Examination of the China-Singapore Suzhou Industrial Park A and B.
Examination of the China-Singapore Suzhou Industrial Park A and B
Globalization has aided in opening up of new markets for investment and economic development. Global alliances are one of the method used to spur economic development in the least developed countries. The partnership between the developed and the least developed countries has seen many projects implemented and the projects have changed the face of the underdeveloped countries. Before China rose into a global industrialized economy, it had its share of development problems both in urban planning and in industrialization. Consequently, China sort strategic alliance from most developed countries that have succeeded in urban planning and industrialization. However, implementation of strategic alliances has its share of challenges given that foreign ideas are implemented in a foreign country.
The joint venture was intended to transform a 70 square kilometers of an average rural and urban community into a modern industrial-residential community (Kennedy School of Government 1a). At the time of strategizing, China was transforming from a communist economy to a capitalist economy. The economy of China could not support huge development projects with the capacity to transform the economy significantly. However, Singapore had vast capital reserves that it was planning to invest overseas in a bid to expand its economy in the light of a small geographical area it covers.
China saw Singapore as the right match in the joint venture. Singapore had transformed from a small economy to one of the largest economy in the world in a span of 30 years (Kennedy School of Government 2a). Major economic strategies had been laid in Singapore with aim of transforming the economy and the strategies had paid off in the long-run. China relied on Singapore to acquire assistance that could catapult its economy by implementing similar economic strategies and technology that saw Singapore rise into a global economy (Kennedy School of Government 2a). Through the partnership with Singapore, China would acquire the much needed knowledge and experience that could further attract new investors in the country. Moreover, Singapore had stroke a good balance between social and economic development an approach favored by China (Kennedy School of Government 3a). In fact, China wanted to borrow development ideas from Singapore and implement them in the country to intensify its rate of development.
Singapore on the other hand was upbeat that the venture would have spurred its economy further by controlling significant economic activities further afield. Globalization had created an important gateway for developed countries to invest their surplus capital reserves in least developed countries with the potential of paying off. Singapore saw China as a viable market owing to the large population and market in the country. Moreover, the area around Suzhou city had well established infrastructures including expressways, waterways, international airport and railway lines that could ease the cost of doing business (Kennedy School of Government 4 a). Additionally, the area had many colleges and universities that could provide skilled labor to the industrial park that was set to be established. Furthermore, the economy of China was growing at an alarming rate of 13% more than the rate of Singapore’s growth, which was 10% per annum (Kennedy School of Government 3a). Generally, the area presented the best value for Singapore and a platform to demonstrate the utility of its model of development. Therefore, other than being an important outward investment, the Chinese market acted as important platform for Singapore to showcase its development model and strategies to the outside world.
Other than economic development, both Singapore and China had become very innovative with a view to improve their economic development. Singapore had adopted a development software that was essential in planning industrial, urban, and residential development. The software had seen Singapore acquire great achievements in both public administration and management of development projects. Moreover, the software was paramount to effective land planning, housing, environmental regulations, industrial planning and management, labor management and preservation of public utilities (Kennedy School of Government 3a). The software helped Singapore develop a modern efficient economy that carefully harmonized important aspects that affect the economy, human life and the environment. Additionally, Singapore was innovative in the way it implored outward markets to make good use of its vast capital reserves. Singapore chose markets that had the potential of paying off the cost of investment and China was among the best markets. Moreover, Singapore had a well-planned residential community that ensured that the efficiency of urbanization was not undermined by unplanned settlements and structures. In extension, Singapore had a strong development strategy that it intended to share with interested partners to spur development in those areas.
On the other hand, China was eager to learn from the Singapore and implement the same development model as the one adopted by Singapore. China understood that proper planning was key to economic growth. As a result, China wanted to employ a development model that would foster economic development, proper urban planning, and innovativeness. The industrial park would attract foreign investors who would invest in projects that would lead to quality infrastructures that would in turn attract more foreign investors.
Factors Affecting Implementation Process
Implementation process of the project was affected by several factors that led to controversy between the two sides.
