< PreviousCan a world-class aerotropolis be developed in less than years providing the most modern aviation-oriented manufacturing, logistics and information-based business services? e answer must be no. Or is it? Zhengzhou Airport Economy Zone (ZAEZ) located in Henan Province (China’s largest), a little over an hour’s fl ight time inland from Beijing and Shanghai, aims to do just that. CHINA 26 JULY 2019 SI T E S E L E C T IO N Zhengzhou Xinzheng International Airport All photos courtesy of ZAEZ Administrative Committee The Zhengzhou Airport Economy Zone: A Remarkable Aerotropolis by JOHN D. K A S ARDA , PhD e ditor @ site s ele c tion.c om S I T E S E L E C T I O N JULY 2019 27 In , the -sq.-mile (-sq.- km.) area that now makes up the ZAEZ consisted primarily of a modest commercial airport surrounded by scatterings of isolated, mostly impoverished villages tied to subsistence farming. Today, driven by the dramatic growth of Zhengzhou Xinzheng International Airport (CGO), the ZAEZ has undergone an industrial and urban metamorphosis. For those keeping count, this transformation occurred in a mere eight years, and only six years since the Zone was formally established by China’s State Council in March . e ZAEZ was crowned “China’s Aerotropolis” in May by the People’s Daily. The Value Proposition What is an aerotropolis? Simply stated, it is a business-optimizing city built around an airport. More broadly defi ned, it is an aviation-centric metropolitan sub- region whose infrastructure and coordinated commercial land use are geared to facilitating time-critical business activity and trade. e primary value proposition of the aerotropolis is that it off ers business speedy national and global connectivity to their suppliers, customers and enterprise partners. Many aerotropolis fi rms — especially those in the high- tech, biomedical, e-commerce, experiential leisure, and advanced business services sectors — are much more dependent on distant suppliers and customers than on those in their own metropolitan region. For such fi rms, time is not only cost, but also currency. e aerotropolis improves local, national, and international operations of businesses by seamlessly fusing highway, rail and air to create an “urban pipe” that reduces the time- cost frictions of space and distance over all geographic levels. is provides both fi rms and places with “economies of speed,” which have become as important in gaining competitive advantage today as “economies of scale” and “economies of scope.” But there is more to creating an eff ective aerotropolis. Its development success requires the complex integration of three critical domains: business, transportation and urban development. is is where the ZAEZ has excelled. Catalyst for Investment e ZAEZ was the fi rst, and to date, the only aerotropolis in China (and arguably the world) to simultaneously address business, multimodal surface transportation, airport and urban objectives as an integrated whole. By carefully following and, more importantly, executing aerotropolis planning principles (see www.aerotropolis. com), the ZAEZ has experienced marked industrial investment and trade growth. Since , over signifi cant industrial projects have been completed in the Zone achieving a gross industry output value of CN¥ billion (US$ billion) in . e Zone’s annual GDP exceeded CN¥ billion (US$. billion) in , with a year-on-year growth rate of %. ZAEZ trade (that is, imports plus exports) surpassed CN¥ billion (US$. billion) in , The Smartphone Park in the Zhengzhou Airport Economy Zone28 JULY 2019 SI T E S E L E C T IO N which accounted for 64% of the total value of Henan Province trade. Contributing most to the ZAEZ’s trade is Foxconn, the contract manufacturer for Apple’s iPhones. Approximately 250,000 workers at Foxconn’s immense ZAEZ factory complex have been churning out an average of more than 100 million iPhones annually over the past three years. With 60 other smartphone manufacturers producing an additional 115 million handsets in 2018, nearly one out of seven smartphones sold in the world were assembled at the ZAEZ. Supported by Zhengzhou Airport’s 29 international air cargo routes, the ZAEZ has not only become a manufactured product export dynamo, but also Central China’s largest foreign-origin meat port as well as a leading Chinese distribution point for a multitude of other imported food perishables. Magnet for Exhibitions, Education A huge, state-of-the-art, CN¥10- billion (US$1.4-billion) convention, trade, and exhibition complex is under construction that will contain 34 halls being jointly developed by China’s Greenland Group, a Fortune 500 company, and Xingang Investment, the capital investment arm of the ZAEZ. This complex, scheduled to open in 