Lanza, G.; Kinkel, S.; Ruhrmann, S. (Editors) Hochdörffer, J.; Kinkel, S.; Lichtner, R.; Ruhrmann, S.; Bürgin, J.; Bäuerlein, F.; Herrmann, F.; Hoeven, E.; Kleinn, A. Industrial Synergies between Baden-Wuerttemberg and Suzhou Industrial Park Contents Contents Foreword 1 Core Findings 2 Introduction 3 Initial situation in Baden-Wuerttemberg and Suzhou Industrial Park 9 Online survey results 59 Expert interview results 83 Summary 103 References 117 Edition notice 132 Foreword Foreword The Ministry of Science, Research and the Arts (MWK) represents political key areas within the state of Baden-Wuerttemberg. We are convinced that science and research are the keys to developing innovative solutions. This is why one of our main policy goals is to create excellent conditions and support researchers and institutions. The main objective of this research study is to systematically analyze synergies and potentials for future collaborations between Although the state of Baden-Wuerttemberg in industry as well as research and education Germany may not be the richest in natural institutions which are located in Suzhou resources, it is - due to its high level of Industrial Park and the state of Baden- industrialization - one of the most prosperous Wuerttemberg. Strengths and weaknesses of regions within Europe and certainly one of the these regions are therefore structured in a way most innovative regions in the world. to support decision makers such as companies and research institutions in their China’s shift towards becoming a promising internationalization strategy towards Baden- sales market and a strong player in the Wuerttemberg and China. manufacturing industry can be observed within the last few decades. In particular certain The Ministry of Science, Research and the areas, such as Suzhou Industrial Park located Arts highly appreciates these research results in the Jiangsu province, are focusing on high- of wbk Institute of Production Science at tech and knowledge-intensive industries and Karlsruhe Institute of Technology, the Institute on highly educating its workforce. for Learning and Innovation in Networks at Karlsruhe University of Applied Sciences and the Global Advanced Manufacturing Institute in Suzhou. Michael Kleiner Director General Research, Technology Transfer, E-Science Ministry of Science, Research and the Arts of the State of Baden-Württemberg 1 Core findings Core findings Firms from Suzhou and B-W Both regions feature highly Firms from B-W and SIP focus on different internatio- skilled talent pools, with high focus on products adapted to and models Business customer needs customer nal market strategies. Sur- numbers of university customer needs, high quality veyed B-W firms employ an enrollment and graduates. and innovative solutions. average of 50% of staff Tertiary education enroll- Competition in SIP is abroad; whereas surveyed ment is at 55% in B-W, and characterized more often by Suzhou firms mostly remain at 68% in SIP. Dual high cost pressure with located in Suzhou and focus education as it exists in B-W competing firms from other on export. is missed in SIP. regions in China. The surveyed SIP firms use Most of the surveyed B-W Both regions feature high innovative technologies to a firms generate innovations in numbers of patent appli- similar extent, but less e- e-mobility (42%) and cations. From 2012-13, the mobility and energy efficient environmental technology patent growth rate in B-W technologies. For certain (37%). Most used techno- was 2%, in SIP 15%. Many research standard components, B-W logies are integrated IT firms in both regions regard firms’ technological lead is systems (48%) & energy/ themselves as market and declining or does not exist material efficient techno- (±70%) or product innova- anymore. logies (39% and 36%). tors (>75%). Technology use, innovation innovation use, Technology Cooperation competition and Cooperation The surveyed B-W firms Some firms already pursue The surveyed B-W firms expect strong competition in local sourcing cooperation in expect strong potential for manufacturing technologies China. International coope- cooperation in fields in which (31%), new materials (25%) ration in R&D is not common China faces severe challen- and nanotechnology (16%). yet. On a domestic level, ges, such as environmental In contrast, Suzhou firms see 82% of B-W’s and 46% of technology (33%), water high potential for cooperation Suzhou’s surveyed firms systems (30%), and rene- in these indus-tries. partner with research wable energy technologies. facilities. (29%) Both regions feature very The surveyed B-W firms High productivity demand high industrialization rates realize 12% of their sales in and rising labor costs will (B-W: 39%, SIP: 51%), China, compared to 8% of push the need for automa- relatively high GDP growth their purchasing of inter- tion in China. Increasing rates (B-W: 1.7%, SIP: mediate inputs. 