Mind the Gaps: Singapore Business in China

1. Singapore’s China Trajectory

Singapore Business in China 1© 2005 Institute of Southeast Asian Studies, Singapore 1 Singapore’s China Trajectory Introduction China has become an important manufacturing base in the global production network, producing consumer goods, electronics, technologyintensive products and low-value added merchandise such as garments, textiles, leather goods and the like. This importance and position in the global economy began in the early 1990s and has grown at an incredibly rapid pace.1 In the last decade, economic growth in China averaged 8.7 per cent per year.2 In 2003, China’s GDP stood at US$1,400 billion, a 9.1 per cent growth over the previous year. This significant growth and accompanying development, as the country opened up, became a magnet for investments of other kinds as well. These other investments have included real estate, finance and business services, and those in the leisure and travel industry, among others. China is now both a substantial market and an investment location that cannot be ignored. It competes with low-wage manufacturing locations in the rest of Asia, directly, and with other locations outside Asia, indirectly. Singapore has, from the early days of China’s open-door Reproduced from Mind the Gaps: Singapore Business in China, by Sree Kumar, Sharon Siddique and Yuwa Hedrick-Wong (Singapore: Institute of Southeast Asian Studies, 2005). This version was obtained electronically direct from the publisher on condition that copyright is not infringed. No part of this publication may be reproduced without the prior permission of the Institute of Southeast Asian Studies. Individual articles are available at 2 Sree Kumar, Sharon Siddique and Yuwa Hedrick-Wong© 2005 Institute of Southeast Asian Studies, Singapore policy, been an interested participant in China’s development and progress. In the initial stages of the open-door policy, investments from Singapore were mainly small, family-oriented ventures seeking out opportunities in their ancestral villages or towns. This was the period of the “great discovery” of family roots after the closure of China following the Cultural Revolution in the 1960s.3 The serious and larger-scale investments into China from Singapore came about after diplomatic relations were established between the two countries in 1990. The early 1990s saw Singapore place greater emphasis on regional expansion of its economic space, there being a need to seek better opportunities in the emerging markets of Asia. China was one of the promising markets that appeared on the horizon at that time. One of the largest investments from Singapore then was the Suzhou Industrial Park, begun in 1994. This was followed by several investments by governmentlinked companies (GLCs) which began to export the Singapore development model to China.4 These included industrial and business parks, modelled on Jurong Town Corporation (JTC); ports and logistics infrastructure, modelled on the Port of Singapore Authority (PSA); and hotel, housing, and leisure construction, modelled on the Housing and FIGURE 1.1 China Gross Domestic Product 1970–2002 0 2000 4000 6000 8000 10000 12000 1 9 7 0 1 9 8 0 1 9 9 0 1 9 9 1 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 Year RMB bn Source: CEIC Note: GDP in Current Prices Singapore Business in China 3© 2005 Institute of Southeast Asian Studies, Singapore Development Board (HDB), JTC, Sembawang Corporation, Keppel Corporation, and CapitaLand. In parallel with this thrust went government statutory boards such as International Enterprise (IE) Singapore, SPRING (Standards, Productivity and Innovation Board) Singapore, the Economic Development Board (EDB), and investment agencies such as Temasek Holdings to develop an overall investment strategy into China, and to assist Singapore companies that were part of the strategy. A more recent element of that game plan has been to disseminate information on, and encourage investments in, provinces that did not enjoy the initial benefits of China’s opening up. These other coastal provinces such as Liaoning, in the north, and Zhejiang, south of Shanghai, have become important in their own right as industrial development has spread across the coastal region of China. There are other inland provinces which are now of interest to investors as these become part of the changing development landscape in China. Singapore has taken a significant interest in the investment opportunities becoming...