By reviewing the past, we gain new insights—and the same applies to investing.
We are more than halfway through 2022. Numerous site selection developments have resurfaced, appearing chaotic at first glance but actually reflecting the prevailing trends. As the saying goes, “The ducks know first when the spring river warms.” Those on the front lines of industrial investment promotion must “hear the cannon fire, see the smoke of battle, and stay grounded.” Who is expanding their footprint? Who is quietly exiting the scene? And what investment clues can we glean from market performance? Looking back is to move forward better; let the past remain history forever. All choices made today will reveal their answers in the future.
01 Riding the Wave of Growth
JinkoSolar’s 5 Billion Yuan Project Settles in Hefei
Hefei High-Tech Zone and JinkoSolar have signed a cooperation agreement, officially establishing the Hefei JinkoSolar 25GW Photovoltaic Industrial Park. Both parties believe that the photovoltaic industry has entered a golden “window of opportunity.” With a solid foundation and deep ties between the city and the enterprise, the time is ripe for a “second bloom,” and the momentum is already in place. When it comes to photovoltaics, it boils down to solar power generation. Solar energy has long been in the public eye and is certainly nothing new, and photovoltaic companies haven’t made much of a splash in recent years. But in 2020, everything suddenly changed. Under the vision of “carbon neutrality,” the photovoltaic industry has been booming, with waves of capacity expansion surging one after another. Over the past two years, downstream developers in the photovoltaic industry have been venting their frustrations, seemingly on the verge of a revolt.Rising prices for polysilicon in the upstream sector have forced some midstream module manufacturers to halt or reduce production, while demand for centralized power plant installations has been suppressed. The situation has become one where “the upstream rakes in a fortune daily, while the downstream is full of grievances,” leading to a scenario where one segment prospers while the rest of the industry struggles. It is reported that 60% of the profits across the entire photovoltaic industry chain are captured by the polysilicon sector—is this acceptable? Consequently, the issue of unbalanced development across the industry chain has remained particularly prominent. This is primarily due to mismatched production capacities resulting from expansion across various segments, which has directly led to reduced output among midstream module manufacturers and lower utilization rates for downstream power plant projects, leaving them teetering on the brink of profitability. When it comes to the development of the photovoltaic industry, short-term profits are clearly not the most important factor. Instead, local governments must seize the opportunity presented by industrial transformation to promote technological innovation among enterprises and anchor the industry chain’s influence on the sector as a whole.
02 Securing a Spot
CATL Invests 14 Billion in Jining
After several rounds of speculation, CATL’s move into Shandong has finally been confirmed, marking a significant addition to Shandong’s new energy industry landscape. Jining will also benefit from the backing of this industry leader, poised to achieve new “acceleration” in the power battery sector. Of course, the initiative extends beyond power batteries to include exploration of ship electrification. In this regard, Jining Energy Development Group Co., Ltd. will become a close partner of CATL. New energy vehicles are currently a red-hot sector worldwide. In this arena, leading players in hard technology industries such as energy storage, lithium batteries, and new materials have emerged one after another. During this critical window for capacity expansion, provinces and cities across the country are eagerly hoping to secure a share of the pie and land high-quality projects. However, rather than a competition for projects, this is essentially a battle for the future.Shandong has played its “opening move” and made its “key moves,” securing a favorable position in the division of labor within the new energy industry. For CATL, the bold decision to significantly expand production capacity stems from its vast “network of partners.”Automotive giants such as Dongfeng Motor, GAC Group, SAIC Motor, FAW Group, Geely, and Honda are all its partners. It can be said that one out of every three electric vehicles is powered by CATL. If we were to ask which industries can sustain annual growth exceeding 20% over the next five years, new energy would certainly be among them. Currently, speculation in upstream raw materials has caused short-term disruptions in the supply chain, but mineral resources are not the bottleneck for industrial development.
03 Joining Forces Once Again
Hengtong New Materials Project Invests 2 Billion in Dalad Banner
On May 31, the People’s Government of Dalate Banner held a project signing symposium with Hengtong Group, signing investment cooperation agreements with Jiangsu Hengtong Optical Guide New Materials Co., Ltd. and Jiangsu Hengxin Quartz Technology Co., Ltd. The total value of the agreements reached 2 billion yuan, aligning closely with Dalate Banner’s strategic focus on “targeted investment promotion for specialized, refined, distinctive, and innovative enterprises,” and will effectively promote the transformation and upgrading of local industries. This marks the second successful collaboration between Guchuan United and Hengtong Group. The service team worked tirelessly to facilitate precise government-enterprise coordination and expedite the project’s establishment, earning high praise from both parties. Upon receiving Hengtong Group’s site selection requirements, Guchuan United leveraged the support of the Guchuan Data Center and the Guchuan Industrial Research Institute to precisely match the company’s needs with the investment promotion requirements of prospective regions.
