Why Suzhou
Eastern Chinese manufacturing hub still hot for foreign investors
The Suzhou Online Dialogue on Global Industrial Chain Collaboration kicked off at the SIP International Expo Center in Suzhou, deep in the economic heartland of eastern China’s Jiangsu Province, last May 18. The event brought the release of an Industrial Chain Global Collaboration Map. In an address to the event, Lan Shaomin, member of the Standing Committee of the CPC Jiangsu Provincial Committee and secretary of the CPC Suzhou Municipal Committee, said, “Suzhou’s industrial chain development epitomizes the development of China’s manufacturing industry. After decades of continuous hard work, Suzhou has now become one of the three largest industrial cities in China, as its industries emerge from scratch.”
Statistics show record-high $4.23 billion foreign investments in Suzhou in the first quarter of this year, up 163.3 percent year on year. As most foreign investment worldwide is suffering impact from the COVID-19 pandemic, Suzhou remains a magnet for foreign investors thanks to its premium services and complete industrial chains.
“Kunshan [a county-level city under Suzhou] was an ideal choice for us due to its sound business environment, solid industrial foundation and generous professional business and investment policies,” remarked Belinda Wong, chairman and CEO of Starbucks China. “Such factors combined make it a perfect home for our new Coffee Innovation Park.”
Starbucks recently applied for business licensing from the Administrative Approval Bureau of Kunshan Development Zone (KDZ) and got a green light to launch the first project funded by a Global 500 firm this year in China. Reports from last year detailed how the global roaster and retailer of specialty coffee decided to build a state-of-the-art manufacturing and R&D base in China, bringing competition from seven potential host cities among which Kunshan seemed like a longshot due to its higher land prices and labor costs. So, how has the city remained so attractive to prospective investors? KDZ organized a special task force composed of authorities from diverse sectors including investment, assessment and approval, project planning and land management and eventually won over the Starbucks team with superb services.
Starbucks is not an outlier. Many other multinationals are also eyeing on Suzhou. Through “screen-to-screen” communication, Xiangcheng District has signed contracts valued at 532 million yuan ($75 million) in total, online or via postal mail, on foreign-funded projects including the China headquarters of Japanese office furniture manufacturer Itoki. Benchmarking World Bank standards on business environment, Suzhou is making every effort to encourage online approvals and services and build municipal online platforms for business services and intellectual property rights protection with an aim to forge an image of an optimal service provider.
Behind the favorable business environment is a complete industrial chain system. Suzhou is among Chinese cities with the most complete manufacturing system, boasting 35 industrial sectors that involve 167 medium-scale sectors and 489 smallscale sectors. Some 160,000 industrial enterprises have settled in the city, including more than 400 projects funded by Fortune Global 500 companies and 26 plants set up by China’s top 500 private manufacturers. In 2019, the gross value of the industrial output of above-designated-scale enterprises in Suzhou reached 3.36 trillion yuan ($473.5 billion), third in China, after the city developed trade partnerships with over 200 countries and regions and imports and exports reached $319 billion, seven percent of the nation’s total. The city has maintained high competitiveness in various industries such as biomedicine, smart screens and optical communication.
In response to new changes in global industrial chain, Suzhou is endeavoring to better seize on domestic demand potential and international industrial opportunities, promote economic and social development in a holistic manner, encourage the city’s upstream and downstream enterprises to strengthen industrial collaboration and technological cooperation, enhance the resilience of industrial chains, and develop a more advanced industrial base and more modernized industrial chains to expand the international influence of the city’s manufacturing industry.
The Industrial Chain Global Collaboration Map released at the Online Dialogue, the fifth part of an Infographic Guide to Investment in Suzhou series, features a complete array of information on investment. The colorful, dense symbols represent industrial entities across the city, investment cooperation demands and theme investigation routes for clients, each indicating specific geographical location, industrial orientation and person-of-contact. The map is designed to enhance the city’s investment attraction in each sector and help supplement, extend and strengthen its industrial chains, so investment will be more targeted and produce much needed and more competitive projects.
As COVID-19 prevention and control has normalized, Suzhou has leveraged its strength as a pacesetter for fast economic growth to strengthen its industrial chains, expand innovative sectors, allocate capital, deploy services, foster alternative links, and improve resilience of industrial chains, thus optimizing its industrial relevance and supporting scientific and technological innovation to drive highquality industrial development.
China is now the Philippines’ largest trading partner, largest source of imports and third largest export destination. The two countries share huge potential for cooperation in areas of security, infrastructure, manufacturing, agriculture and services, especially in Belt and Road construction.
The report China’s Reform and Opening-Up: Experiences, Prospects, and Implications for ASEAN released by the ASEAN+3 Macroeconomic Research Office (AMRO) showed that “broader and deeper economic cooperation, in particular through the Belt and Road Initiative, will foster FDI flow between China and ASEAN.” As the epidemic situation gradually stabilizes, Suzhou’s innovative initiatives and sound business environment will continue to attract investors from ASEAN countries including the Philippines. Suzhou is poised to remain a hot spot for ASEAN investment for years to come.