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JAN 9, 2017 @ 12:24 PM
Wade Shepard , CONTRIBUTOR
I travel to emerging markets around Asia and report on what I find.
Opinions expressed by Forbes Contributors are their own.
In the spring of 2015 I found myself walking through the streets of Horgos, a place on the Chinese side of the China/ Kazakhstan border that has recently reemerged as the first new city of the New Silk Road. Although its history extends back to the Sui Dynasty (AD 581-618) and it was once a stop on the ancient Silk Road, the modern city of Horgos at that point wasn’t even a year old. The initial wave of construction was just getting going there, and the only thing the place really had was a struggling cross-border duty free zone, the full support of Beijing, and little else.
The big dream is for Horgos, a place that is being built up from a small village and some lavender fields, to become a major trade junction that would link together east and west, north and south along the New Silk Road — the emerging network of trade corridors, pipelines, logistics zones, and new cities stretching from East Asia to Europe. It took a couple of years to build the basic infrastructural framework of this place, but in 2017 companies are starting to notice and move in.
Horgos is now being positioned to become a prime robot manufacturing and export hub. A company called Boshihao Electronics has moved a portion of their production from the high-tech empire of Shenzhen on China’s east coast all the way out to the country’s farthest western fringe.
Boshihao manufactures service robots — i.e. robots that can replace humans in professions such as cooking, nursing, banking, and education -- in addition to more standard ones that have industrial capabilities. Chinese President Xi Jinping called for a robot revolution in 2014, one year after he announced the Belt and Road initiative, which was to become the policy framework guiding China's participation along the New Silk Road. Boshihao manufacturing robots in Horgos combines both of the president’s ambitions.
The initial goal is to produce 10,000 robots per year in Horgos, which will be destined for export to Silk Road countries in Central Asia, Russia, and the Middle East. Production is to commence in May.
Why would a sophisticated Shenzhen tech company would move all the way out to the far side of Xinjiang — a place that could serve as the defacto definition of remote — to make robots?
It is Horgos’s unique geographic position that is the main draw here — the place really doesn’t have much else (if you don’t count the massive tax breaks and other government incentives to encourage companies to move here).
Horgos is a new city in the middle of nowhere — almost literally. The place sits a tick from the Eurasian Pole of Inaccessibility, the farthest point on earth from an ocean, near the fabled region which Herodotus claimed to be inhabited by creatures that had the bodies of lions and the heads and wings of eagles, where the North Wind originated from a cave. Sitting right on the border of China and Kazakhstan, Horgos is out there, but it is precisely this remote location that’s now of essence about the place: the middle of nowhere is being turned into the center of the world.
Directly on the other side of the border from Horgos is a place called Khorgos. It has essentially the same name, and, national sovereignty aside, is basically the same place. Both sides of the border are being built up in tandem to serve the same purpose: to become a major international trade hub linking China with the CIS, the Middle East, and Europe beyond. Trains would stop here from all sides of the Eurasian theater, exchange cargo, and deliver goods to anywhere on the continent in under two weeks.
However, being a great transshipment hub wasn’t the sole ambition of Horgos/ Khorgos. Growing manufacturing and warehousing industries were also in the plans. On the Kazakh side of the border is a 5,740 hectare special economic zone that is modeled off of the Jebel Ali Free Trade Zone in Dubai, and on the Chinese side is a vast amount of space earmarked for industrial use.
Although landlocked, this region is aiming to become China’s “west coast.” The vision is to grow Horgos into an industrial counterweight to balance out the booming cities of the east. If Shanghai, Tianjin, and Guangzhou could become catalysts of commerce largely due to being major sea ports then why couldn’t the land ports of the west experience a similar, albeit more diminutive, growth pattern? As production in China continues moving ever westward, it is making less and less sense to move products thousands of kilometers overland east just to load them onto ships to ultimately go west. So cities like Horgos and Kashgar are being transitioned into major logistical hubs, ports for trains and trucks rather than ships.
The dry port on the Horgos side of the border just opened last year, which enables local manufacturers to ship their products directly to Europe by train in roughly ten days at a fraction of the cost of air. Boshihao’s robots are precisely the type of cargo that these new trans-Eurasian rail routes are meant to carry. With a cost between $700 and $150,000 each, these robots are high-value merchandise which need to be shipped fast. Beyond that, their sheer weight can make air shipping cost prohibitive.
Boshihao also claims to be building a high-tech industrial park in Horgos in an effort to attract other companies involved in electronics R&D and production to China's western borderlands.
While it’s ultimately the modern incarnation of ancient trade routes, the New Silk Road is nothing if not high-tech. This is paradoxically in keeping with the trade network’s historic theme, as it was always high-value, highly-sought, luxury items that were being shipped overland between China and Europe along the Silk Road.