Everyone experiences illusions. Some have little impact and can be ignored.

However, in the realm of investment promotion, these illusions can lead regions and companies into a massive pitfall.

Illusions regarding investment attraction capabilities, urban development, and project viability—behind what appears to be “thriving prosperity” may lie “bottomless” traps.

Illusion 1

If others can do it, we certainly can

A couple of years ago, Hefei’s “production-investment” investment promotion model achieved “remarkable success.”

For a time, the “Hefei Phenomenon” was the subject of an intense, barrage-like publicity campaign, and many regions began to emulate this “investment-driven investment attraction” model.

However, after some time, we can see that the results in some of these regions have fallen short of expectations, and even enterprises that were “brought in at great expense” have “failed midway.”

What went wrong in this process?

There is a term called “survivor bias,” which refers to a common logical fallacy.

Essentially, it means focusing only on the results that have survived a certain screening process, while ignoring the screening process itself—and thus overlooking the critical information of what was filtered out.

Everyone focused on the success stories of Hefei Industrial Investment, but failed to see the tragic cases of “bloodshed” that lay ahead.

In late 2016, City N and an automobile manufacturing company jointly announced a 10-billion-yuan investment to build a factory there. But by June 2020, the company’s chairman had returned to the United States, executives had resigned one after another, and the once-promising future had come to an end.

In 2017, City H and an automobile manufacturing company jointly announced a 11.5 billion yuan investment to build a factory and an “Automotive Town” project. But the project’s collapse came suddenly—there was no R&D, only a series of “high-end” PowerPoint presentations.

Of the 2,700 mu of land originally planned for development, only a mess remains today.

All of the above cases occurred in regions with relatively strong economic foundations. Imagine if such disastrous “high-stakes gambles” were to occur in a small city with annual fiscal revenue of only a few billion yuan—the city might find itself in a prolonged predicament.

When attracting investment, blindly following trends must be avoided. Ensuring the local population’s basic needs are met is the foundation; only then should capital be leveraged to attract investment.

At the same time, it is important to note that large projects may be “all talk and no action,” while small projects are not necessarily “cannon fodder.”

Projects that suit local conditions, align with the times, and balance scale—these investment principles apply not only to capital-driven investment but also to other innovative investment approaches.

Misconception 2

If an industry is booming, the companies within it must be thriving

Over the past few decades, the market has seen numerous "flash-in-the-pan" hot industries emerge, such as real estate, the internet, and new energy vehicles.

Today, industries such as lithium batteries, the metaverse, and ready-to-cook meals have emerged as new industry leaders, with their scales currently expanding rapidly.

The Chinese market is the easiest place to turn a blue ocean into a red ocean, especially for industries with low entry barriers—once the floodgates open, the influx of competitors is unstoppable.

However, the hotter an industry gets, the more local governments need to maintain a level head when attracting investment.

The government should address market shortages. Otherwise, once the tide recedes, resources may be wasted.

Zaozhuang, a city with “coal” running through its veins, lacks abundant lithium ore resources. Yet, it has secured a leading role in setting lithium battery quality standards.

This is because, in its pursuit of industrial upgrading and transformation, Zaozhuang has strategically focused on the separators used in lithium-ion batteries and the testing and inspection sector, becoming an indispensable link in the lithium-ion battery supply chain.

By seizing this critical market gap, Zaozhuang has rapidly developed and ultimately secured a foothold in the booming lithium battery industry, successfully embarking on the fast track of local industrial upgrading and transformation.

Investment promotion and market trends are inextricably linked. Sometimes, when the market is sluggish, the government needs to be more proactive; but at other times, even when the market is sluggish, the government must remain even more proactive.

Misconception 3

Casting a wide net will yield results

Currently, industrial parks serve as the primary vehicles for local economic development. To achieve high-quality economic growth, various industrial parks across the country have experienced rapid expansion. This has even led to a situation of oversupply, placing an even heavier burden on investment promotion personnel.

To improve investment promotion efficiency, “targeted investment promotion” has become one of the most frequently mentioned keywords in regional industrial parks.

• Aligning with the overall industrial layout of the local area and the broader region to attract investment by clustering industrial chains;
• Create distinctive park platforms tailored to support industrial development, using these platforms to attract project clusters;
• Clarify investment priorities, targeting not only leading enterprises but also small and medium-sized enterprises, giving equal emphasis to both;
• Strengthening the development of innovation platforms, increasing support for innovation, and investing in innovation infrastructure to attract talent;
• Finally, strengthen the capture and selection of project leads.

The Investment Promotion Network is an online platform that enables investment promotion staff to precisely screen and efficiently match projects.

Now, a new feature allowing one-click dialing to call companies has been launched, enabling investment promotion staff to shift from a passive to an active role—no longer do they have to wait endlessly for companies to reply.

Connecting with companies through the Investment Promotion Network’s client-facing platform is more precise, efficient, and faster!

Misconception 4

Big Cities Mean Good Projects

In many third- and fourth-tier cities, when it comes to investment promotion, people often assume that setting up a presence in Beijing, Shanghai, Guangzhou, or Shenzhen is a must.

But can companies in major cities really be poached?

In recent years, to boost economic development, northern cities have dispatched investment promotion teams to various cities in the Yangtze River Delta and Pearl River Delta regions to learn from advanced practices and attract investment to revitalize their local economies.

Their investment incentives are every bit as generous as those in southern cities, so why are the results consistently lackluster, and why does the pressure to attract investment remain so high?

Doesn’t everyone generally assume that land prices in the south are higher, while those in the north are cheaper?

However, the reality is that while land prices in the south are indeed higher than in the north, the difference is negligible.

For businesses, the time and financial costs associated with relocating customers, suppliers, and employees far exceed the cost of land.

The ultimate outcome is inevitable: high-quality enterprises and economically strong cities will not let them go, and these enterprises will not come; meanwhile, unprofitable enterprises or those in poor industrial locations cannot survive in economically strong cities and are forced to relocate, hoping that support from local governments in other regions might help them “revive” and continue operating.

As for third- and fourth-tier cities, they must first clearly understand why companies are not coming, and then formulate comprehensive plans and policies based on their actual conditions and the characteristics of their industries and resources.

Sometimes, attracting investment cannot be rushed; the consequence of haste may be that the enterprises brought in lack growth potential and are prone to failure.

"You must first strengthen yourself before you can attract others"; eventually, you will be able to attract the phoenix.

Misconception 5

The arrival of a company is always a good opportunity

A former vice mayor of Shenzhen once remarked: “Of all the companies that constantly seek out the mayor and demand government policies, very few ultimately succeed.”

Today, a company’s site selection criteria boil down to strategic planning, regional industrial clustering, and minimizing the cost of production factors.

If, during investment promotion, you encounter companies that come knocking on your door and are solely concerned with policy incentives, investment promotion staff should remain vigilant and skeptical.

After all, leading companies like Huawei, CATL, and BYD did not grow through government subsidies.

It can be said that companies that grow through market competition become more competitive as they expand; however, companies that rely on policy support may gradually turn into “giant babies.”

The traditional model of “enterprises seeking policies” is shifting toward “policies seeking enterprises.”

This is also a crucial means for local governments to ensure that business-friendly policies truly reach market entities in a timely and targeted manner.