2021, will be a magnet for companies from China and throughout the world to come together to display new and innovative products. To create an institutional structure that will draw talented university students along with well-educated Chinese and foreign scientists, entrepreneurs, and professionals, the Zhengzhou International Higher Education and Innovation Complex has been planned. This complex, spanning some 20 sq. km. (7.7 sq. miles), is just 15 minutes from Zhengzhou International Airport and the ZAEZ’s major high-speed rail station that will commence operations in late 2019. Leading domestic and international universities together with their research labs will be recruited to offer instruction, research, entrepreneurial and innovation platforms. A Manufacturing Automation and Robotics Institute is envisioned for the complex that will focus on the advancement of artificial intelligence, machine learning and The E-Commerce Industry Park in the Zhengzhou Airport Economy Zone S I T E S E L E C T I O N JULY 2019 29 automation, the last of these involving autonomous factories and autonomous vehicles. e complex is designed not just as an education and research campus, however. It will also be a university city. is university city will serve as an ecologically landscaped, architecturally appealing centerpiece for Zhengzhou’s National Central City designation by Beijing, whose purpose is to foster entrepreneurial and innovation-driven urban transformation in China. As the ZAEZ implements the aerotropolis model to attract innovative manufacturing and knowledge-based services, it is catalyzing numerous emerging economic sectors including, among others, new energy vehicles, precision manufacturing, commercial aircraft leasing, high- value food processing and cultural tourism. Delegations from around the world are coming to observe the ZAEZ, with many returning a year or so later to visually capture the pace and scale of development of this remarkable aerotropolis. e ZAEZ was the rst, and to date, the only aerotropolis in China (and arguably the world) to simultaneously address business, multimodal surface transportation, airport and urban objectives as an integrated whole. S I T E S E L E C T I O N JULY 2019 31 INVESTMENT PROFILE: NANJING, CHINA, PART 3 Much of the future of China’s automotive industry already is in place in Nanjing. Part of Nanjing’s value proposition as a location for new and expanded industrial facilities is its proximity to Shanghai, about an hour to the east on the China Railway High-Speed bullet train. As was noted in the previous installments of this Investment Profile, such business costs as labor and real estate are less expensive than those of Shanghai, and the labor supply is vast, thanks to its more than 800,000 college students. Nanjing also has the Longtan Port with a railway on the Yangtse River, an airport with international nonstop destinations and industrial development zones with abundant room for operations of any size. Proximity to Shanghai also factors into the rapid success of Nanjing’s new energy vehicle industry. Bokuan Chen, digital data analyst at Daxue Consulting in Shanghai explains: “Nanjing is a significant part of the Yangtze River Delta economic and financial integration, and the city has built closer ties with Shanghai. Its local economy is effectively driven by Shanghai. For auto investors, Nanjing has a huge auto market, advanced auto factories and tech support from Shanghai.” Do the cost advantages of Nanjing translate to the quickly growing electronic vehicle sector? “Since Nanjing has had in place an automobile industry supply chain, the division and cooperation of different auto manufacturers reduces the costs and improves efficiency,” Chen points out. “New energy vehicles are booming in Nanjing, many NEV (new energy vehicle) projects already have landed in the region, such as BYTON Auto Industry Park and ChangAn EV’s factories. New energy tech R&D is also a good option for auto investors in Nanjing. Nanjing will be the NEV production and developing center in Jiangsu province and the Yangtze River Delta, except Shanghai. More advanced and mature NEV industrial bases are going to be built in the region,” he predicts. A One-Stop Shop for New Energy Vehicles by MARK AREND mar k .ar end@ site s ele c tion.c om32 JULY 2019 SI T E S E L E C T IO N INVESTMENT PROFILE:NANJING, CHINA, P ART 3 All Electric Future in Sight Nanjing will become even more strategic as automobile sales migrate to new energy vehicles, which already is happening in China — the world’s largest automotive market since 2009. Meanwhile, for the first time in 20 years, new car sales in China declined in 2018, by 2.8%, according to Daxue Consulting analysis. From a June 2nd Daxue