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New Economist Zongjian Chen Comments on the Development of Small Town with Chinese Characteristics

“Sina-Us Innovation Times Reported by Youping Wen, Feb. 22nd , 2018” Recently, Zongjian Chen, the founder of Porter Corporation (ULNV) and a new economic expert, led the senior executives of Porter Corporation to carry out the inspection and investigation of special towns with Chinese characteristics (hereinafter referred to as “Small Town”) in Guangdong, Chongqing, Hubei, Hunan, Anhui, Jiangxi and other provinces and cities. After one-month-long systematic inspection, Mr. Chen comments that“The construction of Small Town is an important measure for China’s promotion of urbanization. At present, it is imperative to realize the integration and optimization of industrial resources as well as the gathering of industrial elements, so as to serve the entities and truly becomes an innovative business model and development model for the development of China’s new economy”. 

Mr. Chen believes that during the first three decades of China’s reform and opening up, China’s urbanization process has been concentrated in China’s first-tier megacities such as Beijing, Shanghai, Guangzhou and Shenzhen. Despite the tremendous achievements were made in such megacities, while problems of unbalanced development caused in the course of urbanization, especially the urgent solved problems like the waste of land and resources in the rural areas.

Mr. Chen pointed out that today, China is trying to change this unbalanced development situation, thus a large number of urbanization processes focusing on key provincial capitals are being conducted in an orderly manner. Among them, the process of urbanization in China is being closely integrated with the construction of Small Town, and has become an important direction for China’s reform and opening up, especially for China’s revitalization of rural strategies. Therefore, the construction of Small Town has become an effective path for China’s urbanization development in China.

As for the construction of Small Town with Chinese characteristics, especially those of pastoral complexes style, Chen Zongjian analyses from the perspective of new economic and clearly recognize the current misunderstandings of which. He also provides some specific and helpful suggestions.

At the same time, Porter also promoted the construction of “Small Town” through its own corporate practices. According to reports, Porter intends to conduct mergers and acquisitions and upgrade nearly ten pastoral-style Small Town, which will in turn enable the construction of   Small Town to connect with the U.S. capital market. This is a major achievement of Porter’s layout in the new economy.

The Misunderstandings in the Construction of Small Town

Mr. Chen believes that there are lots of blindness and copycat in the construction of Small Town, pastoral Small Town are in particular, which should be correct in a timely manner.

First of all, there is a big misunderstanding about the rural land transfer and land contract. Mr. Chen pointed out that many investors now regard the construction of Small Town as the advent of the rural real estate era, and considered which as a golden age for rural land development. As a result, many investment resources like bees being pressed forward in swarms and caused great waste of social resources.

Second, the main investors of Small Town lack rationality and professionalism. According to  Zongjian Chen, there are various types of social investors investing in Small Town, those investors may just previously invest in real-estate industry, may engaged in commercial trade, or they may even just be a rural villager. There exist a great deal of blindness among them to simply invest their money on the construction of Small Town. Indeed, they need professional guidance.

Third, there is a great deal of blindness in the planning and programming of Small Town. According to Mr. Chen that the construction of Small Town requires long construction period, and is deemed as long-term infrastructure investment. The initial period of the construction may cost a big sum of money, while the follow-up investment may easily be feeble. This kind of problem mainly due to the lack of professional planning and programming in the Small Town construction.

Fourth, there is a great degree of blindness in the industrial development and profitability for Small Town development. Mr. Chen believes that many investors neither clear about what they would do through the Small-Town-related projects to earn money, nor do them consider the short-term, medium-term, long-term and permanent ways for profit earning. Because they fail to determine the profit model, then the huge imbalance of high input with low output occurred, which would ultimately caught in a dilemma due to lack of good assets and good cash flow.

Fifth, there is a large degree of blindness regarding connecting to capital market. Mr. Chen pointed out that in reality, many investors who invest in building pastoral style Small Town believe that as long as the project is packaged and can be listed for financing. In fact, the Small Town exist with no quality assets and cash flow, it is difficult to connect with capital market.

