When following economic news, one often hears about industrial relocation and companies moving their operations overseas.

Huang Qifan believes that industrial relocation is a “natural phenomenon.”

In reality, this reflects investment patterns, and investment promotion serves as a proactive mechanism to facilitate industrial relocation.

Industrial upgrading and iteration, regional restructuring, optimization of industrial chains, and the spatial relocation of productive forces all drive regional development.

Fundamentally, industrial relocation is a market-driven choice; it should not and cannot be decided by the government.

Where industries relocate is primarily determined by a region’s capacity to absorb them and its market appeal.

01 Why Do Companies Relocate?

In a stable market, the primary factors determining corporate investment are efficiency-driven and cost-driven.

Industries at higher levels of the industrial gradient place greater emphasis on efficiency-driven factors, with cost-driven factors coming second. Conversely, industries at lower levels of the industrial gradient prioritize cost-driven factors, with efficiency-driven factors taking a back seat.

As the name implies, efficiency-driven refers to the principle that the faster the production efficiency, the better. Such enterprises generally operate in higher-tier industries.

If an industry relocates, it will inevitably move to areas with a suitable labor force, well-developed basic infrastructure, and a robust supply chain.

For high-end manufacturing, accelerating production efficiency and shortening production cycles have become key priorities for increasing profit margins.

At the macro level, industrial relocation refers to the spatial movement of industries triggered by changes in resource endowments or market supply and demand conditions.

At the micro level, it can be understood as a process of relocation driven by a company’s pursuit of profit maximization. From the perspective of investment promotion, the goal is to improve the efficiency of corporate relocation while minimizing the number of moves.

For example, why has the Chengdu-Chongqing region been able to absorb the coastal electronics industry chain?

The answer lies in the fact that the electronics manufacturing sector is a mid-to-high-end industry driven by efficiency.

We have provided services to the Sichuan Pidu Smart Technology Park, where the park’s development was nearing completion last year. By precisely attracting electronics and information technology enterprises, we strengthened the resilience of the industrial chain.

Guided by the principle of “supporting the industry while prioritizing supporting facilities,” we are continuously refining the “half-hour” support zone. The relocation of electronics and information technology enterprises is precisely driven by a focus on “neighborhood-based layout.”

Within the Chengdu-Chongqing Economic Circle, the entire electronics manufacturing supply chain can be found within the region.

Most people have heard of Sichuan Changhong. In addition to defense and home appliances, the company also produces consumer electronics. Back when Changhong was manufacturing televisions, it had already established a supply chain spanning everything from displays to batteries; with just a minor adjustment to production lines, it could supply components for smartphones and tablets.

From this perspective, for mid-to-high-end manufacturing—which relies on complex and redundant supply chains—all production processes can be completed within the same region.

This means logistics routes are shortened, product integration is accelerated, and costs are naturally reduced.

Industrial relocation sites generally focus on building industrial transfer clusters, forming a cross-regional industrial landscape characterized by complementary advantages and coordinated development.

For enterprises, key considerations when selecting a relocation site include: whether the location suits their current stage of development, the market capacity of the local and surrounding areas, the completeness of industrial support systems, and labor recruitment and employment costs.

Today, through the establishment of “reverse enclaves” in Pearl River Delta cities such as Guangzhou and Shenzhen, resources that were previously scarce are now flowing to Eastern, Western, and Northern Guangdong.

A startup specializing in the R&D of 3D modeling equipment—which fills a domestic technological gap—is set to launch its industrial operations in Shanwei.

A well-known manufacturer of game controllers and smartwatches is set to invest in a factory in Longchuan, Heyuan.

A Qingyuan-based company that had struggled to recruit suitable talent—and had even set up a branch in Guangzhou to attract candidates—has now successfully recruited e-commerce professionals in a short period of time.

As a result, the “science and technology innovation centers” established by enterprises in Eastern, Western, and Northern Guangdong within these “reverse enclaves” can drive the transformation and upgrading of existing enterprises.

Meanwhile, attracting the incubation and establishment of science and technology innovation projects in “host regions” can effectively foster the growth of emerging industries, driving the development of new industries and new-quality productive forces with stronger innovation characteristics across Eastern, Western, and Northern Guangdong.

At this stage, industrial relocation is driving the implementation of various projects through three models: forward-looking enclaves, reverse enclaves, and resource exchange.

02 Effectively Facilitating Industrial Relocation

Industrial relocation is the result of both market-driven resource reallocation and government policy promotion.

To effectively receive industrial relocation, we must first clarify the relationship between “receiving” and “accepting.”

"Receiving" means accepting and supporting from below. This requires a solid foundation and platform to support the transferred industries, ensuring they can be effectively accommodated.

"Connecting" means integrating into a unified whole. This implies that the transferred industries must be organically integrated with local industries; simply "receiving" without "connecting" would squander development opportunities.

In the process of industrial relocation, if “receiving” is the foundation and “integrating” is the means, then “fusion” is the ultimate goal. Specifically, this means fusing the relocated industries with local industries.

