To Improve Economic Density, Investment and Incubation Should Go Hand in Hand2019-11-25 15:54

Mon, Nov 25, 2019

Excerpt from: Wen Hui Bao(WHB)

Interviewee: Ren Hao, Professor of Tongji SEM, Dean of Tongji University Development Institute.

Starting from the earliest Shekou industrial zone in Shenzhen, development zones, bonded zones and high-tech zones have been emerging all over the country. From the initial “freestyle” operation to the overall planning, industrial new town, urban operators to industrial parks, as an epitome of China’s reform and opening up, play an irreplaceable role in promoting regional economic development, opening up to the outside world, and accelerating the reform of system and mechanism. How to keep pace with the times in the construction and development of industrial parks in the new era? In this regard, Wen Hui Bao reporter interviewed Professor Ren Hao of Tongji SEM.

Industrial parks is an important platform for regional coordinated development

WHB: In your book Industrial Parks at Forty, you clarified two basic questions about what happened to China’s industrial parks in the past 40 years and the reasons behind it with detailed fisthand data. In short, what do you think is the importance of industrial parks to China’s economy?

Ren Hao: To look back in history, industry parks have played a pioneering role in providing demonstration, system reform and concept breakthrough of the special economic zones. In January 1979, Shekou Industrial Park was established. In July 1979, four special economic zones were established eventually. At that time, the system reform of the special zones actually copied that of Shekou Industrial Park. For example, the breakthrough of personnel system and ideas like “Shenzhen speed”, “time is money” and “quality is life”, as everybody thought it was first put forward by Shenzhen, actually is original from Shekou Industrial Park.

China’s industrial parks is an important platform for China’s economic development. Currently, viewing from the country’s overall economic data, the 375 national economic development zones and high-tech zones account for 22.5% of GDP, 25% of tax revenue, and 34.6% of total imports and exports. These digits only cover state-level development zones and do not include more data from development zones at or below the provincial level. To put it simply, most of the contribution to the national economy comes from parks. It can even be said that the key to measure the economic development of a region is to apprehand the development of its parks. I have always believed that the insufficient development of regional economic aggregate and high-density development is essentially due to the hinderance on the economic expansion and high-density development of the parks. The economic aggregate and quality development of a region, in a sense, is the economic aggregate and quality development of the parks.

As the main carrier of enterprise agglomeration and industrial cluster, industrial parks are the important platforms and main fronts to realize the coordinated development of regions. The cooperation between industrial parks in the industrial transfer,industrial cooperation and co-construction  of  industrial parks provides an important handgrip to coordinate regional development.

The parks have the foundation to adjust the industrial structure from the inside

WHB: There is a saying that industrial investment is the “lifeline” of economic development in parks. From the perspective of the investment attraction model of China’s industrial parks, they have also experienced the stages of “led by preferential policies “, “led by investment environment ” and “industrial environment orientated”. What’s your opinion about that?

Ren Hao: How to play the role of the park? For a long time, there has been an unchanged trend that the key to the expansion of parks and the improvement of economic density lies in “attracting investment”.

This approach was relatively effective when the park was just established and the external market was not yet saturated. But nowadays, I think we need to adjust. “Attracting investment” and “business incubation” should go hand in hand. We can not just focus on external increment, and ignore our internal stock. Today, although people have realized the importance of industrial structure adjustment, the idea and practice of seeking change is still obsolete, that is, to introduce new industries in line with the direction of industrial structure adjustment from the outside, which is still limited to the external increment.

Of course, “business incubation” requires more investment, and won’t get instant effect. However, it has been 30 or 40 years since the development of the parks. The industrial base of the parks is much stronger than before, so we have the power and necessity to integrate and upgrade the industrial structure inside the parks. Let me cite a positive case. The Beijing economic development zone has invested capital through the park and cultivated the enterprise brand “BOE”. In the past, we talked about business incubation” on the basis of “soft environment”, providing services to “incubate businesses”. The practice of business incubation in Beijing Economic Development Zone is a new way to inject capital, from which I think some parks with strength can also learn.

Not only “complement the subject”, but also “strengthen the correlation”  

WHB: The main driving force of the high-tech industry and the modern service industry is the concentration of batch talents, such as the biomedicine industry and the cultural creative industry. We can see that many industrial parks while paying attention to “attracting investment” are also “attracting wisdom”, actively attracting scientific research institutes, scientists’ studios and postdoctoral workstations to settle in the park. What are the new challenges for the development of human resources in the park with plenty of talents?

Ren Hao: The parks should not only “complement the subject”, but also “strengthen the correlation”. The function of the park is to play an industrial agglomeration effect. Now we only formally gather enterprises together, but what is more noteworthy is whether there is any contact and cooperation between these enterprises. Industrial agglomeration should be transformed into industrial chemical agglomeration instead of physical agglomeration, which is the real essence and purpose of our parks. A successful example of chemical agglomeration is High Tech Campus Eindhoven in the Netherlands. It is known as “the most intelligent square kilometer in Europe”. More than 140 enterprises have settled in it, gathering more than 10,000 high-tech talents from 85 countries. They produce on average four patents every day, accounting for 40% of the whole Netherlands. Why so much innovation? Innovation comes from the idea, and the source of the idea is the collision of ideas, the connection and communication between heterogeneous people. The park organizes more than 500 social activities for high-quality people every year, which not only meets people’s communication needs, but also provides the soil for creative production. Thanks to the ubiquitous office space in the park, inspiration can be recorded and put into practice in a timely manner.

“Strong correlation” puts forward higher requirements on the management of the park that a matched park management system should be established. From the theoretical point of view, for the government, we have public management, for enterprises, we have business administration. However, there is no corresponding management theory for industrial park. The nature of the park is also very special, that is not only profit-making, but also undertakes the public welfare function of the local government to promote economic development. It is our ongoing work to establish industrial park management theory.

Keep pace with the times to promote internal opening-up and internationalization of the park

WHB: Shanghai’s GDP has reached 3 trillion yuan, and the city is pursuing higher quality development. If we still take yield per unit area, benifit, energy consumption or environment as criterion for success, how can the construction and development of industrial parks keep pace with the times,?

Ren Hao: As China’s economy turns from a stage of high-speed growth to a stage of high-quality development, the adjustment of industrial structure and upgrading of industries have become the theme of the times. The strategic emerging industries with high technology content, high added value and high industry driving ability have become the leading industries of many parks that aim to build industrial chain for clustering effect.

On the other hand, openness is the biggest advantage of Shanghai. The park itself is the product of opening up, and it is an industrial development mode with land development and opening up to the outside world as the intermediary. At the beginning, many enterprises came in with “zero land price”. The government introduced capital and technology through land development, integrating the three industrial elements including labor force, capital and technology to empower the parks. The parks in Shanghai should “go out”. First of all, the parks should open up internally, strengthening the regional cooperation and giving play to the brand effect of the park by means of merger, acquisition and reorganization. Caohejing, for example, is short of space, but now it has established zones in Haining, Yancheng and other places, having the main part in Shanghai and the production in the surrounding cities, which efficiently uses the space. At the same time, it can give full play to the brand advantage of the park to help the surrounding provinces and cities attract enterprises to enter the parks and drive the local economic development. I think some good parks in Shanghai can learn from it. The second is the internationalization of the park, which is a two-way process. On the one hand, “going out” means going to the “Belt and Road” countries and regions, that is, going to places close to the market for development. On the other hand, it means going out to developed regions, especially Europe, for cooperation between R&D and science and technology countries and regions.