Shortages and solutions

As Zheng and his colleagues readily acknowledge, Shanwei also faces many of the same challenges Shenzhen once did, and could be a concern for companies looking to invest there.

"When companies operate inland, they have to consider whether the other elements in the supply chain are ready, such as the supply of raw materials and transportation," said Alex Fong, chairman of the Hong Kong General Chamber of Commerce. "The cost may not be lower in the end."

Like much of China, Shanwei also lacks skilled labor and managerial experience.

Zheng Yanxiong, the 47-year-old soft-spoken mayor of Shanwei, has the responsibility of quickly turning the once sleepy backwater into a major city. [China Daily]

"There's obviously a talent shortage" in small- and medium-sized cities, said Woetzel. "There are a lot of people who simply don't know a lot so they rely on whatever they've picked up. The technical level is pretty low. So you get waste and along with waste you get corruption."

Zheng is well aware of these problems. "In Shanwei, we've been undeveloped for so long, our cadres might lack a little energy and initiative," he said. "When you implement things, you have to tell them exactly how to do it, and then supervise them closely to make sure they actually follow through. That is probably my biggest management headache."

In an attempt to address the issue, the mayor has approved construction of two vocational colleges, and is trying to attract companies that can provide training for their employees. He is also seeking to expand the city's educational system to ensure all students at least get to high school.

Currently, only 61 percent of students in Shanwei receive a secondary education. Although this is an 11-percent improvement on last year, Zheng noted that it means the remaining 39 percent - about 78,000 children - are still only completing middle school.

The mayor is also overseeing a host of new infrastructure projects and investments, ranging from the purchase of nine fire rescue trucks to a new, environmentally friendly incinerator to deal with the 100,000 tons of garbage produced annually. (The total was just 60,000 tons five years ago).

Of course, all of this costs money, and one of Zheng's biggest challenges is finding the funds to pay for everything.

Most city government funds come from land sales, industrial taxes, bank loans and central and provincial government subsidies, yet Shanwei's entire city budget of about 2 billion yuan is still relatively small - less than a 10th of the amount Shenzhen gives to the central government each year.

"When ordinary people meet problems in their daily lives, my ability to help them is limited," said Zheng with evident frustration. "Why? Because we don't have enough money."

Consequently, he said, Shanwei often relies on public-private partnerships to pay for major developments.

As well as financing, Zheng also faces the sensitive challenge of managing land use acquisitions for public projects - an issue that has sparked complaints across China that developers, often in concert with local government officials, confiscate land from poor farmers without adequate compensation.

In Shanwei, the issue exploded in 2005, three years before Zheng was appointed mayor. Accusations that land had been unfairly taken to build a new wind power plant led to protests that resulted in the deaths of at least 20 people. Xinhua described the incident as "one of the deadliest clashes in recent years between local governments and villagers over compensation for land".

The local government at the time blamed the violence on a few agitators and the plant was completed a short time later.

Making connections

In the years since that incident, Shanwei has, if anything, only grown faster.

Truly Semiconductors just hired 5,000 new workers for its factory, and after Zheng's aggressive lobbying, is now planning to build a new factory in the city, employing 3,000 more people. (At one point, to sidestep Guangdong's ban on giving away land for free, Zheng offered to simply return the money Truly would pay as a subsidy to a "high-tech enterprise".)

Smaller businesses are also opening by the hundreds. Biguiyuan, a major regional real estate developer, is constructing a major apartment complex and planning a new mall, while a 292-room hotel with a swimming pool was completed last year. Even Wal-Mart is contemplating a store here.