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.

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

Hangzhou Wan Bay New Zone is now connected in a logical way with the Ningbo Economic and Technological Development Zone.

First the Ningbo Economic zone was a major success.

Now, the bridge, which spans the mouth of the Yangtze River from Jiaxing — an hour’s drive southwest of Shanghai, to Cixi — an hour’s drive east of Hangzhou, bring the two closer together.

The Hangzhou Wan Bay New Zone at the base of the Cixi-end of the bridge is an amalgamation of several zones, including the Zhejiang Cixi Economic Development Zone, the Zhejiang Cixi Export Processing Zone.

Established in 2001 the total area of the New Zone is 145 square kilometers.

At the moment it is like a dead village witing to spring to life. Even the Export Processing Zone, which had been established in 2005, is without companies.

Cixi itself is about the size of Suzhou City, 1.2 million.

Cixi has become, in the theory, the Plastics Capital of China; along with Yuyao and Ningbo creating a Plastics Triangle of production capability. Now that thought it about to become a reality. This is a new Zone with excellent prospects simply because of the bridge. It makes the logistics feasible, affordable.

This will the zone to watch for growth. The figures this year should be little less than startling.
Source: This is China!

Communications first. The park is 6 km from the city center, 9 km from Longdongdao international airport, 12 km from the passenger railway station, and 5 km from Dulaying freight railway station. The Chongqing-Beihai expressway passes through the park and is a key land transportation corridor linking Guiyang and Sichuan, Chongqing, Guangzhou and Guangxi.

Post and Telecom is set up within the park and there are, at the moment, 50,000 telephone lines connected to the Guiyang municipal network.
RMB200 million has been invested in infrastructure facilities to provide power, water plant, network of water supply and drainage.
As of now there there are 260 projects. The projects have a contracted capital of RMB3.5 billion and available capital of RMB2.6.
There are 49 hitech enterprises. Four pillar industries started the process - electronic information, optic-machinery-electricity, new materials and biomedicine.
There are about 20,000 employees in the park including 11,000 engineers and technicians.
One-building services have been carried out to take care of the management details.
In a sense it has a five in one combination being a development zone, an open zone for the outside world of Guiyang, a central zone being the center of Guiyang city, an ecological zone and a demonstration zone showing modernization linking all the other elements.

Some of the projects, such as Hisense industrial park, the industrial park of aviation and the mechanical and electrical industrial park, are well on the way to being fully established. It is the very model of a modern industrial park. Compare, perhaps, the to the Indian experience, recounted below.
Source: 1BIW.com and GIBP

This information is from an Indian perspective and allowance should be made for bias.

China started its liberalization and industrialization with the formation of SEZs in late 70s and early 80s.
China had a master plan and an economic framework on how to build and proceed with SEZs. Massive cities for manufacturing and industrialization were built as part of the SEZ framework.
China rolled out the red carpet for foreign companies to build and operate from these SEZs.
China has only five SEZs, India has approved 200 and still counting.
All the Chinese SEZs are located along the coast line.
Indian SEZs are mostly concentrated near major cities and more than half are being developed by real estate companies attracted by the cheap land prices.

KPMG India, Tax Head, Sudhir Kapadia said, ‘Chinese SEZs are close to ports and trade nations like Hong Kong, Macau and Taiwan. A lot of thought has gone into the location of these SEZs.’

Shenzhen is the largest SEZ in China and is spread over 493 square kilometers.
The largest SEZ in India, Reliance — Navi Mumbai and Maha Mumbai SEZ, is a mere 14,000 hectares.
Exports from Shenzen SEZ reached $100 Billion in 2005. total Chinese exports for 2005 was around $700 Billion which suggests Shenzen contributed 15% of Chinese exports.
Chinese SEZ initiative is government driven.
Indian SEZs are driven by private sector.

