Li Yong
Photo Courtesy of TEDA
Interview
TEDA Wants You
The Tianjin development area is looking for a few more good foreign companies
Li Yong is chair of the Tianjin Economic-Technological Development Area's (TEDA) Administrative Commission. He recently spoke with Paula M. Miller, CBR assistant editor, in Washington, DC, during a visit to the United States.
CBR: Why should foreign investors choose TEDA over other development zones? What special advantages does TEDA offer these investors?
Li: I am asked that question frequently, and my answer is, "Foreigners should invest in TEDA because TEDA is the best." Seriously, each year the PRC Ministry of Commerce performs an assessment report on China's national-level economic and development zones—one category of the report evaluates the zones' economic strength, and another category assesses the investment environment. In the past few years, TEDA has outperformed all of the other zones in these two categories.
TEDA also differs from other zones in terms of our market coverage. We mainly focus on northern, northeastern, and northwestern China.
TEDA specializes in four key industries: electronics and telecom; machinery manufacturing, including autos; biotech, pharmaceuticals, and chemicals; and food and beverages. These four industries made up more than 90 percent of TEDA's total output in 2004. Though this focus developed naturally, in the future TEDA will build up two sectors: electronics and auto-related industries. Largely because Motorola, Inc.'s China production base is in TEDA, the electronic and technology sectors are strong. Motorola, Samsung Electronics Co., Ltd., and several Japanese companies, such as Matsushita Electric Industrial Co., Ltd. (Panasonic), produced about 50 million phone sets in TEDA in 2004. And because Toyota Motor Corp. located its manufacturing base in TEDA, TEDA already has more than 100 auto-parts suppliers.
TEDA mainly provides investors with three types of assistance. The zone helps companies with market entry and development; it provides a favorable, high-quality, low-cost investment environment; and it can offer companies incentives in addition to the existing customs and tax incentives the government provides to companies that invest here. For example, TEDA has a fund to support research and development and high-tech companies.
CBR: Currently, how many foreign-invested enterprises [FIEs] are in TEDA? How much money have they invested in TEDA?
Li: In November 2005, roughly 4,030 FIEs from 74 countries and regions were registered in TEDA, with total investment of more than $28 billion and contractual overseas investment of about $22 billion. Of these firms, 45 Fortune 500 companies have invested in more than 100 enterprises with a total investment value of $6.37 billion. Foreign investors dominate TEDA's key sectors, most notably Motorola, Samsung, Sanyo Electric Co., Ltd., and Matsushita in electronics and communications; Toyota, SEW Eurodrive Co., Ltd., and Emerson in machinery; GlaxoSmithKline plc and Novo Nordisk A/S in pharmaceuticals; and the Coca-Cola Co. and Nestle SA in the food and beverage industry. US companies are our largest investors—they account for roughly 25 percent of total investment. US companies such as Honeywell, IBM Corp., PepsiCo, Inc., and Kraft Foods Inc. are also big players.
CBR: What relationship does TEDA have with zones in Beijing? Which areas or zones in China are TEDA's main competitors?
Li: TEDA both cooperates and competes with zones in Beijing. Competition is good because it ultimately improves TEDA. Zones in Beijing are doing well, but they focus more on information technology and computer software, whereas TEDA is more manufacturing-oriented. Beijing has a strong education system so Beijing-based companies can easily acquire talented staff. Tianjin also has a good education system and talented staff—and its labor costs are lower than Beijing's.
The Guangzhou Economic and Technological Development Zone and the industrial parks in Suzhou, Jiangsu, are TEDA's main competitors because they specialize in similar sectors. The China-Singapore Suzhou Industrial Park has become TEDA's main competitor since the Singapore government has invested in it.
CBR: What are the largest challenges to companies in TEDA today and in the future?
Li: Competition is probably the most significant challenge to TEDA. Zones and companies compete for the best investment environment, human resources, and capital. But we consider the challenge a positive one because we must continue to improve ourselves and upgrade the industrial structure. We are now focusing more on the quality, instead of the quantity, of overseas investment in TEDA.
TEDA has been developing for more than 21 years, and instead of slowing down the pace, we see an excellent opportunity to grow even faster. Next year, the PRC central government will announce a new strategic plan to develop northern China—including Tianjin, Beijing, and other major cities near the Bohai Sea—as one of the most dynamic areas in this part of China. TEDA will play an even more influential role, and both TEDA and TEDA's investors will embrace unprecedented business opportunities.
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