Development Zones in China

Shenzhen, Photo from Unsplash

Chinese market is without a doubt one of the most competitive ones in terms of market volume, political stability, economic development, and technological competitiveness. With a population of more than 1.4 billion, over 100 cities of more than a million people, and 900 million citizens with access to the internet, the potential for the tech sector is huge and presents a big opportunity for foreign tech companies. With important trade links across the whole of Asia, China is a key market to crack for any business with global ambition. (Hedley 2021).

As mentioned by Liu Dianxun (CBBC 2019), Director General of Investment Promotion Agency of Ministry of Commerce of P.R.C., a product of China’s reform and opening up, development zones have been a driving force behind China’s industrialisation, and this industrial development has boosted Chinese urban construction; today, the successful integration of cities and industry can be seen in many places. As proven by more than 30 years of development, these kinds of Chinese zones, which act as the window for China’s opening up to the outside world, not only play an increasingly significant role in Chinese open economy but are also a key contributor to China’s modern development.

Briefly, there are 5 types of economic development zones in China: Pilot Free Trade Zones, Economic and Technological Development Zones, High-Tech Industrial Development Zones, Border Economic Cooperation Zones, and Special Customs Administrative Zones. The purposed of the zones are different which can be seen from their different names. Examples of different zones and their targeted areas together with international well-known companies’ names is illustrated below:

Pilot Free Trade Zones in China

Name of the ZoneFocused industries and landed companies
Shanghai Pilot Free Trade ZoneEnergy BP and Oil
Logistics DHL
Automobile Porsche
Finance BNP Paribas and Shanghai Tianwei Investment Co Ltd
Tianjin Pilot Free Trade ZoneAviation Airbus, UTC, and Airyc
Advanced manufacturing Caterpillar and GE Healthcare
Marine engineering and shipbuilding CSIC
Retail Unilever
IT Lflytek, Johnson Controls, and Volvo IT
Bio-industry and healthcare BGI and Ringpu
Automobile Volkswagen
Guangdong Pilot Free Trade ZoneFinance HSBC, Standard Chartered, UBS, Citibank, and JP Morgan Chase & Co
IT and high-tech Arm Holdings, Microsoft, eBay, Apple, Intel,Qualcomm, Airbnb, Medtronic, SAP SE, and SAS
Culture and creativity The Walt Disney Company
Logistics DHL, UPS, Lufthansa Cargo, and Maersk
Manufacturing BP, British Gas, Airbus, Valeo, Tesla, Siemens, ABB Group, and TÜV Rheinland
Fujian Pilot Free Trade ZoneAviation services Taikoo (Shandong) Aircraft Engineering Co Ltd and Taikoo Engine Services (Xiamen) Ltd
Aerospace Technologies (Xiamen) Co Ltd and Honeywell Aerospace
Shipping and logistics Swire Haitou Cold Chain Logistics(Xiamen) Co Ltd
Finance Free Trade Financial Center
Culture and creativity Xiamen C&D Inc
Zhejiang Pilot Free Trade ZonePetrochemical Glencore and Vitol
Aviation Boeing
Shipping and marine engineering IMC Pan Asia Alliance Group and Tsuneishi
Port logistics Brightoil Petroleum (Holdings) Ltd
Marine tourism Sheraton, Westin, Hilton, and Shangri-La
International agriculture Maruha Nichiro
Henan Pilot Free Trade ZoneAutomobile and automotive equipment Volkswagen
Manufacturing Siemens
Financial and professional services HSBC, Standard Chartered, and China Agricultural Bank
Commercial services Starwood
Logistics UPS
Hubei Pilot Free Trade ZoneHigh-end manufacturing GE, Honeywell, Schneider Electric,and GKN
Bio-industry, life sciences, and healthcare Pfizer, Bayer,and AstraZeneca
Technology IBM, Siemens, and HP
Infrastructure and energy Arup
Chongqing Pilot Free Trade ZoneAutomobile GKN, Brose, Ford, and Continental AG General Motors
IT and big data AT&S, HP, Ericsson, Acer, Microsoft, Visteon Corporation, and Honeywell
High-end manufacturing Pilatus PC-6 Airplanes and Enstrom Helicopter Corporation
Finance HSBC, Liberty, and Standard Chartered
Professional services Vailog Group and Jardines
Sichuan Pilot Free Trade ZoneLogistics DHL, Maersk, and FedEx
Finance HSBC, ANZ Bank, and Soft Bank
Advanced technology Microsoft, Sony, Intel, Fujitsu, and Hitachi
Automobile Honda
Shaanxi Pilot Free Trade ZoneAerospace XRA (JV of Rolls-Royce & XAE), Snecma, Avio,and Parker
Finance and professional services HSBC, Standard Chartered, Ernst & Young, PwC, KPMG, and Deloitte
Manufacturing ABB Group and Schneider
IT and software Oracle, Samsung, Intel, and Emerson

