Known as the ‘Venice of the East’, Suzhou is considered one of the richest major cities in China. It is located in the southeast of Jiangsu Province, Eastern China and part of the Yangtze River Delta. In this article, Rainy Yao from Dezan Shira & Associates takes a look at this picturesque city filled with opportunities for foreign investment.

Economic overview

Suzhou is one of China’s foremost destinations for foreign investment due to its proximity to Shanghai and comparatively low operating costs. Major industries include iron and steel, IT and electronic equipment manufacturing, and textile products. Suzhou is the second largest industrial city in China after Shanghai, and is home to 27 listed companies.

In 2013, Suzhou’s GDP exceeded RMB 1.3 trillion, an annual increase of 9.6 per cent. Its primary industry contributed RMB 21.4 billion (a three per cent increase) and its secondary industry RMB 685 billion (a 7.5 per cent increase). The service industry contributed RMB 594 billion (a 10.7 per cent increase)—accounting for 45.7 per cent of the city’s GDP.

Meanwhile, the city’s gross industrial output reachedRMB 3.57 trillion (a 3.4 percent increase).Suzhou’s emerging industries in the manufacturing sector contributed RMB 1.37 trillion (6.7 percent growth)—accounting for 45.2 percent of above-scale industries.

Suzhou’s tourism industry also made a large contribution to the service sector, bringing in a total income of RMB 152 billion (11.9 per cent growth) for the city. Nearly two million foreign tourists visited the city in the last year alone.

Development zones

Suzhou’s main development zones include:

Suzhou Industrial Park

The Suzhou Industrial Park (SIP), a joint project between the Chinese and Singaporean governments, was established in 1994. It is located beside the beautiful Jinji Lake, which lies to the east of Suzhou’s Old City. The SIP covers a total area of 288 square kilometres, of which an area of 80 square kilometres is designated for the China-Singapore Cooperative Zone.

Suzhou Wuzhong Economic Development Zone

Established in 1993, the Suzhou Wuzhong Economic Development Zone (SWEDZ) ranks among the top ten economic development zones in Jiangsu Province. Currently, the Zone hosts some 6,000 domestic and foreign-invested enterprises, featuring industrial clusters in precision machinery manufacturing, electronics and IT, bio-medicine, and new energy and new materials.

Suzhou National New & Hi-Tech Industrial Development Zone

This zone was established in 1990 and is now popularly known as the Suzhou New District (SND). In November 1992, the zone was upgraded to the status of a national-level, hi-tech industrial zone. Major industries in the district include information technology, electronics, pharmaceuticals, fine chemicals and auto parts.

Xiangcheng District

Established in 2012, the Xiangcheng District covers an area of approximately 50 square kilometres, with the Caohu Industrial Park at its centre. The district is located in northern Suzhou and borders the SIP to the southeast and the SND to the southwest. Industry is mainly concentrated in precision machinery, auto parts, energy saving and green technology.

Suzhou Industrial Park Export Processing Zone

The Suzhou Industrial Park Export Processing Zone, located inside the SIP, was approved by the government in April 2000, with a planned area of 2.9 square kilometres.

Investment guidance

In order to promote the economic transformation and development of Suzhou, the municipal government offers various preferential policies to foreign investor (including tax incentives and financial support), and especially encourages foreign investment in the manufacturing and service sectors. Below are some key industries in which foreign investment is encouraged:

Manufacturing sector

• Modern Biological and Pharmaceutical Industry
• New Materials
• Electronic and Telecommunications Manufacturing
• Automobile Manufacturing
• Ship Manufacturing
• Petrochemical and Fine Chemical Manufacturing
• Fine Steel Manufacturing

Service sector

• Banking
• Logistics
• Wholesale and Retail Trade
• Scientific Research and Comprehensive Technology Services
• Real Estate
• Tourism
• Information and Consulting
• Outsourcing

Preferential tax policy

A limited-partnership, venture-capital enterprise (VC Enterprise) established in the SIP, in accordance with relevant laws and engaged solely in capital investment, is entitled to preferential tax policies if it has invested in an unlisted small- or medium-sized, high-tech enterprise by way of equity investment for two years (24 months) within the pilot period.

Seventy per cent of the total investment by the partners of the VC Enterprise may be deducted from the taxable income distributed by the VC Enterprise. If a legal partner has invested in several qualified enterprises in the SIP, the deductible investment and taxable incomes may be calculated on a consolidated basis.

Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.

For further details or to contact the firm, please email china@dezshira.com or visit www.dezshira.com.