“The government tightening its belt” has become one of the key phrases in this year’s Government Work Report.

On the surface, administrative expenses and “three public” expenditures have decreased, while spending on social welfare has increased.

In reality, local governments must not only know how to save money but also how to spend it wisely. While making the most of existing funds, they must also generate a steady stream of new revenue.

Only by implementing targeted policies and spending money where it matters most can businesses turn a profit and the general public become increasingly prosperous.

Attracting Investment: The Top Priority for Local Governments

Whether it be individuals, enterprises, or local governments, all should adhere to this principle:

Any expenditure that enhances core competitiveness should be made. Conversely, spending on other areas must be strictly controlled.

For example, a third-tier city invested 1.5 billion yuan to build a cultural park, but in the four years since its opening, total revenue has been less than 13 million yuan.

Locals don’t want to go there, and out-of-town tourists don’t want to visit either.

With such a massive investment of over 1 billion yuan, it would likely take 50 years to recoup the full amount.

If that money had been invested in attracting business and developing regional industries, the resulting economic and social benefits would have been worlds apart.

High-quality investment projects bring cities not only tax revenue but also job opportunities. The clustering effect of talent will further stimulate the real estate market.

Increased tax and land revenue will further boost fiscal income, creating a virtuous cycle. The prosperity of industries, coupled with a healthy and stable fiscal and financial system, is the key to enhancing a region’s core competitiveness.

This is why we insist on treating investment promotion as our “top priority,” viewing it as the lifeline of economic development.

In this regard, it is especially important to learn how to spend money wisely.

Making the Most of the "Public Purse" to "Set the Stage" for Investment Attraction

How can the government spend its resources more efficiently when attracting investment?

Opinions on this vary.

Some regions invest more in infrastructure, some allocate substantial funds for preferential subsidies, while others compete vigorously in promoting their business environments...

Filling gaps where they exist and highlighting strengths where they lie—there’s nothing wrong with that.

The question is: where exactly are the shortcomings? Where are the strengths?

“You cannot see the true face of Mount Lu because you are in the midst of the mountains”—in such cases, it is often necessary to seek outside help to re-evaluate oneself.

It’s important to note that nearly 100% of Fortune 500 companies have hired management consulting firms, and they spend a significant amount on this.

Entrepreneurs are not born managers; when it comes to judging and making decisions on critical issues, they are easily limited by their own perspectives.

Local officials in charge of a region are not naturally gifted at attracting investment either. Faced with fierce competition, partnering with experienced, market-oriented investment promotion agencies to gather diverse perspectives is a better choice than “making large-scale investments without fully understanding the situation.”

Commissioned Investment Promotion

The most direct form of cooperation is delegating investment promotion.

This is also a relatively common cooperation model between local governments, industrial parks, and GuChuan Alliance.

Take Guchuan United as an example—

After signing a cooperation agreement, we dispatch a dedicated research team to the local area to conduct on-site investigations and gain a clear understanding of the actual conditions of industries, enterprises, facilities, and various production factors.

Based on the findings of this on-site research, our investment promotion team will be stationed locally to provide services. In this scenario, our service team effectively functions as a local investment promotion unit.

Through continuous promotion of investment opportunities and online and offline project matching, we ultimately succeed in attracting high-quality projects that meet the investment criteria and requirements, thereby achieving the agreed-upon investment targets.

The dual-track approach of “self-directed investment promotion + commissioned investment promotion” has become the new norm for investment promotion efforts by local governments and industrial parks.

Industrial Consulting

1. Test the waters: Assist in feasibility studies to mitigate decision-making risks when formulating industrial plans or planning industrial transformation and development.

Before launching investment promotion efforts, numerous issues must be addressed.

How should we analyze industry trends and define our industrial positioning? How can we leverage our existing industrial foundation to develop an investment attraction strategy for the industrial chain?

These all require precise decision-making, and the more rigorous the basis for these decisions, the better.

Generally, governments and industrial parks have their own overall strategic direction. However, when it comes to selecting specific sub-sectors, they often face indecision or have options but lack the means to validate them.

