One of the best summaries of zones and how they work in China is offered by the US Embassy. It takes this history of the zones from the early 1980s and in an impartial and unbiased way gives a complete run down of what they are and how to distinguish between them.
It is of the opinion that their success largely stems from the preferential policies they offer and the safe investment environment they create. And the fact they tend to share advantages such as convenient locations, modern developed infrastructure, rich human resources and efficient management and services.
The paper reports that often the name differences refer to duty levels and import/export restrictions. Then it adds a warning:
‘The differences can be, by far, greater than the similarities. For manufacturing investors in China, choosing a development zone as their base is the first step in an enormous risk-hedging exercise. Most consider at least three, or as many as five. As every zone has personality of its own, it is essential to look beyond the pamphlets and the published information, and get down to the details.’
‘The key points to consider, however, will still be whether the added value brought by location, local administration and services, tax rebates will justify an operation in dearer development zones.’
It also mentions that in 2003 the Ministry of Land and Resources and other government departments concluded an unprecedented nationwide probe into rampant land abuses in development zones in 2003.
The investigation resulted in the shutting-down of 4,735 development zones, about 70% per cent of the nation’s total.