< Previous18 MAY 2019 SI T E S E L E C T IO Nof three “municipalities” in the New Area. Chip City, or Circuit City, is a similar cluster for the IT industry, with an emphasis on integrated circuits and high-end electronics. A Financial Center is home to banks and institutions that support startups and commercially viable innovation taking shape in the other two. Gene City, with its pharmaceuticals and medical device specialties, is more than mere land. NJBPV makes it possible for companies to start work immediately, because everything from research space to labs to manufacturing space already is in place — investing companies don’t need to build their own until the day comes that they outgrow these facilities. “We now have more than 400 companies here,” says Chen Hong, Director of the Nanjing Jiangbei New Area’s Life Science & Health Industry Office. “We have invested around US$15 million to purchase the clinical instruments for the research, including those for chemical analysis and biotech research. That is one of the public platforms we make available to investors. We also have a research arrangement with Nanjing University, which has a National Genetically Engineered Mice Resource Bank. It can provide these mice for the pharmaceutical companies’ research.”One-Stop Biomedical ShopGene City intends to add value along “the complete industry chain in the life sciences and health industries, including medical services, high-end medical devices and big data,” says Hong. “We have five square kilometers [2 square miles] just for the international health center,” he adds. “This area will attract organizations that can provide medical services like hospitalization and rehabilitation, and training and education. We are cooperating with Cambridge University to build a research center here, and we collaborate with Uppsala University in Sweden to build medical organizations here. We also work with Beth Israel Deaconess Medical Center, a teaching hospital of Harvard Medical School, which is building a center here — this will be a high-end medical research center. We also connect with medical organizations in Europe that would build specialized hospitals here, such as for cardiology.”Big data? Very big data. A DNA sequencing platform is being built in the Nanjing Jiangbei New Area, part of a genetic information database for ethnic Chinese. The project is part of the National Health & Medicine Big Data (Nanjing) Center, an $894 million center now under construction and slated for completion in 2021. Health and medical information on about 80 million people, the equivalent of the population in Jiangsu, will be stored at the center. The DNA sequencing project will be jointly undertaken by the state-owned Yangzi Group, Southeast University and Nanjing Medical University.Researchers will use big data created in the The Nanjing Biotech and Pharmaceutical Valley is just 13 kilometers (8 miles) from the city center. S I T E S E L E C T I O N MAY 2019 19database to study genetic mutations related to major diseases, look for the impact of interaction between genes and environmental concerns on human heath, and provide statistical support for diagnosis and treatment of major diseases, according to the provincial health and family planning commission. The program will focus on population genetics, newborns, childhood brain and cognitive development, cancer and rare and chronic diseases.Location DNAWhat do biotech investors think about Nanjing as a location for their businesses? They are in agreement on some key area attributes. GenScript started operations in Nanjing in 2004, two years after the company was founded. Today, it employs more than 2,500. GenScript is a leading contract research organization providing gene, peptide, protein, CRISPR, and antibody reagents to scientists in over 100 countries worldwide. The company’s founder, Dr. Frank Zhang, taught at Nanjing University, so he was more than familiar with the city. Beyond that, “Nanjing has some very obvious advantages,” says Celine Wang, Investment Negotiation Manager. “The many famous universities make ready-to-use talent available, and Nanjing is very convenient being so close to Shanghai. Most of our customers are international, so it is very easy for them to access us and for us to visit them. Also, we have very good government support.”Geneseeq Technology picked a location in the Sino-Danish Science Park in NJBPV several years ago when the Toronto, Ontario-based genetic testing and research company needed a testing facility in the huge Chinese market. It’s turning out to be a perfect fit. The company helps determine the best oncology treatment for cancer patients based on their genetic makeup. Oncologists and hospitals are the company’s market, which eventually will extend to the patients themselves.The bulk of Geneseeq’s R&D is done in Toronto, but the R&D must one day become applied. In 2013, it was decided by company management that China was the best market, given its vastly larger population than Canada and the U.S.Why was Nanjing chosen over so many other Chinese location options?