Consulting report, “Unpacking the world’s largest auto market: Is new energy vehicles the future of China’s car industry?”: “Despite these struggles in the ‘regular’ automobile market, there is one sector that is showing promise, new energy vehicles. Chinese consumers are leading the world’s boom in electric vehicles. The Chinese market has stayed on track of purchasing more than 1 million electric vehicles (EVs) in 2018, after seeing a sales growth of 53% in 2017. In essence, China’s leadership is charting a course to an all-electric future, targeting 2 million annual EV sales by 2020 and a complete ban on internal-combustion engines, which officials predict will happen before 2040. In combination with lowering technology costs and rising disposable incomes, there should be further growth in the electric vehicle market in China in the years to come.” From Daxue analysis in a May 1 report, “Automotive Industry in China: How car makers compete for first place”: “Electric or hybrid cars have been very successful in recent years in China, thanks in particular to the support of the Chinese government but also because buying an electric vehicle avoids the cost of purchasing a license plate, which is a considerable saving. In 2018, the sales of new energy vehicles in China consistently grew reaching 1,25 million units sold. Buyers of new energy cars in China are mostly urban and young: 40% of China’s electric car sales in 2018 came from six large Chinese cities which are Beijing, Shanghai, Shenzhen, Tianjin, Hangzhou, and Guangzhou because of the awareness of the pollution problems inherent to combustion vehicles and the gasoline-car restrictions that have been implemented in these cities. Most of them are also the first person in their family ever to own a car.” Why Nanjing Is Ahead Several Chinese electric car manufacturers are chasing this market, including BYD, BAIC, Changjiang EV, Nio and Lifan, among others. But BYTON is doing so from its base in Nanjing. In addition to its headquarters, BYTON houses its research and development, engineering and manufacturing operations in the Maple Science Park (MSP) component of the Nanjing Economic and Technological Development Zone. In May, BYTON held a Plant Open Day in Nanjing, showcasing its global manufacturing base to the public for the first time. The plant covers an area of 800,000 square meters, with a total investment of over $1.5 billion. Plant construction, which started in September 2017, is nearing completion. Trial production will commence in the third quarter of 2019. “Our plant in Nanjing incorporates the world’s best equipment and production processes and follows the highest standards in safety and environmentally responsible production,” said Dr. Daniel Kirchert, CEO and Co-Founder of BYTON. “This will allow us to deliver on our promise and commitment to quality. As we move Source: Baijiahao “New energy vehicles in China " 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 70% 60% 50% 40% 30% 20% 10% 0% 53% 0.51 0.77 1.25 1.6 53.3% New Energy Vehicle SalesYOY Growth 61.7% 28% ANNUAL NEW ENERGY VEHICLE SALES IN CHINA (MILLIONS) 2016201720182019FS I T E S E L E C T I O N JULY 2019 33 forward to series production by end of the year, our dream of reshaping the future of mobility with our first car — the M-Byte — will become reality.” BYTON’s Nanjing plant is built to the Industry 4.0 standard, using global leading manufacturing equipment and technology: • The stamping shop, using the industry-top servo press, completes one panel every 3 seconds on average. It will be one of the fastest stamping production lines in China. • The welding shop, which incorporates 335 welding robots supplied by leading manufacturing equipment provider KUKA, boosts the automation rate to 99%. • The paint shop is equipped with cutting-edge painting technologies such as a “3 Coating 2 Baking” system and thin film pre-treatment as well as the transverse “Eco-Incure” oven technology — one of the first in China. • The battery shop will produce and assemble battery packs, designed independently by BYTON. Leading battery maker CATL provides the battery cells and modules, while aluminium maker Constellium supplies the aluminium battery tray. • Workers at BYTON’s assembly shop will receive special training. They are conducting several months of trial operations before the launch of series production. Nearly 100 prototypes are currently testing on tracks and roads worldwide. The BYTON M-Byte will be the first vehicle to be built on the highly adaptable BYTON Smart EV platform. The Smart EV platform provides an industry- leading overall configuration and optimal chassis structure to maximize in-car space, while exhibiting exceptional maneuverability and ride comfort. North