China Seminar Post 2: IBM

            In my last post, I recalled a visit to Baosteel, a symbol of the massive manufacturing capacity China has.  The following day, we visited IBM’s flagship office in Shanghai.  Not coincidentally, IBM ought to be taken as a symbol of China’s massive service-industry capacity.  For those who are unfamiliar, as I was to a large extent, International Business Machines provides custom programming services to business in need of software solutions, among many other things.  It is also a major player in the Big Data revolution, which I have written about before, competing with the likes of EMC and Google to meet the world’s growing data needs.  IBM has many branches beyond data processing and programming which makes it a major player and competitor in separate but complimentary industries such as financial management services and business operation planning.

            IBM is aware that the world is changing, sometimes for the better and sometimes for the worse.  But their overall mandate, as we learned in a lecture and saw on public service announcement posters hung around the office, is to build a smarter planet.  By “smarter”, they mean more connected, more responsive, and more efficient.  As we see, the world is a system of systems which exist not in isolation of each other, but rather as an ecosystem of its inhabitants.  In the broadest sense, IBM tries to measure the heartbeat of a city: its traffic, utilities usage, weather, and anything else one could possibly be imagine are all compiled and used to make a city run better.  Traffic is regulated more efficiently depending on the time of day, electricity is conserved in times of low demand, etc.  Weather readings are used to model climate patterns and make predictions for the future.  Even the pharmaceutical and medical research industries are being transformed as huge amounts of information is created from the processing of data at an The value of this kind of data compilation and processing can be seen at the individual user’s level as well when smart alarm clocks know poor weather conditions will exacerbate traffic and wake up their owners earlier.  The applications for this kind of technology are endless and as a doctor accesses and make decisions for his patient by measuring vital signs, so humanity can build a better world.

            IBM has been a particular boon to a developing nation like China because it is able to bring high technology to rural areas that are just beginning to modernize.  Without infrastructure like sewage systems, running water, power grids, public transportation, and the like, small towns are able to adopt the bleeding edge technology of city planning with the benefit of hindsight that is just one piece of the expertise IBM brings to its municipal clients.  By using IBM’s services, and the services of companies that offer the cutting edge of technology immediately, a town can make decades of regular development in one swoop of upgrade and join the 21^st century efficiently and quickly.  This means dramatic increases in the living standards for the populace touched by these improvements.  

  

                                                                                                                         IBM Logo

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China Seminar Post 1: Baosteel

I was in Shanghai recently with a school fieldtrip and we had a visit to one of the manufacturing facilities of China’s largest state-owned steel manufacturing company, Baosteel.  It is the second largest steel producing in the world after a Luxemburg company called ArcelorMittal.  With an area larger than the city of Macau (itself 11.39 square miles), the whole complex was an astonishing and breathtaking sight to behold.  One of my initial impressions was the fact that despite being a massive manufacturing area, the place did not give off the odor of pollution one would expect in a place where heavy machinery and metal smelting is in operation.  It turns out, and quite contrary to the popular culture belief of Western nations, China is quite environmentally conscious and has taken steps to offset the pollution created by Baosteel by covering 45% of the factory grounds with trees and foliage.  In reality, we learned that Baosteel is a small city with a zoo, pool, and other amenities that serve the employees and their families who live on-site.  I could not imagine an American company doing so much to take care of their people, and remember that this plant is in a country that often has a reputation for being a “pollution haven” by its detractors in the rest of the world.  Personally, I did not smell much pollution in the area and regardless of how effective their efforts are, one ought to give them credit for trying.

We witnessed the miracle of steel processing from the safety of a catwalk above the fray of the factory floor.  As we stepped into the room, it seemed as though we had been transported to a scene in Atlas Shrugged.  The heaviest of heavy industry came together in a shower of sparks emanating from fiery red steel ingots and measuring initially about three feet wide, by 50 feet long, and a few inches tall.  Over the course of a quarter mile of machinery, rollers pressed it down until it was much thinner and several times as long.  Before the metal was completely cooled, it was rolled into a coil.  Having finished, it was shipped off as the raw material for the next producer to use in his manufacturing.  Not only does the product from Baosteel go around the world but is used in a wide variety of applications from weapons to automotive, marine components to soda cans, and many more.  As a matter of fact, the 1 Yuan coin is stamped from their alloy.

As we drove around the city-factory, I was struck by many things.  The scale of the machinery was beyond anything I had seen before.  The blast furnace was actually several buildings because one could not contain it, for example.  Baosteel has three port harbors.  One is for receiving iron ore from Australia and Brazil.  A second is for shipping the finished product all over the world.  A final one is for the removal of slag, the impurities taken out of the ore in the smelting process.  It is common practice to recycle this slag and our tour guide was proud to inform us that many buildings are constructed of concrete made from Baosteel’s unusable materials. 

Despite the rather sun-shiny view we were given by the Baosteel executive/tour guide, I did hear from other sources that it is plagued with some large, but not unsurprising in light of the fact that it is a government-owned institution, problems.  First and foremost, and as one might expect, it is a highly corrupt institution.  It turns out that the monsters of patronage politics and its twin crony capitalism are alive and well all over the world when business and government are mixed. 

Overall, however, the tour was an eye-opening experience by any account and I came away with a more complete appreciation of the Far East’s progress.  So often in economics classes we will hear that the Chinese are building towers and buildings at unprecedented rates.  But this comes alive when we are greeted by a forest of cranes upon arrival in Shanghai.  In the same way, we hear that manufacturing is booming.  But I can say with some confidence that one starts to leave the realm of knowing and enter that of understanding while walking through in a room heated and illuminated by glowing steel. 

I didn't take this picture, but this is the room we saw. The line of fire is a steel ingot being rolled.

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