China-Singapore Suzhou Industrial Park



Singapore Infopedia

by Sim, Cheryl

Background

The China-Singapore Suzhou Industrial Park (SIP) project was launched in 1994 to develop a model industrial township within the city of Suzhou in China’s Jiangsu province.1 The first flagship joint project between the two governments, a key feature of the SIP involves the transfer of Singapore’s “software” – industrial development model and public-administration experience – to China.2 At the time, China was keen to study Singapore’s development model, while Singapore saw China as an important market for the country’s regionalisation drive.3 Both governments believed that the SIP, developed and managed based on Singapore’s approach, would be attractive for foreign direct investments.4 Profitable since 2001, the Singapore–China cooperation zone currently spans an area of 80 sq km.5 Besides industrial developments, the integrated township also encompasses residential areas, commercial and recreational facilities, as well as educational institutions.6

Background
The origin of the SIP project can be traced to former Chinese leader Deng Xiaoping, who mentioned during his tour of southern China in February 1992 that the country could learn from Singapore in the areas of economic and social development. In Singapore, then Senior Minister Lee Kuan Yew saw China’s interest in the city-state as an opportunity that could benefit both countries. During a visit to China between September and October 1992, Lee expressed intent for a bilateral project through which Singapore would share its experience.7 On 18 December 1992, an agreement to confirm the mutual interest to develop an industry township in Suzhou was signed between the Singapore Labour Foundation (SLF) International and the Suzhou government.8 Thereafter, Lee sent a proposal for cooperation to China’s then vice-premier Zhu Rongji, which entailed a government-to-government transfer of Singapore’s knowhow in the development of an industrial township in Suzhou.9 Specifically, a 70-square-kilometre parcel of land in the east of Suzhou was selected for the proposed project.10

Singapore decided to develop the industrial township in Suzhou for several reasons: its market was not yet saturated, there was not much industrial activity, and for the city’s advantageous geographical location. In addition, Jiangsu’s governor had expressed keen interest towards having Suzhou collaborate with Singapore. Suzhou’s mayor also reported that Deng Pufang, Deng Xiaoping’s son, supported the project, which implied endorsement from the Chinese central government.11

On 11 May 1993, during a visit by Lee and then Deputy Prime Minister Ong Teng Cheong to Suzhou, an in-principle agreement was signed to establish a joint-venture enterprise for the township’s development. Subsequently, then Chinese premier Li Peng gave the project his blessings, with instructions that the industrial park was to focus on high-tech developments and to adapt Singapore’s management experience to China’s conditions.12

Later, the two governments decided that the project would be spearheaded by the private sector instead of a government body so as to ensure the commercial viability of the SIP. On 16 September 1993, the Singapore-Suzhou Township Development Private Limited (SSTD) – a Singapore consortium led by Keppel Corporation Limited – was officially established to develop the township.13

Establishment
On 26 February 1994, Lee and then Chinese vice-premier Li Lanqing signed the government-to-government agreement on software transfer and joint development of a special economic zone in Suzhou to better attract foreign investors.14 Also inked on the same day was the commercial agreement on the formation of the joint venture, with 65 percent of its shares owned by SSTD and 35 percent by a Chinese consortium, the Suzhou United Development Company (SUDC).15

The joint-venture entity known as the China-Singapore Suzhou Industrial Park Development Company (CSSD) – comprising SSTD and SUDC – was responsible for the development, management and commercial viability of the SIP.16 The two countries also established a joint steering council – first co-chaired by Li Lanqing and Singapore’s then Deputy Prime Minister Lee Hsien Loong – to review and tackle any key issues on the township project.17

A ground-breaking ceremony for the SIP was held on 12 May 1994.18

Early developments
Infrastructure
Initially, the SIP did not have its own supply of power, water and gas. Hence, infrastructural development at the park began with tasks such as sourcing for clean water, planning a reliable power supply and building of a waste treatment plant.19


Work on the SIP commenced on 12 May 1994 with the tapping of utility lines from Suzhou city.20 An eight-square-kilometre area was marked for the first phase of the SIP’s development, within which piling work commenced in a two-square-kilometre start-up zone on 16 August the same year.21 On 22 May 1995, Rexton (Suzhou) Hearing Systems, a hearing-aid manufacturer and affiliate of German electronics conglomerate Siemens, became the SIP’s first tenant to commence operations in a ready-built factory within the park.22

