Industrial relocation will not stop.

Technological progress and the pursuit of profits by capital drive enterprises to continuously flow toward “cost-effective regions.”

Take Guangdong’s electronics and information technology industry, for example: it first shifted from Shenzhen to Dongguan and Huizhou, then flowed to the west bank of the Pearl River, and is now moving outside the province and even to Southeast Asia.

This is a proactive choice by entrepreneurs and also presents investment opportunities for surrounding regions.

Guangdong’s Electronic Information Manufacturing Industry

An Analysis of the Current Development Status

The electronic information industry is Guangdong’s largest pillar industry.

In 2021, revenue from Guangdong’s large-scale electronic information manufacturing sector reached 4.56 trillion yuan, ranking first in the country for 31 consecutive years. Guangdong’s 14th Five-Year Plan states that by 2025, revenue from the next-generation electronic information industry is expected to reach 6.6 trillion yuan, indicating broad development prospects and significant spillover effects.

1. Production Costs Continue to Rise, Increasing Pressure on Labor-Intensive Sectors

The vigorous development of Guangdong’s electronics and information technology manufacturing sector has driven up the prices of various production factors.

Take factory rent, for example.

Rents in Huizhou are even significantly higher than those in Chengdu. And this is merely Guangdong’s fifth-largest city; ahead of it lie manufacturing powerhouses such as Shenzhen, Guangzhou, Foshan, and Dongguan.

Take labor costs, for instance. Here are the top 10 average wages for urban employees in 2021, as published in the *China Statistical Yearbook 2022*:

It is evident that Guangdong’s average wages are significantly higher than those of neighboring provinces. To reduce costs and expand into new markets, many companies are planning to relocate.

Although the research and development sector, which relies on scientific innovation and creativity, currently finds it difficult to leave Guangdong—especially the Pearl River Delta—the midstream processing and manufacturing segment, represented by consumer electronics, has become the main force driving industrial relocation.

Industrial Map Production: GuChuan Industrial Research Institute

2. "Little Giants" Cluster in the Pearl River Delta; Midstream Processing and Manufacturing Accelerates Relocation

So, when looking at specific cities, how does the development of the electronic information industry differ?

For example: Where is the automotive electronics technology most advanced? Where is the highest concentration of next-generation display companies?

In other words, if you want to attract electronic information enterprises to Guangdong, how should you choose your destination?

First Tier: Shenzhen, Dongguan

Whether measured by the number of large-scale enterprises or by output value, Shenzhen is the undisputed leader. It is home to industry giants such as Huawei, BYD, ZTE, Skyworth, and TCL, as well as countless supporting enterprises across the entire electronics and information technology supply chain.

Consequently, when local governments go out to attract investment, most start with Shenzhen. Even a small county in Northwest China has the opportunity to tap into industrial spillover effects here.

This is the appeal of the “Window to the World.”

Dongguan, meanwhile, is the city with the most advantageous geographical location globally, situated close to Hong Kong, Shenzhen, and Guangzhou—truly benefiting from the best of all worlds. In particular, the high-quality spillover effects from Shenzhen have brought countless development opportunities for Dongguan’s industrial transformation and upgrading.

Relying on leading enterprises such as Huawei, OPPO, vivo, and Huabei Electronics, Dongguan has established a complete industrial system spanning from basic components to the manufacturing of end-user products.

Second Tier: Huizhou, Guangzhou

Huizhou is also close to Shenzhen, but due to a later start, it lags slightly behind Dongguan. It is home to leading enterprises such as TCL, Asahi Glass, Rayman Optoelectronics, and Jufei Optoelectronics.

Although Guangzhou ranks only fourth in terms of scale, it serves as a composite industrial base for R&D and manufacturing, acting as the core of industrial clustering and the starting point for industrial spillover.

This is a valuable attribute shared with Shenzhen.

Third Tier: Zhuhai, Foshan, Zhongshan, Jiangmen, etc.

After a period of “attracting external talent and nurturing local talent,” the development of the electronic information industry on the west bank of the Pearl River has begun to bear fruit; however, it still lags behind the east bank in terms of scale, level, and concentration.

