Avoid the blind spot of industrial transfer

There was once an entrepreneur in the Pearl River Delta who used Google Maps to show me his power, "Did you see, this piece and this piece are mine, and they were sold to me by the local government at a low price. Yes, they want me to move the factory to promote local development." "How did you plan?" I asked, "To be honest, I don't know how to do it, just let the local real estate invest." With this answer, my heart tangled in my throat, and the faces of local government officials full of expectations appeared in my mind.

Industrial transfer has been going on in the Chinese market for several years. Most second- and third-tier cities see this transfer as a big opportunity to promote urban upgrading and development. Everyone is eager to invite companies from mainstream industries and mainstream cities. . However, in the process of industrial transfer, there are always such unexpected or counterproductive things happen.

Of course the board can't simply hit any of the participating parties. There must be something wrong with the behavior of the Pearl River Delta entrepreneur, but he also has difficulties, "They (local governments) have given me preferential land and policies, but I The resources that can be migrated are also limited.” In fact, in my years of regional industrial economic research, I found that in the process of industrial transfer, there are more or less misunderstandings and blind actions in enterprises, industries, and places of relocation. Obviously, if these blindness cannot be avoided, the effect of industrial transfer will be greatly reduced, resulting in a great waste of resources.

Enterprise: How exactly is the transfer?

Although industrial transfer has become a general economic phenomenon, or even a trend, the companies involved in the trend must figure out why, where and what to transfer. The transfer of enterprises is bound to be accompanied by unpredictable risk costs, so it is necessary to choose the transfer location carefully. Not only must you clearly understand your own actual development needs, but you must also have a good understanding of the soft and hard conditions of the transfer location to see if it is worth entrusting yourself with your wealth. For example, when it comes to transferring to the central and western regions, we have seen the advantages of resources, land and policies in the central and western regions. However, there are also unfavorable factors such as low degree of marketization, imperfect industrial facilities, and high transportation costs. If the comprehensive operating cost of the enterprise is considered, the advantages and disadvantages may balance out, or even the disadvantages outweigh the advantages.

The original purpose of industrial transfer should not only be to create cost advantages, but also to pursue upgrades in the industrial chain. The rise of Japanese and Korean companies is due to the upgrading in the last round of global industrial transfer. China's Li Ning is also taking advantage of the current shift to upgrade its supply chain. While they transferred some processing (or rather, layout) to Jingmen, Hubei, they also attracted upstream and downstream industries through strategic cooperation to form a complete value chain.

Before 2008, Li Ning's supply chain capability was relatively weak compared to its competitors. The average inventory days of Nike and Reebok are 84 days and 64 days, while the average inventory turnover days of Li Ning Company need 161 days. This means that when its competitors make two profits, Li Ning can only make one. Therefore, the ability of supply chain integration was what Li Ning needed to improve at that time. As a result, Li Ning Company seized the opportunity of this wave of industrial transfer. In December 2008, Li Ning Company convened 7 core suppliers to collectively relocate and settled in Jingmen, Hubei, where a clothing group and a footwear group were established respectively, and a brand design center, warehouse, distribution center, etc. were established to integrate suppliers, manufacturers and channels. Businesses and these logistics resources are effectively organized together to form a supply chain base that integrates production and logistics links. It is said that after this upgrade, Li Ning can reduce the operating cycle of goods to 70 days. If this can be done, the value it brings will be immeasurable.

Of course, for small and medium-sized enterprises, it is impossible to do like Li Ning Company, but from the perspective of supply chain management, we can consider the industrial supporting facilities of the transfer place and various factors that affect the operation of enterprises. This may avoid straying into the quagmire due to careless choices.

Inheriting the City: How to Create the "Highland Effect"?

After Li Ning Company disclosed its intention to transfer, many local governments came to throw hydrangea, and Jingmen was just one of the latecomers. Why does Li Ning only pick up Jingmen's hydrangea? Because Jingmen is working hard to create soft power that attracts Li Ning and creating high value-added services.

