SHANGHAI, China – Quick: Name a semiconductor manufacturer that runs a school and a real estate business along with their foundry service.
There’s only one--Semiconductor Manufacturing International Corp. (SMIC), based in Shanghai.
Founded in 2000, SMIC symbolizes China’s ambition to become a key player in the global semiconductor industry. SMIC also developed a template for successful recruitment of world-class talent, by building close to its headquarters a residential campus together with an award winning K-12 international school, which as of 2012 had an enrollment of more than 2,000 students.
The big idea of developing a residential campus complete with school came from Richard Chang, SMIC’s founder. Chang, even long after he left the company, is still adored and respected by many of SMIC’s employees and the high-tech community in China.
To attract to China and SMIC talented people the world over, Chang figured out that it’s important to go beyond the usual financial incentives. At the inception of SMIC, he offered optional housing and educational programs for those with families. The package clicked with many executives who weren’t initially sure about taking a job in China.
The road SMIC has traveled thus far, however, has been treacherous. The company suffered from decade without profits, lawsuits filed by its rival, and sudden management changes in recent years. Although SMIC still needs to close the gap with the world’s leading foundry companies such as Taiwan Semiconductor Manufacturing Co. and GlobalFoundries, the company’s business seems picking up long at last, under the current CEO, Tzu-Yin Chiu.
You’ve probably heard of Foxconn’s dormitories in Shenzhen, jammed with young production line workers recruited from the countryside. Far less known is this semiconductor company–unusual in China or anywhere else in the world–that actually operates a school and provides family living quarters for workers and executives.
The following slideshow illustrates the creation of the SMIC founder Chang--SMIC’s homes and the SMIC School, located within a five-minute drive of SMIC’s Shanghai fab.
These accommodations are rented to SMIC employees at below market prices. Certain employees are even qualified to purchase the properties at a deep discount after a specified period of service. The prevailing joke in the semiconductor business in Shanghai is that SMIC is a bigger success in real estate than it is in the foundry business.
But SMIC deserves credit for writing a text-book scenario on how to set up a successful operation in emerging markets. The key is the school.
The SMIC School, offering an English Track that runs on a U.S. high school curriculum, is known as one of the best schools in Shanghai--even better than the American School in Shanghai--by the expatriate community. On the theory that the best school needs the best teachers, the bilingual school recruited its teaching staff globally, including career educators at prep schools in the United States.
A Harvard Business Review article in 2009 that examined SMIC’s strategy–including the SMIC School–pointed out that “graduates from the school had been admitted to top universities in the U.S., including many Ivy League schools. The school became a popular choice even for non-SMIC employees, which accounted for more than 60 percent of the student body.”
SMIC’s own 260,000-square meter campus is expansive and beautifully landscaped. The living quarters includes big houses for executives, townhouses for employees, and low-cost dormitories for SMIC’s manufacturing assistants.
In short, this may be China, but it ain’t Foxconn.
SMIC headquarters located in the Zhangjiang Hi-Tech Park in Shanghai
There is nothing comparable to this in the US! Even if an USA company were to offer this type of workplace living, I doubt if it will succeed on the same scale as in SMIC. It can only work in China...
I don't mean this disrespectfully, but it could work anywhere where professionals in a given industry do not naturally want to work that could be China, India, Vietnam, etc.
Taking the school out (to a degree), I believe it has happened even in the U.S. and Canada for resources and mining.
maybe it is interesting to americans but not new to Chinese people, back to 30years ago, most of big Chinese state owned companies ran daycare, school,accomodation and even grocery store to serve the employees and their families in the residence campus. and nowadays, still many big state owned the giant companies keep these functions like power supply industry, petro industry, etc. however i agree to build a good school is a great idea and very attractive to employees who have kis in China, the only problem is most of the best schools in China are public schools but not priviate schools, maybe the companies can just sponsor the best schools for ensure the seats for their employee's kids.
30 years ago? Gimme a break.
My father-in-law's family did the same thing on their tea plantation in southern Guangdong province, over 200 years ago. The entire town was owned by the extended family as granted by the government (imperial, pre-Guomindang), including shop and residence spaces, a temple, two schools (equivalent to primary and secondary), all public works, graveyard, etc. Heavily subsidized by the owners, the rents were low and generally people were happy with the situation.
Pretty much the same layout, except it was a rural agricultural center instead of an urban high-tech one. Essentially, a private collective - but clearly the precursor to the commune and later the SMIC-type complex.
This is a very old model that has worked successfully in China for centuries. Of course, it only works if the owners aren't stupid, cruel or corrupt.
As the article says, this is about setting “up a successful operation in emerging markets.”. In the USA it is easier to find a good community with good schools, housing, stores, power, and roads. Then build the factory there. There are many good schools to choose from. The USA is not perfect, but it is much better than most locations in most emerging markets.
blah, blah blah the USA is better, blah blah. Missed the point, you have.
This is an update of an ancient method that works in China and just happens to be successful at attracting foreign and domestic high-tech talent.
Of course it wouldn't be a good fit if plunked down in the middle of Cincinatti (Detroit, perhaps? Maybe. Apologies to Detroit, but friends from there say it's struggling.)
It's about innovating - taking an ancient concept from China and making it work in modern China.
Stop comparing it to Europe or US. It's like comparing apples to elephants.
This is unusual in a capitalistic country like the US. In many parts of the world particularly the socialist countries this is (or used to be) the norm. Companies or governments as most companies were state-owned set up large "colonies" complete with housing, schools, shopping, entertainment and transportation. Access to the facilities was part of the perk of the job.
I know lot of people, including myself who would like the "adventure" of living in an exotic foreign land but can't because of family obligation. It would be impossible for my kids to adjust to a Chinese school, they don't speak Chinese and they hate tests and strict teachers. Having a good American school as part of the bargain would make me much more likely to move there. I think it is a great idea.
As far as I know, many teachers in SMIC schools are from oversea, like USA, Singapore, Malaysia, South Korea, etc. There is an omission in this article. There is a church called Thanksgiving Church near the residential campus, which was advocated to build by SMIC's founder, Richard Chang. Every Sunday Morning, about 1000 people go to the church, including around 200 people from oversea. You can check the church's information on website: http://www.tefshanghai.org/.
we all know junko is a atheist but she should be objective in doing her reporting.
otherwise ppl get cheated in believing school and free apart is SMIC's secret recipe for success.
who knows if this church is the winning sauce in SMIC's fomula.
I had been SMIC's employee for years and don't think church has anything to do with SMIC's success. At certain time it turned negative. I do like to fact that it provides the social place for people of religion. It might be icing on a cake instead of the main ingredient.
Count me among those who don't find this to be a particularly new idea.
For instance, US military bases around the world have existed for a very long time, and also offer these amenities. Schools, shopping, clubs, housing, you name it. Or, how about Aramco in Saudi Arabia? Don't western workers also live in a separate community there?
Places where a lot of expatriots live, for whatever reason, will have similar facilities, although admittedly not often run by just one company. My siblings and I grew up living this way. Sometimes the schools offer different curricula, e.g. a US high school diploma track or an international baccalaureate track.
There's a old American song about this sort of setup, come to think of it. It's called "Sixteen Tons," I believe, and it's about a coal mining town that belongs to the company.
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