The Singapore Entrepreneurial State In China A S ociological S t u d y o f t h e S u z h o u I n d u s t r ia l P a r k (1992-1999) A l e x iu s A . P e r e ir a L o n d o n S c h o o l o f E c o n o m ic s a n d P o l it ic a l S c ie n c e A thesis submitted in fulfilment of the requirements for the Doctor of Philosophy (Sociology) 2001 UMI Number: U159300 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dissertation Publishing UMI U159300 Published by ProQuest LLC 2014. Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code. ProQuest LLC 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106-1346 I M i - 7SS2. A b s t r a c t This study examines the Singapore government’s Suzhou Industrial Park project between 1992 and 1999. It argues that the Singapore governments’ strategies can be explained as those of a ‘transnational entrepreneurial state’ participating in the global game of industrial production. As an interventionist government, it sought to realize financial profits in China to supplement economic growth in Singapore. The project involved two strategies designed to enhance the project’s competitive advantages. Firstly, it introduced the competitive strategy to supply high quality secondary factors of production— such as industrial infrastructure and bureaucratic administration—to industrial transnational corporations seeking to locate in China. Secondly, it utilized the collaborative strategy to encourage complementary collaboration with the China government and several industrial transnational corporations. During the Construction Phase (1992-1994), both strategies were successfully implemented, enhancing the competitiveness of the Suzhou Industrial Park. During the Take-Off Phase (1994-1996), many industrial transnational corporations had responded positively to these competitive advantages and chose to locate their operations at the Suzhou Industrial Park. During the Adjustment Phase (1997-1998), the Suzhou Industrial Park lost competitiveness because of external factors such as the impact of the Asian Finaucial Crisis and also because of intense competition from other industrial estates in China. In the Disengagement Phase (1999), the Singapore transnational entrepreneurial state chose to withdraw from the project for economic and political reasons. This study concludes that the Singapore government differed from the archetypal interventionist state because of endogenous and exogenous factors. It became a transnational entrepreneurial state because by its resources and motivations, aud its own assessment of its economic and political conditions. This study also found that the outcome of its strategies were not just dependent on how they were implemented but also on the actions of other agents, including collaborators and competitors, and the influence of the external environment. C o ntents Abstract ii List of Tables vii Acknowledgements viii C h a p t e r O n e : S ta t e S t r a t e g ie s in t h e G l o b a l E c o n o m y 1 1.1 Research Problem Introduction The Suzhou Industrial Park: A Brief Sketch 1.2 Global Game of Industrial Production The Demand Side The Supply Side 1.3 The Transnational Entrepreneurial State State Entrepreneurship 1.4 Research Question Structure of the Study C h a p t e r T w o : C ollaboration a n d C ompetitiveness 23 2.1 Collaboration: Lessons from the Developmental State Interventionist States Complementary Collaboration 2.2 Embedding Mechanisms Economic Mechanisms Political Mechanisms Social Mechanisms The External Environment 2.3 Competitiveness: Lessons from TNC-led Industrialization TNC-led Industrialization: State Motivations Competitive Advantage 2.4 Globalization and Competitiveness Responding to Globalization 2.5 Conclusion C h a p t e r T h r e e: R e se a r c h M e t h o d o l o g y 51 3.1 Research Question Revisited Multi-level Case Study Design Case Building 3.2 Data Collection The Sample 3.3 The F ield Research On-Site Fieldwork and Interviews Interview Schedule Other Data Sources 3.4 Conclusion iii C h a p t e r F o u r: P a t h w a y s to S u z h o u 4.1 FDI as a National Development Strategy Singapore’s Development Strategies (1965-1980) Competitive Advantage Outcomes of the First Strategy 4.2 Changes in the Global Game Enter the Dragon: China’s Economic Reform The ‘Overseas Chinese’ Connection 4.3 The Global Game of Production in the 1990s Singapore’s Regionalization Strategy Transnational