The beginning of 2018 saw a plan put into action that was both at once audacious and intuitive. It saw the merging of two of China’s leading lights in the world of business and internationalization. And it has set the blueprint for further stimulating China’s onward thrust into future technology.
The deal to merge the Binhai CBD, at the core of Tianjin Free Trade Zone (FTZ), with the Tianjin Economic-Technological Development Area (TEDA) industrial park was aimed at supercharging both.
Now, a year later, the strategy behind the move has been born out under the leadership of Mr. Zheng Weiming, the former chairman of Binhai CBD who became the new head of TEDA upon the merger.
Bringing the free trade and city-hub elements closer to manufacturing made sense for everyone. It should help unlock more higher-end manufacturing and provide a better lifestyle offering, said Mr. Zheng.
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TEDA was Chinas oldest development park and for most of its existence was the highest ranking. Now boosted by its bolted-on FTZ, the new entity continues to be known as TEDA but is bigger and has a new direction.
Mr. Zheng believes the ‘new-TEDA dream’ is coming to fruition. One of his priorities is creating a new identity and culture in which manufacturing is just one element among many.
This will see the southern part of the merged area developed in such a way as to make it a great place to live and develop personally as well as to work.
Some elements of this vision are already up and running “ the prestigious Juilliard School has opened its only campus outside the US at TEDA (i.e. The Tianjin Juilliard School) and is set to open its doors this year. Final-touch work is also underway on the Chow Tai Fook Binhai Center, a landmark skyscraper for the area.
Other projects include the Binhai Cultural Center Park, the Wanda Mall and the expansion of the Maple Leaf International School. New cultural and sporting events include a marathon, a Summer Arts Festival, concerts and an avenue dedicated to street art.
These initiatives are designed to help TEDA attract and retain talent. TEDA has a raft of policies targeting top industrialists, tech experts and entrepreneurs that also focus on the needs of their family members and offspring.
In the knowledge economy work and life can no longer be separated. If we want to attract the smartest people we must be as much a hub of culture and wellbeing as of manufacturing, said Mr. Zheng.
Also noteworthy is the new TEDAs ‘one-map mindset’ in its smart-city-building endeavors. Mr. Zheng says the importance of the regions geo-information services in connecting all the dots “ including schools, hospitals, public transportation and administration buildings — and putting them into a smart grid cannot be over-emphasized.
The other mega-merger effect has been seen in a trend known as ˜industrial-financial integration.
Since around 2016, theres been a marked departure in China from earlier policies that sought to maintain a greater distance between financial capital and industry. But with China’s maturing market, authorities have carefully encouraged greater industrial-financial integration in order to better support the real economy.
This trend has seen big industrial conglomerates establishing in-house financing groups in order to generate more flexible funding solutions. Meanwhile, financial services providers have started offering product portfolios targeted at specific industries and sectors. These range from capital-raising solutions such as bonds and IPOS to corporate restructuring, asset management, employee insurance, and deposit services. At the same time, industrial capital investment in external banks, financial and securities firms, funds and insurers has been on the rise.
However, the new TEDA sets itself apart from other regions of China with its leading expertise in piloting industrial-financial integration, as well as the depth of its offerings.
In terms of capital-raising, TEDA has spearheaded a number of vehicles that go above and beyond the mainstay model of bank lending. These include VC funding; leasing; commercial factoring; subsidized IPOs – both domestic and international; corporate bond issuance; and asset-backed securitization.
Indeed, the figures bear this out. As of the end of 2018, TEDA had used its unique industrial-focused financing mechanisms to help 80 large SOEs. Of these, over 90% have collectively established a total of over 300 new financial arms or finance-related corporate entities in TEDA.
Meanwhile, TEDA has organized financial services providers into several categories. These include FinTech; financial service providers with special licenses or certificates; providers with expertise in supply-chain finance; providers with expertise in cross-border business; and entities specializing in fund management.
As many as ten working teams have thus far been established to facilitate these financial service categories.
“This pattern of organization aims to promote what we refer to as the three paramount principles of corporate services – industrial specialized, optimized expertise, and full-service-orientation,” says Mr. Zhuge Zaiwang, the deputy chief of TEDAs Financial Services Bureau.
TEDA is also serving as a trailblazer for other regions of China, as the best practices it has helped develop can be duplicated widely.
One such case is that of Changjiu Group. The company’s main business lies in automobile value chain integration. However, it has a dedicated financial arm – Tianjin Jiucheyue Supply Chain Management Co. This arm offers a platform for advanced financial services for automobile enterprises.
By utilizing big data, Internet of Things and Intelligent Connected Vehicle (ICV) systems, Changjiu has seen its capital flow become highly synchronized with its transaction and logistics flows.
This in turn has given it a deep set of expertise and knowledge when it comes to the vertical auto industry, leading many banks and auto-finance companies to come to TEDA to collaborate with Changjiu, as well as auto manufacturers and dealers.
Another case is that of Haihe River Industry Fund Co, which has developed a practice that applies a multiplier effect, allowing a single government fund to have a ripple-effect that encourages more market-based venture capital to invest in the most promising industries. These include both new technology and more traditional industries.
The funds partner investors include Unigroup, which established a 12-billion-RMB joint fund with Haihe; a 10-billion-RMB fund with SMIC International to fund ventures in public cloud, semiconducting and other IT-related fields; a joint fund with Haier targeting advanced equipment manufacturing, new-gen IT tech, new materials and healthcare; and a 10-billion-RMB fund with JD Group targeting smart logistics, robotics, AI, intelligent manufacturing, smart city development and smart port development. Total investments made by Haihe and its partners amount to 500 billion RMB.
Long-lasting and deep effect
The wider positive impacts of TEDA’s approach to industrial-financial integration may be harder to quantify, but are no less impressive. One way is how it has helped spread the notion of integrating services into a range of businesses and sectors.
One example is the port industry, which sees several sub-sectors integrated, including seaport logistics and large-volume commodities trading. These in turn are underpinned by relevant services such as smart logistics-tech, innovative financial offerings, legal and cross-border business expertise support. As in the case of Changjiu Group, such integration produces synergies which can then attract a range of related tenants to flock to TEDA.
What they get at TEDA is a service- and reform-oriented admin structure, combined with a can-do attitude aimed at allowing the tenant corporations to maximize their potential.
Indeed, another positive impact has been TEDAs cemented status as a hub for Beijing-Tianjin-Hebei enterprises. Mr. Zheng pointed out that it is one of TEDA’s in-built missions to serve the wider area around Tianjin, Beijing and Hebei. He also hailed policy innovations for mobilizing resources and strengths of the wider region.
“This triggers better input flows, collaborations and new innovations,” Mr. Zheng said. “More importantly, it sees TEDA serve as a gateway to the world for companies in the broader region.
As such, against the backdrop of Binhai New Area striving to become the ˜equivalent of Shenzhen/Pudong in northern China, advanced enterprises from across the country and the wider world have created a thriving ecosystem at TEDA.
In 2018, about 5,260 new tenant companies set up businesses in TEDA, contributing to a collective registered-capital of 140 billion RMB and 1.1 billion USD FDI. They also helped increase the total number of TEDA tenant companies to nearly 60,000. The region achieved 8.2% GDP growth in 2018.
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