When a region is courting major projects, any progress is typically kept under wraps.

The slightest hint of a project’s development can trigger a rush of competitors trying to “scoop it up.”

Conversely, there’s nothing wrong with companies “shopping around” and choosing the best location to “settle down.”

Moreover, with the trend of industrial relocation, it is perfectly normal for companies to relocate...

Economic development follows certain patterns, and the growth of enterprises is no exception. Attracting investment does not mean acting as a mere “porter.”

Two phenomena are inevitable: “scooping up” opportunities on one hand and “spillover” on the other—a situation that worries many localities.

Of course, it’s wise to be vigilant even in times of peace. However, if we truly focus on “developing industries, creating a favorable environment, and optimizing services,” why would we worry about failing to attract businesses?

Accidentally Snapped Up

A project with an annual output value of 300 million yuan secured in the time it takes to drink a cup of coffee.

Let me tell you, this is a “swooped-up” project. In the past, this might have been hard to believe. But now, it’s true—opportunities last only as long as a cup of coffee.

I’ve even heard of a “southern star city” being snatched away—a northern fund spent 10 million yuan to block “technology spillover,” directly causing the company to “abandon the south and settle in the north.”

As everyone knows, among the “rumored contenders” for Tesla’s second factory, Guangzhou, Zhengzhou, Wuhan, Chongqing, and Hefei have all been thoroughly discussed, and places like Qingdao, Yichang, and Hainan have also been mentioned one by one.

Guangzhou: It has a port, the Nansha Economic Zone, and Toyota.

Hefei: With NIO and BYD on either side, why aren’t you coming?

Yichang: The “Lithium Battery Capital”—surely you must need batteries.

Looking back at this frenzy over the site selection, every region was “campaigning” for votes. As a “star” in the automotive industry, it’s only natural that local governments would flock to court Tesla.

Previously, when Tesla was selecting the site for its first factory, Nansha and Shanghai emerged as the fiercest competitors. However, for various reasons, Shanghai ultimately “swooped in” and secured the deal.

It’s not just major projects—even smaller, mid-tier projects can be “snatched up” as well.

Such projects share common characteristics: they are small in scale, lack standout features or distinctive branding, are limited to regional locations, and when it comes to pricing, they rely on policy incentives.

They typically involve low-end industries, focusing on basic processing and energy-intensive operations. At best, they might fall under a popular sector, but they occupy a low-value-added position within the industrial chain.

Incredibly, the moment such enterprises show the slightest “sign of life,” many localities quietly scramble to secure resources.

But how many of these mid-tier projects have been “nurtured” to maturity by local governments? Move them to a different region, and they’d be just as much of a local “giant baby.”

Reluctantly Sucked In

Not long ago, the Dongguan BYD New Energy Vehicle Key Components Project broke ground in Xiegang Town, Dongguan.

With an investment of 6.5 billion yuan and an estimated annual output value of approximately 17 billion yuan, the project is expected to be completed in 2024 and will focus on the R&D, design, and manufacturing of new energy vehicle engines.

Simply put, BYD is relocating its new energy engine R&D, design, and production operations from Shenzhen to Dongguan.

In fact, this comes as something of a surprise.

Generally speaking, companies tend to keep their R&D centers at their headquarters, while expansion projects are mostly production bases.

It is understood that BYD’s R&D department is currently housed in the Hexagon Building at its Shenzhen headquarters. This relocation marks yet another instance of Dongguan “siphoning off” resources from Shenzhen.

After all, Huawei was also “siphoned off” by Dongguan back in the day.

Although Shenzhen boasts industrial infrastructure, efficient services, and a concentration of talent, its business operating costs are becoming a “weak spot” that offsets its advantages.

With continuous industrial support from Shenzhen, Dongguan has grown into a core industrial city in the Pearl River Delta. As the “world’s factory,” every town and street has its own distinctive industry.

Among them, Songshan Lake is a key strategic move in Dongguan’s overall plan.

Songshan Lake is poised to become the vanguard of Dongguan’s industrial upgrading and integration, serving as the hub for Dongguan’s industrial support services and a talent hub.

A few years ago, the city was still urging, “Don’t let Huawei leave,” and to retain this industry leader, it directly attracted Huawei’s supporting enterprises. As a comprehensive national science center, Songshan Lake drives technological innovation across Dongguan by exporting industrial technologies.

In the past, some viewed this as “assistance” or “blood transfusion-style” aid.

In reality, this is not the case; rather, it involves leveraging market-driven mechanisms to achieve complementary strengths and industrial synergy.

Take the food industry as an example: Shenzhen possesses strengths in the headquarters economy for food and beverages, while Chaozhou boasts a well-developed food industry support system and a comprehensive range of product categories.

As the “Porcelain Capital of China,” Chaozhou has established a complete and mature full industrial chain, spanning raw materials, equipment, and molds to packaging, logistics, and sales.

However, Shenzhen is home to manufacturers of automated ceramic production equipment, as well as companies specializing in smart toilet manufacturing, smart toilet seats, and electronic control chips.

In this way, we leverage Shenzhen’s strengths to meet Chaozhou’s needs.

From a broader perspective, by leveraging complementary resource advantages, we can enhance the self-sustaining capacity of receiving regions, expand the development space of originating regions, and increase the resilience and security of industrial and supply chains.

An Intensifying Trend of Spillover

What lies behind these phenomena?

It boils down to two concepts: “spillover from major cities” and “relocation of manufacturing.”

It’s the principle of “when a vessel is full, it overflows.” Once a major city reaches a certain scale, its population and industries will inevitably spill over.

Manufacturing, in particular, tends to relocate, as the economic output per unit area in manufacturing is lower than that of labor- and capital-intensive service industries.

Can a small town be influenced by a central city?

This depends on whether factors such as population, capital, and technology can flow to these emerging towns at low cost and with high efficiency.

First, transportation must be sufficiently convenient.

The less convenient the transportation, the longer the travel time, and the weaker the connection to the major city—the lower the probability of being successfully influenced by it.

Why do most companies relocating from Shenzhen not go to inland cities?

It is precisely because of poor transportation that precision electronic components cannot be quickly sourced, and skilled production workers cannot be found.

Second, infrastructure must be well-developed.

This “infrastructure” encompasses not only roads, high-speed rail stations, and shopping malls, but also public service facilities such as hospitals, schools, and municipal management, as well as whether the existing industrial base can better align with the spillover effects from major cities.

It must be said that, from an economic perspective, industrial relocation is inevitable.

Some industries are labor-intensive, low-tech, and low-margin—they rely on manual labor for profit and are easily affected by costs and wages.

In some cases, they may even relocate to Southeast Asia. Such low-end industries will be weeded out by the market, and their relocation has little impact.

Over time, this will create a positive feedback loop: the relocation of certain low-end industries will directly compel domestic enterprises to innovate technologically.

Therefore, only when China possesses sufficient technological clout and a robust portfolio of intellectual property will the full advantages of “Made in China” be realized. After all, the goal is not to be the “world’s factory,” but to become a manufacturing powerhouse.

In the context of attracting investment, “swooping in” to secure certain projects is merely a stopgap measure; even maximizing the efficiency of existing industries cannot prevent industrial relocation. What matters is achieving breakthroughs in industries with higher technological content and greater wealth-creation potential.