By 1997, the SIP’s infrastructure was largely in place, which included a power supply system with underground cables, waterworks, as well as tree-lined roads similar to those in Singapore.23

Investments
In September 1994, the SIP saw the signing of agreements by its first batch of 14 foreign investors, of which seven were from Singapore, three from the United States, and one each from South Korea, New Zealand, Hong Kong and Japan. The biggest investor was South Korea’s Samsung Electronics, followed by New Zealand beer and beverage producer Lion Nathan.24

Shift in shareholdings and management control
By 1997, the SIP began to face stiff competition from the nearby Suzhou New District (SND), a 52-square-kilometre high-tech industrial zone wholly established by the Suzhou government in 1990.25 While the Suzhou authorities had initially given priority to the SIP, they began to actively promote the SND thereafter, notwithstanding the Chinese central government’s support for the SIP.26 This move by the Suzhou government, coupled with the advantage the SND wielded by having an earlier start in Suzhou and the better rapport it had with large Japanese corporations, contributed to an adverse impact on the SIP’s progress – a situation made worse when the 1997 Asian financial crisis brought about an economic downturn and thus a reduction in investment inflows.27

In December 1997, Lee visited China to discuss this issue with top Chinese leaders. China’s then president Jiang Zemin reaffirmed his country’s commitment to the SIP, which was followed by more gestures of support for the project by the Chinese central government. Such efforts include strong personal backing for the SIP by Zhu, who had then taken office as the Chinese premier, and exempting the SIP from a new tax policy on foreign investments in January 1999.28

After Lee’s visit to China in 1997, lengthy discussions took place to resolve the two governments’ differences over the SIP project. Singapore suggested that marketing of the SND be suspended for five years to give undivided attention to the acceleration of the SIP’s development; China, however, could not oblige.29 In addition, with only a 35-percent share in the joint venture, the Suzhou authorities found that they were unable to justify channelling further resources into the SIP.30

Consequently, both countries agreed on a new course of action. On 28 June 1999, a memorandum of understanding (MOU) was signed, under which Singapore’s shareholding in CSSD was reduced to 35 percent, while China’s stake correspondingly increased to 65 percent. The majority ownership, as well as management control of the SIP, was transferred to China on 1 January 2001. In addition, the Singapore-led CSSD began to focus on completing the first 8 sq km of the park by the handover date, which would then serve as a reference model for the development of the remaining 62-square-kilometre area. The agreement also specified that the Suzhou government would henceforth respect the SIP’s priority status by recommending all suitable projects to the park.31

Later developments
The handover of the equity and management control of the SIP to China saw the park being more actively marketed by the new Chinese-led CSSD. In 2001, the SIP received several huge investments, including a commitment from Dutch multinational corporation Philips, which already had five factories in the SND, to establish a sixth plant in the SIP. The CSSD also made a downward adjustment to the rates charged for the SIP’s industrial units, thus attracting an influx of enterprises from Taiwan.32

In 2001, the SIP registered a profit for the first time and has been profitable since then as at 2014.33 By 2003, it had recouped the US$77 million cumulative losses incurred during the first seven years of operation and paid its first dividend in 2004.34

On 24 August 2006, an agreement was sealed by Singapore’s then Deputy Prime Minister Wong Kan Seng and then Chinese vice-premier Wu Yi to expand the 70-square-kilometre SIP by another 10 sq km. The expansion allowed for the incorporation of logistics and customs supervision facilities in the SIP – which had previously been established just outside the park – so as to better facilitate the flow of goods into and out of the SIP.35

As at March 2011, almost 50 percent of the SIP’s investors came from the United States and Europe, and some 22 percent from Taiwan, Hong Kong and Macau.36

Today, the SIP is widely regarded as a success story. It now serves as a model for urban and industrial development, and has been replicated in other cities across China, including Nantong and Suqian in Jiangsu province, Chuzhou in Anhui and Korgas in Xinjiang.37

Population
In the early years, the SIP was projected to support 600,000 residents and provide jobs for more than 360,000. The township had a population of some 700,000 residents at around 2012.38

Facilities
As an integrated township, the SIP has residential, commercial and recreational facilities as well as educational institutions, in addition to industrial developments.39
 
Commercial and recreational facilities include the Central Park, a 12-hectare green recreational zone, swimming-cum-sports complex, golf centre as well as neighbourhood centres with establishments such as supermarkets, food outlets, banks and recreational centres.40

