Drive Headquarter into the Economic Engine of Beijing(I)
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| 5/31/2005 1:1:0 Beijing CBD |
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Interview with research fellow Mr. Zhao Hong, deputy superintendent of Economic Institute of Academy of Social Science
Beijing CBD: Confronted with the economic globalization and global economic transformation after China's entry into WTO, how should Beijing position its industry strategy in a bid to play the radiating role of the capital economy?
Zhao Hong ("Zhao"): Driven with the unique strong economic growth of China against the global economic slowdown, the center of the global economy is moving to China; in conjunction with the gradual transfer of the traditional manufacturing industry, the global processing industry is also rushing into China, making China the "global factory". The international role of China in the economic globalization decides on the industry strategy of China. Meanwhile, it is also critical to exert the coordination and radiation function of Beijing in the national economy. That is to say, one should nail down the strategy of Beijing from the nationwide perspective. A top official of Beijing recently states that "the headquarter economy represents the macro direction of Beijing economy, it is the winning weapon of Beijing over Shanghai." The strategic role of the headquarter economy lies in its key role in optimized distribution of the nationwide economic resources, as it can enable other regions to take advantage of the strategic resources (e.g. human resource) of Beijing in relatively low cost. Meanwhile, Beijing can also reduce the economic operating cost by utilizing the low-cost resources (e.g. land and labor) of surrounding area (suburb, Bohai band) and other cities. The resource distribution model can best release the value of the strategic resources of Beijing, and will enhance the competitiveness of other regions, even China's competitiveness in the world. In addition, the low-cost resource distribution model can attract more multinationals to be headquartered in Beijing, followed by their production bases into China.
Beijing CBD: Since you are the first to define the headquarter economy, in your opinion, what unique characteristics should the headquarter economy of Beijing have to distinct from those of other nations and other domestic cities?
Zhao: The headquarter economy depends on 2 aspects, i.e. the local existing resource advantage (including infrastructure and culture), and the role of the city in the international or local labor division arena. There are two types of headquarters in the world, i.e. the comprehensive headquarters like Manhattan that consist of finance, insurance and public service, etc, and the headquarter group typical of a certain industry, such as the auto city Detroit, electronic city Silicon Valley, aviation city Seattle, and the culture and entertainment city Los Angeles.
Beijing is ideal as the comprehensive headquarter, primarily attracting the regional headquarters of multinationals, the headquarters oriented to HR information and the headquarters of some sectors highly sensitive to policies. Beijing's advantage is more attractive to the above headquarters.
Beijing CBD: As to the headquarter economy of CBD, some say CBD indeed has only headquarter instead of the economy, as the headquarters have no special economic contribution. In your opinion, what kind of the industry foundation does the true headquarter economy need?
Zhao: I believe the atmosphere is changing quickly. The above concept derives from the fact that most multinationals only set up offices in CBD instead of the true headquarters, so the contribution to GDP and taxation is minor. As more multinationals establish their production base or marketing center in China, more and more headquarters in the real sense will march into CBD. Then the service providers in finance, insurance, ads, exhibitions, intermediaries and consulting will follow the suit, thus creating an industry chain. Meanwhile, the good commercial service environment will attract more headquarters in turn. CBD in Beijing has gained the centralization effect now, which will rise in geometrical multiples soon. In contrast to the industry foundation, the headquarter economy shall provide the multinational headquarters with a fair and transparent legal environment and supportive market environment to facilitate their global competition and development strategy from the perspective of globalization, standardization and regulation.
Beijing CBD: Beijing has launched the strategy to develop the modern processing industry, what is the role of CBD in the strategy?
Zhao: The headquarter economy integrates the "knowledge economy" of Beijing with the industries, and creates the new opportunity of the new round of economic structure adjustment, optimization and update of Beijing. First, the headquarter economy drastically expand the industries available to Beijing economy. For instance, the average manufacturing industry now can be headquartered in Beijing by separating the headquarter from the base; second, the adjustment of the surplus manufacturing resources in Beijing creates a feasible model, by which the existing processing bases can be removed to the suburban counties, or even non-Beijing regions, with the headquarter left in Beijing, to achieve further development backed by the existing brand, channel and R&D resources; third, it provides a new model of economic cooperation between Beijing and other Bohai-band cities to supplement each other via the "differential positioning" of different cities. In the modern processing strategy, the most important role of CBD is to exert the economic engine function of the headquarter base to attract more headquarters of the multinationals in R&D, procurement and other sectors.
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