High-tech zones need to leverage regional strengths

Inclusive management, academic research links and European involvement are key to provincial hubs

As the Chinese economy continues its less-than-smooth transition from low-cost production to high investment and high technology, the contribution by high-tech business parks cannot be underestimated.

Nowhere shows the immense impact they can have more than Beijing's Zhongguancun. But while this high-tech hub's undoubted success has led to similar initiatives nationwide, a series of small replicas may not be the way forward.

Zhongguancun's history - its origins date back as far as the 1950s - and location have contributed considerably to its uniqueness and its success. Nestled not far from Tsinghua University, one of China's top colleges, the area has not only benefited from its location, but it has also established a symbiotic relationship with the prestigious institution. Being in the Chinese capital has also provided obvious advantages, not least being the attractiveness to foreign investment.

But if high-tech business parks outside the capital are to grow and enjoy similar success, a more focused approach is needed.

For a start, they must leverage their regional strengths. Northeast China, for example, and Changchun in particular, is the home of the Chinese automotive industry. So it is important that high-tech parks there and in surrounding areas include mainly companies, of all sizes, directly or indirectly involved in the automotive sector.

While direct links with a top science and technology research-led university may be a distant dream in the provinces, ties with academic research institutes remain key to growth.

In the case of Changchun, the establishment of a research institute focused on the automotive sector should form an important part of any high-tech park's development plan. Such an institute should then forge strong links with local universities to maximize the much-needed technology-focused research.

Industry specialization and links to academic research teams are not the only critical success factors, however. Even more important is the presence of internationally established high-tech companies, which presents a golden opportunity for European enterprises.

European companies keen to enter and expand across the Chinese mainland should closely monitor any emergent high-tech parks in the provinces. The central government has made it abundantly clear that foreign investment and market entry is warmly welcomed in less-developed regions.

European universities and academic research institutes should also be eyeing the growth of the parks and be ready to put forward plans for cooperative arrangements or even some sort of permanent base.

Management of provincial high-tech business parks is also paramount to success. Industry clusters that combine to form a critical mass of smaller companies have provided the springboard to domestic and international market penetration. Japan's keiretsu and South Korea's chaebol provide perfect examples.

Such management should establish a clear growth plan where representation across all parts of the industry supply chain is encouraged and links formed quickly. Any growth plan should also provide ambitious international market penetration targets and not simply focus on domestic business opportunities.

Any European corporate or academic presence could contribute crucially to the selection and eventual penetration of international markets.

But the management of provincial high-tech parks should not require the establishment of an independent management company. Instead, the park's constituent companies could share the management responsibilities. Of course, a permanent management team is required, but this should be chosen, or rather elected, by companies in the park.

Key to this selection is representation across the supply chain. In this way not only will consideration of the full range of issues and challenges facing the park's growth be far more likely, but such representation should also lead to supply chain integration, which is crucial to success nowadays.

Finally, representation on the management team from a range of European countries would also increase the likelihood of growth. Chinese companies will benefit not just from exposure to European industry practices, but also the different cultural values and influences that characterize corporate practice across Europe.

High-tech business parks should form a key part in the modernization and internationalization of Chinese industry overall, but industry focus, academic research and input from European industry should play a prominent part in their development.

The author is a senior lecturer at Southampton University. The views do not necessarily reflect those of China Daily.

(China Daily European Weekly 10/09/2015 page9)