There are three kinds of educational institutions in the SIP. The first is the Institute of Vocational Technology, which trains workers for companies in the industrial park. Mooted by Singapore’s then Prime Minister Goh Chok Tong during his first visit to the SIP in May 1997, the institute enrolled its first batch of 72 students in September 1998. Besides the vocational institute, there are schools and kindergartens for the local Chinese community, as well as an international school for the expatriate community which commenced operations in September 1996.41

Software transfer programme
By 2014, some 2,300 Suzhou and SIP officials had been trained by Singapore in areas such as economic, urban and labour management as part of the software-transfer programme.42

In addition, the development and operation of the SIP have been largely modelled after Singapore’s experience. These include a pro-business one-stop approval process to simplify legal and administrative procedures; the SIP Provident Fund, which was developed based on Singapore’s Central Provident Fund, to attract and assist home buyers; the incorporation of greenery into the industrial and housing estates; and the one-stop mall concept at the neighbourhood centres.43

Timeline
18 Dec 1992: Agreement signed by the SLF International and Suzhou government to confirm Singapore’s and Suzhou’s interest to jointly develop an industrial township in Suzhou.44
11 May 1993: In-principle agreement signed by the Singapore and Suzhou governments to establish a joint venture enterprise to develop the township.45
12 Aug 1993: In-principle agreement signed by Keppel Corporation (on behalf of the Singapore consortium) and the Suzhou government to establish a joint venture enterprise to develop the township, replacing the first agreement signed with SLF International.46
16 Sep 1993: Establishment of SSTD, a consortium of Singapore companies.47
26 Feb 1994: Agreement signed by the Singapore and Suzhou governments on the joint development of a special economic zone in Suzhou.48
26 Feb 1994: Agreement signed on the transfer of software by Singapore to China.49
26 Feb 1994: Agreement signed on the formation of the 65–35 equity joint venture.50
12 May 1994: Ground-breaking ceremony for the SIP.51
13 Aug 1994: Joint-venture company, CSSD, receives operating licence.52
Sep 1994: Agreements signed by SIP’s first batch of 14 investors.53
28 Jun 1999: Signing of MOU on the reduction of Singapore’s shareholding in CSSD to 35 percent.54
1 Jan 2001: Singapore transfers equity and management control of SIP to China.55
24 Aug 2006: Agreement signed by the Singapore and China governments to expand the SIP from 70 sq km to 80 sq km.56
2014: SIP’s 20th anniversary.57



