Academic journal article The Geographical Review

The China-Singapore Suzhou Industrial Park: A Turnkey Product of Singapore?

Academic journal article The Geographical Review

The China-Singapore Suzhou Industrial Park: A Turnkey Product of Singapore?

Article excerpt

The economic reforms that followed the shift of socialist dictates to market economies have wielded a tremendous impact on the international scene since the Berlin Wall was cracked in 1989. From this infusion of Western capital into reformist socialist economies, an international division of labor marked by market adjustments and investment to meet fiercer market competition has emerged (Casson 1986; Castells 1993; Castells and Hall 1994; Coffey 1996). William Coffey identifies three divisions of labor in the prevailing information-led post-cold war era: technical (scientific management and Fordism), social (vertical disintegration, with rising reliance of firms on external inputs on a global scale), and spatial (production specialization by geographical zones and at different scales) (1996, 41). Individual firms that produce final products designated for global markets, in theory, benefit in one way or another.

Despite the proportional decline of transport costs in the overall manufacturing process in postindustrial years, the Heckscher Ohlin--Stolper Samuelson (HOSS) theory, much referred to by economists in studying the comparative advantage of international trade, as Mark Casson argues, has remained valid in that the final product of the assembly line should be as close to the centers of demand as possible (1986). Hence China, with a population of 1.2 billion and a newly open market, attracts multinational corporations (MNCS) from the developed industrial core. Since 1993 the developed core has intensified foreign direct investments into the newly open markets (Cho 1995; Clegg 1996; Eng and Lin 1996). In this new international investment strategy, Coffey observes that MNCS rely increasingly on their specialized knowledge, including "research, design, engineering, sales, marketing, consulting, strategic, financial and management services. [They compete] by means of strategies involving global markets, global comp onent and material sourcing, and the international dispersion of production activities in order to take advantage of low cost factors.... [T]his strategy was generally based upon export expansion, foreign subcontracting and foreign direct investment" (1996, 49-52).

Although substantial capital flows from the developed core to the newly industrializing economies--South Korea, Taiwan, Hong Kong, and Singapore--and to peripheral economies, Coffey (1996, 43) also notices rising foreign direct investment by the newly industrializing economies in much less developed territories, where the proportion of labor-intensive industries has declined (Liu and others 1993). But the channel of foreign direct investments to China is complex and highly regulated, given China's restrictions on investment. The dynamics depend essentially on networking. Contrary to Western liberal economies, in which market forces largely dictate localization of industrial activities, personal and strategic network relationships in East Asia, including China, are functions of the social embeddedness of economic action (Park 1996).

Singapore is an intermediary in the current international division of labor that induces Western capital to China. In this note we investigate why Singapore, a small city-state with limited resources and largely devoid of high technology outside its own management expertise acquired from MNCS during three decades of modernization, has attracted Chinese interest in establishing a flagship industrial project, the 70-square-kilometer China-Singapore Suzhou Industrial Park (CSSIP), in southern Jiangsu Province about 80 kilometers west of Shanghai (Figure 1). We then examine why Suzhou occupies a prestigious position in Singapore's overseas investments. We end by addressing the software transfer of Singapore's management style to the CSSIP and considering some of the remaining problems.

SUZHOU: A STRATEGY AIMED TO SERVE MUTUAL INTEREST

Since the reforms in 1978, the development of Sino-foreign cooperative enterprises aimed toward a strongly commerce-based industry has formed an integral component of China's world trade, as a means of raising the living standards of its population after years of slow growth under Mao Tse-tung's self-reliance policy. …

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