Why did Huawei get on the "train" in Changchun?

Jilin and its capital Changchun, sandwiched between Liaoning and Heilongjiang, have always been "invisible" in Northeast China. Why did it attract Huawei's attention this time? 

Huawei is going to build a research institute in Changchun?! Recently, many local netizens have been discussing this news.

According to the official website of Jilin University, a symposium on deepening cooperation between Jilin University and Huawei was held recently. At the meeting, Tao Jingwen, director of Huawei and president of the Quality and Process IT Management Department, said: "Huawei will set up a research institute in Changchun. In terms of scientific research cooperation, Huawei will continue to increase cooperation with Jilin University in multiple disciplines and fields such as smart cars and artificial intelligence based on the Changchun Research Institute in the future."

This means that Huawei, which has established R&D institutions in many places around the world, will soon be setting up in the Northeast region.

In fact, this is not the first time such news has been reported. On August 6, at a press conference held by the State Council Information Office, Jilin Province Governor Jing Junhai revealed that "Huawei has selected a site in Changchun to set up a large R&D institution to attract and gather talents."

Uncle Cheng can't help but think of the video of Jack Ma eating popsicles on the streets of Harbin that went viral online not long ago. At that time, some netizens said: Alibaba went to Harbin, Tencent went to Shenyang, did you forget that there is a city called Changchun in the Northeast?

Yes, Jilin and its capital Changchun, sandwiched between Liaoning and Heilongjiang, have always been "invisible" in Northeast China. Why did it attract Huawei's attention this time?

Huawei's move

"We will go to wherever there is capability. We can build a research institute there." This is a famous saying by Ren Zhengfei, the founder of Huawei.

For Huawei, which has always attached great importance to R&D investment, it is normal to set up branches in various places. According to data from Huawei's official website, the company currently has 36 global joint innovation centers and 14 research institutes. In China, Huawei currently has 8 research institutes in Beijing, Shanghai, Xi'an, Nanjing, Chengdu, Wuhan, Hangzhou and Suzhou.

The research institute is like the "brain" of a "giant". According to Wang Yufeng, a professor at Nanjing University of Posts and Telecommunications, Huawei's R&D center layout "can be roughly divided into two types: technology highland and talent rich area". In his view, Huawei sets up R&D centers in places where global talents gather, and sets up different research centers for different talent structures in various countries, gathering global wisdom and resources and realizing local access to global talents.

In China, Huawei's location selection logic is similar to this - the functional positioning of each research institute is closely related to the industrial advantages and talent structure of the city where it is located. For example, the Chengdu Research Institute focuses on storage R&D, transmission R&D and other businesses, while the Wuhan Research Institute focuses on optical capability R&D and terminal R&D.

This time, Huawei chose Changchun, and one of its key areas of layout is smart cars.

On August 9, Huawei's "Hongmeng" operating system was first released, and one of its application focuses is the Internet of Vehicles. Although it has always claimed that it "does not make cars", research by CICC shows that Huawei's annual sales in the field of smart car electronic components are expected to reach US$50 billion (about RMB 352.1 billion) in the next 10 years, and it is expected to become an automotive electronics giant comparable to Germany's Bosch.

Correspondingly, automobiles have always been a pillar industry in Changchun. The first truck, the first car, and the first off-road vehicle of New China were born here, and it is known as the "cradle of China's automobile industry."

Founded in 1953, Changchun FAW fired the first shot in the car manufacturing of New China. For more than 60 years, its production and sales have always ranked first in the country. The recently released 2019 Fortune Global 500 list shows that FAW ranks 87th among the world's top 500 companies.

In 2017, the total industrial output value of Changchun's automobile manufacturing industry reached 601.57 billion yuan, accounting for 58.1% of Changchun's total industrial output value above designated size, nearly 60%. Presumably, this is also an important confidence for Changchun to "conquer" Huawei.

Changchun Dilemma

It is no exaggeration to say that FAW is the "lifeline" of Changchun.

In Changchun Automobile Economic and Technological Development Zone, the only national-level development zone named after automobiles, there are more than 350 auto parts companies supporting FAW in addition to FAW. Not long ago, Wang Haiying, deputy mayor of Changchun, "reported" to FAW headquarters on his first day as secretary of the Party Working Committee of Changchun Automobile Economic and Technological Development Zone, and bluntly stated that "it is the responsibility of Jilin Province and Changchun City to fully support the development of China FAW."