Author
Cheryl Sim



References
1. Irene Ng, “Suzhou Project ‘More Ambitious Than Thought’,” Straits Times, 10 July 1999, 3; “Suzhou Project Will Spur China On, Says Vice-Premier Li,” Straits Times, 20 May 1994, 3. (From NewspaperSG)
2. Francis Chan, “S’pore Committed to Suzhou Industrial Park’s Development,” Straits Times, 24 July 2010, 26 (From NewspaperSG); L. F. Lye, “Suzhou Industrial Park: Going Beyond a Commercial Project,” in Advancing Singapore-China Economic Relations, ed. Saw Swee Hock and John Wong (Singapore: Institute of Southeast Asian Studies, 2014), 88 (Call no. RSING 337.5957051 ADV); In Unison: Bilateral Collaboration on the Suzhou Industrial Park (Singapore: Times Editions, 2001), 6. (Call no. RSING q338.0951136 IN)
3. Kao Chen, “Lessons from Suzhou,” Straits Times, 3 June 2011, 40 (From NewspaperSG); Lye, “Suzhou Industrial Park: Going Beyond a Commercial Project,” 68.
4. Alexius A. Pereira, State Collaboration and Development Strategies in China: The Case of the China-Singapore Suzhou Industrial Park (1992–2002) (London: RoutledgeCurzon, 2003), 1. (Call no. RSING 338.951136 PER)
5. Lye, “Going Beyond a Commercial Project,” 75; Aaron Low, Suzhou Park Entering New Phase: DPM Teo,” Straits Times, 28 July 2011, 6. (From NewspaperSG)
6. Tan Kim Song, “Piling Work Begins at S’pore-Suzhou Township,” Straits Times, 17 August 1994, 40 (From NewspaperSG); Bilateral Collaboration on the Suzhou Industrial Park, 74, 192.
7. Ca-Mie-De Souza, Bold Vision, Vibrant Chords: Sino-Singapore Suzhou Industrial Park (Singapore: Keppel Corporation Limited, 2009), 15–16 (Call no. RSING 338.951136 DE); Sunny Goh. “Mr Lee Leaves for Two-Week Visit to China,” Straits Times, 28 September 1992, 3. (From NewspaperSG)
8. Souza, Bold Vision, Vibrant Chords, 17; Yong Pow Ang, “Keppel Takes Over Lead from SLP Int to Develop Suzhou Township,” Business Times, 1 August 1993, 1. (From NewspaperSG)
9. Pereira, State Collaboration and Development Strategies in China, 47.
10. Souza, Bold Vision, Vibrant Chords, 17.
11. Souza, Bold Vision, Vibrant Chords, 16; Pereira, State Collaboration and Development Strategies in China, 45, 47.
12. Souza, Bold Vision, Vibrant Chords, 18.
13. Souza, Bold Vision, Vibrant Chords, 18–20; Yong Pow Ang, “Keppel-Led Consortium Signs Accord on Developing Suzhou Township,” Business Times, 13 August 1993, 2. (From NewspaperSG)
14. Sunny Goh, “Suzhou Industrial Township Pact Signed,” Straits Times, 27 February 1994, 1 (From NewspaperSG); Pereira, State Collaboration and Development Strategies in China, 1.
15. Pereira, State Collaboration and Development Strategies in China, 1; Souza, Bold Vision, Vibrant Chords, 19–20; “Singapore, Suzhou Sign Deal on Chinese Township,” Straits Times, 13 May 1994, 47. (From NewspaperSG)
16. Lye, “Suzhou Industrial Park: Going Beyond a Commercial Project,” 85; Pereira, State Collaboration and Development Strategies in China, 51; “Singapore, Suzhou Sign Deal on Chinese Township.”
17. Souza, Bold Vision, Vibrant Chords, 20.
18. Souza, Bold Vision, Vibrant Chords, 25, 27; “Singapore, Suzhou Sign Deal on Chinese Township.”
19. Souza, Bold Vision, Vibrant Chords, 25–26.
20. Souza, Bold Vision, Vibrant Chords, 25.
21. Tan, “Piling Work Begins at S’pore-Suzhou Township”; Pereira, State Collaboration and Development Strategies in China, 53.
22. Bertha Henson, “Suzhou Township Celebrates First Year; US$1.25b Committed,” Straits Times, 23 May 1995, 3. 9(From NewspaperSG)
23. Chua Lee Hoong, “Why One Park Is Better Than Two in Suzhou,” Straits Times, 14 December 1997, 19. (From NewspaperSG)
24. Tan Tarn How, “14 Investors Sign Up for Suzhou Township,” Straits Times, 15 September 1994, 1. (From NewspaperSG)
25. Chua Lee Hoong, “SM Lee Unhappy Over Suzhou Park Progress,” Straits Times, 5 December 1997, 1; Tan Tarn How, “Venice of the Orient Turns On Style for Singapore Guests,” Straits Times, 14 September 1994, 35. (From NewspaperSG)
26. Kao, “Lessons from Suzhou”; Teh Hooi Ling, “Suzhou Park – S’pore To Cut Stake to 35%,” Straits Times, 29 June 1999 (From NewspaperSG); Chua, “SM Lee Unhappy Over Suzhou Park Progress.” 