“We were looking for areas with the best policies to support us,” says Marc Zhao, Chief Operating Officer. “What we cared about most at the time was first, if the government or the New Area have specific support for your specific company. One company, one policy. That is very attractive, and they did that. The support is all customized. We went to more than 20 cities in China before coming back to Nanjing. We took the decision very seriously, did a lot of cross 20 MAY 2019 SI T E S E L E C T IO Nchecking and comparisons and eventually picked the Nanjing Jiangbei New Area as the location for our Chinese headquarters.”The second consideration was talent, Zhao relates.“Life sciences are highly technical and highly skilled, so you must make sure there is enough of that talent to support the business,” he says. “If you rank Chinese cities in life sciences, Nanjing would be in the top three because of the strong university support.” It’s home to more than 50 colleges and universities, 75 research institutes, 17 national engineering technology centers and 25 national key laboratories. “The universities in Nanjing are very strong in the biomedical and life sciences areas,” Zhao points out. Geneseeq employs more than 400 in Nanjing, approximately 70% of which are local graduates.A third factor in Nanjing’s favor at the time of the headquarters search was the location of the city, in the Yangtse River area. “The high-speed railway makes it possible for me to travel to most of the cities I want to visit — Shanghai and all of Jiangsu province, up to Beijing and west to Wuhan,” says Zhao. “Nanjing is very strategically located. It is very convenient. If I need to go to Guangzhou in the southeast or to northeast China, I can fly from Nanjing. The location is very good.”A fourth factor was cost management, says Zhao.“The living costs, the compensation levels in Nanjing are Tier 2 compared to Beijing and Shanghai, the latter being very close to Nanjing,” says Zhao. “It’s just 90 minutes by high-speed rail. Wages are roughly 30% higher in Shanghai than in Nanjing. There are cheaper cities in China than Nanjing,” Zhao adds, “but you have to balance the factors I have listed — the policies, talents, physical location and cost management. We made the decision that Nanjing is the best location for our company.Better Than Before“That was six years ago,” he says. “If we look back now, do we have any regrets? Is there a better location choice for our company? No. The four factors I talked about still exist, and their merits are even stronger over the last five years. We have even more support from the central government, and companies coming here now looking at the policy component will find even better terms than we did.”The location is better than six years ago, because the trains are even faster, notes Zhao, and connectivity has improved. The universities continue to deliver a strong talent base, and the cost benefit of Nanjing has increased. “Real estate prices in Shanghai and Beijing have risen dramatically more than in Nanjing in the past five years,” says Zhao. “Everything is better than five years ago.”Since the establishment of the Nanjing headquarters, Zhao has added another factor that makes the city the right location: “We are the icon of genetic testing in China,” he explains. “Like a magnet, we are attracting more people to come work at the company. In Shanghai, you always have competitors. In Nanjing, anyone who wants to get into this business thinks first of Geneseeq. There are advantages to being the best in the industry,” he says, not the least of which are finding business partners easily and having the pick of the brightest candidates for employment. “These advantages are amplified, which is a key message,” says Zhao. “Being able to take advantage of these factors over the last several years in Nanjing makes my decision to base our operations here one of the best decisions I have made in my entire career.” This Investment Profile was prepared under the auspices of the Nanjing Municipal Bureau of Commerce. For information, visit www.investnanjing.gov.cn.Nanjing BPV tenants occupy a wide range of real estate, from incubators and accelerators to research labs and manufacturing space.Photos courtesy of NJBPV22 MAY 2019 SI T E S E L E C T IO NA fiber maker’s CEO talks through his fiber company’s location choice in an evolving Asian marketplace.When it comes to staple products, the fiber inside fiber is as essential as it gets. “That’s our specialty,” said Tom Zaiser, CEO of FiberVisions, at an April event convened in Atlanta by the Thailand Board of Investment (BOI). FiberVisions, based in Greater Atlanta and a subsidiary of Bangkok-based Indorama Ventures (IVL), makes super-soft polypropylene staple fibers for items such as feminine hygiene products, baby wipes and baby diapers. The India-based Indorama parent company has more than 100 sites around the world.