According to a news briefing on Hainan's economic operation, the 61 new projects used foreign investment of 1.63 billion U.S. dollars in the first three quarters of 2017, increasing by 4.0 percent year on year. In general, the environment for foreign investment is not satisfactory as compared with the inland provinces. Industry insiders say that Hainan should display its advantages to make up for its shortcomings in line with its reality and choose foreign investment with a designate purpose in mind.
Analysis shows that the quality of foreign investment in the province is not ideal. The average investment scale is generally small, except a few large industrial projects and real estate projects. There are no competitive multinationals (World Top 500) investing in the province. The current enterprise brands and clustering effect were weak. Although the use of foreign investment has kept a rising trend in recent years, there is still a big gap with developed provinces and municipalities in terms of the total volume of foreign investment attracted. While the whole country is trying to attract more foreign capital, the policy attractiveness as a special economic zone has been weakened.
The spatial distribution and structure of foreign investment remain to be optimized. There is a regional imbalance in the use of foreign investment. Such cities and counties as Qiongzhong, Baoting, Baisha, Tunchang and Wuzhishan have not attracted any foreign investment for years. Some cities and countries are not clear about the orientation of foreign investment and there is no connection between local industry development and specialty resources development and the use of foreign capital. The level of industrial clustering is not high enough. There is no flagship's leading role in attracting foreign capital.
The sources of foreign investment are not diversified. The investment from Hong Kong accounts for over 50 percent of direct foreign investment and even climbed to 92.2 percent, 88.6 percent and 97.7 percent, respectively, over the recent three years. Investment from Europe, the United States and other developed economies is limited.
The province has not done enough to find the resources and the potentials for using foreign investment. Hainan is speeding up the building of an international tourism island. Tourism is the leading industry and also one of principal industries for absorbing overseas investment. But for years, limited amount of foreign investment and enterprises have invested in tourism projects (except tourism real estate projects). Tourism's potential for absorbing foreign capital has not been tapped and used.
In general, there has been no fundamental change for years in the external environment for making foreign investment and enterprises to stay, making it difficult to form a synergy in attracting foreign capital and expanding the capital reserves. As the island economy and culture are relatively independent and lagging, the industrial foundation of the province is weak and the logistics system is not well developed either. Both the raw materials and market are not in the province and that has increased the cost of enterprises. There are also not enough reserves of technical and integrated management personnel. There are some conflicts between foreign investors and local business people in the philosophy of management, operation and development and there are barriers for exchange and communication with local workers who have received little training in overseas affairs and who are slow in learning. The province is in the front ranks in the country in terms of government services and has done well in attracting foreign capital. But it lacks systematic and operable measures to make foreign investors stay and help them adapt to the investment environment in the province. Some investment aspirations have not been realized in the long-term investment projects. Just as an official of the provincial bureau of commerce says: "The current problem is not that the policy is not preferential enough and the foreign investors are not willing to come. The problem is foreign investors are not used to the local environment."
In face of daily fiercer competition in investment promotion, industry insiders say that Hainan must face its shortcomings and, in line with its reality, display its advantages to make up for its disadvantages and seize the opportunity to actively use foreign capital purposefully and create a good environment for doing business.
First, tap and refine policies for supporting industries and use foreign capital to make its advantage industries bigger and stronger. The 24 provincial-level major industrial parks are the main areas for attracting foreign investment and it is necessary to implement the related policies well and flexibly, enhancing their guidance. Take the medicine industry as an example, Hainan has rich resources of the South Medicine, the Li Medicine and Ocean Biomedicine and the output of the four south medicines accounts for over 90 percent of the national total. In the next step, the province will build a high level eco-science new city in Haihou and the "Mei'an New Medicine Valley". It will introduce flagship medical enterprises from domestic and abroad, high-level R&D team, high-end new varieties, various industrial capital, marketing teams, medical mobile platforms and Internet e-commerce, optimize the development of chemical drugs, with emphasis on making breakthrough in the development of biomedicine, medical instruments, in developing the South Medicine, Li medicine and marine medicine, traditional Chinese medical drinks and pills, medical cosmetics and other medicine and health products and creating an highly efficient innovative industrial cluster.
Secondly, actively carry out publicity and promotion in neighboring and developed regions to seek cooperation. It is necessary to plan a diversified economic and trade promotion activities and deepen cooperation with Hong Kong and Macao in areas where it enjoys superiority in Hong Kong and Macao and in industries that promise development potentials and create an innovative highland for service trade system. An official from the provincial department of commerce says that the province is planning the building of Hainan-Hong Kong and Hainan-Macao service industry parks and zones. "Comparing industry, the service industry is easy to become the orientation for opening to the outside world and it is essential to modernize and internationalize the service industry.
Thirdly, strengthen the building of soft environment compatible with foreign investment. It is necessary to provide training to enterprises engaging in foreign affairs, give welfare lectures and make a big effort to improve the qualities and civility levels of the whole people. It is necessary to strengthen big project planning and provide domestic and overseas top-level personnel with a platform for development and provide them with substantial benefits. It is necessary to use the forum platforms smartly, holding special salons and invite noted domestic and overseas entrepreneurs and scholars to offer their recommendations on how to choose foreign investment and strengthen exchange and cooperation with other countries.
Liu Xigui, Secretary of Hainan Provincial Party Committee, points out that the good ecology and environment is the biggest advantage of Hainan. The document issued in September named Decision on Further Strengthening the Construction of Ecological Civilization to Compose a Beautiful Chapter of Hainan stresses that "to use the best resources to attract the best investment and let the people share the best resources". It has clarified the orientation for future industrial development and economic structure adjustment. For Hainan, persisting in building the province with the best ecology and green development, to choose foreign investment is more important than introducing foreign investment.
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