27. Pereira, State Collaboration and Development Strategies in China, 129; Chua Lee Hoong, “Suzhou Park Could Have Developed 50% Faster, Says SM,” Straits Times, 5 December 1997, 78 (From NewspaperSG); Han Minli, “The China–Singapore Suzhou Industrial Park: Can the Singapore Model of Development Be Exported?” (master’s thesis, National University of Singapore, 2008), 82–84, 90, 96, 99–100, http://scholarbank.nus.edu.sg/handle/10635/16090.
28. Chua Lee Hoong, “Why One Park Is Better Than Two in Suzhou”; Pereira, State Collaboration and Development Strategies in China, 131–32; Mary Kwang, “China Gets New Tax Rules,” Straits Times, 7 January 1999, 43. (From NewspaperSG)
29. Teh, “Suzhou Park – S’pore To Cut Stake to 35%.” 
30. Kao Chen, “Lessons from Suzhou.”
31. Dennis Chan, “Suzhou Handover in 2001,” Straits Times, 29 June 1999, 1 (From NewspaperSG); Teh, “Suzhou Park – S’pore To Cut Stake to 35%.” 
32. Pereira, State Collaboration and Development Strategies in China, 155–56; Loh Hui Yin, “Things Move With Wang in Charge,” Business Times, 2 June 2001, 8; Loh Hui Yin, “Taiwan Investors Flock to Suzhou Park,” Business Times, 21 October 2002, 7. (From NewspaperSG)
33. Kao Chen, “Suzhou Park in the Black Now,” Straits Times, 3 May 2001 (From Factiva via NLB’s eResources website); Lye, “Suzhou Industrial Park: Going Beyond a Commercial Project,” 75.
34. L. Teo, “Seeing Double,” Straits Times, 29 May 2004. (From Factiva via NLB’s eResources website)
35. Clarissa Oon, “Suzhou Industrial Park To Be Expanded,” Straits Times, 25 August 2006, 9. (From NewspaperSG)
36. Lye, “Suzhou Industrial Park: Going Beyond a Commercial Project,” 72.
37. Teo Chee Hean, “Deep and Strong Ties With China,” Straits Times, 29 July 2014, 16; Grace Ng, “Suzhou Park’s Stunning Revival,” Straits Times, 23 May 2009, 62. (From NewspaperSG)
38. Tan, “14 Investors Sign Up for Suzhou Township”; Willem Van Winden et al., Urban Innovation Systems: What Makes Them Tick? (UK: Routledge, 2014), 131.
39. Tan, “Piling Work Begins at S’pore-Suzhou Township”; Bilateral Collaboration on the Suzhou Industrial Park, 74, 192.
40. Bilateral Collaboration on the Suzhou Industrial Park, 74; Mary Kwang, “Suzhou Draws Residents to SIP With New Policies,” Straits Times, 27 September 1999, 18; Mary Kwang, “Neighbourhood Centre Makes a Name in Suzhou Park,” Straits Times, 14 October 2000, 24. (From NewspaperSG)
41. Bilateral Collaboration on the Suzhou Industrial Park, 192; Mary Kwang, “Suzhou School to Offer Tuition,” Straits Times, 28 January 1997, 1; Mary Kwang, “Suzhou Park Institute Gets First Batch of Students,” Straits Times, 16 September 1998, 40. (From NewspaperSG)
42. Lye, “Suzhou Industrial Park: Going Beyond a Commercial Project,” 87; Pereira, State Collaboration and Development Strategies in China, 65.
43. Teo, “Seeing Double” Bilateral Collaboration on the Suzhou Industrial Park, 30, 74, 144; Mary Kwang, “Greenery A La S’pore in Suzhou Industrial Park,” Straits Times, 13 October 2000, 17. (From NewspaperSG)
44. Souza, Bold Vision, Vibrant Chords, 17; Yong Pow Ang, “Keppel Takes Over Lead from SLP Int to Develop Suzhou Township.”
45. Souza, Bold Vision, Vibrant Chords, 18.
46. Souza, Bold Vision, Vibrant Chords, 19; Han, “The China–Singapore Suzhou Industrial Park,” 29.
47. Souza, Bold Vision, Vibrant Chords, 19–20.
48. Pereira, State Collaboration and Development Strategies in China, 1.
49. Souza, Bold Vision, Vibrant Chords, 20.
50. Souza, Bold Vision, Vibrant Chords, 20.
51. Souza, Bold Vision, Vibrant Chords, 25.
52. Souza, Bold Vision, Vibrant Chords, 27.
53. Tan, “14 Investors Sign Up for Suzhou Township.”
54. Teh Hooi Ling, “Suzhou Park – S’pore To Cut Stake to 35%.”
55. Mary Kwang, “Smooth Handover of SIP to China,” Straits Times, 1 January 2001, 4. (From NewspaperSG)
56. Oon, “Suzhou Industrial Park To Be Expanded.” 
57. Esther Teo, “Singapore, China Mark 20 Years of Ties in Suzhou,” Straits Times, 27 October 2014, 2. (From NewspaperSG)



Further resource

“China-Singapore Suzhou Industrial Park,” Suzhou Industrial Park Administrative Committee, accessed, 2010, http://www.sipac.gov.cn/english/.



The information in this article is valid as at 16 February 2015 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.

 

 


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