Sixth, there is blind optimism to apply for government subsidies for projects. Mr. Chen pointed out that there are quite a few Small Town projects hold with blind optimism to apply for government subsidies. However, this policy-based subsidy is far from satisfying the project's long-term investment. At the same time, the construction of Small Town has become real estate development, this is also a blind development model.

Seventh, the purchasing power for Small Town is also misunderstanding. Generally speaking, Small Town is normally targeting high-end consumers, rather than the daily consumer groups like urban residents.

Eighth, government officials also lack scientific and reasonable planning in the promotion of Small Town. As long as the central government carry out a Small-Town related policy, everyone is heading toward with blindness. This is mainly because the government blindly reinvests in urbanized landscapes, and at the same time it blindly guides investors and mislead theme regard  Small Town a project with promising investment perspective.

It It Imperative for “Small Town” to Gather Industrial Elements to Serve Enterprises

In view of the various misunderstanding of the Small Town, Mr. Chen stated that the construction of pastoral style Small Town should be relatively rational to plan and consider. We must carefully understand policies and seriously consider the regional environment. Before the investment, we should also make a fully investigation to fully understand the targeting consumers, the unique of the industry, the corresponding folk and culture, and the surrounding transportation and supporting facilities.

What are the innovative thinking and innovation models for the construction of Small Town? As a new economic expert, Mr. Chen believes that the construction of Small Town should be based on rational investment, systematic analysis, comprehensive consideration, and some innovative explorations from the following aspects:

First of all, the construction of pastoral style Small Town should be innovative in thinking, that is, from the limited physical space to the unlimited Internet services. The basic path of this unlimited internet service is to upgrade the characteristics of Small Town with elements such as the natural environment, cultural environment, and cultural heritage of cities clustered in provincial capitals or prefecture-level cities.

Second, our innovations must fundamentally rely on people and industrial services to build platforms and achieve greater room for development. People-oriented, that is to provide a public platform for entrepreneurs like Guangdong entrepreneurs, Sichuan entrepreneurs, and other local entrepreneurial groups for health care, recreation and leisure, business meeting and other activities. It should take its focus on serving and supporting entity enterprises, primary and secondary industries and entrepreneurs with strength due to that they possess relatively stronger purchasing power. Only by this way, corporations and entrepreneurs can better demonstrate their vitality.

Third, we must build a regional online and offline electronic Internet business platform centered on products production for product display, futures trade, bulk commodity orders, etc., so as to achieve greater production value, industrial value and circulation value.

Fourth, through the gathering of enterprises and entrepreneurs, we could provide enterprises with listed financial services and listing-related training for entrepreneurs, so as to achieve the added value of Small Town. Such kind of Small Town could provide enterprises and entrepreneurs with a sustainable development model for modern innovation services based on the local geographical culture and industry.

In the view of Zongjian Chen , the building of Small Town is now in full swing, however this phenomena does not come from nowhere in the final analysis. It must be based on local conditions and customs, or possess with industrial agglomeration with comparative advantages. In this way, the construction of Small Town can truly become an innovative model for the development of the new economy, and then promote the modern development of China’s urbanization in the future.

Recently, the National Development and Reform Commission of China, the Ministry of Land and Resources, the Ministry of Environmental Protection, and the Ministry of Housing and Urban-Rural Development issued the “Several Opinions on Regulating the Construction of Characteristic Towns and Characteristic Small Town” (hereinafter referred to as “Opinions”). According to the "Opinions", Small Town should not be deemed as a baskets to load all elements. Nation must guard against government debt risks, strictly control the tendency of real estate, strictly save intensive land, and strictly observe the ecological protection red line. The "Opinions" pointed out that all regions must accurately understand the nature and characteristics of Small Town, and avoid blindly labeling Small Town as industrial parks, tourist attractions, sports bases, beautiful villages, pastoral complexes, and administration-based towns.

In contrast, as a new economic expert, Mr. Chen's suggestion and advocacy of China’s current Small Town are similar to the “views” in the “Opinions” issued by the above-mentioned national departments.