Nevertheless, a closer examination reveals the unique strengths these cities possess in specific segments of the industrial chain. For example, Jiangmen’s train automatic control systems (part of the rail transit industry) are among the best in the province and even the country.

On the other hand, these cities are also the primary destinations for the relocation of the electronic information industry within Guangdong Province.

Add to this Yangjiang, Yunfu, Shaoguan, Heyuan... Faced with fierce competition for investment and rivals with more pronounced geographical advantages, how can these cities stand out?

Electronic Information Manufacturing

Investment Promotion and Industrial Relocation

Industrial chain-based investment promotion is a systematic, scientific, and professional approach to attracting investment. Assessing the specific segments of the entire industrial chain and their development potential is a crucial prerequisite.

If a city has decided to prioritize the development of the electronic information industry, how should it proceed with industrial chain investment promotion?

1. Know Thyself and Thy Competitor: Fully Leverage Investment Attraction Advantages

Only by knowing both your own strengths and the market can you make the right decisions.

Why are so many electronic information manufacturing companies willing to cluster in Guangdong and Shenzhen?

1. Transportation Infrastructure

China’s economy has long been driven by external demand, making ports crucial. Today, 21 ports—including those in Guangzhou, Shenzhen, Zhuhai, and Dongguan—have formed a world-class port cluster.

2. Industrial Infrastructure

As one of the first coastal regions to open up, Guangdong has established a robust industrial foundation and achieved significant agglomeration effects. When an entrepreneur sets up a factory in Shenzhen, they can immediately source all the necessary components from the entire supply chain—upstream and downstream—within a radius of several hundred kilometers.

3. Talent Advantage

From 2018 to 2020, the Greater Bay Area’s population growth rate reached 2.4%, more than three times that of the Yangtze River Delta.

4. Business Environment

Some describe Guangdong’s business environment by saying, “Zhejiang merchants are traveling merchants, while Guangdong merchants are settled merchants.” While this may be somewhat exaggerated, it is indeed a place where businesses can develop with peace of mind and generate profits locally.

5. Innovation Ecosystem

The Pearl River Delta has a higher proportion of emerging industries and more abundant resources for science and technology innovation, which facilitates technological iteration and upgrading.

6. Climate Conditions

The climate is warm and pleasant year-round, with no extreme weather conditions.

Put simply: the more of these conditions a region meets, the more willing Guangdong entrepreneurs will be to invest there.

Consequently, various regions are continuously increasing their investments in infrastructure, industrial investment promotion, talent recruitment, and the business environment. However, due to a late start, it is difficult to bridge the gap with Guangdong in the short term, leaving them no choice but to offer substantial financial subsidies.

This has also led to competition for investment in the electronics and information technology sector gradually turning into a contest of preferential policies.

2. Be Prepared for the Future: Strengthening Support for Industrial Chain Investment Promotion

Policies can indeed quickly attract companies and generate a “quantitative accumulation” of investment results in the short term.

However, to achieve a “qualitative leap,” we must focus on understanding the true needs of enterprises when selecting a location and make targeted preparations in areas such as park development, support policies, talent supply, and financing guarantees.

We have identified key requirements for electronic information projects from the GuChuan Industrial Database, which accurately reflect the priorities of such enterprises during the site selection and investment process.

Strengthening Park Development

1. Infrastructure

A park’s ability to provide essential resources and accommodate projects is the most fundamental advantage for attracting businesses. For electronics and information technology industrial parks, the following infrastructure must be prioritized:

Electronic and information technology enterprises have high requirements for electricity consumption and supply stability; therefore, some require the park to provide a dual-circuit power supply system.

Many electronics and information technology enterprises generate industrial wastewater, so attention must be paid to the construction of sewage networks and connections to external wastewater treatment plants.

Provide adequate commercial and recreational facilities to meet the lifestyle needs of R&D talent and industrial workers in the new era.

2. Facility Characteristics

Most standardized factory buildings can generally meet the facility requirements of 90% of enterprises. However, some enterprises have special requirements regarding floor-to-ceiling height, span, load-bearing capacity, and crane brackets; therefore, facilities must be reasonably planned based on the industrial positioning before the park is constructed.

Designate a zone for custom-built factories to accommodate major projects that do not fit existing facility specifications.

