(IV) Strive for a win-win situation

The central provinces should adhere to the basic guideline of taking measures adaptable to their local conditions and their respective advantages, according to the National Central Region Development Plan and the actual developmental context in each province.

As these provinces enjoy great potential and unique advantages for attracting investment, efforts should be made to seize the opportunities presented by the international and domestic industrial shift to transform this region into a competitive base for manufacturing, hi-tech, energy and key raw materials industries, for development and output of human resources and for accommodation of the industrial shift.

With the ultimate goal being rapid and sound economic development, the central provinces should always look at the whole picture, properly addressing the relationship between local and regional, and immediate and long-term interests. Close cooperation is necessary in resource and industrial development, infrastructure integration, and construction of a unified market, in order to create desirable synergy. There must be a long-term mechanism and platform for regular communication and constant cooperation between the provinces to promote integration of investment resources, overall competitiveness of the whole region, and better development, as well as better regional image.

Constant exchange mechanism should be formulated to encourage collaboration among six central provinces in the pursuit of faster and better growth. Joint Conference for Investment Promotion Agencies of Central China, for one, can be a good idea. With effective information and experience sharing at the Joint Conference, investment promotion agencies from the central provinces can better cooperate with one another for optimal benefits.

It is important to communicate with investment promotion agencies and intermediaries, through seminars, field visits and information-sharing, and to cultivate and share common operation resources and channels for a win-win situation.

II. Priorities and Key Objectives

(I) Key industries

Central provinces should, by referring to the Foreign Investment Industrial Guidance Catalogue (amended in 2008) and Guiding Catalogue for Foreign Investment in the Dominant Industries of the Central and Western Regions (amended in 2008), as well as the trend of the new round of industrial shift, identify their respective industrial advantages and development profiles for the purpose of developing accurate positioning and long term strategies, and rejuvenating the key and competitive industries by pooling resources.

While the manufacturing industry should be made a priority, investment into the primary and tertiary industries should also be vigorously pursued, especially into modern agricultural and sophistic processing industry, as well as trade, finance, science and technology, education, culture, health, sports, tourism, and infrastructure construction, by means of franchising, leasing, and equity transfer.

Based on the economic development profiles and unique resource advantages of the central region, the key beneficiaries of investment promotion should be feature industries with solid foundation, growth potential, great capacity of employment, and resource advantages, including featured agricultural products and food production; energy and raw materials industries; mining, metallurgical and petrochemical equipment, farm machinery, vehicles, and ship-building; clothing, food, light industry, electronics and other labor-intensive industries; logistics, transportation, and other modern services; electronic information, featured biological industries, new energy, new materials, and other hi-tech industries. Meanwhile, the infrastructure industry should also be made a key area.

The central region, most notably the central cities that have abundant well-educated but low-cost work force, and sound industrial foundation, enjoys tremendous comparative advantages in service outsourcing. As service products do not involve physical transportation, service outsourcing can help the central region overcome the restrictions of landlocked geographical conditions, and shorten the distance to coastal areas.

It must be noted that flexibility is required in positioning the target industries. To make the Plan more targeted and helpful, the provinces should keep track of the changes in comparative industrial advantages, make regular adjustments, as appropriate, in accordance with the Foreign Investment Industrial Guidance Catalogue and Guiding Catalogue for Foreign Investment in the Dominant Industries of the Central and Western Regions, and report to competent authorities relevant amendments and suggestions.

(II) Key investment methods

Effective attraction of FDI is a systematic work that involves bringing in stable and low-risk capitals, as well as high technology, scientific management expertise, and international marketing channels. With a capital structure conductive to creating optimal benefits and high spill-over effects from economic activities, joint ventures should remain a major means of foreign investment to be encouraged.

Alongside this, other means, including mergers and acquisitions, investment in funds and securities, participation in reorganization and upgrading of state-owned enterprises (SOEs), and listing in domestic and overseas capital markets should also be encouraged.

As cross-border mergers and acquisitions (M&As) have become the main form of FDI, central provinces should pay sufficient attention to attracting multinational corporations, especially encouraging their mergers and acquisitions of local businesses.

International practices, including IPO abroad, and BOT or TOT financing should be followed to increase overseas financing by multiple methodologies.

(III) Key investment zones

Starting almost from scratch, the central region does not yet have the capacity to accommodate foreign investment in the region as a whole. Prioritization and proper arrangement are necessary to channel foreign capital to central cities, port cities and those with convenient transportation; provincial-level economic and hi-tech development zones; and heavy industry parks with great potentials.

Priority zones include the economic belts along the Yangtze River and Beijing-Guangzhou Railway, city circles identified by the six provinces respectively, as well as areas that are closely linked with the Yangtze River Delta, Pearl River Delta and the Bohai Bay Rim.

At present, the seven state-level and provincial-level economic and technological development zones from the central region have already developed a fairly advanced infrastructure capable of accommodating investment projects, featured industrial clusters, and a wealth of management experience in industrial development, and therefore are in the best position to embrace the industrial transfer. These development zones and industrial parks should play a leading role to exert build-up and ripple effects. By bringing in flagship projects and supporting industrial projects, they can reduce industrial costs and help form industrial clusters within the region.

(IV) Key sources of investment

When making efforts to attract foreign investment with market-oriented approaches, the provinces should identify their target investors.

