Investment promotion is the key to development and the foundation for success.

Amid the broader context of “seeking progress while maintaining stability,” the requirements of “three highs and one new” — namely, new concepts, a new stage, a new pattern, and high-quality development — serve as the guiding principles and direction for local industrial cultivation and development in the future.

In the face of changes in this new era, local governments must adjust their strategies, methods, and policies for industrial investment promotion to rapidly enhance their capabilities in attracting investment.

01 Technology-driven investment promotion is not a side business; it is the core business

Leading enterprises serve as the driving force behind industrial development, while small and medium-sized enterprises (SMEs) are the backbone of the regional economy.

The focus of investment promotion should be placed on technology-based small and medium-sized enterprises.

Technology-driven investment promotion has become a key focus for many cities. For example, Dongguan stated this year that technology-driven investment promotion is a task for all employees; not only should relevant functional departments focus on investment promotion, but entities such as the General Office and the Science and Technology Museum should also proactively engage in investment promotion.

Compared to leading enterprises, technology-based SMEs appear to require even greater government support and assistance.

To this end, many regions have established various types of government funds—such as seed funds, angel funds, and innovation funds—tailored to different stages of enterprise development, to address specific challenges faced by businesses.

02 The Government Must Serve as a True “Partner” to Enterprises

Recently, Baoshan District in Shanghai implemented a “cash-first, equity-later” policy, effectively becoming a partner to enterprises.

In fact, Baoshan began piloting this approach as early as 2021, undertaking the national “Invest First, Equity Later” innovation pilot program for technology transfer projects. After two years of preparation, the first batch of projects has finally been launched, attracting nearly 50 projects and teams—including top-tier overseas talent.

In the past, government subsidies were often likened to “sprinkling pepper”—an attempt to cover all bases, yet rarely achieving sufficient support.

The “cash-first, equity-later” approach enables government funds to create a virtuous cycle, fostering a steady stream of startups, attracting technology-based small and medium-sized enterprises to establish operations, and cultivating “endogenous momentum” for industrial development.

The “investment-first, equity-later” approach is essentially a form of “option,” enabling promising enterprises to secure support more easily in their early stages while allowing them to better repay the government once they have grown and expanded.

03 Attracting Investment Through “Building Infrastructure to Draw Water” Is the Way Forward

In the past, local governments could typically “attract factors of production” simply by “selling land.”

But the era of “opening the floodgates to draw water” has passed; we have now entered a period of “wide rivers with little water,” where localities can only create a “potential energy difference” through other means to attract enterprises from other regions.

Today, industrial funds have become a key method for creating this “potential difference.” Since 2022, this trend has intensified, with regions across the country simultaneously focusing on the same goal: industrial funds.

Leading enterprises in emerging strategic industries are the scarcest resources. Whoever can attract these enterprises will be able to leverage their spillover and driving effects. The “risk-sharing, profit-sharing, and deep integration of government and enterprise” inherent in capital-driven investment promotion serves as the key to attracting such enterprises.

04 Industrial Funds Represent Development Opportunities

In 2023, Anhui launched a 100-billion-yuan guiding fund, proposing to establish a provincial emerging industries guiding fund with a total scale of no less than 200 billion yuan; Zhejiang introduced the 3.0 version of its iterative industrial fund, establishing five industrial funds each with a scale of no less than 10 billion yuan...

Whether the funds are in the hundreds of billions or trillions, the key lies in their ability to achieve a “leveraging effect.”

Led by the government, these funds attract substantial social capital to the region. Through an “investment-driven attraction” model that leverages the strengths of social capital, they bring high-quality resources and projects to the local area.

Today, it has become common for investment institutions to establish dedicated teams responsible for investment promotion and the implementation of reinvestment projects. This demonstrates that the role of guiding funds is expanding.

05 Industrial Development Requires “Understanding, Investment, and Patience”

For a region to cultivate a new industry or technology, it must inevitably blaze a trail where none has gone before. This is particularly true for technology-intensive sectors such as biopharmaceuticals, new energy, and new materials, which require substantial R&D investment and carry high development risks.

This requires local governments to be prepared to “understand, invest, and wait.”