American Consumers Get a Look In January, BYTON revealed new details about the M-Byte SUV, at the Consumer Electronics Show (CES) 2019 in Las Vegas. “BYTON’s M-Byte represents the transformation of the traditional car into a next-generation smart device for every user,” said Dr. Carsten Breitfeld, CEO and Co-founder of BYTON. “We achieve this through the combination our state-of-the-art EV platform and our proprietary BYTON Life digital ecosystem.” The M-Byte will cost U.S. buyers about $45,000, but that buys some sleek audio and video features. BYTON’s Shared Experience Display (SED) remains the world’s largest in-car display for a production automobile. It displays vehicle and driving information and offers various content options in an intuitive way. The position of the display has been carefully developed and tested to not affect driver line-of-sight and can automatically adjust brightness according to changes in ambient lighting to avoid further distraction. In addition, the SED will meet automotive safety standards as well as crash standards in all target markets. The M-Byte will be the first BYTON vehicle to be built at the new Nanjing plant.34 JULY 2019 SI T E S E L E C T IO N BYTON users will have access to BYTON Life, an open digital ecosystem that connects applications, data, and smart devices. BYTON Life features advanced machine-learning capabilities that analyze the user’s schedule, location, preferences, and application data to provide intuitive support such as scheduling reminders, online shopping tasks, remote charging management, and more. It can recognize voices of diff erent users and sounds from diff erent directions in the car. In the North American and European markets, BYTON has been cooperating with Amazon Alexa to jointly develop voice control. In addition, BYTON has also invited software developers from around the world to join BYTON’s ecosystem and explore new possibilities for applications and content on BYTON Life’s open platform. Batteries Not Included? New energy vehicle companies that don’t produce their own battery packs will need to procure them from somewhere. And that might well end up being from LG Chem’s Nanjing plants, which in January were the target of a more than $ billion expansion investment by the Korean industrial giant. One facility, with a ,-square-meter footprint, will be dedicated to electric vehicle batteries. LG Chem anticipates the need for enough batteries to supply more than . million electric vehicles by . An LG Chem representative explains the advantages of a Nanjing location for an expansion investment of this size: “Nanjing is the hub of the Jiangsu-central Delta economy along with the Guangdong Province-centered delta economic bloc that leads the Chinese national economy. It has the logistical advantages such as the port infrastructure that can extend both inside and outside the country. e railways run through the whole [network of] inland cities and are located in neighboring areas to Nanjing’s airport and China’s economic hub, Shanghai.” LG Chem has high praise for Nanjing offi cials’ expertise and assistance in organizing the project: “ e government of Nanjing City and its economic development district organized a professional task force to promote investments,” the spokesperson explains. “Nanjing City’s industrial department mayor is in charge of the overall project manager, and the head of the government of the economic development district is in charge of the project. ey not only negotiated with us regarding the conditions of corporate investment for tangible and intangible support needed, but also kindly took care of the such details as workers’ residences and children’s education.” LG Chem is not a new investor in Nanjing. It has operated in the former Chinese capital for decades, so it is in a good position to enumerate some of the city’s location advantages. “ e Nanjing area has the benefi t of attracting high- quality, talented people, a stable residential environment, and active support and service of local government. Logistical advantages include Asia’s largest railway and port as well as airports with direct fl ights to Korea — these are signifi cant aspects for us. LG Group’s affi liates, such as those making electronics, displays and chemicals, have been doing business in the area for years. Our relationship with local governments helped us to make a soft landing in the early days of our business.” INVESTMENT PROFILE:NANJING, CHINA, P ART 3 This Investment Profile was prepared under the auspices of the Nanjing Investment Promotion Bureau. For more information, visit www. investnanjing.gov.cn or call +86 25 83581586. LG Chem is building a 200,000-sq.-m. facility in Nanjing to produce electric vehicle batteries.Next >