Industrial Geography and Location Factors Flashcards

The Importance and History of China's Iron and Steel Industry

• Significance of the Industry: The iron and steel industry is fundamentally recognized as the "backbone of all industry." It provides the essential raw materials for a wide array of other sectors, including construction, machinery manufacturing, and car-making.

• Global Standing: With China's rapid economic development, its steel production has grown significantly. Currently, China stands as the largest steel producer in the world.

• General Summary of Locational Changes:

  • Before $1950$: Concentrated in North-east China (e.g., Anshan).

  • $1950s$–$1970s$: Shift towards inland regions, moving to Central China during the First Five-Year Plan and further West thereafter.

  • $1980s$–Early $2000s$: Shift toward coastal regions in Eastern China.

  • Since Early $2000s$: Establishment of more production centres in the South and efforts to move plants away from large cities.

Locations Pre-1950: Focus on North-east China

• Concentration: Production was heavily centered in North-east China, with the most important site being Anshan, Liaoning.

• Factors Influencing Location:

  • Proximity to Raw Materials and Power: The industry was raw material-oriented and power-oriented to save on transport costs. Raw materials like iron ore and coal are heavy and bulky. Since the production process is weight-losing—requiring about $3.5$ tonnes of iron ore to produce just $1$ tonne of pig iron—locating near sources was critical.

  • Land Availability: The industry utilizes large machinery and requires extensive land supply. Anshan, for instance, is situated on a flood plain which provided the necessary flat land.

  • Domestic Market: High demand was generated by heavy industries concentrated in the North-east, such as shipbuilding and car-making.

  • Transport Network: A well-developed railway system allowed for the efficient movement of bulky iron ore and coal to the plants and the delivery of finished products to consumers.

Strategic and Economic Inland Shifts ($1950s$–$1970s$)

• Inland Movement: During this period, new production centres were established in Central and Western China.

• Government Policy: The Central Government exerted strong influence through a series of Five-Year Plans starting in $1953$.

• Strategic Reasons: Due to the Cold War and international conflicts like the Korean War, relationships with Western countries were tense. The "Three Lines" policy involved moving industries into inland regions to safeguard them against potential attacks.

• Economic Reasons:

  • To raise living standards and achieve more balanced economic development between inland and coastal regions.

  • To encourage people to move inland to relieve overpopulation in coastal areas where the population exceeded the carrying capacity of the land.

• Constraint Management: Transporting bulky items between inland and coastal regions was costly and the network was poorly developed; thus, developing industry near inland raw material sources minimized costs.

Market Reforms and the Coastal Shift ($1980s$—Early $2000s$)

• Coastal Centring: Major new centres emerged in Eastern China, such as Baoshan Iron and Steel in Shanghai and the Tianjin Seamless Steel Pipe Plant.

• Reform and Opening-up ($1978$): State-owned enterprises were granted autonomy to make production decisions based on market trends. The policy of "having some regions developed first" favored the more economically advanced coastal regions.

• Market Presence: Rapid population and economic growth in coastal areas pushed up demand for construction materials, electrical appliances, and private cars.

• Agglomeration Economies: Firms clustered in industrial regions to:

  • Reduce transport costs to markets.

  • Share infrastructure (transport, electricity) and supporting services (financial services).

  • Facilitate the exchange of market and technical information and develop a pool of skilled labour.

  • Establish a business reputation, such as that seen in Shanghai and Anshan.

• Technological Advancements: New production technologies reduced the reliance on raw materials. The ability to use scrap iron as a substitute and the implementation of new furnaces in developed coastal cities further reduced costs. Bulk carriers and advanced rail transport minimized the cost of moving heavy materials.

Comparative Advantages and Constraints

• Inland Constraints:

  • Transport: Low accessibility and less-developed systems.

  • Market: Distance from major coastal markets.

  • Labour: Lower population and educational levels leading to less-skilled labour.

  • Environment: Harsh physical environments (extreme climate, rugged relief) and inadequate water supply for cooling.

  • Raw Materials: Exploitation of local coal/iron ore was often uneconomical due to inferior quality.

• Coastal Advantages:

  • Infrastructure: Excellent port facilities for importing raw materials and exporting products overseas.

  • Existing Industrial Centres: Access to a large pool of skilled labour and abundant scrap iron.

  • Physical Environment: Supply of cooling water and extensive flat land, often created through reclamation.

Industry Trends Since Early $2000s$

• Shifting South: Guangdong became an economic powerhouse (contributing $10.90\%$ of GDP in $2021$), creating high demand for steel in construction. To address the imbalance where the South produced only $5.8\%$ of crude steel, the government approved major plants in Zhanjiang (Guangdong) and Fangchenggang (Guangxi).

• Port Location Dependency: Domestic supply of coal and iron ore has faced shortages and low grades. The dependency ratio on imported iron ore rose from $44.4\%$ in $2003$ to $82.4\%$ in $2020$, making coastal ports essential.