Highlight the benefits of “industry-in-buildings” and promptly guide eligible enterprises to occupy suitable floors, avoiding a concentration of businesses on the ground floor.

Enterprises engaged in the production of precision instruments or precision components (such as those in the defense and aerospace sectors) have stringent requirements for building seismic resistance and are not suitable for placement on upper floors.

Optimize Support Policies

Electronic information enterprises pay close attention to policies during the site selection process, typically focusing on equipment subsidies, renovation subsidies, tax policies, and financial support; some enterprises may also be interested in relocation subsidies and logistics subsidies.

To better promote investment in electronic information projects, it is necessary to reference the core needs of enterprises and implement targeted measures; at the same time, risk assessments and contingency plans should be prepared to avoid being taken advantage of.

1. Equipment Subsidies: Electronics and information technology manufacturing enterprises generally make substantial equipment investments; subsidies of 10% to 30% of the total equipment investment may be provided.

Reference Case: For standard technical renovation projects, provide a subsidy of up to 10% of the equipment investment, not exceeding 10 million yuan; for intelligent transformation projects, provide subsidies of up to 12%, 15%, or 20% of the equipment investment—based on the entire production line, workshop, or factory, respectively—not exceeding 10 million yuan.

2. Renovation Subsidies: The renovation costs for cleanrooms or clean workshops in electronic information manufacturing enterprises are relatively high. To prevent “policy-chasing” behavior, subsidies may be disbursed in installments.

Reference Example: Enterprises entering the park are eligible for a renovation subsidy of 500–1,000 yuan per square meter for cleanrooms. The specific subsidy amount is subject to the audit results from a third-party agency commissioned by the park. Renovation subsidies are disbursed based on construction progress and actual work completed: 50% of the total subsidy is paid once the facility meets equipment installation requirements, and the remaining 50% is paid upon completion of cleanroom acceptance.

3. Tax Policies: Electronic information manufacturing enterprises make significant tax contributions; appropriate incentives may be provided based on the enterprise’s operating revenue.

Reference Case: For the electronic information manufacturing sector, enterprises whose annual revenue in the previous year exceeded 300 million, 500 million, 1 billion, or 2 billion yuan for the first time, and whose tax revenue growth rate in the current year is no less than the citywide tax revenue growth rate, will be awarded 300,000, 500,000, 1 million, or 2 million yuan, respectively.

4. Relocation Subsidies: Relocation subsidies will be provided to enterprises based on the appraised value of their equipment.

Reference Case: For industrial projects with high technological content and strong growth potential, where the total annual paid-in value-added tax and corporate income tax exceeds 3 million yuan, a relocation subsidy of 2% of the assessed value of equipment relocated from outside the city will be provided, with a maximum of 5 million yuan.

5. Rent Subsidies: The most common policy is “three years rent-free, followed by two years at half-price.”

Reference Case: For industrial plants and office buildings leased by enterprises, the Management Committee provides 100% rent support for the first three years, with the subsidy capped at the average rent level for similar facilities in the industrial park. In the fourth and fifth years, if the enterprise’s annual tax payments meet the tax targets agreed upon for the third year, the Management Committee will provide 50% rent support; if the targets are not met, no further rent support will be provided. The maximum duration of rent subsidies shall not exceed five years.

Ensuring Talent Supply

Electronic information enterprises have high requirements for specialized talent; leading companies have a proportion of R&D personnel of no less than 15%, with some reaching 30%. Additionally, some projects bring their own R&D talent on board and are highly attentive to talent subsidy policies.

In addition to actively conducting recruitment efforts, it is essential to strengthen cooperation with local educational institutions and vigorously expand cross-regional labor cooperation. Talent policies from regions with well-developed electronic information industries are highly valuable for reference.

Providing Financing Support

Due to factors such as rising raw material costs and market downturns, enterprises face significant financial pressure and difficulties in securing financing; high-tech projects also require support from government industrial guidance funds.

The following approaches can be adopted to provide financing guarantees:

1. Facilitate bank-enterprise matchmaking and promote financing products

Establish a dedicated task force to visit enterprises and assess their financing and loan needs. Collaborate with relevant departments such as the Human Resources and Social Security Bureau and the Finance Bureau to build a bank-enterprise matching platform. Guide major banks to conduct on-site assessments of enterprises and recommend the most suitable financing products.