Professional industrial consulting firms can use scientific methods such as data analysis and research to help clarify industrial positioning, formulate industrial plans, and establish investment attraction strategies, thereby reducing decision-making risks.

2. Providing timely assistance: When investment promotion efforts encounter difficult problems, professional analysis can help identify the root causes.

For example, many regions face the challenge of revitalizing idle factory space.

The root cause is often that no industrial planning was conducted at the outset of the park’s development, or that the planning was flawed and the factory buildings did not meet corporate needs, making investment promotion extremely difficult.

This leaves industrial parks with only one option—

acknowledge the problem, redefine the industrial positioning, and re-establish an investment attraction strategy based on the industrial chain, then stick to the plan from start to finish.

In such situations, relying solely on internal research and learning can easily lead to missing the optimal window of opportunity. Hiring external talent may not yield immediate results and entails significant costs and risks.

Professional industrial consulting firms, however, can use specialized analysis to help the park identify the root causes and navigate out of this quagmire.

3. Adding value: When it is necessary to “make room for new industries” to improve output per mu, explore pathways and provide feasible solutions.

The “output per mu” performance evaluation system has become a new trend in regional economic development.

Whereas scale was once king, now output per unit is king.

Using per-mu output as an evaluation criterion effectively accelerates the pace of “replacing old industries with new ones,” forcing the land to reveal its true value.

However, deciding what to “clear out” and what to “replace” cannot be done on a whim.

Professional industrial consulting firms can develop feasible “replacing old industries with new ones” plans through in-depth research and scientific analysis.

Investment Promotion Training

Renowned management professor Warren Bennis has argued that employee training is the strategic investment with the lowest risk and the highest return for a company.

With economic development and social progress, the demands placed on people are becoming increasingly high and novel, and the relationship between people and their tasks is often in a state of dynamic tension.

To resolve this contradiction, one relies on personnel mobility—that is, “selecting people based on the job”—and the other on employee training—that is, “making people fit for the job.”

Although local governments differ from enterprises, top talent is still few and far between, and ordinary people make up the majority of the investment promotion team.

An employee who performs well this year may fall behind next year if they do not commit to continuous learning. Although individuals vary in their knowledge and capabilities, they all form the foundation of investment promotion work, and their importance goes without saying.

Therefore, engaging professional trainers or firms—essentially bringing in “external expertise” or “coaches” to empower every employee—is undoubtedly an excellent choice for maintaining the investment promotion team’s competitive edge.

Of course, an even better approach is to identify outstanding talent across all departments within the team, have them document their investment promotion methodologies, and guide everyone toward continuous improvement.

Such mentors should rightfully receive greater resource allocation, whether in the form of financial rewards or better career opportunities.

You have to spend money to make more money

This year’s Government Work Report at the Two Sessions stated:

Governments at all levels must continue to tighten their belts, strictly control general expenditures, and have central government departments take the lead in reducing spending. They must revitalize existing funds and idle assets, and use every means possible to channel the freed-up funds to benefit businesses and the people, with over 70% of national fiscal expenditures allocated to people’s livelihoods.

However, strictly prohibiting “extravagance” does not mean “holding back”; an effective government must dare to spend and know how to spend.

As the lifeline of economic development, investment promotion is crucial to a region’s industries, employment, and tax revenue; investment in this area has far-reaching implications.

However, when it comes to the specifics of how to spend these funds, opinions may vary.

Earlier, Suzhou invested 30 million yuan in urban planning, which not only laid out the blueprint for today’s Suzhou Industrial Park but also earned it the title of “China’s Number One Industrial City.”

Later, Hefei placed its bets on BOE and NIO, successfully charting a path for “capital-driven investment attraction” and cementing its reputation as “the most formidable venture capital institution.”

Their “bold” investments are grounded in a deep analysis and scientific assessment of the current state and future prospects of local industries, representing precise, well-considered strategic moves.

Therefore, knowing how to spend money is truly a sophisticated skill.

Against the backdrop of “government austerity,” which local governments can manage their finances prudently, ensuring that public funds are used effectively, yield tangible results, and maximize efficiency?

We’ll have to wait and see.