Chengdu, 12/09/2012 (Agence Europe) - Given the coastal giants - Beijing, Shanghai and Guangzhou - which have seen their growth rates start to run out of steam, Chengdu, capital of the province of Sichuan, in the centre-west of China, hopes to be a new Eldorado for foreign investment. Benefiting from cheaper labour than eastern China and a qualified workforce, Chengdu, whose industry is based mainly on ICT, has become a broad logistical platform for the Chinese economy. The city also benefits from planning which has been optimised by the local government, which has a number of levers to attract foreign investment. This is an opportunity to be seized by European business.
A new nerve centre. Bordering the southern corridor of the Renmin Road, the major artery which bisects the city from north to south, the Global Center, a glass monster housing a surface area of 1.5 million m2 of premises, symbolises the ambition of the development plans of the new megalopolis of the west of China. The inauguration in early 2013 of the world's largest building will put a spotlight on the new flagship centre of the Chinese economy. Having hosted the third ever World Motor Show in early September, Chengdu will be the scene of the prestigious Fortune Global Forum in early June 2013.
With its 14 million inhabitants, Chengdu is home to more than 15% of the population of Sichuan, the region of China with the highest level of population, over an area covering 12,390 m2. In 2010, its GDP exceeded the level of $555 billion, and the total of its exports and imports - $11.2 billion and $8.9 billion respectively - make it the nerve centre of Western China. Although its industry is based on information and communication technologies (ICT), biomedicine, machinery, aviation and modern logistics, Chengdu, which is already home to more than 150 banks, insurance companies and other securities institutions, intends to become a major financial centre between now and 2015.
All roads lead West. Whilst Chinese economic growth is starting to stagnate, the megalopolis of the centre-west has seen a growth rate of nearly 15%, stimulated amongst other things by foreign investment, which is already very much present. Given increasing costs in eastern China, many foreign multinationals have already started to head west. The American giants IBM, Cisco, General Electrics and Dell, Germany's SAP and Siemens, NEC of Japan, the Dutch company Philips and France's Ubisoft rub shoulders with China's Huawei at the Tianfu Software Park, an immense high-tech zone to the south of the city. The Tianfu Software Park, which is already one of China's 10 largest software industry centres, employing 40,000 staff with an average age of 27, plans to continue its development within the country's fourth-largest high-tech zone, where one of the ten highest skyscrapers in the world is to be built by 2020.
Foreign car builders have also set up home in the region, among them Japan's Toyota, the German Volkswagen and Volvo of Sweden, which have joined the economic and technological development zone of Chengdu, which will see the creation of nearly 1.2 million vehicles a year by 2020. They are joined by the European aeronautical manufacturer, Airbus, which has established a factory for its French subsidiary Aerolia here, to produce aeroplane cockpit parts for assembly in Tianjin, on the east coast. The Taiwanese firm Foxconn kicked things off in 2010 by setting up an enormous factory in Chengdu to produce iPads. Chengdu has so far attracted 207 Fortune 500 companies.
A more liveable and 'fun' city. The great attractiveness of the largest city of the centre-west of China can be largely explained by cheaper labour than in Beijing, Shanghai or any of the cities of the province of Guangdong, but just as well qualified, as Chengdu boasts some 50 universities turning out more than 100,000 graduates a year, 90% of whom go on to stay in the region. “They choose Chengdu for our talents”, said the president of the Tianfu Software Park, Christine Du. The attractive external environment, when compared to the large cities of the east, is also a pull factor. At the heart of the region, which is home to giant pandas in the mountains to its north, in the buttresses of the Himalayas, and in a research centre dedicated to their reproduction just outside the city, Chengdu is famous for its more relaxed quality of living, made possible by a less polluted urban atmosphere with abundant green areas, for the drizzle which comes in from the mountains of the north and its delicious spicy cuisine and historical and cultural heritage. “Chengdu is a really liveable city, very fun. It offers the right balance between work and personal life”, Ms Du stressed. The megalopolis of the centre-west of China was also voted the happiest city in China in 2009 in 2010, according to the Oriental Outlook.
A promising regional market. Chengdu, which has become a logistical support base for many of the country's industries, as seen from the fact that the Danish shipping company, the world number one Maersk, has moved its 'back office' activities to the Tianfu Software Park, also affords foreign businesses access to an internal market in full expansion. Additionally, the demographic prospects of the city, whose population could reach 20 million, and of the province of Sichuan, which is home to 90 million people, make it “a promising local market”, according to Astrid Schröter of the German Chamber of Commerce in China, whose local branch is located in one of the buildings bordering South Renmin Road, alongside the Global Center, outside which stands a replica of Paris's Arche de La Défense.
EUPIC support. The same building is also home to the Europe Project Innovation Center, which in 2010 became a local office covering the west of China - the provinces of Sichuan, Chongqing, Yunnan, Guizhou, Xinjiang, Tibet, Qinghai, Gansu, Ningxia and Shaanxi - for the Europe Entreprise Network, which is managed by DG Enterprise of the European Commission. With an initial financial envelope of €300,000 under the Asia Invest II Project, EUPIC has provided "continual support" to nearly 200 European businesses, SMEs and bluechips alike, since 2006. An end-to-end business platform for the promotion of business, investment and technical cooperation between the EU and China, with support from the Commission, the Chinese Ministry of Science and Technology and the governments of the province of Sichuan and the city of Chengdu, EUPIC promotes technological innovation and the transfer of technologies between businesses, universities, science and technology parks, clusters and government organisations. It ensures a soft landing in China for European businesses, whilst supporting the internationalisation strategies of Chinese companies. Since its creation, EUPIC has supported more than 50 companies settling in the region, welcomed more than 3,000 visitors to Chengdu, among them European officials and delegations of businesses and professional organisations, and has hosted more than 100 meetings between the EU and Chinese businesses.
Strong support from local authorities. “There is a great deal of dynamism here thanks to the investment of the local government”, says EUPIC director, Segree Dai, who is due to move to Brussels, where European branch of the centre is to be set up, in November. “The local government provides the stimulation to the economy”, confirm representatives of Maipu Communication, a local company with a staff of 1,000, founded in 1993 and producing communication equipment and IT application solutions. Reduced start-up and corporate income taxes, training grants, low rents and energy bills and various other incentives are among the levers at the disposal of the local authorities to attract foreign investment. Here, businesses can benefit from a "special regulatory regime for the development of the west", confirms the president of the Tianfu Software Park, Ms Du. "The efficient administration of the local government is key in attracting investment, talent and technology", stress the services of the information bureau of the city of Chengdu.
Low investment risk. With its quality administrative services and reduced bureaucratic burden, the Tianfu Software Park is an example of planning which has been optimised to facilitate the economic development of businesses, national and foreign alike. Additionally, although large businesses, whose infrastructure belongs to the state, currently dominate the high-tech park of Chengdu, they will eventually make room for the SMEs when they go on to establish themselves in their own premises, Ms Du promises. The French Chamber of Commerce for western China also confirms that the authorities of the city of Chengdu and of the province of Sichuan are far more open to foreign investment than the regions of the east, explaining that here, foreign companies are not obliged to create a 'joint venture" with a local partner in order to set up in the region. “We are trying to attract more and more European businesses”, says the president of the Tianfu Software Park, Ms Du. Chengdu, which is the Chinese city with the lowest investment risk, is also the number one model city in China on the protection of intellectual property rights, as very few disputes have been submitted since 2007. (EH/transl.fl)