Industry Clusters in China or How to create a more sustainable supply chain

China is roughly 232 times bigger than Switzerland. Even though China spans across a huge landmass and several climate zones, a big part of the country is as densely populated as Switzerland. During the last 40 years China urbanised in an unprecedented manner and now more than 60% of the population lives in urban areas. A lot of these changes happened due to the rapid industrialization and economic reforms starting in the late 1970’s and going into full swing in the following decades. 

“Time is Money, Efficiency is Life” was a famous slogan during the early days of Shenzhen

How does this help me as a Swiss SME?

By utilizing your knowledge of Chinese Clusters, you can save costs, time and a lot of headaches. Chinese urban and industrial planning is following a highly centralised, top-down approach. No month goes by without the grand opening of a new High-Tech Industry Park in some Chinese city. Most of these areas are established with a bigger picture in mind: To create new industry clusters. 

Industry clusters refer to geographic concentrations of interconnected businesses, suppliers, and other institutions in a particular field. Industry clusters can provide a range of benefits to companies operating within them. In China, industry clusters have played a significant role in the country's economic development, and they continue to be an important factor for businesses seeking to operate in the country.

If you produce or source goods in China, it does make sense to take the geographic location of your Chinese peers into the equation. While almost the whole east coast of China, ranging from Guangdong to Shanghai to Beijing, is industrialised, there are still distinct differences:

Guangzhou-Shenzhen

The so-called Pearl River Delta is the most famous and easiest to access industry cluster in China. Here, the Open Door policy, allowing foreign companies to set up and invest money, started and transformed the region into a highly competitive player in the global market. The area started as a hub for labour-intensive consumer goods, such as toys or clothes, and is constantly re-inventing itself. Currently, the Pearl River Delta is the world-leading producer for electronics, IT products and household appliance products. Thanks to its proximity to Hong Kong and the international airports in Guangzhou and Shenzhen, the area is easily accessible for Swiss visitors. 

Dall-E: Edelweiss flowers in a high-tech industrial park in China

Zhejiang-Shanghai-Jiangsu

With Shanghai as the all-encompassing metropolis on the East Coast of China, second tier cities don’t get the attention they deserve. Hangzhou is competing with Shenzhen for the “Silicon Valley” title of China, Ningbo holds the title of the 3rd busiest port in China and Suzhou is a global pharmacy and chemical hub. 

Fun Fact: More than 50% of all sunglasses bought worldwide are produced in this cluster. 

Beijing-Tianjin

Beijing is first-and-foremost the capital and political centre of China. Without Beijing’s blessings, no mould gets formed and no metal wielded. While the city is mostly associated with its political power, the cluster around it is a hub for the automotive, chemical and biotech industry. 

Other notable economic areas

Chongqing: Automotive and Manufacturing
Wuhan: Banking and Finance hub, recent focus on IT services and biotech.
Chengdu: Industrial Machinery, medical products

While these cities are not at the coast, i.e. they are further away from the major ports,  producing in this area can still make sense for some companies searching for highly-specialised suppliers. Thanks to the recent push in train infrastructure, it is possible to ship goods on tracks to Switzerland in a decent time frame. 

Now, how can I create a more sustainable supply chain?

In general, short distances between suppliers, ports and forwarders means less emissions and more efficiency. While the current Zeitgeist definitely favors local manufacturing and “Made in Europe” products, for a lot of companies it is simply not realistic to leave China and find the same quality for a similar price somewhere else in the world. Due to this, it is reasonable to try to minimize your footprint and avoid unnecessary emissions. Shortening the distances and finding manufacturers in a particular cluster also offers several advantages during transportation, such as avoiding overloaded ports, better consolidation options and a decrease in shipping costs.

Furthermore, by finding your suppliers in a particular cluster, we have observed that the quality of the products can increase significantly as well.  As the competition in these clusters is fierce, manufacturers are willing to invest into R&D and training of their employees. 

Are you ready to take the next step?

We are equipped to quickly assess your current production situation and help you with your strategic and daily challenges. Contact us to find out more about the perfect cluster for your products and how to make your company more sustainable.

Dall-E: 3D render of a Flower in a High-Tech industrial park in China, Modern Office Buildings in the far background, symbol of sustainability, digital art