Monday, April 19, 2010

Suzhou No 2 in new ratings of industrial parks of China

The China- Singapore Suzhou Industrial Park is ranked second out of 254 in a new set of ratings of China’s industrial parks released today.

The ratings, which range from AAA to C, are based on research surveys, interviews and site visits by China Knowledge, a China- based research and consulting firm.

They are published in a report titled Manufacturing, Outsourcing and R&D in China – a guide to help investors gauge the relative merits of different investment locations there.

The 2010 ratings have been updated from previous years to reflect the changing structure of China’s economy. ‘China is no longer the world’s factory; it has also become an R&D powerhouse,’ said Charles Chaw, managing director of China Knowledge. ‘Our new rating system accounts for these changes. We have shifted from a single measurement for manufacturing to include R&D types of enterprises.’

China’s top-rated industrial park is the Tianjin Economic-Technological Development Area.

The ratings cover various categories of industrial parks, including Economic and Technological Development Zones, High-Tech Industrial Development Zones, Export Processing Zones and Free Trade Zones.

The parks are evaluated on the basis of five key criteria:

# the macro-economic performance of the local area;

# the level of development of the park;

# local investment and operational costs;

# local skill levels and their availability; and

# the quality of management and administration.

These criteria are accorded different weightings, depending on the type of park. For example, land and transport facilities are accorded higher weightings for parks devoted to manufacturing than for those designed for R&D.

The China-Singapore Suzhou Industrial park, developed jointly in 1994 by the governments of China and Singapore, has served as a model for many of China’s industrial parks. Located about 80km from Shanghai, it covers an area of 268 square kilometres.

The report indicates that by the end of 2008, utilised foreign direct investment (FDI) in the park reached US$15.5 billion. A total of 79 Fortune 500 companies had by then invested in the park, including Siemens, Nokia, Fujitsu, Mitsubishi, Samsung, Daimler Chrysler and BP.

Among the park’s strengths, the report cites a good location; a flexible and open management style; a large pool of skilled workers; a dynamic economic environment in Jiangsu Province (which has the largest economy in the Yangtse River Delta); and strength in high-tech industries and R&D. The park’s main weaknesses are relatively high land and labour costs, and tough competition from the nearby cities of Shanghai and Hangzhou.

Commenting on how investors in China view the relative merits of different cities and regions, China Knowledge’s Mr Chaw said: ‘Beijing, Shanghai and Guangdong have been the first choices for investors. However, Dalian, Qingdao, Tianjin and Suzhou are developing rapidly. The central government’s shift towards improving the economies of western and central China also enable them to score higher, due to incentives and increasing spending.’

China’s industrial parks have been major drivers of its economic development as well as exports.

Initially, they were situated in ‘special economic zones’ (SEZs) that were conceived in the early days of China’s ‘open door’ policy in the 1980s by the country’s then-leader Deng Xiaoping. The zones were designed as enclaves of modernity to spur industrialisation with the help of foreign investment. China started with four SEZs, in Shenzhen, Xiamen, Zhuhai and Shantou.

After the success of the policy, several hundred industrial parks of different types proliferated across China, at first mainly in the coastal provinces, but later, also inland.

According to the report, China’s industrial parks attract about one-third of the country’s realised FDI each year.

To buy the 800-page guide titled ‘Manufacturing, Outsourcing and R&D in China’ 2010 edition, please contact Michael Lee at (65) 6235-8468 or send an email to . The guide will also be available in major bookstores in Singapore from next month.

Source: Business Times, 19 Apr 2010

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