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Chinese Vice-President Xi Jinping and Tanaiste Eamon GIlmore meet piper Neil Carey at Bunratty Castle. Maxwell Photography/PA Wire

Why do China's leaders love visiting Shannon?

Newswhip’s Paul Quigley discovers how Shannon, Co Clare helped invent modern China.

TWENTY YEARS, two premiers and two future Presidents. Why do China’s leaders love visiting Shannon?

Last week, Chinese Vice-President Xi Jinping flew into Shannon airport, met with Shannon Development executives, and went out to dine at a medieval banquet at Bunratty Castle, just off the motorway connecting Shannon and Limerick. The heir apparent to the Presidency of China tucked into the hearty Clare fare and took in the traditional dance and food, and took in some chit-chat from Ministers Eamon Gilmore and Michael Noonan, who sat with him for dinner. It is hoped that he had fun.

Now unless you have a deluded idea of the importance of Ireland (let alone Sixmilebridge) this evening should beg an obvious question: what on earth was the heir apparent to the world’s second largest economy doing in Ireland, in Clare, and meeting Shannon Development, a local Irish agency you probably don’t hear about very often these days? And why the medieval banquet?

Which should beg another question: why, in the past 20 years, have all the following powerful Chinese leaders come to Clare and requested meetings with Shannon Development: President Jiang Zemin; Premier Zhu Rongji; Premier Wen Jiabao; Vice Premier Huang Ju and Vice Premier Zeng Peiyan?

To answer that question we have to go back to 1980, when in global terms, the People’s Republic of China was an economic minnow, still emerging from the shock and destruction of the Cultural Revolution. Moderate, modernising forces had taken control of the Communist party following the death of Chairman Mao. They were searching for new ideas to help build China’s economy. And that search had taken them to the town of Shannon.

Shannon and China, 1980

In 1978, the reformist Deng Xiaoping became President of the People’s Republic of China, succeeding Mao, and considered his options for invigorating China’s economy. He wanted to learn from the world’s advanced capitalist economies. Unlike Mao, Deng was a pragmatic leader, well known for his slogan: “Who cares if a cat is black or white, as long as it catches the mice.”

Meanwhile, by the 1970s, Shannon and Ireland’s midwest were shining examples of what international investment and smart local development could achieve. Shannon Development and its allies had invented the duty-free zone, won special local investment tax breaks, minted strong US relationships, focused on practical third level education, and enjoyed an investment-friendly tax and regulatory system.

Back in China, Deng considered the creation of special economic zones, where overseas investment would be permitted. In 1980, a younger reformist, the engineer Jiang Zemin (who was to become President from 1993 to 2002) and a clutch of other Chinese officials were dispatched on a world tour to see how special economic zones worked in other countries. After a touring several other countries, that journey eventually landed them in Shannon.

The visit was to be something of a revelation. The delegation was introduced to the world’s first duty free shop, an airport-focused infrastructure, and a special zone of low tax and free trade. They welcomed the pragmatic approach of Shannon Development. Unlike all the other countries Zemin visited – most of which had a stake in the cold war – Ireland was not touting an ideological agenda. The officials in Shannon were focused on jobs creation, practical education and transfer of skills, and facilitation of each new company’s needs. This was a cat that could catch mice.

After touring various economic zones around the world, the Shannon model and that of Singapore were the only two that the Chinese decided to follow.

Shannon and Shenzin

Conor O’Clery, former Asia Correspondent for the Irish Times, adds some colour to the tale:

“The place that apparently impressed [the Chinese] the most was the Shannon industrial duty-free zone. I’m told they were also very impressed with the informality of their Irish hosts, who took them to Durty Nellies pub afterwards for a sing-song – which may explain the warmth with which the Taoiseach Bertie Ahern was greeted by President Jiang in Beijing in 1998.

The Chinese government subsequently opened four special economic zones in 1980 on the Shannon model, which were extremely successful in attracting foreign investment, stimulating trade and invigorating growth. There are now more than 9,000 such zones all over the country.”

So what were some of the unique lessons that the Chinese took away? Dr Wang Liming, Director of the UCD Confucius Institute for Ireland, has identified some of the lessons from Shannon that were to prove invaluable for China.

