Last month, Suzhou hosted an important conference focused on regional integration.

The goal is to achieve synergy and complementarity among industrial clusters, deepen the integration of administrative systems, and bid farewell to the "fragmented Jiangsu" phenomenon. Industrial synergy has been a goal pursued for many years in the Yangtze River Delta region and across the nation.

As the main driver of national economic growth, the Yangtze River Delta’s sustained rapid development has inevitably led to industrial homogeneity. Especially in this era of high-quality development, industrial homogeneity has become a thorn in the side—a challenge the region urgently needs to overcome.

Unavoidable, yet unbreakable

More than two decades ago, the proportion of manufacturing output in Shanghai, Jiangsu, and Zhejiang was roughly equal, and the convergence of industrial structures became a prominent and controversial feature of the region’s economic development.

In terms of dominant industrial positioning, Zhejiang’s planned focus at the time was on electronics, machinery, chemicals, and pharmaceuticals; Shanghai’s was on electronic information, chemical and pharmaceutical industries, transportation equipment, machinery, and steel; and Jiangsu’s dominant industrial positioning was largely consistent with that of Shanghai and Zhejiang.

In relevant research literature, scientific calculations were conducted to assess the degree of similarity in industrial sector structures among the three regions in 2002: the similarity coefficient between Shanghai and Zhejiang was 0.70, between Shanghai and Jiangsu was 0.84, and between Zhejiang and Jiangsu reached 0.91.

However, if we look back fifteen years, we can see that the structural similarity coefficient has been steadily declining.

However, if the scope of the discussion is narrowed, the similarity coefficients of industrial structures between individual cities become even higher: the similarity coefficients for the secondary industries of major cities in Shanghai and Zhejiang, as well as major cities in Jiangsu, all exceed 0.9, indicating that the degree of structural homogeneity has consistently remained at a high level.

This has sparked intense debate. Some argue that the Yangtze River Delta region suffers from severe industrial homogeneity, which will inevitably lead to cutthroat competition; others contend that the degree of isomorphism is not as severe, and that industrial convergence primarily fosters regional industrial clustering effects.

For instance, the Yangtze River Delta boasts a large-scale, well-integrated automotive industrial cluster where upstream and downstream sectors are tightly interconnected. A single vehicle requires over 10,000 parts, all of which can be sourced and assembled here. The scale of this cluster serves as the “heart” of the region’s vehicle manufacturing industry.

From this perspective, the latter argument is not without merit. Similar resource endowments, cultural backgrounds, and levels of development naturally lead to similar supply and demand patterns.

According to data from the *International Statistical Yearbook* (1999), the industrial structure similarity coefficients for the United States/Germany, United States/France, and Germany/France are 0.93, 0.95, and 0.94, respectively—indicating a degree of industrial homogeneity even higher than that among the provinces and cities within the Yangtze River Delta.

A sound development strategy must be formulated based on the region’s resource endowments and factor structure. From this perspective, local governments will inevitably make the same or similar choices when selecting their region’s leading industries.

If we further refine the analysis to the level of “major products,” the similarity coefficients drop significantly, indicating that a division of labor still exists within the Yangtze River Delta region. Moreover, as the market continues to expand, product differentiation and market segmentation will deepen further.

It can be said that isomorphism is an inevitable path for coordinated industrial development—one that cannot be avoided but is not necessarily a stumbling block.

At this point, some may ask: while well-developed regions certainly won’t stumble, does industrial homogeneity still offer more benefits than drawbacks for less developed regions?

Unraveling the “Tangle” of Homogeneous Competition

Prior to this, scholars have conducted research on two distinct urban clusters.

The conclusion reached was that cities with a high degree of industrial similarity do not necessarily have lower economic levels; conversely, cities with low similarity do not necessarily have higher economic levels.

Logically speaking, the more similar the goods produced by various entities, the more likely it is to lead to inventory buildup, oversupply, product devaluation, and a situation where no one makes a profit.

However, in reality, the sub-sectors within each type of industry vary in scale, and supply chains vary in length, so the impact of homogeneity differs accordingly.

Currently, when "advantageous" industries in different regions develop in parallel, two general outcomes emerge: either redundant construction or industrial agglomeration.

