Summary of Key Points
A global trend of "merging and upgrading development zones" is underway: Multiple Chinese provinces (such as Liaoning, Zhejiang, Henan, etc.) have significantly integrated their development zones, while manufacturing hubs like Vietnam, India, and Indonesia are also adjusting their industrial landscapes through mergers of provinces and the consolidation of special economic zones. This adjustment is not merely about reducing the number of zones; it reflects a change in the spatial requirements for industrial upgrading. Technological competition demands customized parks, resource concentration for industry repatriation, and the intelligent manufacturing sector is eliminating inefficient spaces. Countries are adopting different strategies: Vietnam is merging administrative regions to create larger industrial clusters, Japan is focusing on core industries and revamping old systems, and Singapore is continuously evolving through its operational institutions. In China, cases like Jiuquan (which lost its national development zone status) have shown that it is possible to "revive" by targeting new energy sectors and addressing service shortcomings. The essence is that industrial spaces must meet new demands; otherwise, they will be marginalized, regardless of their designation.
Why Are Countries Around the World Reorganizing Development Zones Now?
This round of reorganizations differs from China's 2003 effort to curb unregulated expansion. The core issue is not the excessive number of zones but three fundamental changes:
1. Technological competition requires "customized spaces."
High-tech industries like AI and semiconductors require specialized facilities—ultrapure water (1,000 times cleaner than drinking water), stable high-power electricity (without even a second of disruption), low earthquake risks, and dedicated chemical logistics channels. The cost of renovating old parks is too high, so countries are building new ones that can meet these needs and phasing out outdated facilities.
2. Industry is being squeezed at both ends, forcing resources to concentrate in core areas.
Developed countries (USA, South Korea) are bringing advanced manufacturing back home (e.g., TSMC moving to the U.S., Samsung investing $1.3 trillion in South Korea), while developing nations (Vietnam, India) are targeting key links in China's supply chains (e.g., Vietnam for semiconductor packaging and testing, India as the largest importer of U.S. smartphones). Parks that cannot accommodate these core activities will be merged.
3. The manufacturing sector has become more sophisticated, outgrowing old spaces.
Modern factories, known as "lighthouse factories" (the most advanced in the world), are highly intelligent and flexible. For example, Lianbao in Hefei can schedule 20 million pieces of material within an hour, with 80% of orders being customized. Such production requires efficient logistics, data networks, and flexible space layouts, making outdated, scattered parks obsolete.
How Do Zones "Reborn" After Merger?
Merger is just the beginning; the key is to "reinvent" the zones' core functions. Countries have adopted three approaches based on their circumstances:
1. Vietnam: Merging administrative regions to form super-clusters.
Vietnam has merged 63 provinces into 34, eliminating the county level, creating a two-tier structure of province and township. This has centralized supply chains; by 2025, Binh Duong Province is expected to account for 20% of Vietnam's imports and exports, with Samsung having 70% of its suppliers there, making it the country's most concentrated electronics manufacturing area.
2. Japan: Abolishing old systems and investing in core industries.
Japan previously had multiple overlapping special economic zones. Now, resources are focused on semiconductors: TSMC has been attracted to Kumamoto (with government support of 1.2 trillion yen), and local companies are supported for 2nm chip production (with another 2.35 trillion yen in funding). Japan cannot afford to spread resources evenly and must focus on critical areas.
3. Singapore: Operational institutions evolve with industry needs.
Since 1968, the JTC (Jersey Town Corporation) has adapted its strategies with each industrial transition:
- During the heavy-industrialization era, it reclaimed land to build Jurong Island for chemicals;
- In the innovation era, it developed Wee One Tech City for biomedicine;
- Now, it is integrating platforms for chip production, accounting for 1/10 of global chip output and 1/5 of semiconductor equipment production. Its success relies on continuous adaptation by its operational institutions.
How Can Old Industrial Zones Be Revitalized Without Losing Their Status?
The example of Ulsan, South Korea, illustrates this: Although it is a major heavy-industrial base with pollution and poor corporate collaboration, direct closure would harm the economy. Instead, it adopted a "soft upgrade" approach:
1. Building an "industrial symbiosis network": Turning waste into assets.
The government facilitated partnerships between companies (e.g., using waste heat from one factory to power another). SK Energy saved $554 million annually by sharing its waste steam with nearby plants. Greening has become a source of revenue rather than a cost.
2. Introducing new industries: Transforming old facilities for new uses.
The city relaxed park entry restrictions to attract semiconductor and hydrogen energy companies. Hyundai Motor converted its internal combustion engine factories into hydrogen fuel cell production sites, upgrading traditional manufacturing spaces for emerging industries. This transformation did not require losing the development zone status.
How Did Jiuquan, Which Lost Its Status, Regain It?
Jiuquan's economic development zone was downgraded in 2020 but revived through two steps:
1. Targeting a clear industry focus: New energy equipment.
Leveraging its scenic resources in the Hexi Corridor, Jiuquan focused on wind and photovoltaic equipment, attracting leading companies like Goldwind Technology. Its annual production capacity has grown to 20 million kilowatts, making it the largest land-based wind power equipment base in China, with output value increasing from 7.8 billion to 30 billion yuan.
2. Improving services: Enhancing the business environment.
The city simplified approval processes (81.9% reduction in time) and streamlined land acquisition procedures. It also provided incentives for high-skilled workers and established training programs for energy storage, attracting new businesses. In the past three years, 69,600 new entities were created, and by 2025, it was selected as a national-level industrial cluster.
Conclusion:
The fate of development zones depends not on their status but on their ability to meet new industrial demands. Those that can adapt will survive even if they lose their designation; those that cannot will be eliminated. This is the inevitable outcome of global industrial upgrading.