China Law Blog

China Daily and Shanghai Daily just ran articles on a new report listing China's best cities for Foreign Direct Investment (FDI). Suzhou, in Jiangsu province, came out on top, with Shanghai second, followed by Qingdao, Dalian, and Shenyang. 

The study was conducted by the Chinese Academy of Social Sciences (CASS) and China Business News and consisted of a four month evaluation of 290 Chinese cities.  It is not clear exactly what criteria were used.

Nantong, Nanchang, Yangzhou, Chengdu and Changsha were the top five in terms of foreign investment growth.  Suzhou Industrial Park, Shanghai Jinqiao Export Processing Zone, and Xiamen Industrial Development Zone were rated as the "three most sought after" development zones for foreign companies.

A couple of weeks before publication of this report , Business Week's Dexter Roberts did a story on Suzhou, entitled, "Suzhou Wants Your Business," that touts it as having done as much as any city in China to eliminate "red-tape."  The article cites Suzhou's recent influx of multinational investment:

Not so long ago, Suzhou was known as a sleepy city of gardens, temples, and canals. A favorite on the tourist circuit, it was basically a business backwater. But over the past decade Nokia (NOK), Samsung, Philips(PHG), Dupont (DD), Emerson, Honeywell International (HON), 3M (MMM), Bosch, and Delphi (DPHIQ) have poured billions of dollars into Suzhou, making it one of China's most popular investment destinations and an emerging competitor to Shanghai, Shenzhen, and Beijing.

The article goes on to list Suzhou's location near Shanghai (it is just a bit more than an hour away by car), land and labor 20% to 30% less than in Shanghai, well-developed infrastructure, pleasant location and climate, and an "extremely pro-business local government," as having made "Suzhou a raging success." 

In 2003, Suzhou surpassed Shenzhen to become China's second leading city by industrial production on the mainland, trailing only Shanghai.  Foreign investment in Suzhou grew 19.4% last year, reaching $5.03 billion.  Hitachi (HIT), Advanced Micro Devices (AMD), and National Semiconductor all have chip factories there.  The article quotes Michael Barbalas, a general manager with Andrew Corporation, describing Suzhou as "probably the easiest place in China to do business."

The article then raves about Suzhou Industrial Park:

Much of that credit goes to the managers of Suzhou Industrial Park, whose landscaped grounds resemble a community college in Southern California more than a factory cluster. Started in 1994 as a joint venture with the Singapore government, which still owns 28%, it now is home to manufacturing and research and development operations for the likes of Siemens (SI), Alcatel (ALA), and Panasonic (MC). The expansive park's facilities include a Wal-Mart (WMT) and Carrefour for shopping convenience, a luxurious golf course, an international school, and the only international medical clinic in all of Jiangsu province.

The article sees Suzhou and its surrounding cites of Wuxi and Kunshan "as an alternative to such Pearl River Delta cities as Shenzhen, Dongguang, and Zhongshan," due in part to their being "significantly" less polluted.

I too am a big fan of Suzhou and I have noticed a definite up tick in the number of our clients locating there (also to Wuxi, and to a lesser extent, Kunshan).  When I ask why Suzhou, they usually give the same reasons as those given in the Business Week article: it is close to Shanghai, yet a little cheaper and easier to get around in, and it is a nice place.