Hoping to provide lower-cost entry to China for smaller U.S. and European companies, an international property management firm and a Chinese partner have opened what they call the first privately owned industrial park for those firms.
The park, which is about 30 miles west of Nanjing, wants to market itself as an alternative for companies that want to be in China but balk at the increasingly expensive real estate and operating costs in booming coastal cities like Shanghai and Shenzhen.
It can be difficult to attract attention from the government with an investment of less than $10 million in Shanghai or $5 million in Suzhou, China, said Richard Shan, associate director of industrial property in the Shanghai office of Chicago-based Jones Lang Lasalle Inc., which is marketing the park.
``We know there is a high threshold and barriers to entry for SMEs (small and medium-sized enterprises) in China,'' he said.
JLL and Chinese partner BizVision International Investment & Management Co. Ltd. opened the park in mid-March.
``In this kind of city, it is over 30 percent cheaper than Shanghai on land alone,'' he said. ``This location is much more economical than Shanghai or other economic zones. More and more manufacturing is moving to second- or third-tier cities.''
Shan said the park will provide buildings to Western standards, with high ceilings and energy-saving features, and he said it could help with the task of getting government approvals.
``China is still a market that is not mature, especially for the process,'' Shan said. ``You have a lot of authorities who need approval.''
Large international companies are increasingly moving their production inland as they keep headquarters and higher functions like research and development in the coastal cities, Shan said.
Some experts have said finding management and other professional support can be difficult in less-developed interior cities - bringing to mind the so-called McDonald's test, which holds that if a target spot does not have a McDonald's, it will be hard to recruit talent to come there.
But Shan argued that the location will work for manufacturing management, given its proximity to Nanjing: ``They have a reasonable industrial foundation and a reasonable labor source.''
The park is focused on attracting companies that make machinery, auto parts and electronics, but hopes to extend that to home appliances, food processing and logistics.
Shan said Shanghai-based BizVision owns the park and the local government supports it.