• Moving Away from Large Cities: Environmental concerns regarding coal burning (smog, acid rain, greenhouse effect) led to the closure of substandard plants in Jinan, Guangzhou, and Hangzhou since the $2010s$. A notable example is the relocation of the Shougang Group from Beijing to Caofeidian in Tangshan ($2005$). This also freed up scarce urban land for more profitable uses.

Environmental Impact and Industrial Inertia

• Air Pollution Problems:

  • Smog: Coal burning releases sulphur dioxide ($SO_2$), which forms sulphuric acid in the atmosphere. Effects include headaches, eye discomfort, respiratory difficulties, and death. Photochemical smog is common in HK from nitrogen oxides ($NO_x$) and VOCs.

  • Acid Rain: Dissolved $SO_2$ and $NO_x$ result in rain with a $pH$ level below $5.6$. This lead to ecological damage and health problems.

• Industrial Inertia: Some works, like Ansteel in Anshan, remain in original locations despite resource depletion and outdated machinery. Reasons include:

  • Immense costs of relocation and rebuilding infrastructure.

  • Existing specialized labour pools and business linkages.

  • Avoiding localized unemployment and loss of tax revenue.

The Information Technology (IT) Industry

• Definition: The IT industry involves products like hardware (computers, electronics, communications equipment) and software (development, networking, services).

• Characteristics:

  • Intensive in capital, technology, and R&D.

  • Short product life cycles: Development $\rightarrow$ Introduction/Growth $\rightarrow$ Maturity $\rightarrow$ Decline.

  • Multi-point and multinational production.

• R&D Centres: Located in developed countries/regions to access specialists, better legal protection for intellectual property, and venture capital.

• Production Plants: Outsourced to less developed countries (LDCs) to leverage abundant, cheap semi-skilled labour for mass production.

IT Industry in the USA and Reshoring Trends

• US Patterns: R&D is concentrated in suburban industrial clusters near major universities. These sites offer greenery, amenities, and collaborative environments.

• Intensification of Outsourcing: US firms move software maintenance to LDCs like India to maximize productivity via a $24$-hour work day.

• Reshoring: Moving production back to the USA.

  • Push Factors (China): Rising labour costs (wages rose $9\%$ between $2003$-$2021$), increasing land costs ($6.1\times$ higher in $2019$ than $2003$), currency appreciation ($23\%$ between $2002$-$2011$), and weak IP protection.

  • Pull Factors (USA): Tax incentives, protectionist policies (e.g., $25\%$ tariff on Chinese LED TVs), automation reducing labour importance, and the quality image of "Made in the USA."

Manufacturing Industry in Hong Kong

• $1950s$–$1970s$ Development: Dominance of light, labour-intensive, low-tech industries (textiles, plastics).

• Locational Stages:

  • $1950s$: Both sides of Victoria Harbour (migrant labour, Shanghai capital, natural harbour).

  • $1960s$: Expansion North/East/West to urban areas near housing estates.

  • $1970s$: Shift to new towns/industrial estates (Tuen Mun, Tai Po) for lower rents and better planned infrastructure.

• Relocation since $1980s$: The "Front Shop, Back Factory" model. HQs, R&D, and marketing remain in HK, while production shifted to the Zhujiang Delta Region (ZDR).

  • ZDR Pull factors: Low costs, extensive flat land, and lenient environmental regulations.

• Post-$2000s$ Phase: Due to the "Emptying the cage and letting the right birds in" policy (favouring high-tech over polluting industries), many firms are moving from ZDR to inland China or South-east Asian nations like Vietnam and Cambodia.

General Location Factors for Manufacturing

• Government Policy: Land-use planning, pollution controls, and investment incentives (tax cuts).

• Capital: High-tech and heavy industries are capital-intensive. Venture capital is critical for R&D.

• Land: Heavy industries need extensive flat land (often coastal reclamation), while IT firms prefer suburban sites near universities.

• Raw Materials: Weight-losing industries (iron, sugar) are source-oriented to save transport costs.

• Power: Power-oriented industries (aluminium smelting) locate near hydroelectric plants.

• Labour: Quantity (for labour-intensive), Quality (for high-tech), and Cost are all decisive factors.

• Market: Market-oriented industries produce bulky (furniture), perishable (bakery), or fragile (glassware) goods.

• Transport and Telecommunications: Essential for multi-point production and efficient movement of goods.

Globalisation and Socio-Economic Impacts

• Multiplier Effect: This cycle of growth begins when new industries create jobs and income, leading to more spending in local shops and higher tax revenue for infrastructure improvements.

• Socio-Economic Impacts:

  • Benefits: Tech transfer to LDCs and rapid industrial development.

  • Problems: Unemployment in home countries (e.g., Silicon Valley job losses due to outsourcing) and economic decline in areas where factories close.

• Environmental Impacts: Destructon of natural habitats, energy consumption emissions ($SO_2$, $NO_x$), discharge of toxic chemicals (mercury in electronics), and land pollution from waste disposal (e-waste).

• Global Shifts: Globalisation leads to an international division of labour and increased world trade interdependence, where any failure in the supply chain can break the whole production process.

• Significance of the Industry: The iron and steel industry is fundamentally recognized as the "backbone of all industry." It provides essential raw materials for a wide array of other sectors, including construction, machinery manufacturing, and automotive production, impacting national and global economies.

