Tapping business opportunities in the Suzhou Industrial Park

Producer: Felix Tan
First broadcast: 11 June 04, Radio Singapore International

The Suzhou Industrial Park in China has just marked its 10th anniversary.

It has overcome problems of the early years, and is today, an example of Sino-Singapore business cooperation.

With the changing business environment, there are many challenges in sustaining the success of the park.

According to Singapore's Environment Minister Lim Swee Say, who attended the 10th Anniversary celebration in Suzhou, it has to become more pro-business, pro-people, and provide for orderly development.

So, how can this be achieved?

Felix Tan put this question to Song Seng Woon (SSW), regional economist with G. K. Goh Research in Singapore

SSW: I suppose now it is an example where the other parts of China and it is really about getting its people to run the place. And now that they are making money and actually earning an income - for you and I - we can just say that as with any sort of small town, the next phase is always about redevelopment, about upgrading. So, this is where I suppose, we will see in which everything will be about wear and tear and essentially, it is about keeping itself relevant in a increasingly competitive environment as well. So, it has all to do with costs, it is all to do with keeping your customers sort of on your side. So, essentially, you know, we are learning what we have learnt in Singapore itself - in that we should not take our customers for granted - is also key to its success and continue success as well.

What kind of opportunities does the Suzhou Industrial Park provide to Singapore investors?

SSW: I suppose further room, really, will be coming from areas of, as you say, upgrading. We will see wear and tear and it is really about keeping the Park running efficiently and it is a small little town at the end of the day. So, it is about running this town efficiently and continuing to do so. But I think it will be along what we have been seeing all this while as well - in terms of, I suppose, trying to make it a small little town& we have already seen Singapore University sending its students there to be on attachments for learning. And I suppose, we are part and parcel of where Singapore can use in terms of using it also as a launchpad for some sectors of some industries.

Given a changing business environment, what specific areas can Singapore go into then?

SSW: Well, I am not sure exactly what is missing out from Suzhou. By all descriptions, it seems to have everything over there and there are still tenants moving in and to some extent, some parts are growing. This is where, in essence, the city becomes& or the town becomes slightly bigger, it will essentially be allowed to provide for spin-offs, you know, of all sorts of services. That one may be able to bring to the Park as well in terms of once we have an economy of scale, then it becomes more substantial. And we must bear in mind that this is not, again, an isolated little Park, you know, in nowhere. It is in the middle of a thriving region itself. So again, it can be used as a hub to serve other hubs for instance. Who knows? That is again a possibility further down the road, rather than just being a manufacturer - sort of for chemicals or electronics&

Will we see that Suzhou or Suzhou Industrial Park becoming like a so-called like a mini-Singapore in that sense - there is a legal, finances and banking services as well?

SSW: Now, I think that will certainly require some& to try and change& At the current moment, the Park is essentially modelled along how things are done in Singapore itself without necessarily the legal structure, which after all, is still the situation in the province in China. So, it should be subjected to rules and regulations of the province and cities and the state there. So, I think that is certainly one issue that probably will continue to be addressed in that the legal and accounting shortfall in China is one area of deficiency, shall we say. But again, that is being addressed as well&

There were problems in the past, but with China having come a long way since, especially in its business environment and approach, what is the possibility that similar problems will arise again?

SSW: Well, hopefully not, in that area - learn from before& I think it is essentially that both sides learn, again, in that one came in with a greater expectation - Singapore side& we are able to do it here, we should be able to do it there as well. It was a rude surprise when things did not exactly panned out the way it did. On the other side, of course, you know, it is a great opportunity to get at least somebody to come in there and try something from which they can copied from and effectively duplicated over there - which they have done. So, I think going forward, you will probably see that there is more benefits to be working together, I suppose, and this is what we have seen. After all, & continues to pour into China, which is still the case. And as investments diversify into many other areas, now it is going up higher the scale and taking advantage of the highly educated people& PhDs, for instance, are being churned out by the millions in the Universities there. So, in that sense, that benefits Singapore in that we are able to also take some of the bright Chinese back into Singapore itself and we have to created-value added to the Singapore side. So, it has benefited, I think, on both sides.

One of the suggestions is to create a sort of talent management mechanism so as to broaden the net for talent. So, how can this be achieved?

SSW: Two ways. One is just the direct way really. You just go out there and advertise, get the relevant qualified - be a researcher, a scientist or an engineer - to come and work in Singapore and bring their families and stay here. Then of course, you can get them to be working with you in China - adding on to the value-add process in the Singapore-run facility on the China side and ultimately creating and training further groups of people that you can bring here or man over there. So, I suppose this is where the many layers of advantageous can be exploited right from the very low level right to the very high.

Four factors have contributed to the success of the Suzhou Industrial Park - successful software transfer, urban development, investor confidence and profits for the master developer. But the question now would be how can these factors be sustained?

SSW: Well, ultimately, it will be to make sure that these factors remain and going back to what we said earlier about the need to just continually keeping the look fresh. You do not want a industrial park or small town to be rundown. I think this is where Singapore is pretty good at, in terms of the continual renewal of the park itself to make it stay relevant. As I say, this is not just the one park in China; there are thousands and thousands all over the place. So, making it relevant includes updating the infrastructure-wise, in terms of quality of living and et cetera& I think if they are able to do that, I suppose, then there is no reasons to believe that the park will not be bigger or the quality of living there will be upgraded that it will become one of the choice location or remains the choice location.