Are you heading to Inner Mongolia to "snap up projects"?

As a post-90s investment promoter, I’ve always focused my efforts on Beijing, Shanghai, and Guangzhou.

The result? Five projects in seven days, and not a single one closed...

Don’t be surprised—Beijing, Shanghai, and Guangzhou only go after the best projects.

Top-tier companies? Beijing, Shanghai, and Guangzhou won’t let them go—you can’t even get them to consider moving here.

As for subpar companies, they can’t make it in Beijing, Shanghai, or Guangzhou, so they settle for second-best.

Companies that grow through market competition become stronger and more competitive as they expand. But companies that rely on government support will only turn into “giant babies.”

Who in Beijing, Shanghai, or Guangzhou wants to compete for a “giant baby”?

Moving to Beijing, Shanghai, and Guangzhou: There’s No Need to Compete for Resources

Not long ago, the Investment Promotion Center in my third-tier city was officially inaugurated.

Its five specialized investment promotion teams have already been dispatched to Beijing, Shanghai, Guangdong, and other regions.

To many, this newly established agency—at the deputy-director level—demonstrates the local government’s attitude and determination to “attract major investments and big-name businesses.”

To locals, the establishment of such a specialized agency is still a “novelty.”

One might assume that rushing to Beijing, Shanghai, and Guangdong means investment promotion is in full swing.

In reality, competition for investment runs deep, and corporate investment decisions carry immense weight.

At the time, I did some digging.

Among them, Beijing’s investment promotion team numbered over 10,000 people, including representatives from municipal and district-level government departments as well as numerous staff from state-owned enterprises.

It is understood that the most important role of SOEs in investment promotion is to attract investment through their own investments.

In Guangdong, in addition to local government offices competing for projects, many prefecture-level cities have established investment promotion offices. These offices function almost like chambers of commerce.

Originally, the primary purpose of chambers of commerce was to serve member enterprises. Now, assisting their home regions with investment promotion has become one of their key tasks. Seven or eight prefecture-level cities in Anhui have established offices in Shenzhen dedicated to investment promotion, with a combined staff of 50 to 60 people.

In Shanghai, companies relocating from other regions have become the “prized targets” of investment promotion efforts.

Shanghai is a place where “a horse would die running up a hill”—the daily commute alone from hotels to offices covers a distance of over 20 miles.

On one hand, they must contact investors and connect with project resources; on the other, they must secure a permanent office as soon as possible to reduce lodging expenses.

Although businesses are everywhere in Shanghai, they’re like trying to reach for the moon with a ladder—out of reach.

One food company specializes in salmon processing and cold-chain transportation. Its specific site requirements include proximity to the port and raw materials, as well as facilities equipped with steam, natural gas, and grease traps.

These prerequisites alone are enough to rule out a significant portion of investment promotion personnel in Shanghai.

In Beijing, Shanghai, and Guangzhou, the standards for incoming enterprises are as follows: headquarters-type enterprises must achieve a tax revenue of 2 million yuan or more per mu, while the threshold for manufacturing enterprises is 1 million yuan or more per mu.

Such high thresholds decisively shut out lower-tier enterprises.

After working there for a while, I realized that even if we managed to secure a project, the quality of the companies was often “rejected” by other regions.

Some enterprises cannot leave their local areas due to factors such as industrial chains, markets, and talent, requiring our field staff to plan ahead and have them relocate their registered addresses first. Only after the enterprise’s operations have stabilized can they gradually relocate.

The resulting investment promotion costs are self-evident. To eliminate barriers to attracting enterprises and reduce investment promotion costs, [Investment Promotion Network] is dedicated to bridging the “last mile” of enterprise recruitment information. With a single click to call, both parties can connect immediately.

(For precise project matching, simply scan the QR code to add us)

Attracting investment is valuable, but profits may not follow

After establishing a presence in Beijing, Shanghai, and Guangzhou, I dispelled the misconception about land prices. I had always believed that land in the north was more expensive than in the south.

In reality, government pricing for industrial land is roughly the same.

I once spoke with an entrepreneur who said, “The government gives so much money to those unreliable investment promotion agencies—they’d be better off giving it to you instead.”

He replied, “I don’t want it. If I take government money, they’ll start meddling in our business and disrupting our normal operations.”

Indeed, why would a good project let the government share in the profits?

There’s a simple criterion for determining whether an investment project is a good one.

That is: projects that require government funding are often not good ones. Of course, this isn’t an absolute rule, but it’s worth being wary of.

