Seeking direction for transformation: Rising to the high end of the "smiling curve"

According to Qu Baoxian, the Party work secretary of NETDA, the only way to make NETDA healthier and stronger is to develop the manufacturing service industry, make concurrent progress in the modern service industry and advanced manufacturing industry, and to produce with a focus on services.

Nengda Headquarters Base, Yuexing Group, Fclub.cn, 512 Creative Design Park, Wal-Mart Sam Shop, SM Business Complex, Home Textiles Alliance Base, and Nantong Industrial Exposition City are some examples of large modern service industry and manufacturing industry enterprises that have gathered in Nengda Business District. The development model integrates the high-end manufacturing industry and modern service industry and will achieve more amazing development in the future.

Future advantages as a foundation

According to the 18th National People’s Congress, people should consciously cherish nature, protect the environment and strive to create a new age for an ecological socialist civilization. Never make developments by excessive exploitation but get “advantages” based on the future. As a result of these directives, a soft power promotion campaign giving priority to the environment was launched, making NETDA’s smiling curve stronger and better.

Founded in 1984, NETDA is the “southern golden wing” of Nantong. It is the most important development engine. It is home to the most cutting-edge industrial parks and areas. It also serves as a strategic base of independent innovation for Nantong.

However, like other development zones all over China, in its early phase NETDA was still stuck in the middle and upper parts of the smiling curve. The pillars of its economy were mainly production, processing and manufacturing enterprises. Plants could be found everywhere and pollution was quite serious. The added value and profit margins for related industries were quite small, yet they required a large amount of resources. Although it increased GDP, the input-output ratio was far from satisfying.

Qu Baoxian said: “We have no reason to continue it any longer. The environmental capacity of NETDA is limited. Industrialized and urbanized developments have completely damaged the intrinsic ecological system. If the early extensive development model were to continue, the discharge capacity of the existing industrial enterprises would be sufficient to destroy the whole water circulation system, let alone the stable and healthy development of the economic society.”

Therefore, a series of ecological construction projects were launched successively. The Clean Water Project was undertaken to enhance the control of important river ways and sources of pollution and carry out long-term management measures. The Blue Sky Project was established to actively improve energy conservation and emission reduction and extensively implement green construction. A “green space system” was pushed by building a batch of green passageways, green avenues, green streets and green squares.

The promotion of an ecological environment not only brought a new look to the city’s image but also promoted the development model. A group of new industry projects such as Shengwei New Energy, Hi-P and Fu Rong Hui BOPP settled here in succession. It is expected that NETDA can realize an annual output value for new industries up to 37.2 billion yuan, a growth rate of 40 percent.

Last February, NETDA invested 120 million yuan to construct Central Park, rebuilding a “green lung for the city”. The ecological park pursues maximum comprehensive ecological benefits and will make its debut this spring. It will be the first park in the southern part of Nantong. The efforts are part of “the rapid rise of a modern new city with complete functions, clean and beautiful looks as well as an environment suitable for business and habitation acceleration.” Writer: Yang Lixia Photographer: Ding Songshan

High-end transformation according to the smiling curve

Brief comment

Zhongtian Technologies, a private enterprise that grew from a brick and tile plant, entered the optical fiber cable sector 20 years ago. It has become a national innovative enterprise and one of the first batch of leading innovation-type enterprises in Jiangsu province through scientific and technological transformation and the construction of a “fine manufacturing” system. Its annual funds for R&D total over 100 million yuan. Its annual sales revenues are more than 10 billion yuan, including more than 100 million yuan for exporting products. The success of Zhongtian Technologies lies in making money at both ends of the smiling curve.

The smiling curve is considered a lifeline for enterprise development. The highest value-added parts of the product chain are listed at both ends of the curve, R&D design on the left side and brand marketing on the right. Zhongtian Technologies focused on R&D and marketing by making large investments to establish invention patents in 65 countries. It exports its products to more than 80 countries and regions. The growth of Zhongtian Technologies reveals that transformation and promotion of the manufacturing industry has great potential. The key lies in stepping out of the depression of low added-value sectors and occupying the high end of the smiling curve.

In the post financial crisis era, occupying high added-value sectors will be the crux of successful transformations for enterprises and the regional economy as a whole. For most regional economies with a high proportion of manufacturing industry enterprises, low costs and low added value has become a concern of “path dependence”. In order to break the dependence and draw a beautiful arc on the smiling curve, people need to concentrate on internal strength and ask for changes to make better achievements in independent innovation. They must enhance levels of marketing services and create profits in the fields of design, patents and marketing to create value.

Transformation and promotion is a race, and only fast players can be industry leaders and winners. Transforming manufacturing into “wisdom creation” through high-end breakthroughs and development is the only way the regional economy can make money at the upper end of the smiling curve and successfully transform for better development.