  • Locate away from the seat of power. Shannon Development being far from Dublin meant its executives had some autonomy in decision-making.
  • Locate close to a transport hub. Aside from logistical benefits, exposure to foreign (US) business practices and visitors helped Shannon “see capitalism in its most vigorous form”.
  • Use special tax rates and other means to get inward investment, but also nurture domestic business.

These and other principles were put into place when the special economic zones were established. The zones were to become a major driver for China’s economy, allowing private investment to flow into the country, and a massive transfer of skills and technology to take place.

The establishment of Shenzin, the first town modelled on Shannon, was a turning point in China’s economy. The city of Shenzin (1980 population: 25,000) now has a GDP similar to the country of Ireland.

All of this explains why a trip to Shannon is something of a pilgrimage for China’s political elite. A journey back to where it all began, Bunratty medieval banquet and all. I hope that Mr Jinping was also treated to a good sing-song in Durty Nelly’s last week. It may have mythical status in China’s communist party as the highest honour our country can bestow.

So what can we learn?

Well first, the Chinese are damn good at copying things. Which we all should be these days. The reality is that copying an idea and improving it accounts for 99 per cent of business innovation. Steve Jobs would agree. So would Michael O’Leary. Or Bill Gates. Or Warren Buffett. It does seem like we lost something along the way though. We went from being the innovators to watching others really show what could be done with our ideas. So this is probably the bit where I should hark back to the good old days before the Celtic Tiger, when men could turn an estuary marsh into a world model of export-led growth. Back before we all became indulgent tiger cubs high on property crack cocaine, shopping in New York, etc, etc. But harking back to the old days is not a solution, it’s just a fashionable way of ending speeches and newspaper columns these days. And it’s so unhelpful and patronising it makes me want to do violence to the pundits and politicians who trot it out.

The truth is that the success in Shannon was driven by practical thinking. There was no left or right wing ideology – only application of what worked. Sometimes that meant revolutionary ideas won out in Shannon, simply because they were the best. Practical thinking does not exclude brave thinking. It does exclude consensus thinking. It’s exactly what drives good business innovation, and probably all good innovation.

Being practical isn’t just a buzzword: it has consequences. It means measuring results and owning up to failures. We should be willing to test what’s working in terms of job creation and solving our social problems, and funnel resources that way. And when projects or policies don’t work out, close them down. Put the resources into what works.

To find what works, Ireland should allow some room for experimentation – on a policy level, or a local level, like in Shannon. We probably don’t need the tax-raising and cost-cutting experiment being mandated by the self-interested and ideologically hidebound Troika. They have a theory that a black cat – austerity and privatisation – is best for us. But, to paraphrase President Deng, that idea does not seem to be catching any mice.

Shannon happened with a dedicated local team making their own rules away from Dublin’s daily supervision – and building a global model. Could that be done in Ireland today?

Paul Quigley is co-founder of Newswhip.com, an Irish start-up tracking how news spreads through the social web.

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16 Comments
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    Mute Damhsa Dmf
    Favourite Damhsa Dmf
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    Feb 23rd 2012, 11:53 AM

    Nice article and makes some good points on our innovation and development over the years. We don’t lack innovation but somewhere we lack the ability to make it excel beyond what we originally intended, ie. Shenzin grew from a town of 25,000 to generate a similar GDP to the entire of Ireland.
    Maybe our bright leaders should go on a (budgeted) world tour of countries that excelled at copying an existing idea and making it thrive and better than the original, as I see at work and in life here people are all to quick to reinvent the wheel when needing to boost or improve a process instead of just fine-tuning/calibrating or tweaking the existing process to make it more efficient and profitable.

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    Mute Peter Carroll
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    Feb 23rd 2012, 12:13 PM

    Maybe it’s time to return the compliment and visit some of China’s special economic zones to see how they have managed “the next steps”.

    Whilst we undoubtedly have the skills and capacity for innovation, we should not get bogged down in a ” not invented here” mentality. Why, for example, did we not look to our nearest neighbours to provide the Dublin Leap card and save ourselves the thick end of €50 million and 10 years of wrangling.

