Suzhou, a garden city only two hours away from Shanghai, benefits immensely from its strategic access to its larger neighbor’s ports and has a strong consumer and manufacturing base.
The city lies in the center of the Yangtze River Delta, the juncture of China’s coastal cities and the Yangtze River economic development belt. Suzhou Industrial Park (SIP), the city’s most well-known business park, was launched in 1994, and is the biggest cooperative project between China and Singapore.
The park’s burgeoning electronics, biopharmaceuticals and new materials industries attracted US$1 billion in foreign direct investment last year.
Friend to business
Beijing has granted the city an annual subsidy of US$7.8 million, and the cash is spent on infrastructure and incentives given to the investors in the SIP and Suzhou New District, the city’s other business park.
High-tech companies are offered one-time subsidies of US$26,000-65,000, and depending on the deal they cut, the first year or two of operation may be rent-free in city industrial parks. Multinationals like Siemens and Microsoft have all located major research and development operations in Suzhou to capitalize on these incentives.
Suzhou’s top-rate infrastructure and pro-business government have proved decisive in attracting smart technology-driven companies, said Singaporean real estate developer Tay Eng Kiat, chief executive of China operations at Ascendas. Ascendas runs SIP in a joint venture with Suzhou’s government, and is a subsidiary of the Singapore state-owned conglomerate JTC.
“The SIP was born through the collaborative idea of the Chinese and Singaporean governments,” Kiat said. “We started the SIP 12 years ago on farmland. There was uncertainty and an inflationary climate then, so many foreign companies still saw China as high-risk.”
Foreign investors keen for a quick start in China were drawn to Suzhou by the concept of ready-built facilities.
Investors visiting the park are greeted by Singaporeans and Chinese English-speaking staff. The park’s service teams communicate with authorities to help customers get licenses, customs certificates and even assist with recruitment.
“[The park] is one of the best-planned, administered and well-supported in China,” said Kiat, whose company manages several properties and industrial parks around the country.
To entice young talent to power its high-tech industries, Suzhou city authorities price serviced apartments at US$78 a month.
Master’s degree holders are currently eligible for subsidies worth up to US$13,000 to buy a home locally, while a housing fund in the SIP makes it easy for out-of-town employees to own homes in a large residential development the park is currently building. These comforts have helped the city attract and retain talent from more expensive cities like Shanghai.
The city is pushing for a more green R&D city and also working to sharpen an edge in information technology in the back-office work known as business process outsourcing. If successful, it will more jobs available for tens of thousands of workers.
“The Suzhou government believes that ultimately, R&D will be able to employ more educated individuals than manufacturing,” said William Dodson, chief executive of Silk Road Advisors, a consultancy advising foreign business on choosing locations in China.
In 10 years, SIP’s planners hope the park’s value-added service sector and R&D spending will make up 45% of the city’s GDP. They also want high-tech industries to make up 75% of total industrial value.
What started as an experiment in state-level collaboration between China and Singapore now fuels 15% of the city’s growth and draws in 26% of Suzhou’s FDI. The growth will only continue as Suzhou forges ahead in its attempt to emerge as a first-tier city.