“I had access to all the cost data for all of those sites in 31 countries,” Zaiser said, “so I know what it costs to do business in different parts of the world.” His Asian portfolio includes two factories in China and a JV plant outside Osaka. Deciding where to put the next one involved evaluating the ability of workers to work well in hygienic conditions and proximity to a strong port.“Our finished product ships really well, so a good port was important for us,” Zaiser said. “This is going into disposable products, so cost competitiveness is important. Pennies per kilo matter when I’m negotiating with P&G and Walmart.”Middle-Class Momentum“The growth of the middle class in Asia right now is huge,” he said, giving the company several options. But the region has several issues to confront too, including rising costs and low birth rates in Japan, and rising wages, turnover and energy costs in China, which also has a trade war with the U.S. and on-again, off-again difficulties with Japan.“So we decided not to put more steel in the ground in China, and we started looking around in Southeast Asia,” he said, including Vietnam, India, Indonesia and Malaysia. “We know India is the next big boom for us in population, so we looked really hard in India. But the infrastructure wasn’t ready.”Thailand’s attractiveness began with its central location and an international airport from which “you can get almost anywhere in four or five hours, which in Asia is a hop,” he said. At the Map Ta Phut petrochemical site they found a company with land that was easily transferred to the Thai government, from which FiberVision bought it. The company also makes one of FiberVision’s raw materials, “and they supply power and steam we don’t have to provide ourselves,” said Zaiser.A $43 million facility was supported by a five-year tax holiday from BOI. “And everybody in America wants to come to Thailand to see what’s going on,” Zaiser said, driving further commercial business. Turnover in Thailand has been kept to 10%, vs. 30% at the China plants, he says, and overall manpower costs are between 20% and 30% lower.As for the future, “we built a plant twice as big as it needed to be, we were so confident. We’re using the other half for warehouse storage, but our intention is to put another line in that plant, because warehousing is cheap and can be found anywhere. We’ve been operating for two years now, and couldn’t be more pleased with the decision we made ... Thailand already has good visibility, but I think you’re going to see more and more people looking outside of China for opportunities.” by ADAM BRUNSadam.br uns @ site s ele c tion.c omASIALanding inSoftAxeing plans for a glitzy new airport was merely the opening act for Mexico’s new socialist president.Foster + Partners, the renowned British fi rm retained to design a new international airport for Mexico City, declared the $ billion fi nished product would be “like nothing else in the world.” So much for grand predictions.One-third completed, Mexico’s most ambitious infrastructure project is no more, nixed amid corruption allegations by the country’s new socialist President, Andrés Manuel López Obrador. “Idiotic,” responds the Mexican-born managing director of an elite New York investment fi rm, who spoke to Site Selection on condition of anonymity. “We’re stuck with an airport that’s years old with two runways. is is a huge missed opportunity.”Bond holders who had committed money to the project were able to negotiate with the government to be compensated. Contractors have not been compensated fully for losing those contracts.Doubts abound among business leaders as to López Obrador’s cheaper plan, which is to add two civilian runways to a military airport miles ( km.) north of the current Benito Juarez International Airport. Engineers warn of confl icting fl ight paths, and businesses say connecting fl ights between the two could prove to be a nightmare, especially given Mexico City’s notorious traffi c. An international airport and related development would further strain an already overtaxed water supply, according to the military’s environmental impact statement. e military is charged with overseeing the project.