One of the biggest issue of concern was the competition arising from the Suzhou New District industrial park (SND). The park was already established before the China-Singapore- Suzhou industrial park (CS-SIP) come to being (Kennedy School of Government 2b). One of the mistakes that the planners of the CS-SIP failed to account for is the effects SND project would have on the profitability of the CS-SIP project. The SND project already had an advantage since it was running even before the idea of CS-SIP had been hatched. Consequently, the competition happened to be fierce and SND was attracting more investors than those that the Singapore project (Kennedy School of Government 2b). Initially the project was thought to pose no threat since it did not involve massive investment as the project initiated by Singapore.
Other than the competition, the nature of the China government affected the implementation process of the CS-SIP project. The China had several levels of government that wielded some significant level of influence enough to affect smooth implementation of development projects. Despite government-government agreement between China and Singapore, the different levels of government including the municipal and the provincial levels had significant impacts on the success of the project (Kennedy School of Government 3a). For instance, the SND project was initiated by the municipal government was favored by the municipal leaders at the detriment of the of the CS-SIP project. SND was allowing low leasing rates than those applied by CS-SIP hence attracting more investors (Kennedy School of Government 6a). Moreover, the municipal government was failing to honor the directives from the central government hence making it difficult to establish a conducive environment for the CS-SIP to develop.
Evidently, political and nature of government have a significant impact on international development. The different levels of government in China impeded successful implementation of the Singapore’s model of development in China. The various levels of government created several bottlenecks that were hurting effective implementation of foreign policies (Kennedy School of Government 6a). The community favored the SND project because it represented what was common with the people of China. Therefore, the success of foreign investment strategies are directly affected by the political culture of the country they are implemented. Additionally, rival projects offer significant competition and they enjoy backing from those who implement them. Therefore, it is important for international investors to examine the extent of competition in attempt to establish the viability of the investment.
Commitment of the Players
Commitment in joint venture is an important aspect for the success of a project. The Singapore government was committed to ensure success of the project by making huge capital investment in resources, technology, and ideas. On the other hand, the government of china was reluctant to offer the significant assistance where required. The communication channels used in the issuing of directives is an example of failure by the government of China. The government failed to make follow-ups to ensure that the government directives were implemented at the provincial and municipal levels (Kennedy School of Government 6a). The government of China failed to honor some of the terms of the agreement they had entered with Singapore. For instance, according to the legislation of the Chinese government, a land lease is viable for 50 years and not 70 years as the two governments had agreed. Therefore, Singapore ended up being swindled in the deal in the light of huge capital investment it had made. Moreover, the government of China failed to make clear the terms of the CS-SIP projects to the Suzhou leaders and that fueled the wrangles that existed between the project leaders and the municipal leaders (Kennedy School of Government 5a). The local leaders felt being marginalized in the negotiations process hence; they did not commit themselves to ensure its success. Moreover, the government of China was not clear with Singapore on the issue of land acquisition. During the implementation process, Singapore learnt that other than the acquisition cost it had to incur the cost of relocating the affected families and cost of productivity loss. Therefore, unclear policies led to inflation of the cost of the project.
It is important for the project implementers to be aware of foreign policies since they directly affect the profitability and success of a project. Land lease policies and nature of government affected the success of CS-SIP project.
Cost of the Project
Singapore ventured into a project worth $ 13 billion in Suzhou city, which was colossal amount, compared to $ 105 million it had spent in more than eleven countries on industrial parks previously. It is imperative for international investors to consider nature of products before they make any investment.
Conformity of the Project Goals with Interests of the Society
In the process of implementation it turned out that, the Singapore’s software was not consistent with the Chinese business culture. It failed to grasp important social and economic values consistent with the Chinese hence the various problems it was going through.
Kennedy School of Government. ““Same Bed, Different Dreams”: The China- Singapore Suzhou Industrial Park (A).” Case Program CR14-07-1859.0, 2017, pp. 1-8.
Kennedy School of Government. ““Same Bed, Different Dreams”: The China- Singapore Suzhou Industrial Park (B).” Case Program CR14-07-1860.0, 2017, pp. 1-6.
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