Economic Development Zone | Economic Development Agency
Economic Development Zone in Jiangsu Province, China.
Goal:
Achieving a Competitive Edge in China's Yangtze River Delta Region
Challenge:
The Yangtze River Delta region is one of the fastest growing areas of China. Much of this growth is due to China’s booming automotive market, and North American automotive suppliers are expanding rapidly into the region to supply GM’s operations in Shanghai, Ford’s new plant in Nanjing, and Volkswagen’s base in western Shanghai.
Our client, located west of Shanghai along the Yangtze River, is geographically situated to take perfect advantage of this growth. However, the client is one of many economic development zones within the region competing to be the location of choice for automotive suppliers moving operations to China. As OSL began working with this client, it was clear that an immediate challenge was to differentiate our client from the competition.
Analysis:
Through years of experience working with Chinese economic development zones, OSL has learned that North American investors have three major criteria when evaluating sites in China:
- Selecting a low-cost option for their initial investment,
- Rapidly establishing a facility and commencing operations, and
- Easily implementing their existing production system into the new location.
An issue of constant frustration for North American companies investing in China is discovering that ready-built buildings are very different from those in North America. Traditional Chinese workshops are several stories high with relatively low ceilings, and support beams break up floor space. Roads are typically too narrow to allow access for trucks carrying large containers, and buildings do not have the appropriate loading docks to accommodate container shipments. Because the efficient operating systems which companies spend years developing are not compatible with the typical Chinese workshops, investors feel their only option is to build-to-suit, which delays entry into the Chinese market and increases the cost of expansion.
Solution:
OSL collaborated with the client on the concept of an “American-style” industrial park in order to alleviate these hurdles for investors and to facilitate the rapid installation of operations identical to those in their North American factories. Ground was broken in November 2004 and the first phase was completed in April 2005. Twelve single-story buildings in a variety of sizes have been built to a basic level allowing investing companies to retrofit as needed, yet take possession as soon as possible. The broad roads and loading docks offer plenty of room for trucks to maneuver.
Result:
Automotive parts manufacturers can now move rapidly into the Chinese market without having to develop their own custom-built facility.
- One building is already occupied by a company producing brake pedals, and
- Three additional buildings are currently under negotiation.
- Due to the extent of interest, Phase 2 of the park is already under development.
Also, additional greenfield space is available within the park for those companies wishing to build their own facility but locate among their North American neighbors.
Economic Development Agency for a major city in the United Kingdom.
Goal:
Strengthened Relationships with Existing Investors Yielded Positive Results
Challenge:
The city’s economy has seen a tremendous reduction in Foreign Direct Investment by North American companies as well as additional pressure to reduce operating costs. The client’s Business Retention team realized it had not established strong relationships with a majority of its strategic North American companies at the appropriate executive levels. They recognized a need for assistance and retained OSL to develop relationships and establish bonds to ensure minimal disinvestments from the local economy.
Solution:
In order to support and facilitate the growth and sustainability of existing North American business investment, OSL developed a program that incorporated different levels of aftercare activity for different types of companies that included the following:
- disinvestments risks
- expansion candidates
- status quo companies
- high maintenance companies
- low maintenance companies
OSL prepared detailed and thorough corporate intelligence reports that outlined strategic, operational and political issues affecting existing investors and key accounts in the client’s regions. Reports included background information on the companies, and corporate intelligence on their expansion, rationalization or disinvestment plans, and assigned action items and discussion points for all meetings that were arranged.
Fundamental to the program was the ability of OSL to leverage its pre-existing business relationships with senior executives at companies across North America across its strategic business services groups – Investment Promotion, Business Retention, and Fundraising.
Result:
Managing more than 200 companies for the client, OSL was able to:
- Identify and help resolve potential business issues,
- Create goodwill, and
- Identify expansion opportunities.
This allowed the client to have an early and rapid intervention into companies at the right executive level to stave off companies leaving the city in particular and the UK in general.
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