Park Economy and Economic Development Lecture Series: Lecture 4 | Models and Strategies of Overseas Parks

On the afternoon of November 5, 2019, the 4th session of the Park Economy and Economic Development Lecture Series titled the “Models and Strategies of Overseas Parks” was held at Conference Room 205 of the Central Main Building of Tsinghua University. Prof. Tang Xiaoyang, Associate Professor of the Department of International Relations at the School of Social Sciences, Tsinghua University, delivered the speech, which was attended by doctoral students from the Institute of International and Area Studies (IIAS) of Tsinghua University.

After briefly clarifying the definition of industrial park and the history of industrial parks and special economic zones, Prof. Tang examined the opportunities and challenges of overseas park development from the strategic perspective of encouraging enterprises to “go global” and the “Belt and Road” initiative. From 1992 to 2003, the establishment of a number of industrial parks overseas was a bold exploration and attempt at the early stage. After the guideline of the Ministry of Commerce, “Basic Requirements and Application Procedures for Overseas Chinese Economic and Trade Cooperation Zones”, was issued in 2006, in one year, a total of 19 pilot companies were invited to try out overseas economic and trade cooperation zones. As of October 2019, the Ministry of Commerce confirmed a total of 20 overseas economic and trade cooperation zones that complied with relevant regulations and operated normally.

The investment, construction, operation and management of overseas industrial parks require the coordination of multiple participants to ensure their healthy and stable development. Compared with the development model of domestic industrial parks, the establishment and operation of overseas industrial parks involve more stakeholders and the entanglement of complicated interests. Therefore, both government and investors need to clarify the demands of the target country’s multi-party actors and the overall relationship between them. If the development demands of the local authority of the industrial park are in line with the investments of domestic and foreign companies, the two parties will promote each other, and the development of the local economy and the creation of jobs have a significant positive effect on the country’s internal affairs and diplomacy with China. The investments and operations will also significantly drive the revenue of the local parks. In the relationship of these multi-party actors, although the commercial benefits and stable development of the park may cause a certain degree of tension with the political and social forces of the target country in the short term, in the long run, the two parties are actually compatible with and complementary to each other.

After clarifying the overall relationship structure constituted by the above-mentioned multi-actors, Prof. Tang conducted a detailed analysis of several successful overseas park development models from the two dimensions of political performance and financial results. Chinese companies connect with the developed and established platforms in Thailand, Indonesia and other countries, such as the park-in-the-park model of the Thai-Chinese Rayong Industrial Park. For countries and regions that have abundant resources but have not yet established an infrastructure platform, Chinese companies have independently built the platforms and engaged in production and processing, known as the resource-based park model. In addition, the development of special economic zones in some countries has been jointly valued and promoted by the governments of the two countries, and eventually developed continuously, such as the establishment of special economic zones in Egypt and Ethiopia.

Prof. Tang also emphasized that due to factors such as the late start of China’s foreign investment and the development demands of the vast number of developing countries, the development of China’s overseas industrial parks must take a path with Chinese characteristics and realistic considerations. By reviewing the the actual cases and development experience of the TEDA Industrial Cooperation Park in Egypt towards the direction of industry-city integration, the development of the Oriental Industrial Park facilitated by the park policies of the Ethiopian government and the efforts of the enterprises in Cambodia’s Westport Special Zone in assuming social responsibilities and building the park’s ecology, he further Point out the model selection and considerations of Chinese enterprises’ overseas park development. First of all, the need for the government to promote the establishment of industrial parks does not mean that companies are overly dependent on government policies during the development. The companies should make reasonable and full use of preferential policies to independently create business opportunities. Second, the long-term development of industrial parks still needs to be market-oriented and market-centric and follow the laws of market development in the target country. Finally, the development and business models of overseas parks need to carefully examine the local conditions and choose commercial parks or policy pioneering parks as entry points. Instead, it is necessary to avoid the rush for both political and business benefits, which may not meet either goals or the gains couldn’t outweigh the losses.

In the Q&A session, students focused on the applicability of the development model of China’s overseas parks, the possible risks that changes in the political environment of the target country may bring to the sustainable development of the park, the conflicts between the government of the target country and the local people on the issue of primary land development, the rise of the development costs of the second and third phases and the state-funded financing during the development of overseas parks and raised specific questions, which were responded by Prof. Tang based his insights. Finally, Prof. Tang restated that the success of China’s economic development or park development basically depends on market-oriented operations. The development of overseas parks does not follow a specific model. The model is only used as a reference. Long-term success still depends on whether developers can accurately grasp the growth opportunities in the target country’s market and whether they can firmly choose the market-oriented path.

By Lei Dingkun