Invest In China’s Industrial Parks
China’s rapid economic growth has attracted the investment flow of foreign companies all over the world. However, given the sheer size of China and the wide developmental gaps between different regions, it is still a daunting task for prospective investors to decide where to go. When the investors intend to purchase Land Use Rights and have a facility built to their specifications in China’s industrial parks, they are often offered with different incentive packages from many Chinese cities. In addtion to infrastructure capability and investment envoiroment we often talk about, this article gives a brief introduction of two most considerable factors in investment in the industrial park.
Industrial clusters
In China, a recent study by the National Science Foundation, found that the presence of many firms in a single area helped encourage innovation, diffusion of new ideas, flexibility and specialization. The form of industrial clusters develop rapidly in China industrial parks. Most industrial parks in China have their own preferrable industrial clusters by offering companies certral or local government policy support and tax incentives. Such parks generally have an office to coordinate contact with other governmental bureau, such as local environmental inspectors and tax authorities — key contacts for companies in a country where individual connections count for a lot. Local government can be a decisive factor. It is natural for companies to trust a partner with high administrative efficiency and nice services
A good industrial park with industrial clusters also offer a complete environment, including the supply chain, customers and suppliers. Many companies making serious investment look more at these factors. For example, Tianjin Economic Development Area ranked as one of China’s top National Industrial Parks, has developed a telecoms cluster by first attracting Motorola to invest and then working on bringing in its suppliers too, to bring down logistics costs. Another investor, Samsung, brought its own suppliers with it.
Land is always a very constrained resource in China. Building industrial parks involves making huge investments in land development and infrastructure. Companies with good mark in environmental protection and technical innovation that most industrial parks hope to lure.
Industry is an important “resource allocator” as well as “controller” of resource consumption and pollution. At present, China’s traditional industry is still dominant, thus the environmental performance is low and ecological technological renovation is a hard task. Therefore, realize industrial sustainability is a key task during the optimization of the overall structure of the economic system. For this reason, the central government proposes to guide the overall economic and social development with a scientific development approach and establish the strategic objective of developing a recycling economy and constructing a resource-saving and environmentally friendly society.
Long-term operating costs
Typically, investors in China’s industrial parks face two main costs: start-up costs, including buying land, constructing a facility, bringing in equipment and staff; and operating costs, including dealing with different government organisations, buying raw materials and arranging logistics.
Some places focus on the initial cost and give special prices to get companies to come. Yet, to go beyond focusing on a tasty start-up deals and more look at reducing long-term operating costs, is a better approach for investors.
A number of multinational companies, including Intel Corp. and Ford Motor Co. have set up plants in less-advanced interior cities, lured by the prospect of cheaper land, labor and tax benefits.