During this year's "Government Work Report", Premier Wen JIabao proposed that "The special investment of technological transformation in the central government budget should cover the SMEs, and the investment in local governments should be increased, too."   The "Tale of Two Cities" about Liu Shunfeng told us that different business environment and government services will produce very different result to innovative enterprises and local economic development.

Reporter: Zhang Ke

The hero of the story is a small business owner in Wenzhou, his name is Liu Shunfeng.
Black suit, pink shirt and red tie on him seemed to be a bit disproportionate.
Just coming back to Zhangjiagang from the State Council Information Office in Beijing, he was full of pride, excitement as if he has just came off from the alter. As soon as he found someone listening to him, he would act frivolously and talk on and on.

A series of policy measures to further promote the development of SMEs proposed by Premier Wen Jiabao in this year's "Government Work Report" makes him full of energy.

Zhangjiagang is his second business location. It is very alternative that a small business owner from Wenzhou set foot in Southern Jiangsu Province, where there're many foreign business men and be famous for its governments' attract investments, and in addition, he has his own high-tech company in the local development zone.  
British novelist Charles Dickens once wrote in his "Tale of Two Cities": "It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness."

Liu Shunfeng, now the chairman of Zhongguang Technology Development Co., Ltd, also suffered much during the course of his business. From the initial business location Ryan to Zhangjiagang, Liu Shunfeng is expressing a modern "Tale of Two Cities".

A few years ago in Ryan:

The development space became smaller and smaller

The hometown of Liu Shunfeng is Ryan, Zhejiang. It is a county-level city under the jurisdiction of Wenzhou. Ryan is a southern land flowing with milk and honey. And it has bustling marketplace and developed business since ancient times. Guo Moruo once wrote an praising inscription for this place, it said like this: The waves pushes the ones before them, and the talents are stronger than ever before.
After high school, Liu Shunfeng joined the army and became a signalman. After demobilization, it was the very moment of going into business in local area. Liu shunfeng started his first business, and opened Ryan southern industrial product development Co. Because of the right marketing method, the business was very prosperous.

A few years later, he founded Shenzhen Shenqi Electrical Equipment Co., and became millionaire not long.

But at this time, a little thing made him crazy, and made him bankrupt after a few years.

It was in Sep, 1999, during a business conference, a friend introduced a thing called "optical fiber connector". It's not big, and looked very plain. But the friend told him that the optical fiber connector can be used for high-fidelity information transmission, with the rapid development of information networks, it will spread to every family, so the market demand of it must be very large, will demand a very large, and will bring numerous business opportunities.

"Can i open a factory to produce optical fiber connectors, too?" Liu Shunfeng thought.

In fact, this is the inertia of bosses from Wenzhou. At that time in Wenzhou, many family-owned factories are focusing on the marketing opportunities, and relying on manual and semi-mechanization equipments, to serve the big companies or produce the imitations and sell them in the market.

  After half a year's research, Liu Shunfeng found that it was not difficult to produce optical fiber connectors: all the accessories can be purchased, and they just need to fabricate them. However, he noted that the interest of   producing an optical fiber connector is less than ￥ 15, but the profit of producing a ceramic ferrule can be up to ￥ 25.

At that time, there were just a few companies in Japan can produce ceramic ferrule, and they monopolized the huge market. "The profit can't be taken by the Japanese alone", Liu Shunfeng decided to do research on ceramic ferrule. In 2002, Liu Shunfeng set up the laboratories, took out his savings and began the research.

During this period, Liu Shunfeng found many experts home and abroad, " At first I thought it would take at most six month for us to succeed", he said. But three years past, they found more and more problems during the deepening research.

Liu Shunfeng had no choice. He closed the company, sold all his houses in Ryan, slept on the floor in the laboratories, and invested all the money into the research. After that, he began to borrow money from relatives, friends, distant relatives and friends of friends, and owed a debt of thousands of thousand millions.

On the moment Liu Shunfeng almost became desperate, the opportunity came. In 2006, the government of Zhangjiagang went to Ryan to attract investment, and the principal leaders presented from Zhangjiagang hit it off with Liu Shunfeng.

"There're much more made me moved", Liu Shunfeng told the reporters. He moved his company to Nanfeng industrial park in Zhangjiagang on Aug 20^th, 2006. On Sep 15th, 2006, Huang Qin, the secretary of Zhangjiagang city, went to the company to know the situation in person, helped us to solve the problems. Over the next month, the deputy major Shan Yuzhen came to our company for three times, and the the members from the technology Bureau would appear in the company every week.

During the pilot period of the company, Xu nanping, academician of the Chinese Academy of Engineering, assistant governor of Jiangsu Province, inspected our company and provided us technical support with related experts and principals.

