Manufacturing and Logistics Networks of Korean Firms in China: A Case Study of Suzhou Industrial Park

Manufacturing and Logistics Networks of Korean Firms in China: A Case Study of Suzhou Industrial Park

Zheng Liu (Xi'an Jiaotong-Liverpool University, China), Hyung Min Kim (Xi'an Jiaotong-Liverpool University, China) and Kaifeng Zhang (Xi'an Jiaotong-Liverpool University, China)
Copyright: © 2016 |Pages: 27
DOI: 10.4018/978-1-4666-9758-4.ch011
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Abstract

The aim of this chapter is to develop a better understanding of interactions of Korean firms in Suzhou in terms of supply chain, manufacturing networks and logistics. By reviewing the key literature in industry clusters, international strategy, manufacturing systems and logistics management, a conceptual framework is designed to capture the key roles of Korean MNE, SMEs, and local SIP service organizations. Case studies and interviews with practitioners provide in-depth knowledge about firms' operation in Suzhou. An industry review of SIP is also conducted from the perspectives of history, policy, infrastructure and local culture. Discussions are made to address the critical issues followed by a summary of the chapter.
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Introduction

Globalization has brought extensive and intensive restructuring to cities and regions. China, as the largest developing countries, has witnessed massive flows of inward Foreign Direct Investment (FDI), after the economic reform and open door policy in the 1980s. Multinational Enterprises (MNEs) sought out low production sites in search of affordable industrial land and cheap labor costs. The ever growing Chinese market was also one of the key attractions. The evident growth of inward FDI happened particularly in manufacturing sectors where foreign firms have established plants for their production and joint-ventures collaborating with local Chinese suppliers. Industrial clusters have emerged as Overall Equipment Manufacturers (OEMs), Small and Medium Enterprises (SMEs), and service companies co-locate to share information, infrastructure, and suppliers. Industrial clusters, in general, are partially supported by the central and/or regional governments with favorable policies as commonly seen in Chinese manufacturing sectors. Among many industrial parks in China, the Suzhou Industrial Park (SIP) is knowns as one of the successful government-initiated development zones (Wei et al., 2011), aiming to attract inward FDI for economic growth. Established in 1994 jointly by China and Singapore governments, SIP is located in the east of the Suzhou old town, with connections to major cities in the Yangtze River Delta of China, a commercialized trading center traditionally regarded as the “Paradise City on the Earth”. It is defined as “a flagship cooperation project between Chinese and Singapore governments”, and “a pilot zone of reform and opening-up; A successful model of international cooperation”. Under this context, the development goals are clearly identified as “to develop into a hi-tech industrial park with international competitiveness”, and “to develop into an innovation eco-township of internationalized, modernized, information-based happy district of Suzhou”. With the newly developed high speed train systems and highways, it now takes only 20 minutes to reach Shanghai from Suzhou. Other major cities in the east coastal areas such as Nanjing, Hangzhou, and Ningbo are all connected conveniently. Since the 1990s, the SIP has developed quality infrastructure primarily within a land area of 80 square kilometers of the China-Singapore Cooperation Zone that includes well-planned functional areas. Figure 1 is a map of the SIP, which contains 6 major areas:

Figure 1.

A map of the SIP

(Source: Suzhou Industrial Park).
  • 1.

    The Dushu Lake Science-Education Innovation Park with universities around;

  • 2.

    The Jinji Lake Central Business District where most banks and financial institutes are located;

  • 3.

    The Ecological Science Hub;

  • 4.

    The Integrated Free Trade Zone (IFTZ) for logistics service;

  • 5.

    The New and Hi-Tech Industrial Zone mainly for manufacturing companies;

  • 6.

    Yangcheng Lake Eco-Tourism Resort to attract tourists.

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