Eighteen months after a plan was announced to turn the northeastern cities of Beijing and Tianjin as well as Hebei Province into one integrated region, a stream of companies is leaving Beijing for better-suited locations in Tianjin.
Niu Lei, CEO of QuanSheng Group are finding new homes in the Binhai New Area’s Central Business District (CBD), part of a new free trade zone. “We are taking a dual-approach for our new operation here at CBD,” she says.
QuanSheng is targeting e-commerce on the instant messaging platform WeChat, internet-based medical services and mobile healthcare solutions. And CEO Niu says Tianjin was an obvious choice.
Targeting Returnees
Under the regional integration plan, Beijing is relocating some functions and industries to Tianjin and Hebei Province to ease population pressure in the capital and boost overall competitiveness.
To take advantage of this, CBD has created a system to handle the flow of people and businesses from Beijing to Tianjin. In particular, CBD is targeting Chinese people who have returned from living overseas to set up businesses in Beijing, but who face cash flow shortages because of the high costs of locating in the capital, or who simply want to expand.
Binhai CBD currently has about 12,000 tenants, with 500 new additions on average per month. It offers simplified bureaucratic procedures and an array of favorable policies and subsidies to firms looking for a place to set up.
New tenants include real estate firm SouFun, which has announced it will spend one billion USD in Binhai CBD to set up a special investment fund enabling Chinese people to invest in overseas property, with all transactions carried out in foreign currency, something made possible by CBD’s status within a government-designated free trade zone. SouFun’s investors include Goldman Sachs and Telstra.
Matchmaking
To encourage talent to relocate, Binhai CBD has held matchmaking forums to show executives at high-tech Beijing firms the opportunities that exist for relocation, joint research and development programs or establishing an extended campus in Tianjin.
Stanford Song is a serial entrepreneur who is now CEO of DWorld, a Beijing-based mobile games developer. The firm is launching a new product management and operations arm in Tianjin.
The new venture is located in an incubator run by the Chinese internet giant Tencent in a new pilot zone for entrepreneurship and innovation within CBD. Song says the ability to access Tencent’s marketing operations and massive customer base is proving crucial.
But CBD is also looking further afield too. Hedy Zhang is CEO of WTD China, a logistics company rooted in the Pearl River Delta. She says China’s One Belt, One Road initiative – which aims to develop land trade routes from western China to Europe and the Middle East – will lead to a rebalancing of economic activity within China from the south to the north.
Locating in Tianjin made sense because of its port, Zhang says, but also because of its position in the regional integration plan.
A Note of Optimism
However, while CBD offers an array of supportive policies and Tianjin is undoubtedly a more economic place to locate, QuanSheng’s Niu says more needs to be done to make the Binhai New Area an attractive place for people to live their lives.
But CBD has been given a big boost with the announcement that the prestigious Juilliard school of music is to open its first campus outside of New York in Tianjin.
The Tianjin Juilliard School will offer a US-accredited master’s degree in music, along with other instrumental lessons and performing arts programs, according to a statement on their website. The venture is a partnership between Juilliard and the Tianjin Conservatory of Music, the Tianjin Binhai New Area CBD Administrative Commission and the Tianjin Innovative Finance Investment Company.
The school is expected to be completed in between two and three years’ time and will focus on instrumental music, which is in high demand from ambitious parents who have big dreams for their children. Tianjin is also conveniently located for Japanese and Korean students interested in studying at the school.
Tackling Deep Obstacles
While CBD and Tianjin more broadly are benefiting from the effects of the regional integration plan, the plan itself represents a profound push to tackle some of the deep-rooted obstacles blocking China’s economic path up the value chain, away from traditional manufacturing and towards high-tech innovation.
“I believe that the plan’s coming into being exactly reflected the deep-rooted problems of region-vs-region separation and ill-coordination, and even local protectionism,” says Professor Liu Rui of Renmin University.
Liu says that because Beijing, Tianjin and Hebei already form a geographical whole, any inequalities in development are the result of long-term administrative division and the emergence of local interests that seek to block reform.
Eighteen months after a plan was announced to turn the northeastern cities of Beijing and Tianjin as well as Hebei Province into one integrated region, a stream of companies is leaving Beijing for better-suited locations in Tianjin.
