First, here’s a statement from the business owner:

As a veteran of the Northeast’s restaurant industry, I’m venturing into the South for the first time to open a Northeastern Chinese restaurant.

Since natural gas lines haven’t been extended to the restaurant yet, we can’t use them for now. Under these circumstances, we had no choice but to use propane tanks for cooking.

After contacting local staff, a solution was provided within 10 minutes via a coordinated phone call:

Currently, neither natural gas nor power supply can be resolved—this is the government’s responsibility and must not affect the restaurant’s operations.

Under the condition of ensuring safety, the use of propane tanks has been specially approved. Once conditions are ripe, the government will fund the replacement of equipment and utility lines.

Facing this request, they acted decisively; with just a few words, they addressed the issue directly—this is a Southern model of a capable government that speaks honestly and gets things done.

Some say that when choosing a company in the South, one should focus on local industrial policies; when choosing a company in the North, one should focus on the local business environment.

To sum it up, it boils down to eight words: “In the South, look to policy; in the North, look to the environment.” However, I do not agree with this view.

01

The Northern Investment Environment Comes into View

Shandong has launched a new hotline that has attracted nationwide attention.

On November 21, the Shandong Provincial Government Information Office held a press conference to officially announce the launch of a public hotline for entrepreneurs to contact the governor directly: 96178.

Take note of these four words: “Direct Line to the Governor.” Does this mean that northern governments don’t understand entrepreneurs?

This means that when businesses have issues, they can contact the governor directly.

Shandong is fully committed to optimizing the business environment and supporting private entrepreneurs. According to the official statement, the province has assigned dedicated staff to provide 24-hour service.

96178 stands ready at all times to serve entrepreneurs. This demonstrates that communication channels for private entrepreneurs to reach higher authorities have been expanded.

Please note that the Party Secretary and Governor of Shandong share a common background: both are leading officials who rose through the ranks of state-owned enterprises.

Upon graduating from university, they joined enterprises and have worked in state-owned enterprises for over two decades. Both started at the grassroots level of state-owned enterprises and have gained experience across multiple positions.

Consequently, they understand the market and are attuned to the concerns and needs of private entrepreneurs.

Establishing a direct hotline for entrepreneurs to contact the Governor is just one of the measures taken.

For example, meetings are being further streamlined. Generally, no province-wide meetings are scheduled in the name of the provincial government. Meeting agendas are simplified, and meeting times are strictly controlled, with sessions typically lasting no longer than 90 minutes.

By creating a better business environment, we ensure that time is truly dedicated to economic development.

02

Looking South for Policies: High Investment Barriers

A key reason for looking southward is that policies in southern cities are relatively transparent.

Cities in the Yangtze River Delta and Pearl River Delta, in addition to benefiting from national policy support, are more adept at fully leveraging policies, exploring new avenues, and driving administrative innovation.

Common policies such as output per mu, industrial vertical development, and standardized land plots—as well as innovative approaches to investment promotion and land intensification—have largely originated from southern governments.

However, the investment thresholds associated with these investment policies are also relatively high. Not all companies can establish a presence in popular southern cities; some are even “discouraged” from doing so.

Of course, companies that truly remain in the core cities of the Yangtze River Delta and Pearl River Delta are generally not poached by other regions. The main reasons boil down to a few key factors: market orders, upstream-downstream coordination, and labor recruitment.

This is also why, despite the free flow of factors of production, northern governments struggle to lure away high-quality enterprises from developed regions.

What is the ultimate goal and purpose of a company’s existence?

If making a profit is the sole purpose of a company’s development, shouldn’t investment promotion prioritize the logic behind how companies generate revenue?

Although the investment thresholds in the south are high, they tie the region’s investment advantages directly to the needs of the target enterprises.

For local governments, the task is “attracting investment”; for the target enterprises, the task is “generating returns on investment.” During negotiations, local governments are in a passive position, while the target enterprises hold the initiative.

Since local governments often lack a “unique” competitive advantage, companies have more options.

If a company doesn’t settle here, it can settle elsewhere. What companies consider is not what services the region offers, but whether these services can guarantee profitability after the investment is made.

Therefore, it is not the case that the south can attract enterprises to invest solely through investment promotion policies.

03

Differentiated Industrial Development Between the North and South

Local investment promotion efforts are more akin to a “buy-sell” transaction—regions put everything they have on the table, whether it be natural resources, cultural environment, industrial infrastructure, or policy support.

For investors, “investment” may be a “necessity,” but when it comes to choosing which project or region to invest in, the range of options is clearly quite broad.

When southern cities seek to develop the biopharmaceutical industry, information technology, chip manufacturing, and other high-tech sectors, how can northern cities demonstrate their competitiveness if they pursue the exact same strategies?

Furthermore, when examining China’s development landscape, it is not simply a matter of comparing GDP between the north and south, nor is it merely about identifying differences between coastal and inland regions.

From a domestic perspective: Guangdong and the Jiangsu-Zhejiang region have both achieved rapid economic growth driven by the expansion of their industrial sectors.

This raises the question: Why has the north fallen behind the south, even though its industry appears to be highly developed?

This is because the North’s industries are largely concentrated in the upstream segment of the industrial structure.

Industry is divided into upstream and downstream sectors: upstream industries are responsible for providing raw materials, while downstream industries are responsible for producing finished goods and bringing them to market.

The share of upstream industrial output in the North has been steadily increasing, while the share of downstream industrial output has been steadily decreasing.

Northern industry is largely concentrated in the upstream sector, supplying raw materials for further processing by downstream industries in the South; whereas the South is predominantly focused on downstream industries, meeting the export demands of “Made in China.”

Whether in the south or the north, the initial positioning and planning of industries are of utmost importance; this also serves as the core competitive advantage for local sustainable development and a powerful tool for attracting investment. Adopting a differentiated approach to investment promotion and building unique industrial clusters helps enhance industrial competitiveness and drive sectoral development.