• Global Standing: With China's rapid economic development and state-driven initiatives, its steel production has grown significantly over the years, positioning China as the largest steel producer in the world. In recent years, this dominance has led to both competitive advantages and challenges in the global marketplace.

General Summary of Locational Changes

• Before $1950$: Concentrated primarily in North-east China (notably Anshan, Liaoning), driven by early industrial policies.

• $1950s$–$1970s</strong>: The industry began a strategic shift toward inland regions during the First Five-Year Plan, moving to Central China in response to geopolitical pressures and resource availability. The movement further progressed West as infrastructure improved.</p></li><li><p><strong>$1980s$–Early$2000s$</strong>: A noticeable trend toward coastal regions in Eastern China initiated due to market demand and rental cost advantages. Significant new plants were built in proximity to major economic zones.</p></li><li><p><strong>Since Early$2000s$</strong>: Establishment of numerous production centers in Southern China, with an emphasis on reducing urban pollution by relocating plants away from large urban centers to environmentally compliant zones.</p></li></ul><h4>Locations</h4><h5>Pre-1950: Focus on North-east China</h5><ul><li><p><strong>Concentration</strong>: Production heavily centered in North-east China, with Anshan identified as the principal site due to its favorable geographic and economic conditions.</p></li><li><p><strong>Factors Influencing Location</strong>:</p><ul><li><p><strong>Proximity to Raw Materials and Power</strong>: The industry was primarily raw material- and power-oriented to mitigate transport costs, as iron ore and coal are inherently heavy and bulky. Considering that producing$1$tonne of pig iron requires about$3.5$tonnes of iron ore, latitudes of production near accessible resource sites were vital.</p></li><li><p><strong>Land Availability</strong>: The industry utilized large machinery, necessitating extensive flat land. Anshan’s geographical position on a floodplain provided the necessary infrastructure.</p></li><li><p><strong>Domestic Market</strong>: Heavy industries concentrated around North-east generated high demand for steel production, notable in sectors like shipbuilding and automotive industries.</p></li><li><p><strong>Transport Network</strong>: A robust railway system enabled the efficient movement of bulky materials and finished products, aiding economic connectivity.</p></li></ul></li></ul><h4>Strategic and Economic Inland Shifts ($1950s$–$1970s)

  • Inland Movement: This period saw official policies establishing new production centers in Central and Western China, responding to both internal and external factors.

  • Government Policy: Integral to industrial expansion, the Central Government utilized a series of Five-Year Plans (post $1953$) to centralize and influence production efforts systematically.

  • Strategic Reasons: Driven by Cold War tensions and international conflicts, particularly the Korean War, national security concerns compelled the movement of industries into inland regions to safeguard against potential military threats.

  • Economic Reasons: The government pursued initiatives to elevate living standards and foster equitable economic development between diverse regions, in addition to addressing overpopulation concerns in coastal areas.

  • Constraint Management: Transport costs were higher between inland and coastal regions; therefore, locating industries near inland sources minimized logistical complications.

  Market Reforms and the Coastal Shift ($1980s$—Early $2000s$)

  • Coastal Centring: Major new industry clusters arose in Eastern China, with significant developments including Baoshan Iron and Steel in Shanghai and the Tianjin Seamless Steel Pipe Plant becoming visible landmarks.

  • Reform and Opening-up ($1978$): Autonomy granted to state-owned enterprises allowed for market-responsive production decisions, significantly benefiting development in more economically advanced coastal regions.

  • Market Presence: Expanding population and economic growth in coastal areas heightened the demand for construction materials, electrical appliances, and personal vehicles.

  • Agglomeration Economies: Companies gravitated toward industrial regions to:

    • Decrease transport costs to primary markets.

    • Share vital infrastructure resources (e.g., transport, electricity) and supporting services (e.g., financial institutions).

    • Improve exchanges of market and technical information while fostering a skilled labor pool.

    • Establish business credibility, prevalent in cities like Shanghai and Anshan.

  • Technological Advancements: The introduction of innovative production technologies reduced reliance on traditional raw materials, allowing for the use of scrap iron and modernized furnaces to lower overall costs. Moreover, advancements in transportation maximized efficiency in moving heavy materials.

  Comparative Advantages and Constraints

  • Inland Constraints:

    • Transport: Poor accessibility and underdeveloped transport systems inhibited growth.

    • Market: Geographic distances hindered access to major coastal markets.

    • Labour: Limited population and educational levels resulted in a less skilled workforce.

    • Environment: More challenging physical environments (extreme weather and rugged geography) made for difficult industrial setups.

    • Raw Materials: Exploiting local coal and iron ore often proved uneconomical due to quality and feasibility issues.

  • Coastal Advantages:

    • Infrastructure: Superior port facilities enabled imported raw materials and facilitated exporting finished products globally.

    • Existing Industrial Centres: Availability of a skilled labor force and a steady supply of scrap iron supported industrial ambitions.

    • Physical Environment: Access to essential resources such as cooling water and extensive flatland enhanced operational efficacy.