Mohandas Pai, Executive Director, Infosys Technologies said, ‘We should look at entire districts, with a port and a hinterland for SEZ. We should make large-scale investments in that so there is synergy, and we should ensure that manufacturing has priority, followed by services, but the vision has to be much larger. The way it is today, the vision is too myopic, and too small, and I am afraid we will not get the benefit that China did’.
Source: India Real Estate and SEZ

PolyOne Corporation has officially celebrated the opening of its vinyl compounds plant located in Chiling Industrial Zone, Houjie Town of Dongguan, a city in Guangdong province.

PolyOne’s Dongguan plant was acquired from Ngai Hing PlastChem, the vinyl compounding subsidiary of Ngai Hing Hong. PolyOne completed the acquisition of the assets and operations in January 2008.

Since the acquisition, PolyOne has modified and upgraded equipment in the facility, trained the staff to produce Geon compounds, and enhanced environmental health and safety (”EHS”) conditions to meet Chinese and PolyOne EHS standards.

Robert Rosenau, senior vice president and general manager — Geon Performance Polymers, said, ‘I am pleased to say that the operational improvements initiated during the past five months have taken this operation from struggling to profitability and set it up to accommodate future growth.’

PolyOne now has six sites in China; the other locations are: Shanghai (color and additives) Shenzhen (color and additives, engineered materials and polymer coating systems) Suzhou (engineered materials) Suzhou (GLS thermoplastic elastomers) Tianjin (color and additives).

Mainly PolyOne has been concerned with vinyl and there are now concerns about vinyl. On its PolyOne site it takes each of the objections and gives the case for vinyl. However, there are about 10,000 web sites which suggest that there are still issues to be addressed.
Source: ChemEurope

In recent years, China’s rapid growth of chemical industry has boosted the speedy development of chemical logistics industry. There are many large-scale chemical businesses in Shanghai Chemical Industry Park, like Bayer, BASF, SECCO.

It is simplistic but true that chemical companies make chemicals and the logistics in moving these around safely is complex.

These logistics enterprises must operate around the core of chemical businesses.

The chemical logistics industrial cluster in the Shanghai Chemical Industrial Park is Shanghai Jinshan Petrochemical Logistics which is an integrated chemical logistics company founded through the reorganization of the former Shanghai Jinshan Petrochemical Logistics, Shanghai Petrochemical Storage and Navigation and Shanghai Petrochemical Railway Storage. This all happened in 2007 to make a company which could handle large scale third-party logistics services.

Jinshan Petrochemical Logistics makes full use of the functions of its relatively complete operating system adding logistics operating facilities to serve the mass production of Shanghai Petrochemical. This is continually expanding and therefore the logistics company has to expand with it.

This is an example of the integration of world-class large-scale chemical industrial parks.

For the moment, international companies like BP, BASF of Germany, Bayer, Evonik Degussa and public engineering companies like SUEZ, Vopak of the Netherlands, French AIR LIQUIDE and American Praxair are set up in the park at by the end of last year the total investment was $10.04 billion.
Source: China Economic Net

The Mayor of Tianjin, Huang Xingguo, addressed the first panel discussion at 18th Asian Corporate Conference and put across the message that Tianjin and its Binhai New Area carry high expectations not only as the next growth engine for China, but also as a model of sustainable development.

He said, ‘Right after Shenzhen and Shanghai’s Pudong, Tianjin is earmarked as the future portal city of China, a high-profile modern manufacturing and research and development hub, north China’s international shipping and logistics center and last but not least, a green city suitable for human habitation.’

In line with the national strategy for the 11th Five-Year Plan (2006-10), Tianjin has set a bold target to trim per unit GDP energy consumption by more than 20% by 2010.

Taking progress so far as a guide that is possible. Last year the city succeeded in meeting its energy efficiency and pollution reduction targets, with per unit GDP energy consumption dropping by 4.4%.

Tianjin is now working with Singaporean counterparts to build a demonstration eco-city project in its Binhai New Area rising from saline land in an area that desperately lacks water.

