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November 6, 2016

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From construction to connection

Chairman and CEO, EY
Vice Chairman of IBLAC

The growth of the Pudong skyline over the past 20 years serves as an important symbol — wrought in steel, concrete and glass — of Shanghai’s success and dynamism. As each new skyscraper rises it further demonstrates the city’s emergence as a global commercial, financial, cultural and technological center of the first rank.

Over the past decade, while many of those skyscrapers were going up, technology has been transforming almost every aspect of our daily lives: from how we interact and collaborate to how we make decisions; from what media we consume to how we share them; and from how we work with assets to how we transfer them around the globe.

This new technological landscape integrates the Internet and technologies like cloud computing, big data and widespread networked sensors — the Internet of Things — into every aspect of business and society.

This is where the physical and digital worlds merge. Some call this combination of the Internet and other information technology with conventional industries “Internet Plus,” while others describe it as the “fourth industrial revolution” or “Industry 4.0.” Regardless of the name, it means that the next stage of Shanghai’s success will be less about construction and more about connections — among people, machines and even everyday objects.

Build on success

Today, the members of the International Business Leaders Advisory Council (IBLAC) to the Mayor of Shanghai — some 40 CEOs and Chairs of some of the world’s best known and most highly regarded multinationals — will discuss with Mayor Yang Xiong and other city officials how Shanghai can continue to build on its success by embracing Internet Plus.

Negotiating the transition from construction to connection will require important economic, social and educational shifts as growth becomes less about financial and physical capital and more about intellectual capital. Shanghai’s schools and universities will need to make sure the city’s young people develop new skills and, even more importantly, become adaptable life-long learners. And the city as a whole will need to continue its focus on being an attractive base for China’s, and the world’s, most talented people.

I know I speak for my fellow members when I say how optimistic we are that Shanghai will seize this opportunity and reap great rewards from doing so.

The challenges that Shanghai faces are similar to those faced by many world-leading cities, and they all have to do with sustainability in the broadest sense. Municipal leaders are working out how to make sure their cities remain great places to live and work over the long term, even while resources of all kinds come under ever greater pressure as more people choose to live and work there.

Rapid urbanization has undoubtedly brought great benefits in terms of growth, innovation and creativity, but there are issues that anyone who lives in a big city knows only too well — housing pressures, pollution and traffic congestion among them. These are the kinds of things that China's Minister of Housing and Urban-Rural Development Chen Zhenggao spoke about at a recent UN-China forum ahead of the “World Cities Day.”

Shanghai has long been a global leader in urban development and embracing Internet Plus represents the next step. It will go a long way to solving the city’s challenges through the adoption of the latest technological advances. Furthermore, by integrating the Internet and other technologies into every aspect of business and society, Internet Plus will play a vital role in ensuring that Shanghai remains one of the most innovative, productive and vibrant cities on the planet.

Through thoughtful planning over the years, the city already has many of the building blocks needed for Internet Plus in place. These include a booming IT sector, with access to sophisticated financing, solid telecommunications infrastructure and rapidly expanding Internet access, and a network of industrial clusters and incubators.

Major benefits

Continuing to build on these strengths and embracing Internet Plus will benefit Shanghai in three major ways.

First, adopting these new technologies will help to foster business-model innovation and collaboration between old and new industries, thereby stimulating economic growth, entrepreneurship and innovation.

In a survey that EY conducted in 2012, we asked business leaders around the world where they thought the “next Google” would come from and Shanghai came in second place — after Silicon Valley itself. This is credit to Shanghai’s reputation for innovation — and embracing Internet Plus will help to foster the right conditions to deliver on that promise and actually launch “the next Google.”

Second, it will bring about a new industrial revolution by transforming traditional sectors through the use of sensor arrays and data analytics to open up new ways to improve productivity and to offer new services on top of traditional products.

Third, smart-city technology applications will help to bring huge advances in public health and safety, quality of life and social cohesion, too — with better resource management, better traffic management, and smarter infrastructure providing both financial and social gains. Beyond that, Internet Plus will spur greater innovation in public-service delivery and greater access to information, so that the municipal government can better serve Shanghai’s 24 million residents.

I firmly believe that Internet Plus forms the next chapter of Shanghai’s amazing story of transformation. So far that story has been largely represented by construction, visible for everyone to see in the Pudong skyline. The next chapter is all about connection — harder to see but no less powerful. By embracing Internet Plus, Shanghai will drive economic growth and innovation today and set solid foundations for the city it will become tomorrow.


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