“It’s a recipe for disaster,” says the source.AMLO, as López Obrador is widely known, is making investors nervous, while keeping his by G ARY DAUGHTERSgar y.daug hter s @ site s ele c tion.c omMEXICO24 MAY 2019 SI T E S E L E C T IO NOut WithRenderings courtesy of Foster + Partners S I T E S E L E C T I O N MAY 2019 25campaign pledge to institute “radical” change.To get a handle on Mexico’s new direction, Site Selection spoke recently with Duncan Wood, director of the Mexico Institute at the Woodrow Wilson International Center in Washington, D.C.What was the reaction to López Obrador’s cancellation of the $13 billion new Mexico City International Airport?Duncan Wood: Within Mexico the reaction was one of absolute horror. A representative of the business community went on national television and said that this is not only anti-constitutional, but it really does threaten the future prosperity of Mexico, because you’ve cancelled a project which would have brought in a lot of business and would have had a multiplier effect. Number two, by cancelling it you are dissuading foreign and national investors from committing their capital to Mexico. Certainly, the president has done very little to reassure them that this kind of thing won’t happen again. What has been the overall signal sent to the business community so far by President López Obrador?Wood: It’s a little confused, the business message. They’ve presented a budget that’s fiscally conservative, and they want to make sure that they are good fiscal and economic managers. At the same time, they have sent the message that they want to be much more activist in the economy. That the state’s going to play a bigger role. That they’re willing to cancel contracts that have been awarded, the airport being the most important of those.López Obrador has criticized his predecessor’s liberalization of the petroleum industry. In February, he announced he’s suspending joint ventures altogether. Is there a strategy behind that?Wood: Essentially, Andrés Manuel wants to undo 2013 energy reform by making Pemex the center of Mexico’s oil and gas policy. Whereas the 2013 energy reform saw an opening of the sector to private and foreign investment, Andrés Manuel has put all future private and foreign investment on hold. He’s respecting the contracts that have been issued to this point, but he wants to focus all future activity on Pemex. The centerpiece of his strategy to boost oil production is to build a $2.5 billion refinery in his home state of Tabasco. Is that prudent or doable?Wood: There’s a great deal of nervousness on the part of the business community around that particular decision simply because it doesn’t seem like it’s a good business decision for Pemex. It’s going to cost a lot more than the government says, and it’s going to mean that precious resources are going to be diverted away from other parts of Pemex where they could be more gainfully invested. What is the rationale behind the $6.5 billion “tourist train” that’s being proposed in southeastern Mexico?Wood: His idea is that it would drive tourism, that it would connect those parts of the Yucatan Peninsula that are economically successful with other parts which are not, thereby driving economic growth where it’s especially needed. But it’s not a particularly well-thought-out plan, largely because we don’t really have much of an estimate of how much demand there is for a train like that. These big infrastructure proposals both are in southern Mexico. Is there any significance to that?Wood: It’s very, very significant. Andrés Manuel has long promised that he would do what other governments haven’t done, which is develop the south of the country. The north of the country is very well developed. The central part of the country is developed. But the south has been neglected. His goal is to really bring economic prosperity and growth to the south of Mexico. So, bottom line, a lot of big ideas, but maybe not enough attention to the attendant realities?Wood: There’s certainly that. There’s also a belief that it’s a “Field of Dreams” kind of approach — if you build it, they will come. And it’s a belief in the power of the state and the office of the presidency, that basically, the president of Mexico can decree things to happen. There was a time in Mexico’s past when that was certainly the case. These days, it’s not really the same thing. Duncan Wood26 MAY 2019 SI T E S E L E C T IO NWhere Innovation Startups AreFast-TrackedINVESTMENT PROFILE:TOKYO, JAPANFinTech, AI and advanced robotics enterprises are members of Tokyo’s growing innovation ecosystem.You’re part of a new but rapidly growing industry, and you know you need to have a presence in key global markets. One of those markets is huge, and English is not widely spoken. Is it even possible to establish a presence and become part of the business scene in this sector in a timely way? ese are among the considerations and scenarios FinTech and other innovation enterprises face when they seek to be a player on a global scale, not just in a local market. Tokyo, for example, has long been a leading Asian nancial center, and its municipal leaders understand the importance of making FinTech companies welcome, quickly operational and successful in the long run. at was the experience of Privé Technologies, which provides digital solutions for the wealth management and the broader nancial services industry. It’s in many major Asian markets already and couldn’t omit Tokyo, which is working to be a leading center of the FinTech industry — a cluster, in due course. But the Japanese capital’s foreign direct investment plans are broader than FinTech alone, explains Rieko Tagawa, Director for Attraction of Foreign Companies, Strategic Projects Division, O ce for Strategic Policy and ICT Promotion at the Tokyo Metropolitan Government (TMG).