Chengdu’s Investment Zones

Wednesday, May 23, 2007 10:36

Under the current central party leadership, the “Go West” policy encourages growth beyond the East coast. Local Governments of second tier cities are given more flexibility to offer incentives for investment in their regions. With Government incentives being available in the capital of the most populous province with a large labor pool and an average salary far less than those found on the East coast, Chengdu is becoming more attractive to companies viewing the west as a separate market for consumer goods. Items from toothpaste to printers will soon be manufactured in and around Chengdu.

With over 3000 companies registered in the area (Intel, Motorola, Lafarge, Alcatel, Sony, SIEMENS, P&G, Carrfour, KPMG, BP, and others), the efforts of the Chengdu government (foreign investment bureau in particular) and zones has worked very well.. and there does not seem to be much let up in interest as the market is continuing to grow.
the easiest access points for many will be the economic development zones; two of which are highlighted below due their recent success in attracting foreign investment:

Chengdu Economic and Technological Development Zone
The Chengdu Economic and Technological Development Zone was approved as a state-level development zone in February 2000. The zone now has a developed area of 10.25 km². CETDZ focuses on machinery, electronics, metallurgy, building materials, medicine, and food processing.

Currently there are about 500 companies in the park, with 5 to 10 million USD being the average investment size (several investments are of the 1-2 billion USD size).

Basic Stats: 12.5km from the city; VW, STX, Pepsi, BHP, Dupont, and Nippon; Basic licensing takes a week to get, but plan on 3-12 months before turning on the lights depending on whether you buy or rent the facility; average worker wage is 500-800RMB/ month… managers 2000RMB

Chengdu Hi-tech Zone
Initiated in 1988 and ratified as a state-ranked hi-tech industrial development zone in 1991, the Chengdu Hi-tech Zone was approved as a member science park of APEC. The Zone consists of the south and west zones. Eighteen of the world’s top 500 enterprises are in this zone.

The zone is quite impressive, and has done an excellent job of building infrastructure that mimics what can be found in many areas of the States. one executive I spoke with said point blank that the best buildings in Silicon Valley never looked this good.

Basic Stats: 5km from city centre; Intel, Molex, Motorola, Corning, Sony, and another 600+ FIEs have invested 4 billion USD into the park; the park has a one-stop shop for setting up and basic registration can be done in 5-7 days (theoretically); average wages are 1200 – 1600 RMB/ month for fresh graduate

Overall, Chengdu is one of my favorites cities in China from an operational perspective. It is the nucleus of the Southwest market, the city is known for its consumerism, and the quality of living there is great. The above 2 parks are just examples of what is available, but through my visits we are finding that some companies are turning away from those parks in favor of other ones that have better facilities per their industrial requirements.

It doesn’t take long to see that Chengdu is on the move, and there is still a chance to get in early. Many once feared investing in Beijing and Shanghai.. .but over time, many of those investments paid back. Don’t hold me to it… but Chengdu is a town where you will not lose your investment, and for those manufacturers that choose to pass on the opportunity they will regret it.

Stay tuned for our next installment Chongqing (Macro-profile here). If you are interested in learning more about Chengdu’s investment climate or zones, please send me an email, or leave a comment

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9 Responses to “Chengdu’s Investment Zones”

  1. metallurgy » Blog Archive » FREEZER BURN says:

    May 24th, 2007 at 7:41 pm

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  2. metallurgy » Blog Archive » GEORGE PLIMPTON says:

    May 27th, 2007 at 5:35 am

    […] CETDZ focuses on machinery, electronics, metallurgy, building materials, medicine, and food processing. Currently there are about 500 companies in the park, with 5 to 10 million USD being the average investment size (several investments … …more […]

  3. Eric says:

    May 28th, 2007 at 4:28 am

    Excellent article. Im looking forward to the one on Chongqing. I have a pretty complimentary article up at freightdawg.com.

    Great stuff. I love this site.

    Eric

  4. rbrubaker says:

    May 28th, 2007 at 7:43 am

    Thanks for the compliment’s Eric.

    What are you hearing about YRC these days? They committed to China on 2 deals a few weeks ago, but the rumor mill puts them on the blocks…

    R

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