TIANJIN, China--About thirty months after Chinese President Xi Jinping announced plans for a new mega-region in northeastern China, the trickle of tech companies relocating to the port city of Tianjin has swollen to a torrent.
In the first three quarters of this year, some 420 companies from Beijing alone, with a total investment of more than $24bn, set up a presence in the Tianjin Economic-Technological Development Area (TEDA) – China’s first development zone and its highest-ranked for many years.
They include Didi Chuxing, China’s homegrown ride-hailing app and the only company in the world to beat trailblazer Uber at its own game. In July Uber said it was selling its Chinese operation to Didi Chuxing in return for a stake in the company.
“I believe the Beijing-Tianjin-Hebei integration is for Tianjin a historical blessing with a significant time window,” says new Tianjin Party Secretary Li Hongzhong.
The merger is between overcrowded and high-rent capital city Beijing, port and former heavy industry base Tianjin – 45 minutes away by high-speed train – and Hebei Province, which surrounds them.
The idea is to move some of Beijing’s functions out into the wider region and consider the combined area with a population of more than 100m people as one for planning purposes.
TEDA has come up with a plan to make the most of its opportunity – it knows what type of company it wants.
Firms should be in advanced manufacturing sectors such as electronics, automotive, petrochemicals, pharmaceuticals or healthcare; financial services; or emerging sectors such as new energy, new materials, marine economy or environmental protection.
To attract the top names and brightest prospects in these fields, TEDA has divided itself into clusters and created dedicated platforms.
They include the Nangang Industrial Park for petrochemicals; the JJ-Link Tech Startup Club; Tianjin International Joint Academy of Biomedicine; China’s National Supercomputing Centre; and the Low-Carbon Economy Center.
Liu Qi, who is in charge of TEDA’s Intelligent Unmanned Systems Park, says integration is key.
“Not only the integration between enterprises, but also keeping in the loop such key stakeholders as universities, venture capitalists and other service providers assisting companies in building startup entities from scratch in a new location,” he says.
TEDA also knows what functions it wants companies with a presence in Tianjin to carry out there. It hopes they will be regional headquarters, research and development centers, payment and clearing centers or incubators.
TEDA is also setting up a high-level cooperation platform to help connect domestic and international economic organizations.
There are domestic tie-ups too. Cooperation with Beijing universities, research centers and incubators has seen 200 startups leave Beijing for TEDA. The park has also set up five incubators of its own that it runs jointly with Beijing-based bodies.
Quoting a Chinese proverb, Wang Sheng, chairman of TEDA’s administrative committee, has said the park’s aim is to be “an ocean place that draws the dragons out from Beijing”.
The baby dragons include NationalTech, a robotics firm set up jointly by four companies in Beijing and Tianjin. It develops intelligent systems and robot parts and aims to have revenues of $5m by 2017 and $19m by 2019.
Another startup to have moved to TEDA is Watrix, a firm that specializes in recognition and identity authentication at distance and in complex situations. Its technology can be applied in contexts from smart home care to public security and anti-terror operations.
The company says its technology is now almost 95% accurate and is close to commercialization.
Such promising tech startups are at one end of the scale. At the other are bigger tech dragons such as Didi Chuxing, which has located four subsidiary businesses – Didi China, Didi Chuxing headquarters, Didi Business and HuiDi Business Services – in TEDA. Their annual turnover is expected to reach $3.6bn.
Other established firms to locate in TEDA include Sinopec’s chemical business and e-commerce group JD, which has invested $300m in locating three financial companies in TEDA including an insurance brokerage house and a crowdfunding center. Electronics retailer GOME has also set up 16 financial companies in TEDA worth $210m.
“We are well positioned to host more and more companies expanding from their original presence in Beijing with our services, support and overall ecosystem,” says Wang Sheng.
Well-being above all
China joined the global Paris agreement on climate change in September with the aim of slashing emissions and such environmental concerns are at the heart of the BJ-TJ-HB regional integration plan.
There is a particular focus on getting rid of the notorious air pollution that hangs over Beijing and other cities. China’s National Development and Reform Commission and its environment ministry want smog eradicated in Beijing, Tianjin and Hebei by 2020.
The new approach reflects a clear understanding within China that the era of pursuing high GDP growth at the expense of the environment is over.
TEDA is playing its part – as one of China’s pilot regions for low-carbon development it is committed to low carbon business models for its main industries. TEDA’s international low carbon committee works domestically and abroad to explore new avenues for green growth and the TEDA Eco Center focuses on setting up regional pilot projects and spreading low-carbon technology.
Thanks to such initiatives, TEDA’s GDP went up 18% last year but the park also recorded notable decreases in polluting emissions, overall water use and electricity consumption.
An e-waste processing plant means TEDA now provides reuse possibilities for certain metals and TEDA’s Nangang petrochemical park has since 2010 implemented Responsible Care, the global chemical industry’s environmental health and safety standard. Nangang was the first petrochemical zone in China to do so.
TEDA management also realize they need to offer a truly pleasant and livable environment where valued staff can enjoy their free time.
To that end, amenities in TEDA include a professional football team, a botanical garden, an International Cardiovascular Hospital and an international school. Tax breaks and discounted rents are also available to highly sought-after staff.
It is hoped such attractions will lure specific groups of people to Tianjin. They include top entrepreneurs; elite talent currently based in Beijing; experts in the fields of culture, creativity and design; and people with other industry-specific skills where there is a shortage.
The park is also setting aside 3% of its disposable income to create a talent development fund and is investing RMB 10bn into platforms for innovation and services, including those aimed at attracting and retaining top talent.
TEDA has benefited from hundreds of firms quitting the capital but it is also working to transform Hebei Province by passing on development opportunities and best practices.
Since 2015 it has been part of a grouping of 18 development zones of different sizes and scopes within the region as well as Shandong, a large province to the southeast of Hebei. The group conducts a matchmaking meeting every month to encourage the different development zones to collaborate with one another.
TEDA is also jointly operating industrial parks in Hebei, introducing them to its managerial know-how and putting them in touch with potential tenant companies.
Multinational companies are also beginning to use TEDA to access opportunities in the combined Beijing-Tianjin-Hebei region.
Canadian energy management company Entelegis set up a presence in TEDA in September with the aim of providing enterprise resource planning and engineering services for energy companies in the wider region. It is particularly targeting electricity, gas and water utilities, which could achieve higher productivity through greater efficiency and reduced pollution.
Others are likely to follow.
“TEDA has long been recognized for its competitive industrial clusters, sophisticated investment environment, an open and inclusive culture, and vigorous entrepreneurship,” says Xu Hongxing, head of TEDA’s CPC Working Committee.
“After over three decades of development, TEDA is even more innovation-driven today.”
And it’s a success showcase of the regional integration.
Source: Z. H. STUDIO