The Headquarters Economy: An Important Development Direction of Economic Transformation and Upgrading Progress in China's First & Second-tier Cities

BEIJING, Jan. 13, 2011 /PRNewswire-Asia/ -- On December 29th 2010, the Sixth High Level Forum on China's Headquarters Economy, hosted by Beijing Academy of Social Science, and co-organized by China Center for Headquarters Economy Research of Beijing Academy of Social Science and Beijing Fangdi Institute of Economic Development, was held in Guangzhou, China. Chengdu Chenghua district, Shijiazhuang Qiaodong District, Yongkang City of Zhejiang, Zhongguancun Fengtai Science Park, Beijing Air CBD and the Service Industrial Base of Jiangxi Longjin Lake also participated in co-organizing the forum. Taking "Develop the Headquarters Economy, Accelerate the transition of economic development" as its main theme, the forum officially released "China's Headquarters Economy Blue Book(2010-2011)", which is co-compiled by a series of well-known universities and research institutions such as China Center for Headquarters Economy Research of Beijing Academy of Social Science, Beijing Fangdi Institute of Economic Development, Tsinghua University, Nanjing University, Shanghai University of Finance and Economics, etc., and also published "the ability to develop Headquarters Economy of China's 35 major cities" accomplished by Beijing Academy of Social Science.

Mr. Long Yongtu, China's WTO chief negotiator, former Secretary-General of Bo'ao Forum for Asia, Mr. Niu Wenyuan, the chief scientist of Chinese Academy of Sciences and head of the strategic research study group for sustainable development, and Tan Weike, dean of Beijing Academy of Social Sciences attended the forum and made important speeches. At the same time, a series of leaders from national ministries and commissions, municipal government officials, experts and scholars, representatives from municipal commissions, offices and bureaus and business professionals, altogether amounted to 300 people, attended the forum.

The Headquarters Economy theory is originally proposed by Mr. Zhao Hong, researcher of Beijing Academy of Social Sciences and director of China Center for Economic Research. Mr. Zhao defined that the Headquarters Economy refers to certain regions with unique resources, and the development of manufacturing base regions through the "Headquarters - manufacturing base" function chains radiating effect by attracting corporate headquarters clusters and attaining the headquarters agglomeration effect, therefore realizing the division of labor in different regions to optimize regional labor coordination and resource relocation. Mr. Zhao initially established the first research institute of Headquarters Economy in China -- China Center for Headquarters Economy Research of Beijing Academy of Social Science, which currently is China's leading economic research institute in Headquarters Economy, with a full 60-member research team that each year focus on a certain theme to deeply and systematically study Headquarters Economy. The final results are issued in "the Blue Book of China Headquarters Economy" series, which now has six consecutive publications. In the meanwhile, China Center for Headquarters Economy Research has successfully hosted the "China Headquarters Economy Forum" for six years, winning high reputation for their academic activities.

At the forum, Mr. Zhao Hong analyzed pressures, such as industrial upgrading, function optimization and quality improvement, faced currently by China's cities after 30 years' reform and opening-up. He also put up that the headquarters economy theory prefers to solve the "hollowing out" problem in central cities by maintaining and attracting the manufacturing industries' departments of headquarters, R & D and marketing, rather than simply following the stereotype that regional industry selection should be restrained by local resources. The development of headquarters economy could drive the development of the modern service industry such as financial, commerce, communication, mediation industries and so on, promote the structure adjustment of urban industry, and also strengthen the cities' ability of high-end services. By manipulating regional disparity of development levels and local resources, the headquarters economy sets up a bridge for regional cooperation, allows central cities to achieve their development transformation without being confined within their own districts, and even promotes the development of surrounding areas.

