inconvenience for their workers and managers.

Despite that resistance, many of those plants are being slowly pushed out by city governments eager to gain possession of the valuable real estate they occupy. The movement has gained even more momentum in the last couple of years due to the heavy pollution created by these plants. Beijing ordered all factories in and around the city to close for several weeks around the Olympics in 2008 in a bid to clean up the air, and other cities have reportedly taken similar drastic steps before major events.

Such factories are a major contributor to the growing number of smoggy days in big Chinese cities. One of those made global headlines just last month when smog in the northern city of Harbin was so heavy it reduced visibility to as little as 10 meters, and pushed pollution to as much as 50 times healthy levels. Such heavily polluting factories fled major western city centers long ago in the 1950s and ‘60s, moving to distant suburbs and industrial parks in a bid to lower costs.

All this brings me back to Zhejiang and Geely’s 2 urban plants that manufacture cars under the colorful Kingkong and Panda brands. Both nameplates will soon be migrating to more suburban homes, where each can enjoy more open space and leave behind the crowds and high costs of the cities they called home for many years. This migration may be cause for some sadness, since such factories represented an intricate part of China’s urban landscape for most of the 20th century. But these urban manufacturing hubs look mostly like a polluting and space-wasting anachronism in the 21st century, and everyone should be happy to see them move to greener, more suburban pastures.