Insight
Suzhou Industrial Park: The Pilot for Change
Last Updated: 2015-10-14 09:13 | CE.cn
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At an executive meeting of the State Council Sept. 29, Chinese Premier Li Keqiang said that the country "must rely on innovation and entrepreneurship to further develop Chinese economy and society - they are the new driving force for China's development."

Nowhere is that philosophy more clearly at work than in the Suzhou Industrial Park (SIP), a 25-minute bullet train ride due west from Shanghai, where for the last fifteen years, domestic and foreign companies alike have strived to innovate in a Silicon Valley-like environment in which business, academia and R&D cross-pollinate.

In more recent years, SIP has shifted focus from an investment site for foreign and domestic manufacturing toward higher tech innovation and entrepreneurship, and has built a services sector that is made up mostly of companies providing shared services centers for multinational corporations, R&D in the information and knowledge management industries, and financial-tech services, or FinTech.

Today the services sector makes up about 41.3% of the industrial park's total GDP, according to Liu Hua, head of SIP's Bureau of Services, and out of the total incremental investment in the park each year, more than 75% comes from the services sector.

There are already more than 2,000 service outsourcing companies in the park and they, too, are moving up the value chain, Liu says in an interview. "More and more companies are now turning to areas like big data, cloud computing, mobile internet, and the Internet of things, and they are staying away from low value-adding activities such as labor-intensive outsourcing work."

"It's fair to say," Liu adds, "that with more and more companies becoming solution providers in their subject-matter domains, they are actually KPO companies, which already account for about 51% of the park's total outsourcing companies."

Since SIP was created two decades ago as a joint-venture project between the Chinese and Singapore governments, the park has attracted world-class universities that have opened campuses and research facilities that are conducting basic research and creating cutting edge R&D, often in joint ventures with local companies.

SIP has also developed hubs for high-tech and high-value industries in fields such as cloudcomputing, nanotechnology, bio-pharmaceuticals and the life sciences; and lured domestic and foreign incubators delivering services for start-ups and introductions to venture capital.

In addition, of the 3,000 industrial parks in China, SIP is home to the highest number of returnees (118) under the country's Thousand Talent Program, which was designed to attract China's smartest scholars and scientists to return to China after pursuing graduate degrees and careers outside of their homeland.

The park also offers tenants a lifestyle and environment that is hard to find in many other parts of China, with attractive and relatively inexpensive housing, as well as good schools, hospitals, restaurants, public transportation systems and leisure areas such as around the man-made Jinji Lake. This year SIP is hosting the 53rd Ping Pong World Championships, as well as the Jinji Lake Marathon and Dragon Boat races.

The park supports the growth of small and medium-size companies in all sectors by providing a one-stop shop for legal, financial, accounting, human resources and intellectual property rights protection. It has even set up a Patent Exchange Navigation Centre, where tenants can search for existing patents as well as buy and sell them.

"It's a trading system for patents, you can exchange patents through the system and you can value how much a patent is worth, and you can buy them legally," says SIP Chairman Barry Yang, adding that SIP has been "active and effective in areas such as IP enforcement and protection."

One way SIP has climbed the value-added chain so quickly is by creating a dynamic environment that can foster what Yang likes to describe as "chemical reactions" between companies.

"It's interesting to see these chemical reactions taking place among the diverse members of the whole ecosystem," he says in a recent interview, pointing as an example to a US$100 million deal in April last year in which a U.S. based company and the world's second-largest medical diagnostics company, Beckman Coulter Life Sciences, acquired SIP start-up Xitogen Technologies.

Beckman Coulter specializes in cytometers, which are used to measure and observe the characteristics of biological cells, and Xitogen Technologies develops flow cytometers.

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