China industrial parks whip up new formula for success as foreign firms balk at old recipe
- Gone are the days when multinationals were lured to industrial zones with financial incentives alone, as ‘cutthroat competition’ and overcapacity now risk no-win scenario
In the decades following China’s opening up and reform, industrial parks flourished across the Yangtze River Delta. Foreign investment poured into the nation’s biggest port city, Shanghai, and overflowed into the surrounding areas.
Eyeing opportunities in China’s huge market, multinationals with a presence in these parks were often lured by local governments’ enticing offers, including free rent and tax breaks.
Amid the central government’s intensified scrutiny on investment-attraction measures, and with foreign investors’ bearish sentiment regarding China, even the most successful parks in the delta – one of the country’s most economically vibrant regions – are struggling to lure new investors.
“We used to rely on preferential policies, using land and reduced taxes to attract investors, but as the central government emphasises saving resources, this is not workable any more,” said Wang Aijun, director of the management committee of the Jiangning Industrial Park in Nanjing, Jiangsu province.