Recommendations for municipality to reach its potential

When the Tianjin Position Paper 2015/2016 was launched, the European Chamber stated that the city was finally ready to outgrow its status as a stopover and become a key destination in its own right.[1] Just a few years prior, in 2012, the municipality had reported among the highest gross domestic product (GDP) results in China.[2] However, in 2021, Tianjin did not even make it into the top-ten list of Chinese cities in terms of GDP, after having slipped to sixth place in 2017 and 2018, ninth in 2019, and tenth in 2020.[3] What can Tianjin do to turn the tide and get its development back on track?

European companies operating in Tianjin believe that a great deal of potential remains untapped. The city’s proximity to the capital, and its large port, are strong strategic advantages. Tianjin also has a cluster of industries—including aviation, biomedicine, manufacturing and robotics—deemed by the central leadership to be important to China’s overall development and in which European companies are already active. Tianjin has an additional advantage in its top-ranking universities, provided they can be better leveraged to enhance industry- academic research to help the city accelerate its innovation drive. The Tianjin Chapter therefore believes that, instead of looking to copy other cities’ development models, Tianjin already has its own unique advantages that it can use as the basis for developing signature policies that can help the city to regain its allure as a top investment destination.

Significant, long-term investments are based on positive sentiment, derived from confidence that a certain business environment is demonstrably transparent and predictable, and that it will continue to develop. To forge ahead in this regard, the Tianjin authorities first need to increase the frequency and quality of dialogues with industry, including European companies. Currently, the government-industry meetings that take place tend to reflect on recent developments and existing policies, as opposed to looking forward and finding ways to improve the regulatory environment. Instituting a regular, bilateral government-industry communication platform, through which high-level local officials engage meaningfully with the European Chamber and other foreign chambers of commerce, would go a long way towards increasing business confidence in Tianjin.

For the foreseeable future, when looking at where in China to increase their investments, European companies will place increasing importance on their ability to access reliable sources of green energy, and areas where government policies align with their corporate environmental, social and governance (ESG) goals. This is because ensuring their global operations achieve carbon neutrality by 2050 is imperative for most of these enterprises. Therefore, until Tianjin’s overall energy infrastructure can be upgraded, and green energy made freely available, European companies will remain reluctant to expand their investments there, and may even be forced to exit the Tianjin market if they cannot meet their ESG pledges. This in turn will make it more difficult for Tianjin to meet its carbon neutrality goals.

The European Chamber therefore recommends that the Tianjin Government quickly adopt measures that can encourage investment in upgrading energy infrastructure and increase the overall supply of green energy. Involving the Tianjin business community in the policymaking process would be an efficient way to ensure that policies related to decarbonisation and the supply of green energy are both implementable and compatible with corporate strategies. At the moment, companies are often confronted with new and more stringent regulations that they are required to comply with at short notice, and policies are often developed without full knowledge of the industries to which they will apply. This also detracts from Tianjin’s attractiveness as an investment destination and does not encourage companies to seek innovative solutions to reduce their greenhouse gas emissions.

The conditions for companies to engage in advanced manufacturing, and research and development (R&D) in general, are also not optimal in Tianjin due to the lack of a diverse working population resulting from the challenges of attracting and retaining talent. Tianjin is particularly unappealing to Chinese talent, ranking as the 20^th and 23^rd most attractive Chinese city for talent in 2020 and 2021 respectively, according to Zhaopin’s China Urban Talent Attraction Ranking Report.[4]^&[5] Meanwhile, factory and assembly work has become increasingly less attractive to young entry-level workers, who would rather take up jobs in China’s gig-economy, and high-level talent tends to migrate to China’s south to capitalise on established innovation hubs.

Here again, Tianjin has the tools to react positively. For example, the city’s talent pool could be deepened by increasing the involvement of industry players in its talent programmes and by strengthening relationships between government, academia and industry in key sectors. Tianjin could also put renewed efforts into building a dual-vocational training programme, similar to the one established in Germany. Such programmes offer plenty of opportunities for on-the-job training and work experience for entry-level candidates, to ensure that they gain both the theoretical knowledge and practical experience required in the workplace.

Human resources challenges have been further compounded by China’s zero-COVID policy. While the Tianjin Chapter recognises that there may be little the local authorities can directly do to change this, there are certain measures that can be taken at the local level to alleviate the difficulties facing companies. First, because work and business visas are administrated at the local level, Tianjin could implement a fast-track visa programme for foreign experts and certain categories of international talent. Second, it is well within Tianjin’s authority to designate good quality hotels with a high standard of catering and service that can facilitate a smooth process for those that have to undergo quarantine.

Implementing these measures would go a long way towards increasing business confidence and creating a more positive image of Tianjin.

To download the report, please visit the European Chamber’s official website: https://www.europeanchamber.com.cn/en/publications-local-position-paper

[1] Tianjin Position Paper 2015/2016, European Union Chamber of Commerce in China, 3^rd March 2016, viewed 13^th October 2022, p. 3, <https://www.europeanchamber.com.cn/en/publications-archive/407>

[2] Shanghai, Beijing and Tianjin Lead Country in per Capita GDP, The Economic Observer, 3^rd February 2012, viewed 13^th October 2022, <http://www.eeo.com.cn/ ens/2012/0203/220140.shtml>

[3] China Statistical Yearbook 2018, National Bureau of Statistics (NBS), 2018, viewed 23^rd November 2022, <http://www.stats.gov.cn/tjsj/ndsj/2018/indexeh.htm>; China Statistical Yearbook 2019, NBS, 2019, viewed 23^rd November 2022, <http://www.stats.gov.cn/tjsj/ndsj/2019/indexeh.htm>; China Statistical Yearbook 2020, NBS, 2020, viewed 23^rd November 2022, <http://www.stats.gov.cn/tjsj/ndsj/2020/indexeh.htm>; China Statistical Yearbook 2021, NBS, 2021, viewed 23^rd November 2022, <http://www.stats.gov.cn/tjsj/ndsj/2021/indexeh.htm>

[4] 2021 China City Talent Attraction Ranking: Beijing Number 1, Shanghai Number 3, Sina Finance, 14^th May 2021, viewed 10^th October, <https://finance.sina.com.cn/china/ gncj/2021-05-14/docikmxzfmm2330054.shtml>; China City Talent Attraction Ranking 2022, Zhaopin Macro, 17^th May 2022, viewed 5^th September 2022, <https://mp.weixin. qq.com/s/X73j-o5VM7vAQBXbqLvRqQ>

[5] Zhaopin is an online recruitment website with more than 200 million professional users in China. To evaluate the talent attraction of Chinese cities, Zhaopin’s talent attraction index assesses the proportional talent inflow, net talent inflow, talent inflow of fresh graduates, talent inflow with master’s degree and above, and the per capita disposable income of talent in mainland Chinese cities.