“The bigger the project, the better; the more investment, the stronger.”

Some localities have a fixation on attracting flagship enterprises.

They focus their investment promotion efforts on large-scale projects, primarily targeting those worth over 100 million yuan.

They must be either Fortune 500 companies or China’s Top 500, or at the very least, industry leaders in their respective niches.

There is a prevailing belief that foreign investment, listed companies, and high-profile projects are the only ones that bring prestige.

Securing the establishment of leading enterprises or expanding their production capacity can indeed achieve rapid investment attraction and boost GDP within a year or two.

However, this approach overlooks the prerequisites for attracting industry leaders, the actual needs of small and medium-sized enterprises (SMEs), and the potential risks involved.

01 Relying on Industry Leaders Carries Several Major Risks

Not every region has the capacity to accommodate large-scale projects.

Furthermore, companies are now less eager to invest and increasingly selective about their locations.

Relying solely on land, rent, and policy incentives is no longer enough to attract leading enterprises.

Factors such as industrial chains, innovation resources, talent, and capital are also key considerations for them.

A new model of investment promotion is gaining popularity: "all-factor investment promotion." Previous articles have already discussed this model, so we won’t elaborate further here.

For smaller regions, key elements such as high-end talent, national-level laboratories, and market orders are largely concentrated in major cities.

When pursuing all-factor investment promotion, localities often face the dilemma of “insufficient local resources and an inability to secure external ones.”

To attract leading enterprises, some localities offer generous negotiation terms.

For example, they may advance funds to construct specialized facilities on the company’s behalf, offer high-proportion upfront equity investments, or provide unrestricted upfront subsidies.

They may also enter into “strategic tie-ins” with leading enterprises.

Such partnerships are highly exclusive, often involving a commitment not to attract competitors from the same industry.

Subsequently, if other companies within the industry are to be attracted, the leading enterprise’s approval is required, and the new enterprise must operate in a collaborative rather than competitive relationship with it.

If local small and medium-sized enterprises (SMEs) operate in areas that overlap with the leading enterprise’s core business, local authorities may withhold support.

However, even if a leading enterprise is successfully attracted, relying solely on and prioritizing just one or two such companies may carry certain risks.

On the one hand, industry development is cyclical.

In some popular sectors, once they enter a new phase, excess downstream demand may well affect the mid- and upstream supply chains.

These changes will influence corporate decision-making.

Leading enterprises that previously expanded optimistically may consequently cut capacity, suspend production lines, or even relocate.

Additionally, in the field of technological innovation, there are multiple uncertain technical pathways.

For example, to navigate the competition between lithium iron phosphate and ternary lithium battery technologies, power battery manufacturers often hedge their bets by investing in multiple technical routes. However, once a particular route is phased out by the market, companies reduce their investment in that direction.

Supporting enterprises within the industrial park that are tied to these leading companies will find themselves in a relatively passive position, with production orders declining accordingly.

Some may not even be able to cover operational costs such as rent, and will likely end up negotiating rent reductions or vacating their premises.

On the other hand, excessive resource allocation leaves small and medium-sized enterprises (SMEs) without adequate support.

In some regions, there is an excessive focus on large enterprises, with land, infrastructure, government resources, and financial capital—particularly financial resources—being funneled toward industry leaders.

The resulting “siphon effect” makes large enterprises “too big to fail,” squeezing the survival space of SMEs. This bias in resource allocation mirrors the attitude some localities previously held toward non-local and local enterprises.

In terms of policy support and market access, local enterprises are often overlooked, leading to their marginalization and slow development.

When selecting a location, SMEs place greater emphasis on whether they can turn a profit there.

If industrial parks focus solely on the special needs of leading enterprises while ignoring the basic demands and development challenges of SMEs, these enterprises may also choose to leave.

02 Attracting Major Players and Strengthening the Industry Must Go Hand in Hand with Supporting Small Businesses and Nurturing New Growth

Today, competition among localities hinges on the ability to cultivate new unicorns and lead the development of emerging industries.

While attracting major players and industry leaders, we must also focus on supporting small businesses and fostering innovation.

