Growing with Our Investors—Looking back on TEDA’s Early Days (Part I)

On December 6, 1984, the Tianjin Economic-Technological Development Area (abbreviated as TEDA) was officially established. The journey of TEDA’s opening-up and exploration began from the 33-square-kilometer salt fields and wastelands.

In the early days of its establishment, TEDA had nothing. There was no financial support from the government or ready-made models to refer to, not even mature experiences to draw from. TEDA people could only “cross the river by feeling for stones,” searching for breakthroughs in investment promotion.

Starting from Scratch

For a city, especially for TEDA founded upon saline-alkali wastelands, infrastructure is crucial for investment attraction and urban development. The first step of TEDA began at the third branch field of the original Changlu-Tanggu Saltpan. At that time, roads, electricity, water supply, and land flattening were in great need. Only when the basic infrastructure was in place could foreign investment be attracted. With courage and perseverance, TEDA battled day and night at the construction site, reclaiming land, paving roads, and striving to paint a beautiful picture of rapid economic and social development on this barren land.

Amidst the rumbling sound of construction, roads were paved, power lines erected, water supply secured, and projects began to pour in. According to statistics, within just one year of its establishment, TEDA signed 21 domestic and foreign-funded projects with a total investment of $47 million, causing a sensation nationwide. During this period, both TEDA and enterprises still fumbled for a way for business negotiation and cooperation. Both sides had neither a clear understanding nor a comprehensive plan for their future development. Foreign investors were in a wait-and-see attitude.

“Development Zones Are of Great Promise”

On August 21, 1986, Comrade Deng Xiaoping, the chief architect of China’s reform and opening-up, inspected TEDA and affirmed its development. He said, “TEDA is very good. It has already made a name for itself, and the investment environment has improved. Foreign investors would feel more assured about investing here.”

Reform is not achieved overnight, nor is it smooth sailing. TEDA had to overcome not only construction difficulties but also institutional resistance. At that time, some young people raised bold questions: “Is our country’s policy of opening-up going to be restricted?” Comrade Deng Xiaoping firmly stated, “We must keep on opening up to the world. Otherwise, we won’t make it. There’s no such thing as restrictions at all. So much wasteland lies between the port and the city, which is a great advantage. I see great potential here. Be bolder and develop in a faster pace.” Comrade Deng Xiaoping’s words clarified many doubts. He reaffirmed the belief and confidence of TEDA pioneers in opening-up and exploration.

To encourage young people to boldly explore new paths, Comrade Deng inscribed the words “Development Zones Are of Great Promise” by himself, providing not only a guideline for TEDA but also priceless mental wealth and moral force for all development zones across China. It was since then that people in China and beyond had a clearer picture of development zones, followed by a sharp rise in investment. TEDA ushered into a new stage of development.

In 1986, after Prof. George Lee, Commercial Counselor at the US Embassy in China, visited TEDA, he reported to the US Department of State, stating that TEDA and the Shenzhen Shekou Industrial Zone were two best areas in terms of investment environment in China. Global investors hence cast their eyes on TEDA.

Bold Reform Under the “Three Nos” Policy

The Tianjin Municipal People’s Government provided guarantees and support for the construction and development of TEDA at policy level. There once was a policy called “Three Nos”: no financial appropriations would be offered to TEDA’s construction, and funds had to be raised on its own instead; no departments of the municipal government could intervene in TEDA’s specific affairs, giving TEDA full autonomy; all TEDA’s fiscal revenue could be used exclusively for regional development in a given period of time. Within such policy framework, TEDA was highly autonomous in its development, establishing an efficient mechanism and enabling bold reforms.

Back then, applying for foreign-funded projects required lengthy inefficient administrative approval. After the establishment of development zones, the Central People’s Government of the People’s Republic of China delegated approval authority in three grades to various coastal cities. Tianjin and Shanghai, the two cities of the first grade, held the key to authorize projects with a total investment under $30 million. The Tianjin Municipal People’s Government granted TEDA to approve projects within $20 million by itself, outperforming many provincial-level peers. In such way, TEDA saw greater efficiency and broad space for growing an export-oriented economy, establishing joint ventures, and the introduction of advanced technology globally.

Law-based Governance in TEDA

The rule of law has been what underlay investment attraction and social governance in TEDA since the very beginning. In 1985, the 12th Session of the Standing Committee of Tianjin Municipal People’s Congress reviewed and approved four local regulations, namely, the Regulations for the Administration of TEDA, the Regulations on the Administration of Enterprises Registration in TEDA, the Regulations on Labor Management in TEDA, and the Regulations on Land Management in TEDA. These regulations laid a solid foundation for the law-based governance locally. They cleverly corresponded to the three crucial elements of economics—land, capital, and labor, reinforcing the belief in opening-up, pioneering, and transformation of government functions in TEDA. As an indirect result, these regulations made TEDA and enterprises to work and grow together.

The Emergence of a Service-Oriented Government

From the beginning of their investment, foreign investors have found that all their needs can be addressed by and in TEDA without going elsewhere. This led to the initial establishment of a “one-stop service” pattern. The emergence and gradual implementation of the concept of a service-oriented government soon follows. From 1985 to 1986, TEDA successively put forward slogans such as “Investors are kings, projects are lifelines” and “To provide convenience for investors and enable them to gain profits,” reflecting the concept of a service-oriented government. These initiatives put the needs of investors as the government’s top priority, and innovatively propose to create a “simulated international investment environment,” allowing foreign investors to enjoy first-class international investment conditions and services, thereby aligning with international standards.

As TEDA was just starting, both sides had no experience in how to build and operate on this open land. Early investors such as Danhua, Jiatai Ceramics, Hanaco, and Merlin Gerin faced challenges in project negotiations, factory construction, and later-stage operations. However, both sides kept on looking for solutions and gradually established trust in cooperation. It’s fair to say that TEDA and investors positively contributed to each other and grow side by side.

To retain projects and make investors profitable, TEDA spared no effort in brainstorming strategies. In order to reduce their operating costs, TEDA provide various incentives to enterprises in terms of land, factory buildings, etc. This aligns perfectly with the goal of attracting investors and making them profitable. Following the principles of market economy, TEDA did not involve in the administration of business activities straightforwardly. Instead, its way of administration leaned towards rule-of-law and indirect management. Through better ways of service and higher efficiency, TEDA pushed forward the progress of projects and made cooperation sustainable. Consequently, investors can stay and grow. Such way of growth not only accumulated initial funds for TEDA but also promoted Tianjin’s comprehensive opening-up and reform.