“Tokyo is a city of high potential that brings together a concentration of people, goods, money and information,” she relates. “ e metropolitan GDP in was US$ billion, which is bigger than the national GDP of Turkey. Regarding FDI to Tokyo, we have been attracting foreign companies especially related to Industry . , FinTech and asset management companies. From just this April, TMG has also started initiatives to create the innovation-ecosystem in Tokyo.”Ms. Tagawa says TMG provides seamless by MARK ARENDmar k .ar end@ site s ele c tion.c omWhere Innovation Startups AreFast-TrackedPhoto courtesy of the the Tokyo Municiple Governemnt S I T E S E L E C T I O N MAY 2019 27support for foreign companies wishing to start their business in Tokyo, from administrative procedures to establishment of partnerships with domestic companies. For FinTech and asset management companies, her o ce provides a one-stop support service — a Financial Desk Consultant with nancial business experience in and outside Japan with a rich understanding of nancial regulations in Japan.Transparent and Fast How is Privé Technologies’ experience in Tokyo going so far?“We found the environment to be very supportive of new companies,” reports David Lee, senior partner. “First, the process was very transparent. Everything was made very clear for us, and every point was explained in an easy-to-understand manner. Second, the many institutions that provided assistance were very coordinated. For example, general information from the Business Development Center Tokyo (BDCT), along with the free consultation advice from special departments like the Tokyo One-Stop Business Establishment Center (TOSBEC) and regulatory and tax advice provided to establish companies in Tokyo was very comprehensive. Everything was coordinated to make conducting business extremely simple. In addition, support from consulting companies, like Accenture, sped up our decision-making and business-establishment process by two to three times versus having no support from such institutions.”In practice, these resources are critical to startups, particularly where language barriers may exist. “All basic tax, regulatory and other questions were answered in one place with translators available to facilitate communication,” says Lee. “All of the forms and processes were extremely easy-to-follow and clear. If anything was unclear, the persons working in these organizations were always enthusiastic and happy to explain the process and how to complete it.”Silicon Valley-based Artisense develops D-vision technology enabling vehicles, robots and UAVs to navigate e ectively in any space without GPS. It’s a newcomer to Tokyo’s innovation ecosystem.“Tokyo is a great place to do business as an international startup,” says Tim Miksche, the company’s chief representative in Japan. “ e formerly closed Japanese business society has opened up the innovation space and is actively seeking collaboration with foreign technology innovators.” But business practices in Japan are still di erent from other parts of the world, he adds, and newcomers often lack access to local networks and support, which are critical in the early days. “ is was also true when we founded our consultancy transferNET that helps international startups to set foot into Japan,” Miksche notes. “Working with TMG however, we could improve market insights and build highly valuable connections for our portfolio of companies. A good example is the deep-tech startup Artisense. A little over a year after coming to Japan, Artisense has such a fruitful network that they asked us to set-up their own Japanese subsidiary. Now they can work directly with a multitude of clients and move the Japanese business further ahead.” Tokyo brings additional resources to bear, he adds, to help launch new enterprises in these sectors: “ rough the international ‘Invest Tokyo’ scheme, TMG has connected Tokyo to other capital cities, creating a global network,” he illustrates. “ is has created an interesting community of like-minded foreign companies we can tap into to share experiences and to get input for our own business. Events and networking sessions foster informal exchanges and pragmatic support even further. People support and help each other constructively in any way they can.” People support and help each other constructively in any way they can.”— Tim Miksche, ArtisensePeople support and help each other constructively in any way they can.”— Tim Miksche, Artisenseinstitutions that provided assistance were very PeoplePeople support and help each other PeoplePeople support and help each other PeopleThe Investment Profile was prepared under the auspices of the Tokyo Metropolitan Government, Office for Strategic Policy and ICT Promotion. For more information, visit www.seisakukikaku.metro.tokyo.jp/tokku/english/.Next >