Director Yan shared a story about one of his investment promotion experiences.
Currently, he is focusing his investment promotion efforts on the Guangdong-Hong Kong-Macao Greater Bay Area, primarily in the field of new energy.
“In recent years, I’ve dealt most frequently with the investment community.” Director Yan picked up his teacup, took a deep sip, and appeared even more composed.
Knocking on doors, leveraging existing businesses, and engaging through associations—how much impact can these “standard” approaches still make?
To obtain contact information for potential investors, he once traveled to three cities in three days, with the main focus of his trip being visits to several well-known investment firms.
When the market was underdeveloped, I stayed close to it; when project resources were scarce, I sought them out.
He frequented coffee shops, visited small teahouses, and scoured the business district in search of every possible lead. Eventually, he made connections with several “bigwigs” in the investment circle.
What astonished him was that these “bigwigs” knew every company in the district like the back of their hands. It’s safe to say they held a wealth of project resources in their hands…
After 30 years navigating the bureaucratic system, he stepped into the investment world—and returned as an investment banker.
Projects at the Grassroots Level
A Mid-Journey Detour: A County-Level Inspection
In the public imagination, the investment world is one of sharp suits and polished manners, with people shuttling through the business districts of Beijing, Shanghai, Guangzhou, and Shenzhen, laptops in hand, reviewing PowerPoints and investment proposals.
But today, investment work involves visiting factories in county towns, scouting projects in workshops, and even conducting due diligence in fields and at ports.
This has become the norm; county towns have clearly emerged as the “new blue ocean” for the capital market’s expansion into the grassroots. Director Yan put it this way.
A few months ago, he spoke with Old Liu from an investment firm in the Pearl River Delta and learned that they were in talks for a new energy project—specifically one related to lithium batteries.
Old Liu took a drag on his cigarette and said, “Cities with mineral resources get an immediate response, and county towns rich in green energy are gradually becoming rising stars.”
Indeed, if a leading company is attracted to set up shop, a host of suppliers will follow in droves. Whether drawn to resources or markets, the highly responsive lithium battery manufacturing sector is undergoing a new wave of migration.
A decade ago, China’s major lithium battery hubs were concentrated in Henan, Tianjin, and other regions. Leveraging battery technology adapted from military to civilian use, a group of companies—led by Zhongxin Innovation and Tianjin Lishen—dominated the industry.
However, most of these companies gradually declined amid competition for supply contracts. In 2015, Zhongxin Innovation relocated its headquarters to Changzhou, Jiangsu—a location with more prominent geographical advantages—to better serve the numerous vehicle manufacturers across the Yangtze River Delta.
Additionally, Guangdong Province has attracted a large number of consumer battery companies, such as BYD, Sunwoda, and Dongguan New Energy (ATL)—the predecessor of CATL—which shifted their focus to the power battery sector alongside the rise of the new energy vehicle market.
Upon hearing this news, Director Yan, while resting his eyes, decided to visit a “small but beautiful” location for an inspection.
Almost every year, people talk about a “capital winter.” Indeed, it is becoming increasingly difficult for companies to secure financing. However, good projects will still attract investment.
This year, despite various travel restrictions, Director Yan still had several regular destinations for his business trips, such as Anhui, Sichuan, Fujian, and Hubei. In the past, the districts and counties in these cities received little attention, but upon closer inspection, one discovers their advantages in industrial clustering.
What about cities without lithium mines? An abundant supply of green electricity is also an attractive resource for attracting investment, Director Yan said with a smile.
On the one hand, low electricity prices mean lower production costs; on the other hand, green electricity can open up export markets and meet traceability requirements for carbon emissions in Europe and other regions.
The Guangdong-Hong Kong-Macao Greater Bay Area is promoting its “green power” brand to attract the “power-hungry” segments of the industrial chain. Looking at it from another angle, it’s indeed a good idea.
Tianquan County in Ya’an City, leveraging 1 million kilowatts of hydropower resources, has planned a 400,000-ton annual production capacity for anode materials, claiming to be the largest anode production base at the county level nationwide.
Even without Sichuan’s natural endowments, some cities have created green energy resources through human ingenuity. Take Jining, Shandong, for example: the traditional coal industry left behind vast areas of subsidence zones. The local government has remediated these areas using a “fish-solar synergy” model, transforming the subsidence zones into fish ponds and installing solar panels on top to generate electricity.
As he delved deeper into the projects, Director Yan realized he had previously missed out on quite a few promising opportunities...
Corporate Competition
Investment Ambassadors: Building Competitive Advantages
For any individual, group, or region, achieving results in a particular area leads to sustained success and further progress.
That’s right—this is the “Matthew Effect.” In fact, the root of it all lies in accumulating advantages.
For example, the family into which one is born is a form of “accumulated advantage.”
A is born into a family connected to the “Big Three Oil Companies,” while B is born into a farming family in a small town in Northwest China. For B, the ceiling they might aspire to is merely A’s starting line.