    Taking in good ideas and adapting them to our needs is not a sign of weakness but rather of mature pragmatism.

    39
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    Mute Paul Breen
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    Feb 23rd 2012, 3:20 PM

    If you can see them through the toxic smog, good luck!

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    Mute Neil Murphy
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    Feb 23rd 2012, 12:41 PM

    Just goes to show that the basis for good economic governance is simply providing the right climate (low tax, good infrastructure, minimal red tape) in which to create businesses, innovations and jobs and then marketing that environment at home and abroad.

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    Mute Dec Rowe
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    Feb 23rd 2012, 12:52 PM

    Our past is something we should look toward for inspiration! :)

    17
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    Mute Eoin Ó Nialláin
    Favourite Eoin Ó Nialláin
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    Feb 23rd 2012, 1:31 PM

    Up the Banner! ;)
    Great objective article article. Quite interesting too. Can’t for the life of me figure out some peoples overbearing hatred of Shannon airport, an international airport that serves our third and forth largest cities.

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    Mute Ann-Marie Wallis
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    Feb 24th 2012, 10:30 AM

    Couldn’t agree more Eoin. People seem to hate Shannon…I live in Limerick and I know people who would actually drive to Cork to fly out of Ireland, even though they could easily be catered in Shannon. It was a pioneering airport of its time and very handy for us living in the Mid West. Its a shame that it gets negative press with the American stopover situation (which I don’t agree with morally but understand the economic necessity of it). We should be supporting Shannon alot more than we currently do.

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    Mute Ciarán Mc Mahon
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    Feb 23rd 2012, 1:13 PM

    Great article, very interesting to see the backstory to Shannon and China. Nice to see Fianna Fáil’s economic pragmatist policies getting the objective treatment they deserve!

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    Mute Mark Rodgers
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    Feb 23rd 2012, 1:14 PM

    Congratulations on an excellent analysis. Indeed the Chinese for thousands of years have sought to copy and imitate what was best in the world and if we are really clever we can partner with them without them fearing any cultural or political risk in doing so. Adding value to products while providing access to markets is profitable for both sides and stimulation of a Eurozone economy would be of major benefit to China.
    At the same time being given greater access to the Chinese markets for Agri products at world prices would be the icing on the cake.
    The Cabinet will already be undertaking a number of visits to China this year and we need to stop the usual Brigade of naysayers and great unwashed from dissecting and criticising the travel expenses never mind the trips themselves. Readers will recall our Minister for Health travelling Business rather than First Class last year and with modest Hotel costs there was a massive hullabaloo over his temerity in being there. We never did get the real reason for the trip!
    We should also offer congratulation all round to the organisers of the Vice-Presidents visit last week.

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    Mute Richard Brownebacher
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    Feb 23rd 2012, 12:56 PM

    Because it’s a soulless hell hole, and as such reminds them of the communist party.

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    Mute Brian Daly
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    Feb 23rd 2012, 2:37 PM

    I grew up there.

    Therefor I agree.

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    Mute John Tuohy
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    Feb 24th 2012, 10:54 AM

    Three points come to mind

    (1) “Located away from the seat of power” to avoid micro-intereference from politicians.
    (2) The touring delegate, Jiang, was an engineer.
    (3) Practical, not idealogical / political thinking catches the mice.

    This makes me think that politicians are the worst people to send on fact finding / learning missions to China.
    Send proven industry professionals.

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    Mute James Gaffney
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    Feb 23rd 2012, 6:35 PM

    Fantastic article. I was wondering what he was doing in that neck of the woods too, considering he was too late for the Sixmilebridge Winter Music festival which was on last month!

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    Mute Keith Banks
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    Feb 23rd 2012, 10:26 PM

    a great bunch of lads indeed

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    Mute Dave O'Hanlon
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    Feb 27th 2012, 11:59 PM

    A sing-song with the vice-president of China eh, no rebel songs in Durty Nellys that night then.

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    Mute HUGH O'BRIEN
    Favourite HUGH O'BRIEN
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    Feb 25th 2012, 12:36 AM

    great article

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