After settling in Beijing, Shanghai, and Guangzhou, I’ve also heard from companies that some projects were abandoned after being relocated.

Either the local government undergoes a leadership transition—with the entire leadership team replaced—and the new officials refuse to deal with past issues; or when projects are pushed up from the grassroots level, any problems get blocked by higher-ups before they can be escalated, and the leaders won’t even bother to visit the site.

In many places, significant financial resources are poured into attracting investment from Beijing, Shanghai, and Guangzhou, yet the results are minimal. This is akin to spending money to send a child to tutoring classes—it’s merely a psychological comfort for lazy parents who believe this will guarantee their child admission to a prestigious school.

Even when financial resources are directly funneled to companies attracted through investment promotion, it serves only as a psychological comfort for a government that shirks responsibility and fails to act, under the illusion that this constitutes a “good business environment.”

In short, a “good business environment” is one where the market plays a decisive role in resource allocation, while a “pseudo-business environment” is one where the mayor plays a decisive role in resource allocation.

A thread must be threaded through a needle; connecting dots forms a surface

Today, factors of production generally flow freely: labor can seek work anywhere, and enterprises can relocate freely.

Given this reality, why do I still rush to Beijing, Shanghai, and Guangzhou to desperately court investment, yet struggle to attract quality enterprises?

First, the companies that were meant to leave have already left.

Fleeing Beijing, Shanghai, and Guangzhou—once a hotly debated personal choice—has long since become a reality for enterprises.

The migration of new-generation manufacturing to second-tier cities in central and western China is a clear trend. In recent years, Huawei relocated its smartphone manufacturing base to Dongguan, and ZTE moved its production base to Heyuan.

Among second-tier cities, Wuhan ranks at the forefront in terms of its accumulated experience and investment in manufacturing, and has even been designated as the second National Manufacturing Innovation Center in the smart hardware sector.

Take Xiaomi, for example: expansion is a pressing need, reducing operational costs through manufacturing is imperative, and the shift of manufacturing to second-tier cities is an inevitable trend.

For Wuhan, the arrival of a unicorn like Xiaomi has undeniably boosted its appeal to local talent; the two parties hit it off immediately, each getting what they needed.

These cities boast manufacturing infrastructure that rivals that of first-tier cities, a talent pool comparable to those of first-tier cities, and investment incentives far superior to those of Beijing, Shanghai, and Guangzhou—all of which have become compelling reasons for companies to relocate to second-tier cities.

Clearly, it is already too late to snap up the best projects at this stage.

Second, an immature industrial chain makes it difficult to establish operations.

The impact of industrial chains on enterprises depends on the type of business and its stage of development, and industrial chains in different regions offer distinct advantages.

Processing-oriented enterprises have higher requirements for industrial chain support, needing to leverage the clustering effects of the industrial chain to reduce costs and increase profit margins. In contrast, technology-based enterprises with high product value-added place greater emphasis on local infrastructure and the business environment.

If a company is concerned that the local industrial chain is not mature enough to support its establishment, government departments can conduct targeted investment promotion based on the list of suppliers provided by the company.

For sectors with mature industrial chains, investment promotion should focus on addressing gaps. For enterprises in sectors where an industrial chain has not yet formed, efforts should not only target individual enterprises but also promote the entire industrial chain by attracting upstream and downstream supporting enterprises.

Some overseas investment promotion offices are fixated on attracting industries and steering projects, yet they remain proficient only in “old-school” investment promotion—a well-worn, routine mindset.

Hefei’s approach to investment promotion is not particularly novel, and the secrets to local government success are already widely known. Yet why is it so difficult to replicate Hefei’s model?

The reason lies in the fact that, through three waves of industrial upgrading, Hefei has cultivated a group of highly specialized economic and technical officials. Each has their own specific responsibilities, and their understanding, mastery, and experience in identifying high-tech industries have been distilled into the investment promotion process, forming the local government’s “muscle memory.”

Although it appears that Hefei is taking the initiative, its success actually relies on sufficient, massive demand from upstream sectors—demand that arises spontaneously from the market, rather than being “artificially engineered” by the government.

Conclusion

After hitting a few walls while courting investment in Beijing, Shanghai, and Guangzhou, I’ve seen through it all and no longer have the enthusiasm to seek out investment leads…

Local governments operate on leverage, and debt comes at a cost. If they attract projects in Beijing, Shanghai, and Guangzhou—where initial investments are high and returns are slow to materialize—the system will eventually collapse.

And the good projects may no longer be found in Beijing, Shanghai, and Guangzhou...