Behind industrial relocation lies the synergistic coordination of technological innovation resources, human capital, industrial support systems, and the business environment. If these elements are well-established in a region, its capacity to receive such transfers will naturally be sufficient.

Regarding investment promotion, new approaches are emerging to address core business challenges, attract leading enterprises, and foster the clustering of high-value-added industries.

In recent years, due to environmental regulations, the Pearl River Delta has prohibited the printing industry from operating in an unregulated manner.

Undoubtedly, the options were either to raise environmental treatment standards or relocate to other regions.

From the perspective of printing companies, Guangzhou is a hub for the industry, and business is inevitably difficult far from here. If they move to Western Guangdong, the transportation costs, time, and effort involved are difficult to accept.

If Foshan had an industrial park that met emission standards, it could accommodate printing enterprises. The result would be that all attracted enterprises would relocate there and eventually integrate with local industries.

Huang Qifan also noted that during periods of high economic activity, with a sufficient supply of projects of varying scales, coastal and inland regions, as well as large cities and small-to-medium-sized cities, could each find what they needed.

However, under the “new normal,” there is a scarcity of industrial and commercial products and projects with effective supply, and the traditional approach of regions competing to attract investment from one another will face resistance.

At the same time, truly high-quality enterprises place greater emphasis on full industrial chain integration and future development; cost-driven or extensive investment promotion approaches are not the most practical or effective methods.

Regional investment promotion cannot rely solely on industrial relocation. Competition for top-tier enterprises is intensifying, yet investment promotion remains fragmented across data silos; information barriers hinder precise and efficient investment attraction.

Against this backdrop, investment promotion strategies must evolve. Decision-makers must recognize the need to understand the latest trends and define precise industrial positioning; promote industrial integration and foster complementary, collaborative development; gain insights into industrial needs to achieve targeted investment attraction; and drive industrial iteration to lead high-quality development.

This is a challenge facing all localities, and it is why we have remained dedicated to investment promotion for the past fifteen years.

03 Traditional Industries Are Not Low-End

Unnoticed, traditional industries have become the “stepchildren” of the economy.

Due to various factors, governments have phased out “backward production capacity” through measures such as environmental regulations and relocation, leaving traditional industries struggling to regain their footing.

Gradually, “traditional industries” have come to be defined as “low-end industries.”

When it comes to attracting investment, most localities either target “high-tech, precision, and cutting-edge” sectors or at least try to tie their efforts to “smart technology” in some way.

However, traditional industries are the cornerstone of high-end industries. In other words, upgrading and transforming traditional industries is the best shortcut.

Conversely, most regions will struggle to succeed if they abandon traditional industries and start from scratch to develop new ones.

On that note, let me share a real-life investment case:

Previously, a certain locality established a new home furnishings industrial park, with its investment promotion efforts heavily focused on smart home enterprises.

Traditional home furnishings companies, however, were not given much consideration. One project, for instance, primarily focused on producing solid wood furniture, panel furniture, and similar products.

As soon as it was recommended to the government, it was politely turned down—likely because the enterprise was perceived as producing relatively low-end products. In reality, this was not the case; the enterprise was simply a traditional one, and traditional does not equate to low-end.

After persistent guidance and communication with the local government, the project was ultimately approved. Once production began, it became a leading enterprise in the region.

Today, the company has grown significantly. In the mass production phase of industrial manufacturing, robots handle virtually all tasks, enabling a "lights-out factory."

This clearly demonstrates that there are no backward industries, only backward processes; industrial upgrading is inevitable.

As for the government, the competitive edge of traditional industries must not only be preserved but further consolidated and enhanced through transformation and upgrading.

In particular, for high-end industries to secure profits and market share, they must integrate with low- and mid-end industries to form comprehensive and well-developed industrial and supply chains.

Some localities, rather than focusing on addressing the development challenges of low-end industries, are instead trying every means to relocate them, viewing them as a chronic obstacle to the high-end transformation of local industries.

Have these cities ever considered whether they have the capacity to develop “high-end industries”? Do they possess the necessary industrial foundation? Do they have a market?

Do they believe that simply by enacting policies, enterprises will come? If they focus solely on “high-end industries,” where will the suppliers come from? And how will they address the employment issues of the remaining population?

Furthermore, some cities have even rolled out a series of investment promotion policies centered on “high-end industries.” Given the current situation, where can they quickly find suitable enterprises to attract?

As local governments, their role in industrial development should be to foster enterprise growth and guide industrial transformation and upgrading—not to step directly onto the field as referees, issuing “red cards” to send away what they deem “low-end industries.”

In regional development, both central and local authorities must understand the laws of industrial development and clearly identify local industrial strengths. Only after ensuring a complete industrial chain should they proceed to drive industrial transformation and upgrading.

Most importantly, the focus should shift from merely attracting leading enterprises to cultivating a cohort of such enterprises.

Industrial relocation is not a one-time event of moving and settling in, but rather an ongoing process that requires comprehensive, meticulous, and full-cycle support.