2. Guide financial institutions to develop intellectual property pledge financing

Collaborate with various departments to establish a dedicated task force for intellectual property pledge financing. Categorize and analyze the financing needs of private enterprises holding intellectual property rights, and promptly share this information with financial institutions. Conduct in-depth on-site investigations to assist enterprises in meeting loan eligibility requirements.

3. Pioneering comprehensive financial service models such as the “Park Guarantee”

Collaborate with financial institutions to establish a tiered, dynamic management mechanism; the government will set up a risk fund pool, with the government, banks, and other financial institutions sharing risks in varying proportions; provide complementary services such as financial leasing, insurance-financing linkage, technology loans, and bridge financing.

4. Establish a Financial Services Platform

Attract financial institutions and government departments to join the financial service platform and explore an “online + offline” financial service system.

3. Shift from the virtual to the real economy; implement targeted investment promotion along industrial chains

Formulating Strategies

Investment attraction strategies for industrial chains, formulated based on the current status and goals of industrial development, can be preliminarily categorized as follows:

1. Chain Building: The Clustering Phase from Scratch

Identify the park’s key development priorities, attract leading enterprises, and use them as a foundation to establish a brand-new industrial chain. “Chain Building” is an inevitable phase for newly established parks and industrial transformation.

2. Chain Completion: Addressing Missing Links in an Existing Foundation

Chain supplementation is an extension of chain building. It refers to situations where a park already has a certain industrial foundation but lacks one or more specific links, and involves targeted investment promotion to fill these gaps.

3. Strengthening the Chain: Expanding or Upgrading Specific Segments

While the park has achieved a certain level of industrial concentration, it remains at the lower end of the value chain. It is necessary to strengthen services such as R&D and design, brand marketing, and financial support to build a more competitive industrial cluster.

4. Chain Extension: Industrial layout needs to extend upstream and downstream

Chain extension involves expanding an existing industrial chain as far as possible upstream and downstream, requiring the targeted attraction and cultivation of high-quality enterprises at both ends of the “smile curve.”

Practical Implementation

1. Attracting Investment Based on Resource Endowments

Land, labor, capital, technology, and data are all indispensable factors of production. The combination of multiple advantages often creates a unique and hard-to-replicate edge in investment promotion.

Case Study: Chuzhou, Anhui—Turning “Sand” into Gold

In Chuzhou, Fengyang County’s quartz mines have preliminarily identified reserves of 10 billion tons, with a silicon dioxide content exceeding 99%. In terms of reserves, ore grade, and mining value, these deposits rank first in the country.

Chuzhou was the first in the province to establish an industry chain leader system, fully leveraging its raw material advantages to attract photovoltaic enterprises such as LONGi, JinkoSolar, Folate, Fosun, and Dongfang Sunrise to build core production bases in the city.

Today, Chuzhou has established an increasingly comprehensive industrial ecosystem spanning the entire photovoltaic supply chain, encompassing silicon wafers, photovoltaic glass, photovoltaic cells, photovoltaic modules, inverters, photovoltaic frames, encapsulation films, and photovoltaic backsheets.

2. Formulating Industrial Policies to Support Investment Promotion

Industrial policies serve as a powerful tool for investment promotion and play a vital role in fostering industrial clustering. However, the formulation and implementation of policies should be grounded in clear objectives and well-defined pathways, avoiding excessive reliance on industrial policies and preventing the emergence of “policy migratory birds.”

Case Study: Hefei Continuously Refines Its Industrial Support Policies

In 2005, Hefei made the major decision to “build the city on industry” and adopted the “Hefei Action Plan for Prioritizing and Accelerating Industrial Development,” charting the course for Hefei’s transition to industrialization.

In 2014, Hefei refined its industrial support policies, establishing a “1+3+5” policy framework. Guided by the “Several Provisions on Hefei’s Industrial Development Support Policies,” the city introduced three fund management regulations for the first time to standardize fund operations and “loan-to-grant” mechanisms, while five industrial support policies clarified the priorities and specific investment approaches for each sector.

