Business Management

International Intrigue and a Slow Web in China's Dalian

Not a lot of Westerners have heard of Dalian, a major port and a centre for financial services logistics and higher education in northeast China. Yet the chances are that they will register the name more over the next decade. For nearly 20 years, the city has been home to Dalian Hi-Think Computer Technology Corporation, a significant firm of IT outsourcers. In 2010 Intel chose Dalian for its first chip manufacturing plant in China, investing a cool $2.5bn. And just recently, two companies in this lovely city have been busted for using $43m of state subsidies for technology acquisitions to buy into… 14 vineyards in France, probably around Bordeaux.

International intrigues are big in this booming city of six million people. Between 1993 and 2000, Bo Xilai was mayor of Dalian. The rich, Mao-leaning, disgraced Communist Party chief, today serving a life sentence in prison, banned motorcycles and installed parks in the now heavily motorised metropolis. He also managed to transform it into a modest but still vibrant Far East version of the technology hub that is Bangalore. Mr. Bo successfully wooed inward Japanese investment to the local software park: Hitachi, NEC, NTT, Panasonic and Sony all build apps here.

While Beijing is two hours away by air and Vladivostok about the same, Japan is just a longer hop eastwards, over Korea. That monument to post-war cinema from Tokyo, Toshiro (Seven Samurai) Mifune was raised in Dalian and Japanese businessmen still seek their pleasures here. This is not a surprise, given that between 1905 and 1945, Japan ran the place. Before then the Russians did, and they did so again after Hiroshima and Nagasaki; then Stalin gave the city back to China.

In 1950, when the free gift was made, fraternal generosity was the order of the day although relations between Moscow and Beijing soured as early as 1956, culminating in an outright split in 1960. Yet there is still plenty of Tsarist architecture around in Dalian, all imposing brick and dark conical roofs, incongruously mixed up with the new Chinese skyscrapers and confident cranes that go with them.

Koreans in Dalian outnumber Japanese. In a hotel lift, I meet Korean tourists from Panmunjom. Coming from the border between South and North Korea, they giggle at my silent-film imitation of the aggressive peek-a-boo that guards from the two sides play with each other there. Samsung is here in Dalian, but as a hotel, no more. Eighteen months ago, LG CNS signed a memorandum of understanding with a major Shanghainese properly developer to make a ‘smart green city’ – intelligent, energy-saving buildings in the bay area, following models established by LG in three new urban developments near Seoul: Songdo, Pangyo, and Magok in Korea.

Despite all its cosmopolitan influences, Dalian has indigenous business strengths – not least, in batteries. LG Chem opted for Nanjing recently as a site for its manufacture of electric cars, and that revived the fortunes of the Dalian subsidiary of NASDAQ-quoted China BAK Battery Inc. More intriguing still is Rongke Power Group, Dalian, which makes vanadium batteries for storing energy. It has built modular, durable and compact reduction-oxidation flow batteries to smooth power output, regulate frequencies and keep voltages up in 10% of a 50MW wind farm based in Shenyang, 200 or so miles inland from Dalian.

The downside about IT in Dalian is that WiFi service and email transmission can be tough; servers in Shanghai hold up much of the internet traffic that comes out of the city. Result? On top of being unable to access Google and Twitter, when I send out emails I’m uncertain whether the lack of response to them is due to my defects or those of the local/national web. It’s a disconcerting feeling.

Watching TV in Dalian, a smart China stringer from The Economist comes on to say how Weibo, China’s answer to Twitter, incites political debate through the power of Mandarin characters. Yes, with each character worth about half a word, that makes for micro-blogging that’s middle-length blogging – 70-80 words – in practice. And macro-blogging? Well, TenCent’s WeChat may have the edge on Weibo. It’s more one-to-one, private, picture-based than Weibo – a kind of cross between instant messaging and Facebook, but it has no limits on word length. So The Economist is right about Weibo, but doesn’t have quite the whole story.

Put WeChat together with the top-level Party purges China’s leader Xi Jinping has intensified since the Bo Xilai trial last year, and you may have a faintly incendiary mix. Go to the submarine-friendly waters of Dalian, where – even without President Obama’s ‘pivot to Asia’ – Russia, Japan and Korea all have interests, and things could get hotter still.

Extraordinarily, on a street by my hotel, I come across an eagle, surrounded by onlookers taking photos from their mobile phones. Someone captures it, and promises me he will release it. I hope so, but suspect it may be used for gambling on a fight with another eagle. In Dalian, the sense of being in something like a cockpit is never far away.


A physics graduate and sometime professor, James Woudhuysen is a writer, keynote speaker and advisor on the future of innovation. He covers the economics, technology and sociology of construction, energy, IT, leisure, manufacturing, medicine, retailing, and transport and the supply chain. He does not forecast the stock market, the horse races or the weather.


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James Woudhuysen

James Woudhuysen is Visiting Professor at London South Bank University. A physics graduate, he helped install the UK's first computer-controlled car park in 1968.

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