Huang Xingguo said, ‘We will try to be bold and innovative enough to turn the eco-city into a sustainable model project.’

Tianjin has the lowest water consumption and electricity use per unit of GDP in the nation, as well as the highest rate of water recycling.

Water is so scare in Tianjin that its per capita water availability is only one-fifteenth the national average.

Huang Xingguo said, ‘We give top priority to water conservation. A city water usage plan has been worked out with regulating indices for the city and its industries in water consumption.’
Source: China Daily

China plans to open a trade development zone in Terre Rouge, Mauritius, for more than a dozen Chinese firms, at a cost of around $730 million, making it the largest foreign direct investment in the country.

There are still no full details of the Shanxi Tianli Enterprises Business Park, but Mauritian officials say it will provide a launch pad for Chinese operations in the region.

As a member of trade blocs like the Common Market for Eastern and Southern Africa (COMESA) and the South African Development Community (SADC), Mauritius offers a gateway to African markets which comes to about half a billion people.

However, on the island itself not everyone is calm and contented about what is known as the Tianli project.

Tim Taylor, former chief executive of Rogers, one of Mauritius’ largest firms with interests in tourism and logistics, said, ‘It is one of these projects that … looks too good to be true. They need quite a lot of water, power, what have you. That is going to put a strain on the infrastructure.’

However the government is totally behind the project.

Finance Minister Rama Sithanen told reporters, ‘This is an investment of approximately 20 billion rupees ($734 million) over a five-year period that would create direct, indirect or induced jobs of about 40,000.’

That is a large project for a $9 billion economy with a workforce of just 550,000, Minister Sithanen said the Chinese zone will also create exports worth an estimated 6 to 7 billion rupees per year, almost 10% of Mauritius’ total last year.

There is some bobbing and weaving about how many people need to be brought in.

Minister Sithanen said, ‘We will give priority to local people but we know that we have an acute shortage of skills, so in some cases obviously we will need to recruit people from outside.’

Around half of all foreign workers in Mauritius are Chinese. Unemployment on the island was 7.2% at the end of 2007.

An odd end note. Some of the world’s best ship models are made in Mauritius. They are not inexpensive but authentic and gorgeous to behold. Much more on this by clicking HERE.
Sources: International Herald Tribune and Interactive Investor

News from Suzhou Industrial Park is that it has gained a great advantage from the setting up on the first Hinterland International Shipping Reservation Center

Following the establishment of the country’s first comprehensive bonded zone, Suzhou Industrial Park inaugurated the first international shipping reservation center.

Think of it as a maritime one stop shop.

Inbound and outbound cargos on freight lines to Korea, Japan, and Taiwan can be easily consigned within Suzhou Industrial Park for booking, issue of bills of lading, invoice and billing, and container lease and clearance and so on.

The center will act as an information center for harbors of Shanghai, Ningbo, and Taicang, as well as reservation offices of various major shipping companies.

On average, the logistic efficiency was improved at least by three days for reservations and the cost of containers reduced by $30-50 each.

An apology: plainly the illustrations have nothing to do with industrial parks nor yet with outbound cargoes. But some parts of Suzhou are just so beautiful it is difficult to resist the temptation.
Source: Suzhou Industrial Park

China’s State Council, the country’s Cabinet, has approved a new bonded zone in Tianjin, a further move to boost the opening-up strategy in the northern coastal municipality.

An official from the Tianjin Binhai New Area said the bonded zone covers an area of 195.63 hectares at the Airport Industrial Park.

The zone will enjoy favorable policies in taxation and foreign exchange policies. It will offer comprehensive services in international shipping, distribution, purchase, transit trade and export processing businesses.

The official said the preferential policies would benefit plants in the new bonded zone, including the Airbus A320 assembly plant that was approved by the National Development and Reform Commission in June 2006. It is expected to start operation in August.

The zone will attract more aviation manufacturing enterprises and help establish an air freight center in north China.
Source: China Daily