Singapore's Creative in China IT park deal

By Kristie Lu Stout
CNN Interactive Writer

Singapore sound card maker Creative Technology and property firm Dragon Land have agreed a joint venture to build a hi-tech park in China.

Creative Dragon Park will lead development of the US$100 million business park in Qingdao, an industrial hotzone on China's northeastern coast and headquarters of mainland business superstars Haier Group and Tsingtao Brewery Group.

The deal follows the Singapore government's bitter exit from the US$30 billion Suzhou Industrial Park, a pet project of Senior Minister Lee Kuan Yew, amid anger over the mainland partner's reported lack of commitment.

A group of nine investors including Singapore's Datapulse and United Test Assembly Center (UTAC) have agreed to take equity stakes in the Qingdao-based 50-50 joint venture company.

The park, with phase one to be completed in 18 months, will borrow upon Creative's strengths in the electronics and media industries.

"Our vision is to develop the park into a conducive Silicon Valley-like environment," said park deputy chairman and Creative chief executive officer Sim Wong Hoo.

He said the facility would be "complete with digital connectivity and broadband infrastructure where creative talents will converge because it is an ideal place to work, live, learn and play."

Stephen Chan, VP Merrill Lynch Singapore and Creative watcher, believes the high-tech park deal is Creative's strategic entry point into establishing Qingdao as its new production center.

"The implication for Creative is more strategic since they would like to have a manufacturing hub in China to complement their facilities in Malacca [Malaysia] and Singapore," he told CNN.com.

Although Creative gained the top spot on the Singapore Exchange immediately following the announcement, with shares surging S$0.80 to close at S$20.20 on Tuesday, Chan contests reports from C/Net and other sources that the gains came as a result of the deal.

"In terms of share price implication we don't expect any significant earnings impact," he said. "They shipped the 100,000th unit of their Nomad toolbox. That's what generated market excitement."

Anlaysts say Creative Dragon Park will have to take lessons from the failure of an earlier project, the Suzhou Industrial Park, which turned in five years from a symbol of Sino-Singapore economic friendship into a prime example of how such projects can go wrong.

As a result observers like Chan have a "wait and see" attitude about the Qingdao park venture.

"It's premature to say it's going to be a big success. It will take a while to see if anything comes out."

Creative Technologies
Dragon Land Limited - China Property Developer Based in Singapore

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