By Rainy Yao
Suzhou: Venice of the East
Suzhou is a major city in the southeast of Jiangsu Province, Eastern China and part of the Yangtze River Delta. Considered one of the richest major cities in China, Suzhou is known as the “Venice of the East.” In this article, Rainy Yao from Dezan Shira & Associates takes a look at this picturesque city filled with opportunities for foreign investment.
Suzhou is one of China’s foremost destinations for foreign investment due to its proximity to Shanghai and comparatively low operating costs. Major industries include iron and steel, IT and electronic equipment manufacturing, and textile products. Suzhou is the second largest industrial city in China after Shanghai and is home to 27 listed companies.
In 2013, Suzhou’s GDP exceeded RMB 1.3 trillion, an annual increase of 9.6 percent. Its primary industry contributed RMB 21.4 billion (a 3 percent increase) and its secondary industry RMB 685 billion (a 7.5 percent increase). The service industry contributed RMB 594 billion (a 10.7 percent increase)—accounting for 45.7 percent of the city’s GDP.
Meanwhile, the city’s gross industrial output reached RMB 3.57 trillion (a 3.4 percent increase). Suzhou’s emerging industries in the manufacturing sector contributed RMB 1.37 trillion (6.7 percent growth)—accounting for 45.2 percent of above-scale industries.
Suzhou’s tourism industry also made a large contribution to the service sector, bringing in a total income of RMB 152 billion (11.9 percent growth) for the city. Nearly two million foreign tourists visited the city in the last year alone.
Suzhou’s main development zones include:
Suzhou Industrial Park
The Suzhou Industrial Park (SIP), a joint project between the Chinese and Singaporean governments, was established in 1994. It is located beside the beautiful Jinji Lake, which lies to the east of Suzhou’s Old City. The SIP covers a total area of 288 km2, among which an 80 km2 area is designated the China-Singapore Cooperative Zone.
Suzhou Wuzhong Economic Development Zone
Established in 1993, the Suzhou Wuzhong Economic Development Zone (SWEDZ) ranks among the top ten economic development zones in Jiangsu Province. Currently, the Zone hosts some six-thousand domestic and foreign invested enterprises, featuring industrial clusters in precision machinery manufacturing, electronics and IT, bio-medicine, and new energy & new materials.
Suzhou National New & Hi-Tech Industrial Development Zone
This Zone was established in 1990 and is now popularly known as the Suzhou New District (SND). In November 1992, the Zone was upgraded to the status of a national-level hi-tech industrial zone. Major industries in the District include information technology, electronics, pharmaceuticals, fine chemicals and auto parts.
Established in 2012, the Xiangcheng District covers an area of approximately 50 km2, with the Caohu Industrial Park at its center. The District is located in northern Suzhou and borders the SIP to the southeast and the SND to the southwest. Industry is mainly concentrated in precision machinery, auto parts, energy saving and green technology.
Suzhou Industrial Park Export Processing Zone
The Suzhou Industrial Park Export Processing Zone, located inside the SIP, was approved by the government in April 2000, with a planned area of 2.9 km2.
In order to promote the economic transformation and development of Suzhou, the municipal government offers various preferential policies to foreign investor (including tax incentives and financial support), and especially encourages foreign investment in the manufacturing and service sectors. Below are some key industries in which foreign investment is encouraged:
- Modern Biological and Pharmaceutical Industry
- New Materials
- Electronic and Telecommunications Manufacturing
- Automobile Manufacturing
- Ship Manufacturing
- Petrochemical and Fine Chemical Manufacturing
- Fine Steel Manufacturing
- Wholesale and Retail Trade
- Scientific Research and Comprehensive Technology Services
- Real Estate
- Information and Consulting
Preferential Tax Policy
A limited partnership venture capital enterprise (VC Enterprise) established in the SIP in accordance with relevant laws and engaged solely in capital investment is entitled to preferential tax policies if it has invested in an unlisted small or medium-sized high-tech enterprise by way of equity investment for two years (24 months) within the pilot period.
Seventy percent of the total investment by the partners of the VC Enterprise may be deducted from the taxable income distributed by the VC Enterprise. If a legal partner has invested in several qualified enterprises in the SIP, the deductible investment and taxable incomes may be calculated on a consolidated basis.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email firstname.lastname@example.org or visit www.dezshira.com.
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Guide to the Shanghai Free Trade Zone
In this issue of China Briefing, we introduce the simplified company establishment procedure unique to the zone and the loosening of capital requirements to be applied nation wide this March. Further, we cover the requirements for setting up a business in the medical, e-commerce, value-added telecommunications, shipping, and banking & finance industries in the zone. We hope this will help you better gauge opportunities in the zone for your particular business.