In a private dinner at Goldman Sachs Internet and Technology Conference, I was asked to share a great idea with the accomplished investors, CEOs, and journalists. This is my idea:
Put all your money in the second tier cities in China! 10 cities in China is building their first metro system today, and they are connected by high-speed train system already. The Chinese version of Eisenhower national road system is also completed even before the economy stimulate plan, connecting these cities together. With the jump-start transportation system, talents, and capital will flow from first tier cities like Shanghai and Beijing to the second tier cities in the next 10 years. Think about what you can do in these booming cities: real estate, business, manufacture, outsourcing…
My passion and optimist for the second tier cities is real. The recent Hainan trip, and Wendy’s recent trip back to Henan all sent a clear message to me: the second tier cities are where the opportunity lies. Shanghai has became less and less competitive because of the expensive living cost, making it less attractive to talents.
When I met Yang Meng who just got back from his home town in Changsha in Palo Alto, he shared exactly the same thing with me. His high-school friends all went back to Changsha from big cities, to start their business there. He wrote a great blog about it: Golden Decade for Second Tier Cities (In Chinese).
Wendy and I went back to Nanyang years ago, and found out the highway with road plate G40 and G45 – one connect the city to Shanghai and Xi’an, and another connecting it to Guangzhou, and north China. All these roads were newly built. Wendy drove along the highway in the more recent trip, and reported back – there are no cars on it yet. When third cities like Nanyang gets connected to second tier cities, it makes the second tier cities more competitive with the vast supply of labor, resources, and market.
What do you think?