Mr. Tan Weike, dean of Beijing Academy of Social Sciences, expressed the same perspective. Starting with the economic development of Beijing, Mr. Tan analyzed the headquarters economy's positive effects on promoting the capital's economy development. The dominating industry of Beijing has transferred from industrial economy to service economy, Mr. Tan said, which has effectively coordinated and harmonized the urban functions and local economic development in Beijing. In particular, the emerging of headquarters economy has deepened the connotation of the capital's economy, and become one of its main characteristics. By the end of 2008, there were 784 enterprise groups which were regional headquarters of multinational companies in China or domestic headquarters in Beijing, 30 of which were Global 500 corporate headquarters, selected in "Fortune 2010", second only to Tokyo. The development of headquarters economy has significantly enhanced the capital's economic competitiveness and the capabilities in regional, even global resource allocation.

Therefore, it has been widely welcomed and implemented by many central cities in China when the headquarters economy theory came out. Some of the most important central cities, such as Beijing, Shanghai, Chongqing, Guangzhou, Shenzhen, Nanjing, Wuhan, Chengdu, Hangzhou, Shenyang and Qingdao, have taken the headquarters economy as one of their most important strategies to accelerate local economic transformation and to achieve fast economic development. For instance, in "Beijing Municipality Advisements to Beijing National Twelfth Five-Year Plan", it put up that "Beijing National Twelfth Five-Year Plan should further exit the potential of headquarters economy", and "build global headquarters economy and high-end industrial clustering".

Mr. Zhao Hong indicates that currently in China, there are three levels of the development of headquarters economy. On the first level, most cities are still in the initial stage, where enterprises mainly rely on product manufacturing and processing for multinational corporations to enhance their competitiveness and local economic strength, and by which gradually integrate into the chain of global headquarters economy. On the second level, some cities have already taken part in a higher level of the development of headquarters economy. By distributing enterprises' headquarters and manufacturing departments in different cities according to their comparative advantages, these cities are cooperating to maximize the efficiency of domestic resources. Finally, in the third level, there are some cities where a number of large enterprise groups have already been in the forefront of the development of headquarters economy, and began to arrange their manufacturing sectors overseas to obtain the revenue of global resources' relocation. Mr. Zhao Hong says, "In 2010, there are 42 companies selected in the world top 500, while in 1995 there were only 3. All of these selected companies are distributed worldwide according to the headquarters economy theory."

On the forum, China Center for Headquarters Economy Research of Beijing Academy of Social Science and Beijing Fangdi Institute of Economic Development co-released "ranking for the capability of headquarters economy in China's 35 major cities (2010)," in which the economic development capacity of headquarters economy in China's 35 major cities were ranked, and Beijing, Shanghai, Guangzhou, Shenzhen, Hangzhou, Nanjing, Tianjin, Chengdu, Wuhan and Qingdao were among the top ten.

In additional to theoretical study, the Forum on China's Headquarters Economy is also concerned about the experience from practical sectors. At the forum, secretary Wu Yanjun from Yuexiu district, Guangzhou, Zhao Bingrong, the deputy head of Chenghua district, Chengdu, Wang Huaping, the committee and deputy head of Chenghua district, Shijiazhuang, Lou Chuyang, the executive vice mayor of Yongkang City, Zhejiang Province, Fu Xuejiang, the deputy director of Management Committee of Zhongguancun Fengtai Science Park and Gong Xun, the deputy manager of Beijing Business District Construction Management Committee, sent their respective speeches around the characteristics of their own cities/districts, experiences of local headquarters economy's development, and also put up a series of new ideas stemmed from practice.

Created by China Center for Headquarters Economy Research of Beijing Academy of Social Science and Beijing Fangdi Institute of Economic Development since 2005, China's Headquarters Economy Forum, which enjoys a high reputation in both economic and theoretical areas, has a strong influence in both theoretical and practical departments of headquarters economy and has been successfully held for five times in Beijing, Qingdao, Nanjing and Wuhan. At the sixth forum, guests focused on the inherent laws of development of headquarters economy, and exchanged their respective practical experiences on promoting central cities/districts' industrial upgrading and economic restructuring by developing headquarters economy, which is very important to promote China's headquarters economy to a higher level, as well as to increase the understanding and friendship between different cities/districts. Besides, the forum also held "China's Headquarters Economy Forum" Cup Ceremony, and reclaimed that the seventh forum (2011) will be held in Chenghua district, Chengdu.

SOURCE Beijing Fangdi Institute of Economic Development