In 2018, Hefei introduced the "Several Policies of Hefei City on Cultivating New Growth Drivers, Promoting Industrial Transformation and Upgrading, and Driving High-Quality Economic Development," providing further clarification on the detailed rules for industrial support and the use of government funds.

Comprehensive industrial policies are an indispensable component of investment promotion activities and help create a favorable environment for industrial investment.

3. Planning Investment Promotion from the Enterprise’s Perspective

Local governments continuously invest in enterprise development through land, capital, and infrastructure; taxes serve as “dividends” for local governments, making them the “shareholders” of enterprises.

Investment promoters should focus more of their energy on enterprises, engage with entrepreneurs on the same wavelength, and help enterprises “address their weaknesses” by reducing costs, improving efficiency, and enhancing core competitiveness. This approach builds corporate confidence in the investment environment and attracts enterprises to establish operations locally.

Case Study: “Strategic Investment Promotion” in Ningxiang, Hunan

In 2019, Pengbo New Materials relocated to Ningxiang, attracted by the clustering effect of the advanced energy storage materials industry there. Initially, the company planned an annual production capacity of 20,000 tons with no immediate plans for expansion.

In 2022, one evening after the Spring Festival, Huang Tao, Deputy Secretary of the Ningxiang Municipal Party Committee and Mayor, called Peng Peng, the company’s founder, following a site visit to Pengbo. During their in-depth conversation lasting over an hour, Huang Tao analyzed the necessity and feasibility of the company seizing this golden opportunity to accelerate expansion, offering tangible support in terms of resource allocation and policy incentives.

With the support of the Ningxiang Municipal Party Committee and Government, Pengbo New Materials secured overseas financing, keeping the 3 billion yuan expansion project in Ningxiang. The number of production lines was expanded from the original two to 16, increasing annual production capacity to 70,000 tons. Once the project reaches full production capacity, it is expected to generate an annual output value of 10 billion yuan, with an output value per mu reaching as high as 100 million yuan.

4. Leveraging Leading Enterprises to Drive Investment Attraction

Leading enterprises exert strong influence over upstream and downstream businesses in the industrial chain. Once they invest in a particular location, a wave of companies will gradually establish operations in the surrounding area to meet the leading enterprise’s requirements for suppliers or to reduce logistics costs.

Case Study: “Chain Leader Investment Promotion” in Zhanjiang, Guangdong

On September 6, 2022, the first unit of BASF’s Zhanjiang Integrated Base commenced operations. With a total investment of 10 billion euros by 2030, this project marks the first wholly foreign-owned enterprise in China’s heavy chemical industry.

Leveraging the leading effect of the BASF project, Zhanjiang has actively pursued “chain-leader” investment promotion to propel its petrochemical industry cluster toward “world-class” status. At an investment promotion conference on September 15, 11 enterprises along the petrochemical industry chain signed cooperation agreements with the Zhanjiang Economic and Technological Development Zone and BASF, with a total investment of approximately 7 billion yuan.

5. Strengthening Investment Promotion Through Agglomeration Effects

The industrial agglomeration effect has attracted a steady stream of high-quality projects, propelling investment promotion into a phase of scaling up “from 1 to 10.” Examples include the economies of scale generated by the clustering of similar industries and the ecosystem benefits resulting from the aggregation of upstream and downstream supporting enterprises. Although the formation of agglomeration effects is a market-driven process, it is essential to continuously improve enterprise services in line with the times to unleash even greater industrial appeal.

Case Study: Zhangjiang Pharmaceutical Valley Public Service Platform

Although Shanghai Zhangjiang has attracted a large number of biopharmaceutical enterprises, a significant portion of these small and medium-sized enterprises (SMEs) have low risk-resilience, and the rate of direct commercialization of biopharmaceutical research outcomes in Shanghai remains relatively low.

To accelerate the rapid development of biopharmaceutical SMEs, Shanghai Zhangjiang launched the Zhangjiang Pharma Valley Public Service Platform. The platform provides public services covering six key areas for clinical research on new drugs: generic technical services, industrialization services, public testing (analysis) services, operational support services, and integrated software services. It also assists SMEs in overcoming the “valley of death” and achieving industrialization as quickly as possible through the establishment of incubators and investment funds.