However, A’s grandfather and B’s grandfather once herded cattle together. The difference is that A’s grandfather seized an employment opportunity, worked hard for generations, accumulated wealth and experience, and achieved a leap in social class and urbanization.
This isn’t a joke; it’s a true story. During an inspection tour, a ride-hailing driver told Director Yan that he came from a family like B’s. He even quipped: “If Grandpa doesn’t work hard, his grandson is stuck at home.”
The same principle applies to urban investment promotion, where there exists a deeply entrenched “advantage of accumulation.”
Before 2000, economic development across the country was relatively balanced. Back then, northern cities like Tianjin, Qingdao, and Dalian were all renowned industrial powerhouses.
But more than 20 years later, there are very few northern cities to be found in the national top ten GDP rankings.
For cities, the foundation of “comparative advantage” lies in industry. Industry inherently possesses a cluster effect.
When a major enterprise sets up shop, it immediately attracts a cluster of small upstream and downstream businesses, thereby fostering the formation of an industrial chain and creating high-paying jobs.
In my conversation with Director Yan, he likened the central government to an investment institution, while cities are the enterprises in the market. In a sense, the relationship between the central government and cities is one of investor and investee.
Are sub-provincial cities inherently stronger than prefectural-level cities? Do prefectural-level cities receive more resources than county-level cities? Does higher administrative status equate to being a “favorite child,” while lower status means being “put on hold”?
Finally, are large cities getting bigger and smaller cities getting smaller?
However, that is not the case.
I once read that the outcome of the U.S. presidential election was predicted based on the flags produced in Yiwu. This year, with Europe facing an energy crisis, did it rely entirely on electric blankets and heating pads exported from Yiwu to get through the winter?
Yiwu is a county-level city under the administration of Jinhua. The reason it has become a “model of excellence” is that its local investment promotion department traveled across the country, working tirelessly to bring manufacturers from all over the nation together, providing factory space, facilitating construction, and even offering incentives for going public.
Amid the pandemic, local governments urged enterprises to transform and upgrade by launching live-streaming channels, developing online businesses, and promoting products in front of cameras. They truly embodied the principle of “everything revolves around projects, everything focuses on projects.”
Director Yan noted that the success or failure of a region’s investment promotion depends on whether the government is willing to take the initiative to pursue opportunities, strategize, and strive to create a high-quality business environment.
Once investment promotion is properly executed and resources are effectively aggregated, one must never be “overly ambitious yet lacking in practicality.” Just as bait left in the water for too long loses its flavor…
Defying Fate
After Attracting the Chain Leader, Rapidly Filling in the Gaps
Looking at the current landscape, aside from “clustering” in resource-rich areas, another clear trend is following the footsteps of major clients. Precisely for this reason, “anchor” enterprises rank as the absolute top priority on local governments’ investment attraction lists, and the difficulty level is correspondingly the highest.
There is no doubt that once a leading enterprise settles in, investment promotion becomes much easier.
Director Yan mentioned that he has followed the capital “bigwigs” around for quite some time. He learned that when CATL invested in the north, before the local government signed the deal with CATL, they had to go out and find suppliers; after the contract was signed, suppliers came knocking on their own. It must be said that the first one to two years after CATL’s arrival are the golden period for investment promotion.
However, not all suppliers follow the lead of these industry leaders. Even when offered preferential policies—such as subsidies for the first phase of factory construction—some choose to pass on such opportunities.
It’s not hard to imagine that building a factory demands significant capital and manpower. Even if they go, they’ll only have the opportunity to provide supporting services—it doesn’t guarantee orders. Still, they tend to spread their eggs across several baskets, aiming to extend their production capacity to as many clients as possible.
However, investment promotion is not a one-size-fits-all race. At any time, merely following trends or imitating others will only lead to difficulties.
Differentiation is one of the key strategies in attracting investment.
For example, if you make one type of face mask, I’ll make a different kind. If you focus on affordability, I’ll focus on aesthetics—that’s differentiation.
In the lithium-ion battery industry, CATL is the market leader. Since there is already a dominant player, your strategy should not be to compete with them on scale or cost.
You cannot compete with the cost advantages they gain from their scale.
When it comes to attracting lithium-ion battery investments, if you target power batteries, I’ll target energy storage batteries.
Attracting investment is like a basketball game: a shorter team has no need to battle for position under the basket; by leveraging agility and outside shooting, they might still secure a victory.
Conversely, a taller team should leverage its advantage under the basket, using interior offense to put the opponent’s defense on the back foot and gain the upper hand in the game.
What matters is taking the most down-to-earth steps to stay ahead, one step at a time.
In this era of intense competition, we have chosen not to give up, but to find every possible way to attract investment and create more opportunities.
Director Yan is a prime example of this—he sought answers in the investment community, and the results were surprising, helping the Greater Bay Area “defy the odds and rewrite its destiny”...
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