A fine horse deserves a fine saddle; a fine factory deserves a fine location. Over the past year, major players in the new energy sector have set up shop in Jiangxi, chip manufacturers have splashed out billions to stake their claims, and state-owned enterprises have been moving south en masse from Beijing... It’s clear that companies no longer prioritize renting factory space in Beijing, Shanghai, or Guangzhou over securing land in county-level areas. Previously, these three cities were the top choices for businesses, following a logic that ranked “first-tier cities > provincial capitals > prefecture-level cities > county-level cities.”
But now, the notion that investment must flow to major cities is shifting...
The Facts: Is This Really the Case?
In the past, city selection came first; Beijing, Shanghai, and Guangzhou were cities where companies simply had to establish a presence. As long as they were in these cities—regardless of which industrial park they entered or where they acquired land—they could at least get a small share of the pie; investment was practically a surefire win.
Undoubtedly, in these locations, companies could secure a strategic advantage in information, access the best resources and policies, and enjoy rapid, unstoppable growth. Whether for manufacturing facilities or office spaces, the standard approach to site selection was: “Find a XX-square-meter factory or office building in the XX area, with rent not exceeding XX yuan per square meter…” "XX area" most commonly refers to first-tier cities—and even after narrowing down to a specific city, the selection often narrows further to a specific district, with no one willing to go to the suburbs far from the city center. Before Tongzhou District became Beijing’s urban sub-center, "XX area" most commonly referred to Chaoyang District and Haidian District. It was only after Tongzhou District solidified its status as the urban sub-center that it began to appear in corporate inquiries. As cities develop, land prices and logistics costs continue to rise, with high rents “eating into” corporate profits. The dominance of Beijing, Shanghai, Guangzhou, and Shenzhen is gradually being broken, and companies in industries such as automotive manufacturing, biopharmaceuticals, and integrated circuits no longer rely solely on these locations. Instead, central cities and urban clusters are emerging as the primary spatial forms for hosting development factors, with an increasing number of new first-tier cities and national central hub cities stepping into the spotlight of industrial development. For instance, when it comes to the electronics and information industry, Shenzhen is no longer the only name that comes to mind. The electronics and information industry in the Chengdu-Chongqing region boasts a solid foundation and equally robust capabilities. When discussing semiconductors and automotive manufacturing, aside from the established leader Shanghai, one cannot help but think of Hefei.
Logically speaking, this is indeed the case.
After years of development, various regions have been adjusting their industrial structures. Based on their own business needs and strategies, some enterprises have indeed abandoned their presence in major cities and are seeking to cluster in areas more suited to their development. When choosing a city, enterprises do not necessarily have to go to megacities, but they can make choices based on economic zones. Today, corporate site selection is far more complex than simply finding a location that is “spatially adequate and well-connected.” Factors previously considered have become standard criteria. What new considerations should companies incorporate into their site selection process now? As investment promotion professionals, we must first adopt the corporate perspective before advancing project progress. Only then can we align with the company’s priorities and improve the efficiency of investment promotion.
01 The Essence Remains the Same—Identifying the Right Region
Regional development often determines the rise and fall of an industry and the quality of a company’s operating environment.When selecting a location, companies must not only evaluate the physical infrastructure of the site itself but also thoroughly understand the regional context. Each region has distinct plans for industrial development, and certain industries can more easily gain a competitive edge when developed in specific locations. Companies should choose to operate in industrial zones with distinct regional characteristics based on their own industry and strategic needs. Furthermore, different types of companies have varying requirements for industrial parks at different stages of site selection, leading to distinct preferences in their choices.
If a company chooses to locate in Shaoxing, its primary considerations will be the market and talent pool across the Jiangsu-Zhejiang-Shanghai region. Conversely, if it settles in Zhongshan, its focus will shift toward establishing influence within the Pearl River Delta.
02 The Strength of a Strong Network: Finding the Right Industrial Park
In recent years, the government has progressively refined its land and regional industrial development planning, introducing a series of adjustments to urban renewal layouts and industrial land policies.
It must be said that a clear trend has emerged: while rents for older, privately-owned factory buildings are relatively low, companies—whether leasing or purchasing—prefer newly constructed industrial park facilities. These offer clear and unambiguous property rights, allowing businesses to focus on production with peace of mind. In particular, the phenomenon of “scarcity of available space” in some areas has created a necessity for “industrial verticalization.” The key factor in determining whether a business can move into a high-rise facility lies in whether its production involves large or heavy machinery, as well as whether it is subject to environmental protection and safety requirements. Therefore, choosing a high-quality industrial park not only allows businesses to access various supporting facilities but also provides access to dedicated teams offering professional services: talent recruitment, policy applications, technical upgrades, equipment maintenance, and more.
03 Building on the Past and Looking to the Future: Examining Industrial Agglomeration
When making site selection decisions, enterprises must prioritize industrial clustering and the integrity of the industrial chain. The clustering of upstream and downstream industries not only enhances the region’s overall industrial chain but also enables the completion of raw material supply, channel support, and market support—all within a unified production line.
As the industrial chain continues to grow and expand, the production scale of enterprises along the chain increases, attracting more businesses. The closer the integration of supporting enterprises, the more competitive the quality and cost of components become. Companies in industries such as automotive, materials, and batteries are all leveraging supply and demand within the industrial chain to accelerate their entry into advantageous market segments. Everyone understands that collaboration across the upstream and downstream supply chain is an effective way to control costs.
Seizing the Moment: Sending the Proposal
Having discussed the factors companies consider when selecting a location, when is the optimal time for investment promoters to present a site selection proposal? Before formulating a site selection proposal, it is essential to gain a thorough understanding of three key areas: the company’s industry, the target company’s business operations, and the decision-makers’ priorities. Typically, investment promotion professionals will provide the first draft of the site selection proposal before the company visits the industrial park, highlighting supporting resources across the upstream and downstream of the industrial chain to encourage the company to conduct an on-site inspection. Then, during the company’s “comparative evaluation” phase, it is best to provide a revised proposal highlighting comparative advantages based on the areas the company has already evaluated, for their reference. Furthermore, if you have conducted professional research on the company and its industry, the final version of the site selection proposal can include detailed data analysis charts. For example, you can create a cost analysis chart based on the distribution of the company’s customers and suppliers. Additionally, startups and rapidly expanding companies typically have financing needs. The site selection proposal can include information on industrial guidance funds and plans for connecting with investment and financing platforms.
Conclusion
As for the enterprise, how exactly should it make its choice? If a reference point is needed, it should simply benchmark against locations suitable for its own development.
Different companies prioritize different factors when selecting a site, and the entry barriers vary for each approach. Companies should choose a suitable location based on their own characteristics, a comparison of strengths and weaknesses, and a corresponding risk assessment.
