In the Zone

Hou Weili

Pan Yunguan， 68， participated in the planning， preparation and launch of the China-Singapore Suzhou Industrial Park （SIP） in east Chinas Jiangsu Province. For the former deputy director of SIP Administration Committee， Suzhou is still iconic as a test field for Chinas reform and opening-up.

“We sowed seeds from Singapore in the crisscrossed farmland of China，” Pan declared.

The seeds refer to the experience in attracting foreign investment by building industrial parks or zones which Singapore accumulated as it optimized its regional economy. And Suzhou Industrial Park was literally built atop farmland.

Over more than two decades， the seeds have bloomed： SIP has emerged as one of the fastest growing and the most internationally competitive economic development zones in China. Since its inception in 1994， major economic indicators have been growing at an average annual rate of 30 percent. According to the SIP Development Report jointly released by Suzhou Industrial Park Administrative Committee and the Center for Livable Cities under Singapores Ministry of National Development， in 2016， the regional GDP totaled 215 billion yuan （US$31.4 billion）， a surge of 190 times larger than 1994. Per capita GDP surpassed US$40，000， whereas Chinas national figure had just reached US$8，800.

The development presents a crystal-clear example of partnership and mutual learning between China and ASEAN countries over the past four decades， a period when China adopted reform and opening-up policies that fueled an economic liftoff. Since the industrial zone modeled after Singapore took root in China in the early days of Chinas opening-up， its traits spread across China as well as to neighboring ASEAN countries， emerging as a strong engine driving the regional economy， urbanization and sustainable growth.

Joining Hands

China-Singapore cooperation on industrial parks can be traced back to 1978 even before the milestone Third Plenary Session of the 11th Central Conmmittee of the Communist Party of China （CPC）. About one month before the meeting that officially ushered in Chinas reform and opening-up， 74-year-old Deng Xiaoping， then Vice Premier， paid state visits to Southeast Asian countries of Thailand， Malaysia and Singapore.

“The purpose of the trip was to clear the air and win support from neighboring countries for both our domestic and foreign policies，” explained Zhang Jiuhuan， who served as Chinese ambassador to Thailand at the time. “Another reason was seeking reference points and experience for Chinas modernization and economic reform.” In the late 1970s， some Southeast Asian and South Asian nations were concerned about Chinas left-leaning policies and worried they might affect their own domestic stability.

Singapore was Dengs destination for reference points. In the 1979 World Development Report released by the World Bank， Singapore was recognized as an emerging industrial country.

The trip was worthwhile. In 1992， Deng delivered his famous “southern tour speech” during a trip through the four southern cities of Wuchang， Shenzhen， Zhuhai and Shanghai. “Singapore maintains good social order，” Deng opined. “We should learn from it and do better.”

From Singapores perspective， the island country was facing an urgent challenge to restructure the economy as domestic labor and land costs were soaring. To maintain competitiveness， the country opted to diversify the economy by driving regional development and businesses to expand to the outside. The industrial zone model proved feasible. “It transformed cheap basic factors of production like natural resources， an unskilled work force and capital into high-quality products and industrial infrastructure，” said Zhang.

The nation was eager to explore international partnerships through expansion. Singapores Senior Minister at the time Lee Kuan Yew sensed opportunity in Dengs speech. Within about six months， Lee led a delegation to Suzhou and expressed interest in partnering with the city to establish an industrial park. One year later in October 1993， the Jiangsu provincial government and Singapores Ministry of Trade and Industry signed a memorandum on such a partnership. In February 1994， it was approved by Chinas State Council， and three months later， the first phase of SIP was launched.

Adapting to China

SIP didnt copy everything from Singapore， but adapted the experience to local conditions. The SIP Development Report attributed SIPs success to three factors： visionary planning， streamlined efficient administration and close relationship with businesses.

Back in 1994， it was a common practice to develop an economic zone without any previous plans. The first lesson Suzhou learned was that long-term planning precedes development and construction. This principle has been preserved across every change in government officials.

“At first， some officials and residents didnt understand why we were building such broad roads or why residential and commercial areas were laid out as they were，” recalled Pan. “Now it is clear we made the right call.” Traffic congestion has never been a headache in the 800，000-square-km industrial park with a permanent population of 807，800， even when it hosts large international events.

