By As the global economy continues to struggle to regain its momentum after the financial crisis struck four years ago, it's become more important than ever for companies to be selective about where they choose to invest their resources.
Despite the higher bar, however, it came as no surprise that the Tianjin Economic-Technological Development Area (TEDA) attracted five new Global Fortune 500 companies to its roster of tenants in 2013 -- bringing the total number of the world's most profitable corporations that have decided to put roots down in the special economic zone to 90, and the number of their investment projects to 229.
At its Annual Work Meeting on January 13, TEDA also posted record revenues last year, surpassing for the first time in its history its previous milestone of 50 billion RMB. In 2013 revenues hit 54.71 billion.
A big driver behind TEDA's success in attracting companies and keeping them there is the network of services it provides that help them navigate the complexities of doing business in China. These services range from offering free legal advice and financial aid to suggesting long-term market strategies.
China's leadership announced last November a series of major reforms that aim to bolster the role of markets and push the economy further up the value chain. The measures are widely expected to portend a fundamental shift for both companies and business clusters in the country.
"China is on the cusp of a shift towards a more Western-style model of urban-driven growth," says Duncan Innes-Ker, senior China analyst at the Economist Intelligence Unit (EIU). "This means that China will have to focus more on raising productivity per worker through greater innovation and education."
Many policymakers and analysts see industrial parks as a pivotal component of that push. The parks encourage the formation of business clusters and help to attract top talent, and are "at the core position of the nation's drive to move along the industrial value chain."
"Our mindset is that we are the partner of the investors," explains Yang Shu, deputy director of TEDA's Investment Promotion Bureau. "We'd like to sit down with them and provide suggestions and recommendations on everything from Chinese market access to government approval procedures. It is far more than a 'template offering' by a typical development zone."
The free services TEDA provides its tenants encompass a wide range of fields, Yang adds, and involve dedicated departments that handle specialized areas such as tax and accounting law, environmental protection regulations, construction and worker safety, financing and even intellectual property rights.
The park also hosts regular briefings for investors on breaking news and business developments in China and arranges breakfast meetings for administrator's management team to mingle with tenants.
The usual path of a foreign company in China begins with a modest initial investment and only limited business presence, says Yang. As the firm gains confidence, it slowly increases the investment and expands its corporate functions. Businesses often experience various kinds of growing pains during this expansion phase, which is where TEDA aims its services.
Yang points to the example of John Deere, an American maker of farming equipment, as typical case. The company entered TEDA in 2006 by setting up a small transmissions factory. Its initial investment, at around US$30 million, was modest relative to the company's size. Over time and with TEDA's support and input, the firm gradually increased its investment and operations. Today John Deere not only has manufacturing facilities in TEDA, but also research and development functions, a testing center, a training base and finance and leasing businesses. Nearly every division of the company now has certain project or operation at TEDA, says Yang.
TEDA's services are not limited to the biggest companies, either, and also nurture homegrown start-ups too, especially those in the constantly evolving tech sector.
While the industrial park has carved out a reputation over many years for coming up with financing options for tech firms in need of capital, venture capitalists and professional services firms increasingly believe that advice and know-how are often just as important for fledgling entrepreneurs.
"From an accelerator's perspective the most valuable financing is that which is accompanied with experienced strategic guidance," says Sara Sanford, an attorney at Garvey Schubert Barer, a law firm that specializes in cross-border business transactions.
"The typical visionary of a start-up usually fails in the acceleration phase [not only] when added financing is obviously needed, but also when added skills, discipline and organization are required to take a great idea to the next level."
To that end TEDA offers training programs aimed specifically at start-ups that include guest lectures, field training and networking events. TEDA-sponsored forums often serve as a kind of "psychological support" for budding entrepreneurs who use the events to discuss common challenges and share ideas with people in their field, says Li Hongliang, deputy general manager of TEDA's Science and Technology Development Group.
Li Xinmin, who heads Motimo Membrane Technology, says TEDA's services and consultations have been critical to the company's success, adding that the park's staff were always available to offer solutions when the company faced challenges. "During our growth here at TEDA, the administration's team never stopped offering us support," Li says. "From day one we felt that at those most important points in our development, TEDA helped us resolve the key issues."
One area of particular importance to companies that set up shop in the industrial park is familiarizing themselves with and meeting environmental regulations both in China and abroad. TEDA has taken the lead in providing information, as well as expertise, in this domain.
"International firms are increasingly concerned with environmental issues when they invest in the region," says Song Yuyan, director of TEDA's Low-Carbon Economy Center. In its meetings with companies questions are often raised about local environmental regulations and standards. "They care about the quality of the environment like air and soil quality. They want information and training on environmental protection issues."
TEDA has met that demand with a series of initiatives and green programs, among them a scheme popular in the United Kingdom and funded by the European Union that encourages local companies to recycle and reuse the corporate waste within the community. The park's staff organized workshops and gathered together firms to find out whether one firm's waste might be useful to another company's industrial process.
Under the IS (industrial symbiosis) program, as it's commonly known, clean-tech outfits from as far afield as Australia have been invited to TEDA to explore ways in which tenant companies can improve their recycling methods. So far twenty workshops have been held and facilitated about 100 synergies, reducing carbon emissions by roughly 185,000 tons, according to the park's calculations.
The industrial park, along with the Tianjin government, has also implemented a program encouraging corporations to make public their environmental information each year. Last year nearly 50 firms in the park published an annual report about their impact on the environment.
If the firms publish the environmental reports for three consecutive years, they are eligible for a subsidy from the local government.
As TEDA's most recent environmental programs demonstrate, the industrial park is continuously coming up with new ideas and solutions to attract the growing number of environmentally conscious investors who not only need to be in compliance with environmental regulations themselves, but also demand the same from their suppliers up and down the value chain.
Yang fully expects TEDA's services will continue to progress as firms in China move up the value-added chain. "What we provide for businesses is evolving all the time," she says. "We're growing with companies together."
Z. H. STUDIO
Lan Shen, (86)21-22311397
lan.shen@zhstudio.net