Combining this with an accurate assessment of each region’s resource endowments, industrial foundations, and capacity to host such projects, the team ultimately identified Dalate Banner in Ordos City, Inner Mongolia, as the target location. As one of the world’s top three fiber optic communication companies and a member of the Top 500 Chinese Enterprises, Hengtong Group’s decision to locate these two major projects here will help refine the Group’s strategic layout in the upstream raw materials sector, further extend its industrial chain, and expand into new fields. In the future, Dalate Banner will leverage the industrial agglomeration effect driven by leading enterprises to continuously enhance related industrial, supply, and value chains, achieving a win-win outcome for regional economic development and environmental protection.
04 Creating Opportunities
BYD Invests 10 Billion Yuan in Jinan
Since the registration and establishment of Jinan BYD Semiconductor Co., Ltd. last August, BYD’s ties to Jinan have grown increasingly strong. This July, another major BYD project was launched in the High-Tech Zone, with a planned total investment of approximately 10 billion yuan. The project involves the construction of 16 power battery production lines, with a full-capacity output of 30 GWh per year. It is evident that Jinan and BYD are playing a fast-paced game of chess. At the end of last year, BYD acquired 2,946 mu of land in Jinan’s Start-up Zone for 1.031 billion yuan.In just six months, BYD has successively established battery and chip production bases as well as an automotive industrial park in Jinan. This is no longer merely an industrial chain, but an industrial network. The two intertwined main themes behind this development deserve even closer attention: One is urban competition. In the cultivation of emerging industries that will shape a city’s development over the next two to three decades, the new energy vehicle sector is undoubtedly the hottest. Major cities are engaged in both open and covert battles over this “ticket,” with investment promotion campaigns erupting one after another. The other is the race for industrial leadership. In 2022, driven by a convergence of factors, the new energy vehicle industry will face greater uncertainties, compelling BYD to accelerate its strategic deployment. If this trend continues, the ultimate outcome will be a city deeply tied to a giant in the new energy vehicle sector, jointly pursuing a path of “common prosperity.” This also confirms that in the realm of new energy vehicles, the competition is not about individual projects or industries—it is about the future.
05 Nuclear Power City
China National Nuclear Corporation Settles in Yantai
In May of this year, China Power Investment Nuclear Power Co., Ltd. completed the business registration procedures for its relocation from Beijing to Yantai and successfully obtained a new business license, marking the official relocation of the State Power Investment Corporation’s nuclear energy headquarters from Beijing to Yantai, Shandong. Analysts suggest that Yantai’s vigorous development of nuclear power is, on the one hand, linked to Shandong’s accelerated pace of energy structure adjustment and efforts to transform old and new growth drivers; on the other hand, it is a crucial measure to help Yantai achieve its “dual carbon” goals.
As a key hub city within the Bohai Rim Economic Zone and the Jiaodong Economic Zone, Yantai was selected in 2017 as part of the third batch of national low-carbon city pilot projects, becoming one of 87 pilot cities nationwide. The relocation of China Power Nuclear to Yantai is a result of the city’s efforts to advance carbon peaking and carbon neutrality, and also marks a significant milestone in its endeavor to build itself into a “City of Nuclear Power.” Since last year, the pace of headquarters relocations by central state-owned enterprises (SOEs) has accelerated, with nearly 10 such enterprises having announced plans to select new locations or relocate their headquarters.The trend of SOE headquarters relocations reflects China’s new round of economic restructuring. Of course, SOE site selection also aligns with national strategy, with relocation destinations chosen based on functional requirements. For example, based on functional considerations, China National Tobacco Corporation should be located in Yunnan, and China National Tourism Group should be located in Hainan. Furthermore, since Northeast China serves as the nation’s granary, COFCO Group’s relocation to the region is considered particularly well-founded.
06 New Speculation:
Where Will Tesla’s Second Factory Be Located?
Several versions have circulated regarding the location of Tesla’s second factory. Initially, Qingdao and Guangzhou were mentioned; later reports suggested Shanghai, only to be immediately denied by insiders.
The longer the decision remains unresolved, the more cities find themselves “eager to compete.” It must be said that attracting a super-leader in the new energy industry to set up shop truly comes down to “internal strength.” At a minimum, three key requirements must be met: a well-developed automotive supply chain, proximity to core markets with strong demand, and a large port with a sophisticated logistics system. Why is a well-developed automotive supply chain essential? Because Tesla’s need to increase production capacity is so urgent. Tesla prefers to build factories in areas with mature supply chains—whether in the immediate vicinity or nearby—so that production can begin immediately upon construction to expand capacity, rather than expending energy to build an automotive supply chain from scratch. Furthermore, a concentrated upstream and downstream supply chain helps the company reduce procurement costs, achieving the goals of “more, faster, better, and cheaper.” Regardless of where Tesla deploys its new production capacity, the situation differs from its initial entry into China. Back then, there was a ramp-up process that lasted “as long as” over a year, giving suppliers a time window to expand production and adjust their operations. However, the ramp-up period for the new capacity will be significantly shorter; production must approach full capacity immediately after trial runs, which means the company can only choose a mature parts supply network. From this perspective, the Lingang Phase II site offers a significant time advantage over building a second factory in a different location. No matter how the situation evolves, when new energy companies decide where to locate production capacity, supply chain considerations far outweigh other factors—and Tesla is no exception.