A lot of places where favorable conditions are presented to Li Ning are like a price war. Whatever conditions you give, I will give more favorable conditions than you. This is what we often call the phenomenon of depression economy. Compared with them, Jingmen's way of creating personalized service capabilities on the premise that its own natural resources are not dominant is actually creating its own "highland effect".

Actually, the local government must objectively and rationally analyze its actual situation, identify the position, and know clearly whether it can undertake, what to undertake, and what to take to undertake. Under the premise that it can be undertaken, blind introduction should also be avoided, and there must be a plan, a plan, and a purpose to realize the undertaking. In particular, we must pay attention to improving the supporting facilities of the industrial chain, creating a good business environment, and reducing the comprehensive operating costs of enterprises. At the same time, we must also increase our vigilance to prevent unscrupulous enterprises from encroaching on the land and making money in the name of industrial transfer.

Before preparing to recruit Li Ning, Jingmen specially invited experts to study the motives of Li Ning's migration. When it identified the pain points of Li Ning's supply chain, it innovated its own services according to this idea, such as visiting Li Ning's suppliers one by one to understand the suppliers. Development bottlenecks and care about their needs. As a result of understanding the needs of Li Ning Company and its suppliers, Jingmen designed some targeted services and formed a plan for perfect services. Such soft ability and awareness finally won the recognition of Li Ning Company and its suppliers. Since Jingmen's advantages in hardware resources such as land are not obvious, Li Ning also specially organized a supplier conference to let suppliers vote on whether to go to Jingmen. Most suppliers voted in favor of Jingmen's soft power.

Moving out of the city: How to avoid hollowing out?

For developed coastal areas and first-tier cities, industrial transfer is sometimes like a hot potato. They both want to transfer out some low-value-added enterprises and upgrade their industries, but they are afraid that enterprises will take everything away , resulting in the hollowing out of the industry. The reason why Guangdong Province changed the policy slogan of "Empty the Cage for the Bird" to "Expand the Cage to Strengthen the Bird" is to prevent the "bird" from going to the "cage" after the "cage is vacated". Therefore, the government should guide enterprises to realize the transfer in an orderly manner in the process of industrial upgrading, not only to retain enterprises with strong core competitiveness and great development potential, but also to transfer out of low-end processing enterprises that are difficult to survive in the local area and have little impact on the local area. enterprise.

For enterprises, unless they are dealing with simple processing without technical content, they generally do not migrate everything away. Many enterprises in the Pearl River Delta just migrate the processing business out. And turn the original factory into a headquarters or other functional center. Therefore, as the birthplace of these enterprises, we should find ways to improve the services or environment of the corresponding headquarters and functional centers, so as to form the so-called new headquarters economy.

Don't interpret the headquarters in the headquarters economy as the corporate headquarters. In fact, the functional departments of the enterprise that need centralized management can be regarded as the headquarters, such as the R&D headquarters, the procurement headquarters, and the marketing headquarters. Moreover, the headquarters is also divided into group headquarters and regional headquarters. Therefore, the moving area must be aware of these connotations of the headquarters, and combine the regional resources to determine their suitable headquarters positioning. For example, Shanghai is positioned as the Asia-Pacific or China headquarters of multinational companies, while Suzhou is positioned as the R&D headquarters.

Suzhou's approach is very wise. It does not blindly compete with Shanghai for resources, but takes the initiative to enter the Greater Shanghai economic circle, build a high-tech environment based on manufacturing technology, and provide conditions for enterprises to establish R&D headquarters there. Form interaction and complementarity with Shanghai as a R&D base. Panyu, adjacent to Guangzhou and Shenzhen, is also implementing a similar idea. It vigorously develops the business travel economic circle through the establishment of a new high-speed railway station, builds itself into a sub-city central area by improving the cultural environment, and undertakes various functional headquarters crowded out by Guangzhou and Shenzhen.

In any case, industrial transfer is happening. I watched its progress with mixed feelings. It is hoped that all parties involved in the transfer can avoid the blind spots of the transfer, and hope that a balanced industrial pattern can be gradually formed.

Note: The author is the director of Bilan Institute of International Industrial Economics