It is important to recognize that SMEs are the backbone of the private economy.

Official data shows that as of the end of May this year, China had over 58 million private enterprises, the vast majority of which are SMEs. Among national high-tech enterprises, private enterprises number over 420,000, accounting for more than 92% of the total.

SMEs that embrace a wealth of new technologies—especially those classified as “specialized, refined, distinctive, and innovative”—are the key drivers of industrial innovation.

Previously, cities such as Shenzhen, Chengdu, Suzhou, Beijing, and Hangzhou introduced zero-rent policies, with state-owned capital primarily playing the role of patient capital in fostering industrial development.

By providing space through rent waivers, coupled with supporting services such as venture capital, open application scenarios, and shared platforms, these initiatives aim to support and nurture SMEs.

From a fundamental perspective, this represents a reallocation of investment promotion resources.

The approach involves first identifying promising, high-growth enterprises and then allocating resources to them to build up the local science and technology innovation industry.

As for other regions, they need to place greater emphasis on supporting SMEs and fostering specialized, refined, distinctive, and innovative enterprises.

A thriving SME sector serves as the strongest foundation for local investment promotion.

Taking Shanghai’s Qingpu District as an example, through tiered cultivation, it has incubated 1,329 municipal-level innovative SMEs, 716 municipal-level specialized, refined, distinctive, and innovative enterprises, and 55 national-level specialized, refined, distinctive, and innovative “Little Giant” enterprises.

Specifically, if a startup technology enterprise secures a Shanghai municipal-level innovation funding project, it can receive a 1:1 district-level matching grant of up to 400,000 yuan, along with guidance from national-level incubators and entrepreneurial mentors. Technology enterprises in the growth stage are supported by technology performance-based loans and can also enjoy low-cost financing as well as full premium subsidies.

A single high-tech achievement commercialization project can receive up to 5 million yuan in support. By pursuing a dual-track approach of “financing + commercialization,” the city is helping to accelerate the implementation of these achievements.

To do a good job, one must first sharpen one’s tools.

Local governments seeking to boost the production capacity of small and medium-sized enterprises cannot avoid equipment upgrades and intelligent transformation.

In this process, it is often found that enterprises are stuck in certain difficulties.

A common challenge is tight funding. Equipment upgrades require capital, but investments often running into the hundreds of millions of yuan pose a significant hurdle for enterprises.

For most SME owners, coming up with such a large sum all at once requires tremendous courage and determination.

However, if local governments take the initiative to guide and assist enterprises in securing funding through support policies, they can significantly alleviate this burden.

For example, a company requiring 150 million yuan for equipment upgrades might raise 50 million yuan on its own, receive a 22.5 million yuan subsidy from ultra-long-term special government bonds;

and through loan policies supporting equipment upgrades, it secured an 80 million yuan unsecured bank loan.

With dual support from the national and local governments, the company saves over 2 million yuan in interest annually, truly enabling it to operate with a lighter financial burden.

In addition to supporting equipment upgrades, public service platforms can be established to provide technical information, consulting, testing, inspection, as well as product development and processing services, thereby facilitating resource sharing.

For example, some small and medium-sized enterprises may have limited production lines and need to seek contract manufacturing or wait in line for production during peak seasons.

With a shared equipment platform within the park, enterprises can save on equipment purchase costs, access high-quality support services, and steadily secure more orders.

We have also observed that the Hangzhou Artificial Intelligence Industrial Park, in an effort to help SMEs overcome technical bottlenecks, has established a public AI technology service platform focused on eight key areas, including AI technology supply, industrial research, technology transfer, and talent training.

In some regions, there is a tendency to rely on large-scale projects to rapidly boost GDP and achieve short-term results.

However, supporting small businesses and fostering innovation must not be overlooked. For these efforts to truly take root, local leaders must shift their perspectives on development and performance evaluation.

By paying closer attention to the development challenges faced by promising SMEs, and through financial support and resource sharing, we can reoptimize resource allocation to help them break through barriers and grow, thereby injecting more momentum into local industrial and economic development.