“How can a company grow if it relies on government subsidies and bailouts every single day?”

During the Two Sessions, Dong Mingzhu’s remarks struck a chord with business leaders.

When it comes to policy, the topic of “optimizing the business environment” inevitably arises. From the central government down to local authorities, there is a strong emphasis on improving and enhancing the business environment.

Localities have successively introduced regulations to optimize the business environment, engaging in a “chest-thumping” competition over policies and service improvements, as if it were something that could be achieved overnight.

However, a “good business environment” does not mean meeting corporate demands at no cost or without conditions, nor can it be improved simply by enacting a few regulations.

On the contrary, projects that rely on government policies and funding are often not good projects.

A “good business environment” is one where the market serves as the sole criterion for evaluating projects.

Granting every request, fulfilling every demand

In recent years, there have been frequent "flashpoints" between the government and businesses.

A certain locality poured tens or even hundreds of billions of yuan into attracting investment, only to end up with stalled production, laid-off employees, and capital flight.

In the end, it’s a complete mess—who will foot the bill?

Such cases are neither isolated nor rare. Investors demand that the government build factories on their behalf or offer five years of rent-free space. If they lack funds to purchase equipment, they expect the government to provide financing.

In some cases, local governments hastily attract enterprises that do not align with local market dynamics simply to meet investment targets. However, under the banner of “optimizing the business environment,” local governments have placed greater emphasis on policy measures.

The market is a mixed bag, with many projects using the “business environment” as a banner to siphon off local government resources. In particular, when some localities encounter major projects, they cater to investors’ every whim and spare no effort to satisfy their demands.

In an effort to create a favorable business environment, local governments roll out every possible policy to resolve the difficulties faced by enterprises and polish their reputation for investment promotion.

However, in terms of service delivery, there is a lack of appropriate mechanisms and methods. This has created a contradictory situation where policies are strict but services are lax, and policies are favorable but services are poor, leading investors to judge the quality of the business environment based solely on the strength of the policies offered.

It is indeed no easy task for enterprises to survive and thrive. In the process of attracting investment, providing policy support to investors is both necessary and feasible. For high-quality projects, support should be extended in areas such as policy, resources, and financing.

However, the core prerequisite for a business to survive is market competitiveness—not survival determined by local policies.

Practice has also proven that in regions where there is no shortage of projects, professional capabilities are high, service quality is excellent, and investor feedback is positive.

Walk the Talk

From the central government down to the local grassroots level, attention to the business environment has been a consistent priority.

So, what exactly constitutes a “good business environment”?

In a market economy, it means ensuring fair competition and allowing businesses to thrive or fail based on market forces.

It does not mean allowing enterprises to “hold local governments hostage” during investment promotion, letting bad money drive out good, and ultimately leaving everyone in a bind.

Of course, as various regions rush to roll out new investment policies, have they reviewed past policies to determine which have been effectively implemented and which remain mere pipe dreams?

Have the reasons for non-implementation been identified? How can we avoid the phenomenon of having policies without results, or making promises that are never fulfilled?

If these issues are not thoroughly investigated and addressed, even new policies will merely attract attention without yielding tangible results. We must avoid repeating the lessons learned from going through the motions and prioritizing form over substance.

Not long ago, while meeting with a company, I learned that the local government was facing financial difficulties, resulting in delayed policy implementation. They also reported that policies changed constantly, with decision-making treated like a child’s game.

Previously, when I secured a plot of land for development in a certain area, I never expected that years later, it would still be a field of fruit trees, with the government not even having completed the land expropriation procedures.

Recalling the negotiations with the government at the time, the process of finalizing various agreements and project proposals dragged on for months. Now, the land transfer fees alone amount to tens of millions, and the annual interest burden is substantial.

The company stated that since the country has intensified its reform efforts, policy changes have become frequent. Particularly during the transition between old and new policies, “gaps” inevitably arise, leaving businesses at a loss as to how to proceed.

This clearly indicates that in the business environment, there are additional requirements beyond the official list and extra approvals beyond the standard process—it is not simply a matter of “anything not prohibited by law is permitted.”

However, many regions in southern China have introduced “Business Environment Experience Officers.”

These primarily include representatives from various enterprises and associations, frontline investment service staff, professionals, media workers, and socially-minded individuals who voluntarily participate in business environment oversight.

Through this approach, they actively participate and gain firsthand experience, providing feedback on market entities’ genuine perceptions of the business environment, as well as the difficulties, issues, and suggestions they encounter in production and operations.

In addition, some localities have launched the “Bureau Chiefs Experience the Process” initiative. By stepping into the shoes of ordinary citizens, they aim to identify and resolve bottlenecks and pain points in development.

Precision-Targeted Business Support, Optimized Environment

While “optimizing the business environment” is a nationwide priority, let’s start by discussing the allocation of resources and factors.

What are the immovable factors? Primarily land, location, climate, and mineral resources.

These are inherent conditions; while indispensable, they are no longer decisive factors for competitive advantage.

Enterprises, talent, capital, and technology—these are mobile factors. For a region to achieve sustainable development, while having these factors in place is essential, what matters even more is their optimal allocation.

A region’s ability to continuously attract mobile factors is the key to ultimately prevailing in intense regional competition.

The 20th National Congress emphasized the “Three Primaries”: “Science and technology are the primary productive force; talent is the primary resource; and innovation is the primary driving force.”

Why would these mobile factors gravitate toward a particular region rather than elsewhere?

It is not hard to imagine: it depends on whether a fair, market-oriented business environment can be created.

And when it comes to optimizing a fair, market-oriented “business environment,” the first key word is “business.”

By segmenting service offerings according to the characteristics and specific needs of enterprises, we introduce the concept of “precision business support.”

To put it bluntly, investors aim to make money, not to enjoy services. If a region cannot generate profits, even the most attentive “concierge-style” service will not persuade enterprises to choose it.

This is similar to Maslow’s hierarchy of needs; business needs can be divided into five levels:

Levels of Business Needs

Level 1: Normal operations, i.e., survival needs.

Level 2: Sustained profitability, i.e., safety needs.

Level 3: Maintaining profitability, i.e., operational needs.

Fourth Level: Delivering Value, i.e., social needs.

Fifth Tier: Industry Leadership, i.e., the need for advancement.

These five levels follow the law of hierarchical satisfaction. At different stages of development, every enterprise has different priorities and varying requirements for the business environment, resulting in distinct “precision business” strategies.

This explains why different enterprises react differently to the same business services.

Today, many regions are building “industrial ecosystems” precisely to create an environment for sustainable enterprise development, providing fertile ground for deep-rooted operations, and maximizing the fulfillment of corporate needs.

From a production perspective, an industrial ecosystem extends beyond the traditional industrial chain to encompass related sectors. For example, this includes derivative industries and associated industries. Take the new energy vehicle industry as an example: in addition to the vehicle assembly and supporting industries, it also encompasses fields such as smart in-vehicle systems, new materials, and energy storage.

Within the new materials sector, there are further connections to specialty materials, high-end materials, and composite materials. These directions intertwine and permeate one another, expanding niche markets and enriching the industrial landscape, thereby enabling enterprises to align their needs, establish business connections, and integrate into the market.

It is foreseeable that the industrial ecosystem constitutes the most significant business environment.

Moving forward, local governments must move beyond the stage of competing with “sell-the-family-silverware” style preferential policies. Instead, they should build symbiotic, mutually beneficial, and regenerative industrial ecosystems—these are the true “business paradises” that attract enterprises, allowing a “good business environment” to play a decisive role in the allocation of market resources.