Western Europe, North America, and the Asia-Pacific region are where the world's export of capital occurs most frequently and where original and innovative intellectual property rights, hi-tech and high value-added manufacturing industries and service industries are concentrated, while multinationals are the major carriers of technological transfer worldwide, accounting for 85 percent of the capacity for technology development. The central region should make it a priority to attract powerful multinationals from these regions, in order to substantially improve the share of investment from developed economies.

This, however, does not mean to belittle the role of small and medium-sized foreign capitals. If the central provinces should interpret it as an absolute policy and are spurred to compete for investment from multinationals, the cost of cooperation will rise as a result. The provinces must review the structure of foreign capital sources and assess applicability of foreign investment, that is, whether it is consistent with the overall level of local productivity and consumption, in accordance with a market-oriented principle. It should be noted that a large number of established and professional small and medium-sized enterprises (SMEs) from developed countries are considering branching out into overseas markets to slash costs and maintain their traditional advantages in this fiercely competitive market.

Based on the existing economic and especially the industrial development profiles, and given the mounting pressure of unemployment in the region, the provinces should consider it a medium- and long-term strategy to attract the investment of SMEs from Taiwan, Hong Kong and Macao, Japan and South Korea. While formulating and implementing policies, the provinces should give considerations to the affordability of SMEs.

The provinces should further organize investment promotion events in key target countries and areas in support of the state-prescribed "Businesses Going West" initiative and cooperate with the Yangtze River Delta, Pearl River Delta and Bohai Bay Rim economic zones to flexibly adjust the business investment strategies according to the increased FDI in these regions.

III. Promotion Measures and Supporting Policies

(I) Establish a sound promotion system

In recent years, government investment promotion departments and professional intermediary agencies have been set up in the region to effectively facilitate foreign capital promotion activities, together with the local investment organizations with their respective responsibilities and priorities. The provinces and cities should establish and refine service systems for investment promotion in accordance with their specific conditions and requirements.

The government investment promotion departments are responsible for providing guidance, management and coordination, including formulating and implementing well-conceived investment promotion plans, guiding the establishment of a modern promotion system and taking effective measures.

Inter-provincial joint conferences and regular communication and consultation mechanisms should be established for the provinces to share resources and information with their neighbors, and negotiate cross-provincial investment promotion activities, thereby preventing waste of resources and industrial layout disorder. It is suggested that the provinces establish dedicated bodies to take charge of the investment promotion for key industries, regions and projects in their jurisdictions, and provide subordinating departments at the city and county levels with guidance and coordination. With province-level promotion bodies playing a leading role, the cities and counties should establish investment promotion bureaus (centers), and towns, promotion offices if possible, so that a complete administrative facilitation network can be formed.

(II) Reinforce capacity-building for promotion agencies

The Ministry of Commerce will conscientiously help improve the expertise and skills of frontline investment promotion staff by consolidating relevant resources from different regions and carrying out professional training programs from time to time, including inviting foreign experts to teach them on how to seek various effective promotion methods that are suited to their local conditions when holding exhibitions and special promotion events, receiving foreign delegations, going on business trips with leaders, and participating in international forums; how to make the promotion services more considerate and targeted; and how to strike a chord with potential investors at the first instance.

(III) Reinforce the construction of promotion platform

While hosting "Central China Investment and Trade Fair" and investment promotion events, the central provinces should actively participate in "China International Investment and Trade Fair", "China International Hi-Tech Fair" and other large-scale international investment promotion events so as to build a platform and large network for investment promotion. Efforts remain:

To establish a regional information and resource platform and a service-sharing mechanism, an information and network platform of desirable scale and level should be established to make better use of the Internet so that investors can have easy access to complete and accurate information, considerate on-line services for answers to their questions.

At the same time, laws and regulations in connection with investment policies can by instantly published and made known to ensure information-sharing with major international investment promotion bodies. In this way, the investment promotion agencies can become effective service interfaces.

To bring in and employ customer relations management and customer tracking software systems, etc. to collect, analyze and process useful information, especially investor-related information, and provide investors and investment targets with all-round counseling services by establishing contact and communication mechanisms with potential investors.

Most investment promotion activities are currently short-term ones that can not be sustained due to the shift of location and time. It is therefore necessary to explore effective and long-term mechanism-based investment promotion platforms on top of the existing on-line business promotion interface and physical promotional events, such as fairs, business promotion fairs and exhibitions.

To effectively facilitate the transfer of export-oriented industries from coastal areas to the central region, the Ministry of Commerce has established in Kunshan and Shanghai industrial transfer promotion centers as platforms for the central region to showcase its investment environment, attract investment projects and conduct cooperation negotiation. On one hand, the promotion centers help the appointed staff from the central and western regions to pick up new ideas and skills by introducing new methods of investment promotion, industrial development and transfer trends abroad, and successful practices of other investment promotion agencies; while on the other hand, they proactively organize match-making exchanges between the appointed staff and local overseas investment agencies, business associations, regional headquarters of multinational companies, and businesses interested in investing in the central and western regions.

The establishment of these industrial transfer promotion centers will be conductive to comprehensive upgrade of the eastern region's participation in global division of labor, and the central region's capacity to accommodate transferred industries.

(IV) Formulate modernized promotion modes

The central provinces should formulate their own modernized investment promotion approaches by learning from the latest models and strategies employed around the world, and trying out promotion strategies. Efforts should be made to achieve the following:

Transition from passive operations to proactive ones. On the basis of fully understanding the goals and needs of foreign investors, as well as an accurate grasp of the local investment environment and advantages, the provinces should make comprehensive use of all possible marketing strategies and means to engage target investors, introducing the local investment environment and programs, to facilitate the materialization of projects.