[photopress:zone_sez.jpg,full,alignright]A researcher at distribution warehousing giant ProLogis says leaders in Western nations can learn from China’s use of special business zones.
The special economic zones, first set up around port cities by the People’s Republic nearly 30 years ago, have been a resounding success. Last year, merchandise exports from SEZs totaled $1.2 trillion, trailing only Germany and the U.S.
Leonard Sahling, Prologis’ first vice president of research and an expert on trade zones said although zones like Shenzhen are well-known to executives at multinational corporations, few outsiders truly understand how the sites operate.
In China, the zones typically include spacious roadways and modern infrastructure and operate as relatively insular communities. Some even have their own worker housing.
Leonard Sahling, said, ‘They’re like cities that have all been master-planned. They’re beautiful. One looks like a Disney park.’
Tenants can range from Chinese importers, exporters or manufacturers to American and European companies. But Asian-based businesses, particularly those from Japan and Taiwan, dominate.
Some of the special districts are designated economic trading zones (ETZs) and others economic and technological development zones (ETDZs).
Five of the ETZs are treated as being ‘outside of China,’ thus eliminating levies such as value-added taxes and customs duties.
[photopress:zone_sez2.jpg,full,alignleft]There are 54 ETDZs. Foreign enterprises establishing operations in these zones are granted tax breaks, the ability to repatriate profits and capital investments, below-market lease rates for land, government financing for hiring and training, employee housing and various customs exemptions.
‘I think China has proved that economic reform through the use of trade zones can play a huge part in a nation’s economic success,’ Leonard Sahling said.
Source: Financial Week