Investment abroad is key for Suzhou
Investment and trade at foreign markets are key components of China’s endeavor to foster its economical relations with foreign countries.
In the 1980s, Suzhou put forward the strategy of developing “foreign trade, foreign investment and foreign economy.”
In the 1990s, adaptation of a series of policies made Suzhou’s investment and trade at foreign markets enter the fast lane, and outsourcing and labor service cooperation became its major means of investment and trade at foreign markets.
At the beginning of the 21st century, as China became a member country of the World Trade Organization, Suzhou made major breakthroughs in its foreign investment and trade, shifting its strategies of outsourcing and labor service cooperation into investing abroad.
The city saw a boom of companies going abroad, a wide variety of investment forms, a quality leap in outsourcing projects and labor service cooperation.
Since Suzhou implemented its “going global” strategy and was integrated into the nation’s Belt and Road Initiative, it promoted structural reforms on the supply chain system, strengthened the city’s openness and innovation, and sharpened the advantages in its open economy.
So far, the number of the city’s overseas projects amounted to 1,714, and the total investment from Chinese side valued US$24.45 billion.
The investment in international markets takes diversified forms, such as greenfield investment, merger and acquisition, setting up overseas sales and service networks, and building national manufacturing and processing trade zones such as the Eastern Industry Zone in Ethiopia. Key foreign investment projects keep emerging. So far, Suzhou has invested in 286 key projects, each with an investment over US$10 million.
In the meantime, a batch of Suzhou’s companies increased their research and technological development capability by acquiring high-tech companies’ technologies and talent through M&A. The capital used for merger accounted for 25 percent of the total foreign investment, and 80 overseas research and development centers were set up.
A number of Suzhou’s companies took advantage of the Belt and Road Initiative to branch out into the Belt and Road countries to strengthen their production capability. Suzhou has invested in 377 projects in 36 Belt and Road countries with total investment of US$6.82 billion. The investment took place mostly in Singapore, Thailand, Indonesia, Vietnam and Pakistan.
It shows that Suzhou has advantages in investing in the secondary industries in Belt and Road countries. The project number and the contract value on China’s part account for 50 percent and 68 percent respectively in the regional markets, among which, the investment in manufacturing is more prominent, and the project number and the contract value on China’s part account for 30 percent and 50 percent.
The “going global” endeavor has strengthened the city’s global production capability, eliminated trade barriers and served local customers. It has also laid the foundations for the city’s industrial upgrade.
The efforts in cultivating Suzhou’s local international companies have been a success. In 2003, Suzhou introduced policies to support such companies. More than 30 companies, such as China-Singapore Suzhou Industrial Park Ventures Co, Shagang Group, Jiangsu Qiyuan Group, Bosideng, Longrich, Pioneer Wood and Neway Valve (Suzhou) Co, have set up at least three subsidiaries in foreign countries, and have invested in more than 300 projects in foreign markets, and the contract value on China’s part reached almost US$4 billion.
The local companies that have set up their headquarters in Suzhou not only reduced their costs and achieved maximum profit in their global industrial layout, but also broadened their companies’ development potential, and increased their international operation capabilities.
The Eastern Industry Zone in Ethiopia, invested and developed by Suzhou’s Zhangjiagang Yongyuan Investment Co, was approved by China’s commerce and finance ministries to be a national overseas trade and cooperation zone in processing and manufacturing. So far, the zone has completed its phaseone construction, and its phase-two construction and business invitation work are underway.
The zone is Ethiopia’s first development zone and a leading industrialization project, as well as an epitome project of Suzhou’s “Maritime Silk Road” initiative.
Jiangsu Ketapang Ecology and Agriculture Forestry Industrial Park Development Co is developing and building the Ketapang Ecology and Agriculture Forestry Industrial Park in Indonesia. When completed, the park is expected to attract more than 100 related companies, and it will become another success example of Suzhou’s key foreign investment projects in Belt and Road countries. Through the “going global” endeavor, Suzhou has focused more on expanding its export volume. Local companies, such as King Long, Bosideng, Goodbaby International, HTGD and Neway Valve (Suzhou) Co, have set up global sales networks and branched out into the global market.
The city’s companies in the photovoltaic industry, such as CanadianSolar, Talesun and Sunlink PV, have set up factories in foreign countries to absorb their massive production capacity, circumvent trade barriers, and boost exports.
The city’s outsourcing of contract projects have kept upgrading.
The labor exported has shifted from mainly sewing workers to technicians in fields such as electronics assembly, welding, machining and gardening.