Treaty of Nanking

Park opens its gates to foreign SMEs

PUBLISHED : Tuesday, 14 February, 2006, 12:00am
UPDATED : Tuesday, 14 February, 2006, 12:00am

Developers target firms too small to cope with big-city costs

Jones Lang LaSalle and a Chinese private investment company yesterday launched an industrial park aimed at small and medium-sized enterprises (SMEs) from Europe who are being driven to invest in China.

The BizVision International Investment Park is located in Quanjiao county in Anhui province, and close to the road and rail corridor between Shanghai and Hefei.

Shanghai BizVision International Investment & Management has created the park inside an existing development zone, which last year attracted 181 Chinese investors in car components, machinery and garments.

Ian Crawford, executive director of the Shanghai British Chamber of Commerce, said if China wanted to maintain foreign direct investment at current levels, it needed to be more friendly to smaller firms and to diversify.

'Multinationals are established in China. Now the small and medium-sized enterprises are coming. In some cases, if they do not come and reduce costs, they will die,' Mr Crawford said.

'For them, it is a bigger step than for a multinational and represents a bigger proportion of risk. They need to control risk and get going quickly at minimal cost.'

The Quanjiao park has a planned area of 17 square kilometres and its management has started talking to foreign firms being driven away from Shanghai, Beijing and Guangzhou by high costs for land and labour, power shortages and a lack of space.

Richard Shan, associate director of industrial property at Jones Lang LaSalle, said smaller firms accounted for 97 per cent of foreign investment projects and 50 per cent of the invested capital, with an average volume of US$2 million.

Last year, China attracted a little more than US$60 billion in foreign investment, unchanged from 2004.

'Cost pressures are pushing [smaller companies] inland,' Mr Shan said. 'If the investment is less than US$10 million, you cannot acquire land in Shanghai. If it is less than US$5 million, you cannot acquire land in Suzhou or Wuxi. An SME receives less attention and government support.

'Many zones set investment criteria that SMEs simply cannot meet in terms of investment density and enterprise scale,' he said.

'Establishing the infrastructure and services for a small factory is also often too complex or expensive to contemplate in an unknown environment. This park is an alternative which caters to this sector,' Mr Shan said.

Jones Lang LaSalle is acting as a strategic partner to the park.

'The park offers land ready for immediate entry with sufficient power supply and full local government support,' he said.