A&M China Investment Observation Series – Beijing Changping District Investment Policies And Incentives

Changping District is one of the key districts of Beijing, the capital of China. The Health and Beauty industry is highly supported in this district with a wealth of incentives and policies that support the growth of both foreign-invested and domestic enterprises. Biotech and pharma, as well as advanced manufacturing industries, are also fully supported by the district.

Through our China Investment Observation series, enterprises and investors will be able to see that the China market remains attractive and will objectively understand the true business environment of China.

Choosing a good neighborhood is an ancient Chinese wisdom that is often undervalued. The mother of the Chinese philosopher Mencius moved the household three times before settling down in the vicinity of an academy. She saw the neighborhood as full of cultured scholars and students who observed the etiquettes and aspired for greater knowledge. She thought it would be a great place for her little son Mencius to live and grow.

When it comes to corporate development and transformation, choosing a suitable location can provide the much-needed edge for businesses to survive and prosper in a competitive market as well as a provide a solid foundation for long-term growth. Today local governments across China are proactively implementing the concept of high-quality development, aiming to attract high-quality enterprises to settle in their regions to create synergies and strengthen the local industry clusters.

A&M had an in-depth discussion with the investment promotion agency of the Changping District in Beijing regarding the currently available investment policies. We found that Changping District has unique advantages in terms of location, incentive policies, talent reserves and infrastructures, thus making it a suitable destination for companies exploring development opportunities in sectors such as health and beauty, biotech and pharmaceuticals, and advanced energy and manufacturing. The investment promotion agency of Changping District welcomes both foreign and domestic enterprises to invest in the area and participate in the local industrial clusters .

The Changping District is located in the northwest of Beijing, with a total area of approximately 1,300 square kilometers and a resident population of 2.27 million. The key industrial parks in the district are about 20 to 40 minutes' drive from Beijing Capital International Airport. As a key development area of the capital, Changping is committed to building a "Science City, University City and Ecological City," accelerating the construction of a model first-class new city within Beijing.

Source: China Ministry of Natural Resources

In terms of industrial development, Changping District has industrial clusters, such as the Life Science Valley and the Energy Valley, as well as abundant resources of tertiary education institutions. As of the end of 2023, the Shahe Tertiary Education Park has attracted 45 colleges, nine first-class disciplines, and 49 national and provincial-level key laboratories or engineering technology centers. In addition, Changping District also focuses on the development of leisure and tourism industries, boasting its cultural tourism areas, such as the Ming Dynasty Emperor Mausoleum and the Great Wall, the Juyongguan section, as well as natural scenic spots like national forest parks.

The existing mature industrial clusters in the district include the health and beauty industry, biotech and pharmaceuticals, and the advanced energy and manufacturing industries. Currently, Changping District is vigorously promoting the development of modern industrial clusters to implement the strategy of high-quality growth. It has also introduced a series of major investment policies to attract and nurture businesses in the region. In this article, we will provide a macroscopic introduction to the current industrial layout of the region, together with the industrial policy and the major incentive policies offered by the Changping District.

1. Industrial Layout and Talent Reserve

Changping District is committed to building world-class modern industrial clusters centered around its "Two Valleys and One Park," i.e., the Life Valley and the Energy Valley, and One Park being the Shahe Science and Education Park. The industrial clusters can help enterprises reinforce their positioning in the market and strengthen interaction with upstream and downstream players of the supply chains. The education park provides sustainable high-end human resources to power the industry upgrade and innovation initiatives. The industrial layout also echoes its sector strategy that focuses on health and beauty, biopharma, and advanced energy and manufacturing.

"Life Valley": Life Valley, pivoting around the signature Changping Life Science Park, brings together a handful of world-renowned R&D institutions and companies focusing on innovative pharmaceuticals. According to the Changping District government report in 2023, Life Valley was rated as a national model science area, with its addition of six national key laboratories, the introduction of both the Beijing Institute of Life Sciences and Technology and the Beijing Drug and Medical Device Innovation Service Station; in the same year, 34 projects in the valley won Beijing Science and Technology Awards, 57 common technology service platforms were established, and five projects were selected as the first batch of leading examples of startup incubators in the city. Within the year, the total number of companies founded by well-known scientists reached 83.

"Energy Valley": Energy Valley, located in the east part of the Future Science City in the Changping District, focuses on nurturing technological product innovation and industrialized manufacturing in fields such as high-end equipment, new-generation information technology, pharmaceutical manufacturing and advanced energy. According to the Changping government report in 2023, contracts for 130 projects such as Fosun Pharmaceuticals and Sinosoft International were signed, 18 projects such as Ziguang Digital Economy Science and Technology Park and IMEIK Technology had started construction, and 13 projects such as Xiaomi Intelligent Factory were put into use. There are 188 new Specialized, Refined, Unique and Innovative (SRUI) enterprises and 31 "small-giant" enterprises in the valley. The land supply for industrial use has increased for three consecutive years, while most other first-tier cities have slowed the distribution of industrial-use lands.

