Chengdu: If you built it… they will come

Wednesday, June 21, 2006 10:50
On a recent trip to Chengdu, it was once again an amazing site to see the speed at which the second tier cities of china are growing.

Like Shanghai and Beijing before, the city of Chengdu is in a process of being torn down and rebuilt.  a drive along Renmin Road (People’s Road) and you will see the old and the new… noodle shops.. and Starbucks..  Unlike a second tier city in the United States (St. Louis, Memphis, or Reno) which may have 20 active cranes at anyone time in the entire city, the Chengdu skyline is littered with the blinking red lots of progress.

With the support if the central and provincial government policies, cities like Chengdu (incl. Xi’an, Wuhan, Xiamen, etc) have taken very proactive strategies of building infrastructural projects that are believed to be the keys to attracting FDI. And it is through this policy that both the central and provincial governments believe stability and prosperity will be possible.

In short. these governments have implemented an “If you build it, they will come” strategy… and as can seen in Chengdu… the are coming

In Chengdu, this has meant companies like Nokia, Motorola, Intel, and other high tech firms establishing sales offices, manufacturing, and R&D sites in newly developed technology zones. For Chongqing, heavy manufacturing companies are moving in to take advantage of the city’s steel capacity, skilled labor, and access the the Yangtze river (which will soon have a deep sea water port!)

With recent reports of rising costs (real estate and labor primarily) on the East coast, many companies are now looking to second tier cities to once again take advantage of proactive government policies and lower cost bases as areas to establish manufacturing sites.

Like a snowball effect, the progress that only recently started is now taking on a life of its own.  As cities like Shanghai and Beijing become saturated, talent pools are depleted, and new markets are developed, cities like Chengdu, Chongqing, and Xi’An will become the Chicago’s, Oakland’s, and Pittsburgh’s of China.

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2 Responses to “Chengdu: If you built it… they will come”

  1. All Roads Lead To China » China’s New Found Economic Nationalism says:

    August 15th, 2006 at 3:30 am

    […] With the economy growing at 11.3% a year and FDI increasing year on year there is no reason to believe that the doors are closing. Investors that move inland will still find very receptive government officials that will offer incentives, tax breaks, and access to companies within their market. The national government has itself recently come out and begin promoting new incentives for investments in technology and in China made machinery. […]

  2. If You Build It, They Will Come (Part II) | All Roads Lead To China says:

    May 20th, 2007 at 10:52 am

    […] cities have literally been growing out of the fields. It is something I tried to capture in my post Chengdu: If you built it… they will come last year, and it is something that I have seen nearly every day in one fashion or […]

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