This is China! BLOG

Ascendas-ing in China

I recently had a charming visit from representatives of Ascendas, a commercial realestate developer. Ms. Ge and Mr. Fan are based out of Shanghai, and traveled into Suzhou to chat about developments of the company throughout Asia. I was already acquainted with Ms. Ge from the AMCHAM Shanghai Conference at which I had spoken a few weeks before on investment trends in china’s second- and third-tier cities. I had talked about Dalian’s infrastructure developments vis a vis Singaporean investment. As Ascendas is a Singaporean company, she took it upon herself to tell me she would be visiting her company’s investment in Dalian within a fortnight; she’d like to tell me about developments there when she returned from the trip.

Fresh back from her visit to Dalian mid-July 2007, she explained to me how the Dalian Ascendas IT Park was shaping up. The total area of the park is 35 hectares, about 70,000 square meters of which is all but complete. The Park will support public transportation as well as cafes, a post office, banks, shops and a fitness center, in addition to the more mundane office buildings that will house R&D, IT- and Business Process Outsourcing centers. Intel is installing a training center in the Park, and plans to begin hiring upwards of 10,000 fresh graduates into its ranks. According to Ms. Ge, nearby companies such as GE, IBM, Dell, SAP, HP, Sony, Panasonic and the like are concerned about the squeeze Intel’s hiring plans will put on an already-tight local labor market.

The Park is a 50/50 joint venture with the China Yi Da group, a city-vested holding company. The Park is about a 20-minute drive from downtown Dalian, which rates as one of my favorite cities in China to rest and eat very flavorful seafood.

Ascendas actually has developed infrastructure projects throughout China and Asia. The company was one of the first in the Suzhou Industrial Park and, according to Mr. Fan, pioneered the concept of the “ready-built workshop space” in China. Ready-built workshops are empty factory-space shells, the interiors of which can be fashioned to the corporate-renter’s specifications. The ready-built workshop concept has been a major draw for companies with operations that were too small to warrant the purchase of land in China, or somewhat risk-averse to a more ambitious investment in China. Now, ready-built factories are an expected function of economic development zones throughout the country.

Ascendas has also created working spaces in China in: Shanghai, Nanjing Jiangning, Xi’an, Wujiang, Beijing, Shenyang, Hangzhou. Throughout the rest of Asia one can find industrial and science parks in: Singapore, India, Phillipines and South Korea. Ms. Ge told me Ascendas developed the Bangalore IT Park, which was then used as a model for eight of the ten IT parks in China Ascendas built.

The Shenyang International Technopolis is geared toward the hi-tech component development and manufacture for the automobile industry. Car makers such as BMW, Shanghai GM and Brilliance Auto are nearby. The Shenyang government apparently had a heavy hand in developing the Technopolis (I’m sure they also gave the Park its corny name, as well), the negotiations for which were not easy going. But then again, that’s part of the work Ascendas does: to facilitate negotiations between the local government and potential investors who could use the infrastructure Ascendas builds.

Ascendas was also instrumental in putting together the Dalian Gold Coast Marine & Shipbuilding Accessories Industrial Park, which builds on Dalian’s historic asset as a shipbuilding center in China.

The company, though, is clearly moving along with China up the production-value chain. Ascendas has capitalized on Xi’ans clear educational advantage by developing a R&D and Hi-tech hub in the Xi’an Hi-tech Industrial Development Zone. The mayor of Xi’an had worked with Ascendas when he was the mayor of Dalian, which facilitated local government negotiations for the Xi’an project. Xi’an trumps Dalian for its lower hi-tech salaries and turn-over rates than in Dalian, which has exploded as an IT- and BPO center. Xi’an has also historically been very strong in turning out scientists and technologists. “…and Xi’an people deliver what they promote,” Ms. Ge added. However, she said, getting project managers to Xi’an is an expensive proposition, as few experienced silver-collar Chinese professionals want to move to Xi’an to make their lives.

Ascendas has recently signed a Memorandum of Understanding (MOU) with the Hangzhou New and Hi-tech Park to build a Singapore$3 billion R&D center in the Park. Hangzhou already has shown its great strength as a financial services outsourcing center, processing many of the financial transactions for Shanghai institutions.

Ascendas also expects its software development park in Nanjing Jiangning to attract top-flight companies, since the salaries for technical professionals in the area is 30% less than in Dalian.

Like the Chinese Central Government itself, Ascendas knows China’s future does not lay in being the Workshop to the World. Instead, Ascendas is putting into place a foundation that will help catapult the company and an entire country into a new-knowledge era.

Bill Dodson
SUZHOU, China