Examples of Economic and Technology Development Zones(ETDZ) in China

Name of the ZoneFocused Fields and landed companies
Beijing Economic and Technological DevelopmentArea (“BDA”)Automobile Porsche
Robotics and equipment manufacturing General Electric-Hangwei
Biomedicine Sanofi
Science and technology culture Tesla
High-end service industry J. P. Morgan
The Shanghai Minhang ETDZPharmaceutical high-tech, and electrical equipment industries. Investments from the food, beverage, and leisure industries.
Changsha National High-tech Industrial Development ZoneAutomotive GAC Fiat Chrysler, Volkswagen, Bosch, and Continental AG
Financal and professional services HSBC, Standard Chartered, CitiBank, Ernst & Young, PwC, KPMG, and Deloitte
Advanced engineering machinery Hunan Frutiger Machinery Equipment Co Ltd and Hunan Cifa Engineering,Machinery Co Ltd
New materials Honeywell Boyun Aerospace Systems (Hunan) Co Ltd
Biomedicine Fresenius Kabi Jianyuan (Changsha) Medical Technology Co Ltd
Chengdu Tianfu Software ParkICT Intel, IBM, and Thoughtworks
Automotive FAW–Volkswagen
Food&Drinks Unilever
Equipment Manufacturing Siemens, Sigma Precision Components, and Gardner Aerospace
Bio-pharmaceutical Bayer and Sanofi
Chongqing Liangjiang New AreaAutomotive Ford, General Motors Corporation, Iveco, Honda, Johnson Control, Renault, Mazda, Suzuki, and Volvo
High-end manufacturing Pilatus PC 6 Airplanes, and Enstrom Helicopter Corporation
Electronic components AT&S, HP, Ericsson, Acer, Microsoft, Visteon Corporation, and Honeywell
Services Jardines and Raffles Medical Group
Guangzhou Development ZoneIT Jabil, Sony, Omron, and Samsung
Chemicals P&G, Amway, LG Chemical, Colgate-Palmolive,and Evatane
Auto and auto parts Honda, Toyota, Jatco, Stanley Electric,and NTN
Food and drink Meiji, Yakult Honsha, PepsiCo, Wrigley Company, and Nestlé S.A
Biomedical GE, Thermo Fisher Scientific, Bayer, Baxter International, and Biothera
Hangzhou Hi-Tech Industry Development ZoneNetwork communication equipment: H3C, Huawei, and MacroSAN
Information software: Insigma Technology Co, Hundsun,and Enjoyor
Internet of things, System integration: Hikvision, Supcon,Dahua, and Uniview
E-commerce: Alibaba, Toocle, and NetEase
Health: Sanofi, Tigermed, and Centrillion
Nanjing Economic and Technological Development ZoneNew electronic information Green smart cars Biomedical and energy-saving new materials Software and information services
Qingdao National Hi-tech Development ZoneEquipment manufacturing Edwards and Recaro
Services Standard Chartered Plc and Maersk
Intelligent manufactuing and new materials Rhodia
Bio-pharmaceuticals Genova Inc
Marine products
Shanghai Fengxian Economic Development ZoneAdvanced Engineering RMI Pressure Systems Ltd
Electrical Shanghai GE Guangdian Co Ltd
Automotive manufacturing General Motors and Volkswagen
Financial services HSBC and Lloyds Insurance Company
Hospitality and tourism Radisson, Hilton, and Marriott
Harbin Economic and Technological Development ZoneHigh-end equipment Hafei and Airbus
Pharmaceutical and food AB-Inbev, Brewery, Botian Sugar Co Ltd, and ABNA Harbin
Information and Cloud computing Towngas Telecom Harbin Data Centre
Shenzhen Tian’an Cyber ParkFinance HSBC, Standard Chartered, UBS, Citibank, and JP Morgan Chase & Co
High-tech Arm Holdings, Microsoft, eBay, Apple, Intel,Qualcomm, Airbnb, Medtronic, SAP SE, and SAS
Culture and creative Disney
Modern logistics DHL, UPS, Lufthansa Cargo, and Maersk
Manufacturing BP, British Gas, Airbus, Valeo, Tesla, Siemens,ABB Group, and TÜV Rheinland
Xi’an Hi-tech Industries Development ZoneAerospace XRA (Rolls-Royce & XAE JV), Snecma, Avio, and Parker
Finance and professional services HSBC, Standard Chartered, Ernst & Young, PwC, KPMG, and Deloitte
Equipment manufacturing ABB Group, and Schneider
Software and IT Oracle, Intel, and Emerson
Ningbo Hangzhou Bay Economic and Technological Development ZoneAutomobile Volkswagen, Faurecia, and Johnson Control
Equipment Phase and Eaton Cooper
Household appliances Unilever

In addition to the economic development zones scattered around China for different development purposes locally, the central government has pointed regional strategic development areas to enhance inter-city cooperation in order to strengthen regional economic development both locally and internationally. For example, Yangtze River Delta which contributes 20% of China’s GDP, Jing-Jin-Ji and Xiong’an New Area which is one of the most important region economically and politically, Yangtze River Economic Belt which helps strengthen the economic in western-middle parts of China, and the Great Bay Area which promotes China’s tourism and international collaboration.

As China will become technology superpower by the year of 2050 (Hedley 2021), with growing advanced technology invented domestically and number of engineers graduated locally, Finnish tech companies will not only have the opportunity to scale up in Chinese market in case of successful investment acquisition, but also acquire privilege to accelerate their technology through joint R&D with Chinese partners.

Nevertheless, companies need expertise to guide them through the Chinese market, shed light on the pros and cons of different zones and regions, and seek for the best policy support in order to find the best solution tailored for their own cases to do business in China.

Chongqing, Photo from Unsplash

Reference:

China-Britain Business Council(CBBC).2019. In the Zone: A Comprehensive Guide to China’s Zones and Regions

Mark,Hedley.January 22nd ,2021.Why China Will Become A Tech Superpower by 2050. China-Britain Business Focus. Assessed on 1.3.2021. https://focus.cbbc.org/chinas-tech-landscape/#.YDzLM2gzbb0