49% of the pollution in China will call for 10.7%) and high export surveyed firms from B-W solutions in environmental challenges ratios. Therefore, manu- already have manufacturing technology, water treatment, facturing plays a significant locations in China, 32% also medical technology, and e- role in both regions. have R&D locations. mobility. Location factors and future future and factors Location 2 Introduction In Bonded Zones, high-level logistics services as well as tax exemptions are offered. The Introduction Chinese government also started developing S&T parks in the 1980s, based on the Baden-Wuerttemberg Suzhou Industrial Park example of Silicon Valley in the USA. (Unesco 2014; Schuurman & He 2013) The federal state of Baden-Wuerttemberg Suzhou Industrial Park (SIP) is located in the (B-W) is located in the south-west of Germany city of Suzhou in China’s Jiangsu province, and is the third largest German state in both with direct and fast connections to major hubs Idea Contract Contract Singaporean SIP terms of area and population. Its population such as Nanjing, Jiangsu’s capital, and of for SND for SIP is government reports consists of 10.51 million people (including Shanghai. Jiangsu is the most densely SIP is signed signed lowers its its first 11% foreigners) as of December 2011. The populated province of China: although it is the is share to 35% profit nd th state capital is Stuttgart, which is also one of 2 smallest province, it has the 5 largest born the country’s most important cities in the population. (Deutsche Bank Research 2015) country economically and a center for the Suzhou has 10.58 million inhabitants, automotive industry and manufacturing. It is comparable to B-W. The share of expatriates 1992 Nov. 18 Feb. 26 Jan. 1 2001 home to well-known manufacturers such as in Suzhou is at 0.2% of the total population. 1992 1994 2001 Daimler AG, Robert Bosch GmbH, and (Crown Relo 2014) Time (years) Dr. Ing. h.c. F. Porsche AG. (Birkner 2013) SIP is one of eight high-tech industrial zones Figure 1 Timeline of the history of SIP (Han 2008) Structurally, B-W is divided into four major in Jiangsu province. Moreover, there are 16 administrative districts (Freiburg, Karlsruhe, economic and technological development SIP started as a joint project between the Stuttgart, and Tuebingen). These again are zones (ETDZ), six science and technology governments of Singapore and China in 1994 grouped into a total of 35 sub-level (S&T) parks, and one bonded zone in the (see Figure 1). The Singaporean government administrative districts and nine independent province. (Schuurman & He 2013) For each owned a majority share of 65% at the time at 1 cities . Economically, it is divided into 12 type of zone, the Chinese government which the contract was signed in 1994. The cluster regions (see Table 1). (Birkner 2013) implements different measures, special endeavor was meant to lead to crucial regulations, and exceptions. ETDZs are zones The history of B-W in its current form dates benefits for both parties: on the one hand for in which foreign direct investments2 (FDI) are back to the year 1951, in which it was created the Singaporeans to invest in China, on the encouraged, i.e. by tax exemptions and by a merger between Wuerttemberg-Baden, other hand for the Chinese to learn from special import regulations. There are 49 Wuerttemberg-Hohenzollern and South Singapore’s vast knowledge and experience. ETDZs in entire China, one third of them are Baden. (Birkner 2013) (The Straits Times 2014) SIP received strong located in Jiangsu. High-tech industrial zones competition from neighboring Suzhou New are very similar to ETDZ, and the definitions District (SND) industrial zone in its first years are often used interchangeably. They are, and faced severe losses. In 2001, SIP started however, more targeted towards high-tech to make its first profits. (Han 2008) industries, like SIP. (HKTDC 2014) SIP is divided into six zones: Dushu Lake Science Education Innovation Park, the Jinji Lake Central Business District, an Integrated 2 Investment from one country into another (usually Free Trade Zone, a high-tech Industrial Zone, rather by companies than by governments, and an ecological science hub, and Yangcheng 1 Baden-Baden, Freiburg, Heidelberg, Heilbronn, involving a physical investment or establishing Lake Eco-Tourism Resort. (SIPAC 2011d) Karlsruhe, Mannheim, Pforzheim, Stuttgart, Ulm. operations) 3 4 Introduction 3 Trends and strengths Moreover, SIP has received an ‘AAA’ rating and several other awards and accolades, a The market in B-W follows a trend typical for One trend among foreign investments in selection of which will be listed here. One of highly-developed countries, and faces China is the shift from China as a low-wage the characteristics of SIP that is most often challenges with regards to rising labor costs, manufacturing location toward a potential applauded is its administrative efficiency high quality standards, and high innovation sales market with a strong growing middle based on the Singapore example.