This year, one city has achieved the feat of “remaining silent for a decade before making a stunning breakthrough”—Changzhou. Overnight, Changzhou’s reputation as the “Capital of New Energy” has spread far and wide.

Tracing the origins of this industrial development, Changzhou established the New Energy Vehicle Research Institute as early as twelve years ago, with power batteries serving as the first step in its strategic layout. At the same time, Changzhou fulfilled the two “musts” proposed by Municipal Party Secretary Chen Jinhu: it must remain steadfast in its conviction and persevere; and it must identify the right path and focus its efforts precisely.

It is clear that industrial development requires not only the patience to “hone a sword for ten years,” but also tacit coordination.

06 The “Burn Money” Logic Does Not Necessarily Lead to Profits

Nurturing and developing an industry takes time, but as competition intensifies, the window of opportunity for up-and-coming companies in the sector is growing increasingly narrow.

Take the new energy vehicle industry as an example: under the dual pressures of Tesla’s price cuts and the growing dominance of leading new players, how these emerging companies optimize costs and achieve profitability as quickly as possible tests their core capabilities—and poses a challenge to local governments as well.

After all, local governments have invested significant effort in attracting these leading enterprises.

While capital-driven investment promotion can certainly attract major enterprises, knowing how to budget wisely and allocate funds effectively is an art in itself. If large sums are poured into initial construction, there is a risk of subsequent cash flow disruptions.

07: Prioritizing What to Do and What Not to Do in Industrial Development

In practice, many regions still tend to chase trends when planning their industries, sometimes neglecting their own local conditions. This ultimately leads to stagnation in their existing foundational industries and a chaotic mess in the trendy sectors.

Industrial development requires a clear focus on what to pursue and what to avoid.

A modern industrial system implies modernization across all sectors—agriculture, industry, and services must all be modernized.

If every region prioritizes biopharmaceuticals, new energy, and electronics as key sectors, it will inevitably lead to a situation where one area is neglected while another is overemphasized.

Local regions must extend and upgrade their existing competitive industries, ensuring that we have what others lack, excel where others are strong, and offer unique strengths where others are already strong—only then can we truly build a “moat” for sustainable development.

08 Investment Promotion Focuses on “Going Out”

As the era of all-out economic development arrives, regions across the country have launched “vigorous” investment promotion campaigns, with the most visible changes stemming from “going out” and “bringing in.”

Scenes of top leaders personally leading outreach efforts are becoming increasingly common. In mid-February, a Party and government delegation from Jiangxi Province traveled to Anhui for a two-day study tour; Qingdao municipal leaders led a delegation to Shanghai to visit enterprises and hold negotiations...

This intensive series of investment promotion trips at the start of the year sets the tone for the year’s investment efforts in these regions.

As the weather gradually warms, investment promotion and spring converge, with the season’s vitality fully reflected in the strides of those engaged in investment promotion.

09 Industrial Investment Promotion Is a Dynamic Process

Industrial development is in a state of constant flux; the specific stages, required policies, and services needed vary at different phases.

For example, first- and second-tier cities have ample reserves of capital, talent, and research capabilities, but face relatively scarce land resources; industries there can choose to start from scratch (0 to 1). In contrast, third- and fourth-tier cities have abundant resources such as land, labor, and raw materials, allowing industries to rapidly scale up (1 to N).

Investment promotion strategies must also adapt to the times—shifting from policy-driven to capital-driven approaches, and from environment-focused to service-oriented initiatives—ultimately achieving mutual benefit through diversified investment promotion.

10. The successful implementation of industrial funds is key

The entire process—from establishing an industrial fund to its implementation, attracting projects, and ultimately building an industrial cluster—is no easy feat.

Many regions suffer from “much ado about nothing”—funds worth tens of billions that fail to materialize are effectively meaningless.

Compared to supporting a single enterprise, industrial guidance funds focus more on driving, extending, and stimulating the entire industrial chain; therefore, fostering the coordinated development of market-driven funds is crucial.

To fully leverage their potential, a solid foundation is essential. Industrial funds can only deliver their true market-oriented and professional benefits when the goals of regional industrial development align with those of private capital.