Innovative area for changing economy

Updated : 2014-01-16 By : Fu ChaoSource : China Daily

Innovative area for changing economy

In addition to its business environment, TEDA also has a natural setting that attracts investors from around the world. Photos Provided to China Daily

'Bold turn to technology and human resources'

Tianjin Economic-Technological Development Area is gearing up for challenges and opportunities offered in today's increasingly integrated global economy.

Zhou Liqun, executive vice dean of Binhai Development Institute, said he started the New Year with a survey "to find out the most needed talent for enterprises in TEDA, especially foreign ones".

The first round has been completed covering enterprises including Coca-Cola and Master Kong. Zhou said the most needed talent is in management and marketing, as well as technical and manual labor.

During a review meeting on Jan 13, Xu Hongxing, chairman of the TEDA administrative commission, said that five more of the top 500 companies in the world registered in the area last year, while nine increased their investments. Till now, there are 90 top 500 companies in the area with investments in 229 projects.

More than 5,000 foreign enterprises from some 60 countries and regions have now registered or invested in TEDA, according to a statement from the local government.

"The amount of the actually utilized foreign capital in the Binhai New Area, where TEDA is located, accounts for 10 percent of that in China," said Zhou. "As the key area, TEDA's actually utilized foreign capital accounts for about 50 percent of that in Binhai."

According to the data from the local government, in the first three quarters of last year, the nation's actually utilized foreign capital reached $88.6 billion. Binhai New Area had $7.89 billion, while TEDA received $3.76 billion.

'New forces' in capital

The foreign capital influx in China today is different from the past, said Zhou, with three "new forces" at work.

First, emerging industries such as bio-engineering and new resources, major industries in developed countries, are now flourishing in Binhai, especially at TEDA.

Global wind energy manufacturing giant Vestas of Denmark built its largest manufacturing base at TEDA, while Hewlett-Packard of the US put its first cloud computing solutions center in the world in operation in the area. By 2015, the output value of TEDA's emerging industries will reach more than 300 billion yuan ($49.6 billion).

Zhou said the second new force is extended industrial chains. China is no longer the world's biggest factory, but its rapid economic growth has turned it into the world's largest market in need of virtually all products.

Denmark pharmaceutical giant Novo Nordisk at first used the area to simply produce packaging and devices. It has since built a whole industrial chain as it eyes the massive Chinese market.

When settling at TEDA in 1995, Novo Nordisk only made insulin product packaging and injection instruments. In 2008, it invested $400 million to construct a factory making insulin preparations.

By 2012, the factory was exporting its products to Europe. A year later, it announced that insulin products from its TEDA factory will go directly onto the Chinese mainland market.

A third force is R&D centers for multinational companies settling in TEDA to better tap the country's markets.

TEDA is now home to R&D facilities for PPG from the US, Novozymes and Novo Nordisk from Denmark, and Samsung from South Korea.

Further integration

The "new forces" in foreign capital will also speed up integration of local and international resources, said Zuo Chuanchang, who has a doctorate in Economics and now a researcher at the Institute of Economic Research in the National Development and Reform Commission.

He said that foreign companies before only sent capital to China, but they now want the country as a market and have brought in more R&D and other resources.

"Chinese companies can share talent and technologies with them," said Zuo.

As one of the country's first State-level development areas, TEDA has its own advantages in human resources, finance and manufacturing that make changing the industrial structure possible, said Zuo.

"The area is taking on a new role," he said, adding that international trade and investment as well as R&D will become its new focus.

With more than 500 fund and fund management companies now at TEDA, the area has become the nation's hub for private equity. In the first half of 2013, they funded projects worth a total of 7 billion yuan.

TEDA's legacy

The area has its own advantages that other development areas do not have, said local officials.

The Binhai New Area generated 551 billion yuan in product volume by September 2013, with TEDA accounting for nearly 183.7 billion yuan, according to the statement from the government.

Besides its competitiveness, TEDA's investment environment tops many others, said Zuo.

"What attracts foreign capital today is no longer cheap land and labor, but 'soft power', which lies in the environment," Zuo added.

Professionals, innovation, a well-developed legal system, and a beautiful living environment are the area's strong points, Zhou said.

Last year, TEDA launched a campaign that recruited 145 professionals and cooperated with 40 vocational colleges to offer training to more than 18,000 students.

Zhou said many coastal cities in China are still using a project-based approach for traditional industries to attract investment, while TEDA "is innovative and bold by turning to technology and human resources".

"Foreign companies want their investment to become high-yielding. Binhai New Area is the gateway to North China. It is also a port city for a hinterland spreading to the whole Chinese mainland - a huge market for investors," said Zhou.

New directions

While foreign capital is pouring into China, domestic capital is leaving.

"Capital formerly used in some low-cost industries in Tianjin and Dongguan of Guangdong province is transferring to Southeast Asia," said Zhou.

It might be a trend for China to bring its successful development areas to the world, said Zuo.

"Build areas with local governments, then transfer our domestic industries. TEDA can be introduced as a great case," he said.

China's first State-level overseas economic and trade cooperation zone in the Suez area of Egypt is operated by TEDA as its first step out into the wider world.

The first phase of the zone has been completed, with 1.34 square kilometers already sold. A deal for 6 sq km was signed in 2013 and has just started construction.

According to a statement from the government, investment from Chinese companies in the cooperation zone account for nearly 80 percent of all domestic companies doing business in Egypt and a cluster of industries is emerging.

Tian Xue and Gao Fei contributed to the story.

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