Shared growth and win－win results achieved through cooperation， as the Belt and Road Initiative （BRI） accelerates advancement
The COVID－19 pandemic in 2020 dealt a major blow to the global economy.However， from January to May 2020， China’s non－financial ODI in B＆R countries increased by 16％ against the downward trend， which indicates the BRI is playing an increasingly important role in the internationalization of Chinese enterprises.
“As most B＆R countries are developing countries with weak economic foundation， the outbreak of COVID－19 highlighted the gaps in infrastructure such as health and telecommunication between B＆R countries and developed economies. ” says Jane Yang， Government and Public Sector and Infrastructure Leader， EY Belt and Road Task Force.
“This will drive B＆R countries to advance the development of ‘Health Silk Road’ and ’Digital Silk Road’ and inject new impetus into global economic recovery.”
Co－developing China overseas industrial parks to build a new landscape of the B＆R
Based on an analysis of 74 overseas industrial parks ， the overall distribution is ＂generally dispersed and regionally concentrated＂.
Cross－border cooperation in technological parks and innovative research ＆ development center parks are still at the early stage of development.
“Overseas industrial parks are designed to be built in the major cities of B＆R countries. With the advantages of integrating policies and resources， the parks always present strong clustering effect to attract enterprises along the industrial chain， creating ‘going abroad’ opportunities for Chinese enterprises. ”says Martin Qi， Advisory Service Leader， EY Belt and Road Task Force.
However， most of the overseas industrial parks are still in their early stage of construction and development， facing challenges like unstable external environment， lack of protective mechanisms in cooperating models and systematic planning.
It is necessary to strengthen collaboration among all parties， including governments and enterprises from both China and host countries， to achieve win－win results.
Challenge 1： Macroeconomic and political instability and unfavorable business environment in host countries
Along the route are mainly developing countries or regions with relatively unstable politics and economy， unfavorable business environment and insufficient supporting services.
Thus， investors of the overseas industrial parks often encounter issues such as project suspension， government disapproval， political instability， and insufficient market absorption capacity.
It is recommended that， when making the first overseas investment， enterprises should conduct comprehensive external environment analysis， including macroeconomic， industry and market analysis， assess business environment and formulate corresponding risk prevention and control mechanisms.
Challenge 2： Cooperation model requires more protective mechanisms
Many disagreements will need to be resolved in the long－term， due to the differences in culture， working habits， laws and regulations between China and the host countries.
Enterprises investing in overseas industrial parks are usually at a disadvantageous position when they negotiate policies with the host government.For example， it is often difficult to achieve ideal outcome on major issues such as the park’s desired operating model and profit－sharing scheme.
In addition， there are also business overlaps and lack of coordination among government agencies in the host country.
Enterprises are recommended to set up joint ventures to improve the park’s collaboration mechanism.
Finding a local partner in the host country to jointly invest and participate in the park’s operation will enable Chinese enterprises to understand local market rules and regulations in a more efficient manner and will also be more conducive to gaining the local market’s recognition and better develop business locally.
Challenge 3： Overseas industrial parks lack systematic planning
Although overseas industrial parks are often led by governments， the operation is eventually implemented by enterprises.
However， many enterprises’ capabilities are limited by their small scale and insufficient experience in overseas investment， which always leads to frequent changes of primary industries of the parks， or lack of specialized supporting services for a long time.
As a result， the parks will face difficulties in attracting investment. Moreover， site re－selection and capital withdrawal may happen. Related enterprises are recommended to design comprehensive strategies， operation and implementation plans of overseas industrial parks.
Related enterprises are recommended to design comprehensive strategies， operation and implementation plans of overseas industrial parks. Also， by doing a competitive analysis， investors could better understand the competitive landscape and formulate more reasonable and feasible strategies.
In addition， a detailed business operation and implementation plan can help investors implement the development strategy smoothly. It is also recommended to continuously seek performance improvement during the whole operation phase.
Future development trends of overseas industry parks
Today， China overseas industrial parks have become important platforms for promoting B＆R development and international capacity cooperation. EY expects four future development trends of overseas industrial parks.
Firstly， more digital in operation － will shift primary industry toward high－tech fields.
Utilize digital technology to solve the problems encountered in overseas investment and operation， improve the park’s business environment， reduce operating cost， increase the core competitiveness and finally enhance investment attractiveness to achieve win－win results.
Secondly， more diverse in operation － will promote collaboration in the development of parks and enterprises.
Future operators of overseas industrial parks will integrate more participants including governments， implementation enterprises and external companies. All participated parties will work together to promote the development of the parks.
Thirdly， city－industry integration will become the orientation for the development of overseas industrial parks.
China＇s extensive experience in city－industry integration can be replicated to B＆R countries and regions after applicable adjustments.
Through the help of industrial parks， host countries can form characteristic leading industries such as high－end manufacturing， information technology， etc.
By combining supporting services such as real estate， business and urban services， city－industry integration can be realized to promote economic and social development of host countries.
Lastly， connect with professional service providers to leverage their expertise for business expansion.
As more Chinese enterprises move into overseas industrial parks， we expect increasing demands for various professional services.
The establishment of a professional service platform in an overseas industrial park will help companies quickly connect with relevant service providers， make full use of local resources to conduct business effectively.
Jane Yang concludes， With further development of the BRI， Chinese enterprises are exploring new ways to get deeper involvement.
The Infrastructure projects have paved the way for industrial cooperation between China and B＆R countries， while building high－standard overseas industrial parks will create closer ties and open a new chapter for achieving high－quality development of the BRI.