Nothing captures the Chinese government's commitment to business quite like the China-Singapore Suzhou Industrial Park, about 50 miles west of Shanghai.
China's only government-to-government economic development project, the venture began 10 years ago, has jurisdiction over more than 100 square miles of former farmland and is giving rise to a glistening, self-contained city on a large, natural lake. The city is expected eventually to house 600,000 residents.
Current highways leading into Suzhou are landscaped and decorated with outdoor sculptures. Even so, local governments are busy with a road-building program that will result in 36 lanes of expressways linking Suzhou and Shanghai within two years, according to local development officials Cindy Xiao and Jacky Wu. They said all buildings in the immaculately landscaped park have been constructed in the past six years.
The governments of China and Singapore own SIP - China controls a 65 percent stake. Xiao and Wu - speaking in a July 7 interview at the Suzhou Industrial Park Administrative Committee headquarters, said it will take 20 years to develop the site fully. Even so, the current pace is dizzying.
The park's central zone covers 27 square miles and offers an array of benefits and services. SIP's special governmental status gives it powers that virtually render it an autonomous country within China. Its officials can approve business licenses (usually within seven days), clear customs shipments around the clock, and expedite exports in a manner similar to a free trade zone. It has its own Ministry of Foreign Affairs office that can issue passports and visas.
The park also generates its own electric power - a vital benefit to manufacturers in an energy-starved country that regularly imposes brownouts and rolling blackouts to conserve electricity. Companies within the SIP's central zone are immune from national-government restrictions on energy use.
The park, which is fully wired for high-speed Internet access, offers tax incentives that would make North American companies drool. Foreign-invested manufacturing enterprises pay a 15 percent corporate tax rate, and are exempted from the 3 percent local tax. But they also enjoy a corporate tax holiday for the first two years, and they pay just half the going rate (i.e., 7.5 percent) for the next three years following their first profit-making year.
The park's inhabitants even have their own social security system, which is more favorable than the fledgling, 10-year-old system used in the rest of China, according to Wu.
``We will provide training to young people'' who come to work in the park, as well, Xiao said. The SIP Institute of Vocational Technology cooperates with the Singapore Nanyang Polytechnic to provide courses and train workers according to the needs of the companies.
She said 140,000 people live in the park's subdistrict, with 80,000 of those in the central area of the SIP, which already is home to facilities for about 50 Fortune 500 companies. Some familiar names include Alcatel SA, BASF AG, Baxter Healthcare Corp., Black & Decker Corp., Delphi Corp., Groupe Danone, DuPont Co., Eaton Corp., Eli Lilly and Co., General Motors Corp., Honeywell International Inc., Invacare Corp., Kraft Foods Global Inc., L'Oreal Group, Nokia Oyj, Philips NV, Samsung Electronics Co. Ltd., Siemens AG, Solectron Corp., Sony Corp., TRW Inc., Unilever NV and Toyota Motor Corp. Some 95 percent of the ventures are wholly owned foreign enterprises (known as ``woofies,'' or WFOEs).
Of the park's 1,500-plus tenants, only about 10-20 are plastics firms, including Basell Polyolefins Co. NV, Omni Tech International Ltd., Suzhou Juken Technology Co. Ltd., Mikron Industries Inc., Scholle Corp. and United Plastics Group Inc. Half the investment at SIP has been by high-technology and electrical/electronics firms, but Wu expects many more automotive parts suppliers as China's car market expands.
Suzhou's metropolitan district, home to 7 million people, last year generated gross domestic product valued at $33.8 billion, the fifth-largest in China, and the SIP alone said it accounted for $13 billion in combined imports and exports.
Contractual foreign investment in the park reached $12.5 billion in 2003 alone (the most of any region in China), with more than half of that ($6.81 billion) utilized last year. European firms account for 25 percent of the park's current foreign investment; North America 24 percent; Taiwan, Hong Kong and Macao 20 percent; South Korea and Japan 17 percent; and Singapore 6 percent.
When the park first began selling factory space it was at the rate of US$5.57 per square foot, but administrators since have slashed that rate by 75 percent, to $1.39 per square foot. Residential and commercial space, though, is sold via auction and runs at about $93 a square foot, Xiao said.
``We make money on housing, but we lose money on commercial space,'' she said. The park offers a broad range of housing options. That includes everything from luxurious, lakeside houses and villas for executives that can cost between $242,000 and $845,000, to apartments at roughly $46 per square foot, to public, dormitory-style housing for factory workers that costs each occupant less than $13 per month. Officials tout the fact that labor costs in Suzhou are 40 percent lower than in Shanghai, and 20 percent lower than in surrounding areas.
Since land is at such a premium, SIPAC officials are taking extreme measures to ensure they maximize use of every available square foot. They announced July 13 the aim is for each square kilometer (0.39 square mile) of occupied land to equal US$1 billion in investment, and to generate average industrial output of $2.42 billion.
Park administrators also have stipulated that projects with an investment of less than $10 million each will not be provided with land in principle, but rather will be referred to a site featuring ready-built factories. At present, they noted, more than 40 companies have taken space in the Xinsu Ready Build Factory unit, with total investment of $657 million representing $2.58 billion per square mile.
The park includes:
* A 600-student, English-language international school (based on the British education system).
* Various hospitals and clinics (including a foreign hospital under construction).
* An operating nine-hole golf course, with a 27-hole course to be built next year.
* A pair of large supermarkets.
* An international exhibition center under construction.
* Universities offering courses from 10-12 universities around the world. The University of Dayton in Dayton, Ohio, for instance, is one of the institutions that will offer MBA courses in the park in the near future. Two universities in the park already are offering Ph.D. degrees, with 600 students currently enrolled.
SIPAC officials also plan to build twin, 80-story office towers side by side that curve to connect at the top.
While the Suzhou Industrial Park (www.cssd.com.cn) is unique in being a government-to-government venture, it still is just one of dozens of regions in China that have been designated as economic, technology or free-trade zones.
Just across town in Suzhou, for example, is yet another industrial park - Suzhou National New & Hi-Tech Industrial Development Zone - that is home to such firms as Nypro Inc., PolyOne Corp., Seiko Epson Corp. and Motorola Inc.