Entrepreneurship Industrial Parks Programme 4.4 Convergence Basis for Collaboration 4.5 Conclusion C h a p t e r F iv e : T h e C onstruction P h a s e 5.1 Geographical Competitive Advantages ‘Location, location and location’ Lee Kuan Yew’s Personal Involvement 5.2 Infrastructural Competitive Advantages Ready Built Factories 5.3 Institutional Competitive Advantages ‘Pro-Business’ Environment ‘Innovative’ Systems 5.4 ‘Govemment-to-Govemment’ Embeddedness Embedding in Suzhou Embedding with Beijing 5.5 ‘Pioneer’ Companies 5.6 Conclusion C h a p t e r S i x : T a k e O ff P h a s e 6.1 Transnational Corporations at the SIP Profile 6.2 Competitive Advantage Why China? Why Suzhou? Why SIP? 6.3 Institutional Competitive Advantages Assessing the Software Transfer 6.4 Govemment-to-Govemment Collaboration 6.5 Keeping Customers Satisfied 6.6 Conclusion C h a p t e r S e v e n : S h o c k s to th e S y st e m 7.1 The Asian Financial Crisis The Crisis hits the Companies The Crisis hits the Landlord and Broker 7.2 Sibling Rivalry The Suzhou New District Unfair Competition? 7.3 Arrows Fly Frustrations The Real Gulf 7.4 Beijing Acts Pacification Suzhou’s Autonomy 7.5 Conclusions C h a p t e r E ig h t : D isengagement 8T Disengagement Crisis of Credibility 8.2 Disengagement Strategies Formal Strategies Informal Strategies 8.3 Reactions to Disengagement Tenants’ Views China’s Reactions 8.4 ‘Singaporean’ Competitive Advantages? Political Naivity Social Naivity 8.5 The Elite’s reflections Valuable Lesson Sour grapes? 8.6 The Dust Settles C h a p t e r N in e : S u z h o u a n d S in g a p o r e ’s R egionalization 9.1 Singaporean Industrial Enterprises Singaporean Enterprises in Suzhou 9.2 After Disengagement 9.3 The Wuxi Industrial Park Suzhou’s Assessment of Wuxi? '9.4 The Other Regional Industrial Parks 9.5 Conclusion C h a p t e r T e n : T h e S o c io l o g y o f th e T ransnational E ntrepreneurial S t a t e 10.1 Evaluating the Suzhou Industrial Park 10.2 The Transnational Entrepreneurial State 10.3 Interventionist States in the Global Economy What Next? B ibliography a n d R e f e r e n c e s A p p e n d ic e s L ist o f Ta b le s Table 1.1: The System of Collaboration at the Suzhou Industrial Park Table 1.2: Number of Companies and Fixed Investments Commitments in the Suzhou Industrial Park (1994-1999) Table 4.1: Foreign Investment Commitments in Singapore’s Manufacturing (1966-1984) Table 4.2: Percentage of Employment Share of Industries in Singapore (1961-1991) Table 4.3: Singapore’s Selected Economic Indicators (1960-1990) Table 4.4: Sources of Foreign Direct Investment in China (1979-1995) (cumulative). Table 5.1: Singapore’s Industrial Parks in the Region, as Reported in 1995 Table 5.2: Selected Economic Indicators by Province (1978-1996) Table 5.3: Selected Socio-Economic Indicators Comparing Jiangsu with the China Average (1995) Table 5.4: Chairman/Chief Executive Officers of the CSSD (1992-1999) Table 6.1: Companies Located in the SIP and Those Included in the Sample, Categorized by Country of Origin (of Largest Shareholder) Table 6.2: Companies Included in the Research Categorized by Business License Type Table 6.3: Proportion of Business License Types of Foreign Direct Investment in China (1979-1996) Table 6.4: Companies Included in the Research Categorized by Business Sector Table 6.5: Companies Included in the Research Categorized by Length of Occupancy Table 6.6: Companies Included in the Research Categorized by Factory Type Table 6.7: Responses to ‘Why China?’ Table 6.8: Destination of Products for Companies in the Sample Table 6.9: Responses to ‘Why Suzhou?’ Table 6.10: Responses to ‘Why SIP?’ Table 6.11: Respondent’s Views on SIP AC Table 6.12: ‘Satisfaction’ Index Table 6.13: ‘Dissatisfaction’ Index Table 7.1: All Companies Located in the SIP Categorized by Business Sectors (1999) Table 7.2: Companies Included in the Research, Based on Size of Factory, Number of Employees and Fixed Capital Investment Table 8.1: Respondents’ Views of the Disengagement by Percentage Table 8.2: Respondents’ Views of the Impact of Disengagement (Percent) Table 8.3: Responses to ‘How good was the Singapore Government in Doing Business in China?’ Table 9.1: Destination of Singaporean Companies’ Overseas Investments Table 9.2: Respondents’ View of the Wuxi Industrial Park A cknowledgements I would like to thank Leslie Sklair who has provided valuable guidance over the period of this research.