"What impressed me most was on lunar Jan 9^th, 2008, the secretary Huang Qin along with more than 20 leaders or experts visited us, caring about the work and life of Zhongguang staff." said Liu Shunfeng. “That day happened to be my birthday, so i remembered it well."

The action of Zhangjiagang and Suzhou government is just a typical characteristic of southern Jiangsu pattern. Southern Jiangsu pattern was called as "super government intervention model" or "achievement of economic model" by experts. And the government is the most powerful promoter of the rapid growth of economic and business in southern Jiangsu. And that is the most useful to Liu Shunfeng who was in great trouble of business.

The Zirconia ceramic ferrule researched in Zhongguang Technology has been produced in large scale since 2009. Having been inspected and affirmed by several groups of experts from the State Council Development Research Center, the National Development and Reform Commission, Ministry of Science, the Ministry of Finance, and the Ministry of Industry and other relevant ministries and commissions, Zhongguang Technology not only won a number of domestic and international invention patents, also broke the Japanese technology monopoly in the production on injection Zirconia ceramic ferrule. This has made very important contributions to China's high-end products of ceramic industry joining in the advanced class in the world.

Liu Shunfeng changed himself from a layman to a man who can emulate the global front academy, his work does have great meaning. The R&D Team and the people who have provided help for this innovative subject including one academician, 22 experts and professors, 147 professional technical personnels and engineers.

Liu Shunfeng's success naturally attracted attention of many domestic leaders and leaders form his hometown. He told the reporters, "During the spring festival, Shao Zhanxiong, the secretary of the Wenzhou Municipal Committee, Zhao Yide, the Mayor of wenzhou, Xiao Jianxiong, the director of Management Committee of the Wenzhou Economic and Technological Development Zone, and many other leaders all dated with him. Shao said: “This technology has been successfully researched, you have already succeeded in high-tech field in behalf of the Wenzhou people; you have broken the technological monopoly of the Japanese in optical communication field, so you can represent the national pride. We know the things about you half a year ago, if you want to enlarge the production scale, we welcome you to set the base at Wenzhou, we government will provide full support."

"Fang Hui, the Vice mayor of Ryan Municipal Government inspected Zhongguang Technology in person with some relevant leaders accompanied, and pledged full support for us. Chen Jilong, director of the Economic Cooperation Office, have visited us for 5 times." Liu Shunfeng told the reporters.

Some leaders from Wenzhou once said in the public,” It's a very regrettable thing that we did not make him stay there.

The two city tale:

The government plays the leading role in innovation.

“The government plays an important role in nurturing the innovative business and the high-tech clusters.” The above seminar pointed out: “Even under the time of capital, the powerful supports provided by the government are still the back force and the indemnity for the small and medium enterprises (SME) to develop steadily.

Lu Baifu, a member of the seminar, the former vice director of the Development Research Center of the State Council , told the reporters: In recent years, the central government put forward a high-profile objective, to build the "innovative society", in order to achieve China's economy transition to an intensive mode of production as soon as possible. Objectively speaking, the implementation of this target also closely depends on local governments and various types of high-tech enterprises.

While on the government investments, the seminar suggested like this ： On one hand, local governments should formulate relevant laws and regulations, and do separate provision to the budget ratio and the investment ratio on innovation; On the other hand, we should increase local financial subsidies and tax reduction, and increase the investment on R&D of the enterprises.

Lu Baifu told the reporters: A large number of studies have shown that the enthusiasm in R&D investments in enterprises of developed countries had greatly increased, and it’s a result mainly caused by the national science and technology policy.

At a rough estimate of the seminar, in some countries, more than 50% R&D investments in high-tech enterprises are generated by the financial subsidies and the tax reduction of the government.

On the difference of the government management between Rui’an and Zhangjiagang, Yang Jianglong said: “Making enterprises the main body of independent innovation doesn’t mean the government could only give requirements to them without cooperation, but to actively conform social resources, optimize the allocation of productive factors, and create top environment for innovation by all means”.

During this year's "Government Work Report", Premier Wen Jiabao emphasized to energetically promote the construction of service-oriented government, and try hard to create a fair developing environment for all types of market players.

“Enterprises are the main body of innovation. To stimulate the inherent power of enterprises is an important aspect of transition, and this power is fundamental. The end result of the transformation of government functions also depends on the innovative enterprises themselves”, said Jiang Hongkun, the Party Secretary of Suzhou.

Liu Shunfeng told the reporters: “Under the different developmental stages of the enterprises, it does need a different environment and soil. While in the process, what kind of role the government plays and how to provide help is a major problem”.

From: China’s First Financial Daily (11^th, Mar, 2010)