Must Read: World Bank Report

Monday, November 13, 2006 5:29
Comments Off on Must Read: World Bank Report
While doing some background research for another post, I found Competitiveness Enhancements for 120 Cities in China, a comprehensive guide to investment in China.As the title suggests, through the interviews of over 12,000 firms, the World Bank have ranked 120 of China’s top investment destinations (we are currently constructing manufacturing and investment guides to 15 of them).Some of the key findings were:

  • Taxes and fees average 3.1 percent of sales revenue at the top 10th percentile of cities, versus 6.9 percent at the bottom 10th percentile.
  • Firm interactions with major bureaucracies average 36 days/year at the top 10th percentile of cities and 87 days/year at the bottom 10th percentile.
  • Firm expenditures on entertainment and travel, which can be a vehicle for corruption, average 0.7 percent of revenues at the top 10th percentile of cities and 1.9 percent of revenues at the bottom 10th percentile.
  • Combined time for customs clearance of exports and imports averages 5.4 days at the top 10th percentile and 20.4 days at the bottom 10th percentile.

However, other more interesting finding highlighted (see report for complete details) were:

1) Significant gains in firm productivity and/or foreign investment could result from the
following reforms:

  • Elimination of tax preferences, for instance, for foreign investors;
  • Adoption of best-practice customs clearance procedures at inland customs posts;
  • More consistent labor practices, by tightening enforcement where necessary to improve worker protections and loosening labor rules where possible to enhance labor flexibility;
  • Providing additional legal/regulatory protection for lenders; encouraging more widespread credit reporting; and making it easier for small and medium enterprises (SMEs) to use assets other than real estate as collateral;
  • Encouraging wider use, by local banks, of international best-practices in SME lending.

2) Government reforms and/or medium-term investments can bring about
improvements in important city characteristics:

  • Firms in more-populated cities tend to be more productive, due perhaps to greater competition and agglomeration benefits.
  • Through both physical improvements and local income gains, continued investment in urban infrastructure and services could make lagging cities more appealing to investors, especially foreign investors.
  • Transport costs for moving goods to/from seaports is a key consideration, especially for foreign investors.

Luckily for us, the World Bank has been kind enough to share their findings with us.

This is one report that I find hard to just pick summary facts to entice readers. It is just a darn good report that all should read and it only provides further evidence (if our posts have not been enough), that the future of China is inland.

Enjoy the reading, and in case you missed the first two links.. here it is again (PDF report). If you haven’t had enough, go to China’s Other Cities

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