As the saying goes, "Success is due to Xiao He, failure is also due to Xiao He", the consequence of long-term high reliance on the automobile industry for economic development is that the secondary industry in Changchun's industrial structure is "dominated by one company" and the tertiary industry is "incapable of doing so". In 2018, the proportions of primary, secondary and tertiary industries in Changchun were 4.2:48.9:46.9 respectively.

Looking at the 27 provincial capitals in China, Changchun ranks second in terms of secondary industry, second only to Nanchang; conversely, Changchun ranks second to last in terms of tertiary industry, only higher than Nanchang. In other words, Nanchang and Changchun are the two provincial capitals that rely most on secondary industry and have the weakest tertiary industry.

Data source: Local statistical bureau websites Map: Urban Evolution

The economy relies on the automobile industry, which directly leads to a decrease in the city's risk defense ability. Once the industry risks are encountered, it may drag down the economic performance of the entire city. A popular saying is, "If FAW catches a cold, then Changchun will have a severe cold, and Jilin Province will also have a chill."

Therefore, when domestic auto sales fell for the first time in 28 years and the auto market entered a "cold winter", Changchun also suffered a severe economic setback.

The latest data from the Ministry of Industry and Information Technology shows that from January to July this year, the national automobile production and sales reached 13.933 million and 14.132 million respectively, down 13.5% and 11.4% year-on-year respectively, and there is no sign of recovery yet.

Correspondingly, Chengshu found a GDP statistical data of 15 sub-provincial cities in the first half of 2019. Changchun's GDP in the first half of the year was 300.59 billion yuan, with a year-on-year growth rate of only 0.5%, and the growth rate of secondary industry was only 0.7%. Both data growth rates ranked at the bottom.

Data source: Screenshot of Ningbo Statistics Bureau website

This is a big “dive” for Changchun. From the first half of 2016 to the end of 2018, Changchun’s economic growth rate has been stable at 7% to 8%, which is not only higher than the other three sub-provincial cities in Northeast China, but also higher than China’s overall GDP growth rate.

Compared with Changchun, Jilin's overall economic situation is more severe. Since 2018, Jilin's quarterly GDP growth has never exceeded 4.5%. By the second quarter of 2019, Jilin's GDP growth rate fell to 2.0%, ranking last among the 31 provinces in China.

How to "drive"?

Obviously, Changchun has reached a critical moment when it has to transform. How to transform? It is still necessary to make good use of its own advantages and do what it can and what it cannot.

At a press conference held by the State Council Information Office on August 6, Jilin Provincial Party Secretary Bayanqolu said when talking about how to promote the development of the digital economy and build a strong manufacturing province that one of Jilin’s current breakthroughs is to "lead with intelligent automotive manufacturing and promote the digital transformation of the automotive industry."

We have mobilized the whole province to promote the automobile industry, especially the innovation of FAW. FAW has undergone a complete transformation, and in a certain sense, it has been reborn from the ashes.

We fully support the deep integration of Internet companies such as Huawei and iFLYTEK with the automotive industry, promote the integrated development of traditional industries and the digital economy, and accelerate the intelligentization, networking, and sharing of the automotive industry.

This cooperation with Huawei is undoubtedly a key step for Changchun to upgrade its automotive industry. Cheng Shu noticed that in order to retain Huawei, the news on Jilin University’s official website also stated that the school will “offer relevant courses based on Huawei’s self-controlled technology in computer, software and other related colleges, create a joint creation and joint training cooperation model, and jointly cultivate high-quality talents that meet industry trends and corporate needs.” Tailoring talents for Huawei shows its sincerity.

For Jilin and Changchun, one of the current key tasks is to vigorously attract investment. Jing Junhai previously revealed that since last year, he has participated in more than 190 provincial-level investment promotion activities, and even held a symposium when investors came to Changchun at night.

According to the work report of Changchun Municipal Government, Changchun will ensure the implementation of more than 1,200 projects with an investment of more than 100 million yuan this year, and focus on 100 industrial projects with an investment of more than 1 billion yuan, such as the upgrading and transformation of Hongqi and the expansion and transformation of FAW Fengyue.