In March 2016， Chinese President Xi Jinping proposed a new type of government-business relationship when meeting with business circles during the annual NPC and CPPCC sessions. He opined that government officials should take the initiative to provide businesses with needed services and help them when difficulties or problems arise.

In fact， SIP has long adopted such practice to maintain close relationships with its tenants. Tian Yuan is a co-founder of Feiyinuo Technology Ltd.， a startup specializing in ultrasonic medical equipment research and development. “The local government genuinely cares about our growth and helps resolve real issues，” said Tian.

The founder recalled that hospitals rejected him one after another after the company developed its first ultrasonic product and sought clinical trials in hospitals. “I was at the end of my rope，” he gasped. Right as he was about to give up， the SIP Administration Committee held a business fair and invited local hospitals for face-to-face talks with drug companies and medical equipment developers like Feiyinuo. Tian eventually found a partner who agreed to conduct clinical trials.

To better serve businesses， SIP has been optimizing government services and streamlining administrative procedures. Pan noted that one-stop services for business registration and project approval were already available in SIP as early as 1995. Today， the whole procedure of registering a company can be completed in two working days， and approval for an industrial project can happen in 33， which used to take nearly half a year.

Efforts are rewarded when foreign investments roll in. Official statistics showed that every square kilometer of industrial land in SIP attracted an average of US$1.7 billion in investment and that each project reaped more than US$30 million.

Steps Forward

SIPs success attracted others to follow suit. In 2007， Sino-Singapore Eco-City， the second governmental cooperation project between the two countries， was designated for north Chinas Tianjin Municipality. In response to climate change， the eco-city is meant to set an example for building a resource efficient and environmentally friendly community. It features new industries like movies and animation， green industries and internet-related businesses.

In November 2015， President Xi visited Singapore and closed the third project deal to establish the China-Singapore （Chongqing） Demonstrative Initiative on Strategic Connectivity with his counterpart. A flagship project under the Belt and Road Initiative proposed by President Xi in 2013， the demonstrative initiative will focus on financial services， aviation， transportation， logistics and information and communication technologies among others.

“The joint project will connect the western inland region of China to Southeast Asian countries by sea and to West Asia and Europe by land， kindling tremendous opportunities along these routes，” explained Dai Zhiying， associate professor of public administration at Chongqing Academy of Governance.

Chan Chun Sing， Minister of Trade and Industry Singapore， echoed Dais sentiments. “Contrasting the previous two joint projects， the initiative in Chongqing highlights connectivity across geographical boundaries，” he added. “We are not replicating what we did in Singapore， but brainstorming new ideas together with Chinese partners to produce mutually beneficial outcomes.”

As more and more Chinese businesses go global， they find the industrial zone model a win-win solution for both enterprises and local development. In partnership with ASEAN countries， a total of nine China-funded industrial development zones are now located in Thailand， Cambodia， Laos， Vietnam， Indonesia and Malaysia.

“Investing in an established industrial park is a wise choice for businesses eyeing foreign markets， especially small and medium enterprises，” noted Xu Ningning， executive director of China-ASEAN Business Council. “They can make use of the incentives and well-constructed infrastructure like industrial buildings and roads as well as water and power supplies in the park. Risks involved with overseas venture are substantially reduced.”

Holley Group， a Hangzhou-based private pharmaceutical company， has found this to be true. “When we first opened a branch in Thailand， it was difficult to get things done as an individual enterprise，” revealed Xiao Qijing， president of Holley Group. In 2005， the company jointly launched the Thai-Chinese Rayong Industrial Park with local partners. It is now the largest industrial cluster of Chinese businesses in an ASEAN country and a key manufacturing base in the region.

“Parks are also conductive to the establishment of local industrial chains， job creation and expanded revenues，” added Xu， “as long as they consider local conditions and integrate with local development plans.”

Holley Group now has a big expectation for the joint industrial park. In collaboration with Thailands ambitious East Economic Corridor scheme， it will better harness local resources， talent， Chinese capital and expertise for the purpose of transforming the three eastern provinces of Chonburi， Rayong and Chachoengsao into a hub of technological manufacturing and services with strong connectivity to its ASEAN neighbors through land， sea and air.