Whether the outcome is the former or the latter depends on the reasons behind the local industrial similarities, combined with a comprehensive analysis of various factors such as local resource endowments, markets, technology, and institutional mechanisms.

For example, the Beijing-Tianjin-Hebei region is dominated by heavy industry reliant on resource extraction. Due to similar resource endowments and institutional mechanisms, cities within the region are more prone to duplicate construction and overcapacity.

Take the Yangtze River Delta region mentioned earlier: since export trade has the greatest impact on its economic trends, and its dominant industries tend to feature long supply chains and numerous specialized segments, homogenization will not cause significant negative impacts in the short term.

It is important to note that this conclusion does not imply we should tacitly accept the legitimacy of homogeneity. The homogenized competition resulting from such structural similarities is already a reality.

To prevail in intense competition, one must secure resources. To pool these resources, local governments and enterprises have formed alliances bound by economic interests and have used administrative measures to suppress the free flow of production factors, thereby segmenting markets and leading to uneven development across regions.

This is why the state issued the "Opinions on Accelerating the Construction of a Unified National Market" this year, proposing standards for a domestic economic cycle characterized by homogenization and the emergence of new industries at a critical juncture in the development of the national modern industrial system.

Take, for example, two leading biopharmaceutical companies: after careful consideration, Company A ultimately chose Zhejiang while Company B opted for Jiangsu. While the government cannot interfere with their choices, it can leverage institutional mechanisms to guide complementary collaboration among enterprises in specialized sectors, using the “invisible hand” to untangle the “knotted yarn” of homogeneous competition.

Coordinated Development Is the Only Way Forward

While structural convergence is an inevitable path, the only way for China to become the world’s leading power lies in coordinated development.

The New York metropolitan area, the world’s most comprehensive urban synergy system, also underwent a transition from homogeneous competition to collaborative division of labor.

Phase One: During the early stages of urbanization and industrialization, the scale of cities and transportation capacity could not form effective spatial linkages, leaving each city to develop independently.

Stage Two: Fueled by the Second Industrial Revolution, an export-oriented economy ushered in a golden era of rapid development for port cities like New York, Boston, and Philadelphia, while the United States experienced a technological boom.

Phase Three: To address increasingly fierce international competition, the New York metropolitan area continuously strengthened the division of urban functions and industrial specialization, enhancing economic interdependence and complementarity. This ultimately resulted in a world-class metropolitan area characterized by a well-developed spatial hierarchy, a rational industrial structure, the free flow of factors of production, and vibrant technological innovation.

When examining and drawing lessons from international experience, it becomes clear that the most critical step toward regional integration is to accelerate the "breaking down of barriers."

The Yangtze River Delta, on which great hopes are pinned, has been uncompromising in its efforts to break down barriers.

First, there is the interconnection and complementarity of infrastructure, which has eliminated dead-end roads between provinces and cities and expanded the high-speed rail network. Second, Jiangsu, Zhejiang, and Shanghai have repeatedly conducted joint market supervision and law enforcement operations; simultaneously, cross-provincial medical insurance transfer and continuity have been achieved through a “one-stop online service.” Furthermore, the main body responsible for the highly anticipated “Greater Hongqiao” project has shifted from being solely managed by Shanghai to being jointly developed by the three provinces and one municipality...

The most pivotal move by the Yangtze River Delta this time has been the establishment of various “networks” among local cities. Beyond routine study tours and investment promotion, they have formed a series of city alliances, industrial alliances, park alliances, and entrepreneur alliances spanning the three provinces and one municipality.

The goal is to break free from the “internal strife” caused by redundant industries and low-quality competition, and to overcome local protectionism.

Geographically, these “networks” are not limited to the proximity principle between core cities and their surrounding areas, but extend to long-distance, cross-provincial and cross-municipal “checkers-style” cooperation.

Compared to the geographical location and distance between two cities, whether their industrial structures are complementary is the key to coordinated development.

Once the hurdle of industrial homogeneity is overcome, how far will the Yangtze River Delta still be from becoming a world-class urban agglomeration?

Finally, for most regions that still have room for development, industrial homogeneity likely signifies issues such as low industrial standards and redundant construction.

This is not a cause for alarm, but transformation and upgrading remain an urgent priority.

To achieve industrial synergy and avoid homogeneous competition, it is crucial to conduct scientific industrial positioning and planning in advance.