"Shahe Science and Education Park": Vigorously promoting inter-college cooperation and campus-city integration, Shahe Higher Education Park has attracted many well-known Chinese universities. The aim is to transform the advantage of university resources into regional innovative development advantages. According to the Changping District government report, Changping District cooperated strategically with 11 universities in 2023. The year also witnessed the start of construction of Tsinghua University's heavy industry research center. Within the same year, the China Electric International Energy Power Innovation Center was completed and put into operation.

2. Industrial Policies

In line with the local economic development strategy, the Changping District government has launched a series of industrial policies, covering multiple fields such as health and beauty, biotech and pharmaceuticals, advanced manufacturing and advanced energy. Eligible companies can apply for the policies through the investment promotion agency of Changping District.

We have summarized the key categories of policies for the main industrial clusters in Changping District as follows:

Key Support Policies for the Health and Beauty Industry

• Support for new raw material registration and filing, cosmetics R&D and medical beauty product R&D at a maximum funding support of up to RMB 10 million
• Support for domestic and foreign well-known enterprises to set up headquarters, R&D and operation centers at a reward of up to RMB 10 million
• Support for beauty and cultural enterprises, brand planning and other related enterprises at a reward of up to RMB 2 million for newly registered enterprises
• Support for industry incubation and industry cluster formation, brand promotion, office rental, exhibition hosting and employee training

Key Support Policies for the Biotech and Pharma Industry

• Support for phased clinical R&D of new drugs, with a funding support of up to RMB 100 million per enterprise per year
• Support for innovative drug and equipment registration, with a maximum funding support of up to RMB 10 million per product
• Financial support for service outsourcing institutes such as CRO, CDMO and CMO based on a proportion of the annual revenue

Key Support Policies for the Advanced Energy and Manufacturing Industry

• Encourage the construction of research and innovation platforms, with a maximum reward of RMB 20 million for approved enterprises
• Support for university-enterprise cooperation to carry out collaborative innovation projects, with a maximum support of RMB 2 million for contracts with a total amount of up to 5 million RMB
• For enterprises investing in intelligent production lines, digital workshops and intelligent factories, financial support is provided based on a proportion of the CAPEX investments.
• Loan interest subsidies for important projects

3. General Incentive Policies

The Investment Promotion Agency of Changping District aims to provide incentive policies for the needs of enterprises, including various one-time or phased financial subsidies. Additionally, Beijing Changping District also provides priority arrangements to support the settling and growth of enterprises, including but not limited to the purchase of land, office leasing and comprehensive support for talents to settle in the region. In particular, the talent support may extend to child education, medical care and household registration in Beijing, which are top concerns for Chinese employees coming from outside Beijing.

The Investment Promotion Department of Changping District will also provide other specific incentive policies on a case-by-case basis, including but not limited to:

• One-time and annual subsidies can be granted in the area of successful application of high and new tech enterprises, ongoing R&D investments, collaboration projects amongst universities, research institutes, and enterprises, and projects achieving GDP revenue growth , at a total maximum of RMB 10 million.
• Continuous support for Specialized, Refined, Unique, and Innovative (SRUI) enterprises, including R&D subsidies, collaboration projects amongst universities, research institutes and enterprises, and loan interest subsidies, with a maximum subsidy of RMB 20 million per year for each successful application.
• Subsidies of up to RMB 12 million will be provided for successful domestic or offshore exchange listing, as well as financial support provided for bond issuance and issuance of new shares to strategic investors in public or private markets.
• Financial support is provided to eligible top talents and management teams, along with government housing, household registration in Beijing, child education and medical care to attract talent to settle in Changping District.
• Encouragement of innovation in financial products and new business models, such as for venture capital institutions to make angel round investments, and for the induction of financial institutes. The maximum one-off subsidy may exceed RMB 10 million.

A&M Comments

Enterprises' management may contact us and the local investment agency for more details on the regional business environment, including location, talent reserve, regional industrial layout and, most importantly, the applicable incentive and industrial policies. Based on Changping District's enterprise strategy planning and business model, and in today's competitive market, enterprise management may consider leveraging the regional incentive policies to their advantage.

With years of experience in analyzing and researching local investment incentive policies, A&M is committed to assisting enterprises in sorting out and matching appropriate local incentive policies, facilitating negotiations with local investment promotion bureaus and providing one-stop financial, tax, strategic and operational consulting services.

Originally published 01 May 2024

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