When a tower the size of the Empire State Building begins to sway, the tenants panic. Last week, that’s what happened in Shenzhen, China’s top technology hub. Video shows thousands of people sprinting and screaming out of the SEG Plaza, an iconic 20-year-old skyscraper. The sway returned on Wednesday and Thursday. On Friday, Shenzhen Electronics Group Co., the owner of the building, closed it to tenants and visitors while inspectors sought to determine the cause.
In Shenzhen, it’s an overdue reckoning. For many years, local authorities turned their backs as entrepreneurs prioritized profits and speed over safety and quality. In one sense, it worked: Over four decades, the area grew from a string of underdeveloped rural towns to a major global tech hub. But as last week’s events demonstrated, it also meant that Shenzhen would be haunted by the accumulated risks for many years to come.
In 1982, a mere two years after China opened Shenzhen to the world, the city’s leaders proposed building an international trade center, and doing it quickly. Despite a lack of experience in putting up skyscrapers, developers finished a 50-story tower, then China’s tallest, in early 1985 (complete with a revolving restaurant on top). Local lore has it that the Guomao Building was completed at a rate of one floor every three days. True or not, that pace became a standard known as “Shenzhen speed,” and builders across China aimed to meet it.
A decade later, the city was booming, and Shenzhen SEG Co. was keen to go even bigger. In 1996, the company went public and rolled some of the proceeds into SEG Plaza. Last week, Chinese media unearthed a report on the building’s construction authored by a (then) graduate student. She noted that “Shenzhen speed” wasn’t speedy enough for SEG Plaza: The tower was raised at a rate of one floor every 2.7 days. She also found that the building’s construction began before the design and review process was even complete, and that updated plans were delivered throughout the project, meaning that completed sections would often have to be reworked.
SEG Plaza wasn’t the only project to cut such corners. For years, Shenzhen’s contractors made cement with sea sand. It’s far cheaper than river sand, and for good reason: It corrodes the structural steel that holds up buildings. In 2013, the city identified 31 companies that had used sea sand in construction and suspended eight of them for a year — but it never identified any at-risk buildings. Perhaps unsurprisingly, building collapses are a regular, recurring tragedy in China.
If construction problems had impeded Shenzhen’s march to affluence, the government would’ve intervened decades ago. But the unvarnished truth is that China’s epic economic boom happened inside of poorly built offices and factories. In many cases, the relatively modest investment in infrastructure gave building owners and landlords little incentive to stick to a building’s original purpose. A few years after opening, for example, SEG Plaza became a global hub for trading cheap, used electronic components — rather than the new ones that the company had hoped to drive. Chinese traders in, say, New York might buy 5,000 used desktops from a Wall Street bank and ship them to south China. Within a couple of months, their semiconductors would be on sale in an SEG stall.
It wasn’t the kind of business that Shenzhen wanted to advertise to the world (when dignitaries were in town, the government would actually shut the plaza down). Its mere existence hinted at the city’s relatively flexible attitude to intellectual property. But over the years, the neighborhood surrounding SEG Plaza filled with malls also marketing used components to up-and-coming manufacturers who weren’t exactly scrupulous about patents and trademarks.
In recent years, it became obvious that SEG Plaza’s best days were behind it. Chinese consumers who once sought out the largely disposable electronics built from SEG’s inventories were moving up to better devices. When I first visited the tower in the mid-2000s, the dim 10-story mall at its base was a crowded and relentless warren of stalls, all packed with chips and computers for sale. In the last half-decade, the stalls have become increasingly populated with beauty products, electronic cigarettes and crypto-mining rigs. Shenzhen’s freewheeling days as an unaccountable manufacturer of low-cost goods are over.
Also gone are the days when buildings like SEG Plaza could be erected at Shenzhen speed, and when used electronic marketplaces would dominate China’s biggest cities. In both cases, the country has moved on to better and more expensive things. Still, it won’t be easy to erase or forget the buildings and industries that paved the way to China’s current affluence. The swaying of SEG Plaza is just the most prominent reminder that the reckoning could be lengthy, and expensive.
Bloomberg
