Q&A with Chengdu’s Investment Promotion Commission

Thursday, January 10, 2008 17:02
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For regular readers, you will know that for the last 6 months or so, I have been posting regular news briefs of Chengdu’s investment. The group that provides this information, the Chengdu Investment Promotion Commission, has done a lot in the last 9 months to improve their communications with a new website, their newsletter, and have been reaching out to various groups to help promote their capabilities.

Recently while speaking to a member of their team, I asked them if they would be open to answering some questions for the All Roads readers, and they agreed. while I was leveraging my time, I put together some basic questions for them that I thought that readers would like answers to, and here they are:

1)The last 5 years has brought a lot of interest to Chengdu. What are the industries that you believe are most suitable for Chengdu, and in your experiences, what are the industries that you feel are not suitable?

1. Electronic information industry
2. Aviation manufacturing industry
3. Tertiary industry especially the R&D centers, financial business,
4. Hotels and Tourism

2) Are investments in Chengdu typically the second and third investments for multinational companies, or are many of your investors new to China?
Second and third investments for multinational companies are the major investments in Chengdu. Because China is so big, and great differences exist in between different places in the aspects of environment, human conception, consuming habit and many others. In order to minimize the risk of doing business in China, almost all of the multinational companies would like to choose coastal cities as their first strategic locations. Plus the coastal areas would largely reduce the transportation cost which is a strong advantage for companies who are initially doing businesses in China. Once they are stabilized in coastal areas, they will be encouraged to go inside. Therefore it is not quite often that foreign investors will choose Chengdu as its first investing place. However, Southwestern China is a highly-populated area with a huge market. It is a very important strategic location that the foreign company would occupy sooner or later.

3) When establishing operations in Chengdu, what should companies know about Chengdu? do you feel that foreign firms fully understand the benefits of establishing in Chengdu, or do many firms still have a lot to learn?
I should say that all of the companies who have started or are thinking about starting business in Chengdu should have, at different extent, recognized the benefit, otherwise they would not choose Chengdu. However, sometimes the benefit that the company finally get from this market are beyond the initial anticipation, because this is a emerging market, the consumption capacity of southwestern China is far from your imagination, and Chengdu’s strategic position in this market endowed it with extremely strong radiation capability. Akzo Nobel, a world leading company in coating and chemicals, has set up their first factory in Chengdu at the beginning of this year. But it only took it 4 months to accomplish its whole year’s sales plan. So we say the more the potential investors know about Chengdu the more they will be encouraged to enter this market.

4) What does your department do to assist foreign firms interested in Chengdu? What is the easiest part of your role? What is the most difficult part?

Our department, Chengdu Investment Promotion Commission (CIPC) is a municipal unit to spearhead Chengdu’s efforts to attract investment. CIPC offers solution-oriented investment promotion, facilitation and government related services to ensure that companies have all the support required to establish operations in Chengdu. CIPC provides comprehensive investment support services of information provision, site visits, business matching, or interface with government departments to the prospective and existing investors

6) Chengdu or Chongqing… which city will be the logistics hub of China’s southwest?
This question should be answered in different terms. In terms of air and land transportation, we Chengdu shall be taken as the hub in Southwestern China. But if it is in terms of water transportation, no doubt that Chongqing is the hub. This could be explained a little bit more as follows:

7) After firms make the decision to invest in Chengdu, how long does it typically take for them from signing the MOU to opening? What are the most important steps in this process?

Actually the processing time varies from different projects. Because different types of projects may need different authorities approvals. For some simple business like just setting up a, consultant company or branch office should be within a week to go through the administrative procedure under the condition of all required materials being prepared; for some factories setting up, it might be little longer since the land acquisition, evaluation of environmental protection and project construction application or other things are involved; in some special respect, the projects are also required to be delivered to the state ministry of commerce or other state authorities for approval, which might take even longer time.

The most important step is: make sure you get to the right departments to handle your business setting up procedures. We would suggest go to the local commerce department or investment promotion bureau because they are accountable for helping the investors to deal with all the procedure and there will be no charge for this.

8) What advice would you give to foreign firms entering China? Are there things that foreign firms often forget to do or do not understand?
As a governmental department, we would like to honestly give the following the advices for the foreign firm entering China: Make good and full use of governmental resources and authority.

Based on the particular condition of this country, government is playing a very important role in economic field in the way of acting as the guidance of industry development, making economic industrial and supporting polices, helping companies to do businesses through the way of administrations, coordinating the relationship between the companies and different local authorities, etc. This is quite different from the western country where the government is seldom involved in the businesses activities.

Many potential investors especially the western ones who are the first time to enter China, when running into some troubles, would normally turn to organizations like chambers, associations, consulates, or law firms for assistance instead of the local related authorities since they don’t think the government authorities would be a help with the businesses. However these ways often take a lot of time or cost money.

Therefore we suggest those companies who are the first time to come to China or come to Chengdu first find the right governmental department to help them to start the businesses, and when they runs in to the problems, do not forget to make good use of local authorities to solve the problem.

9) Chengdu is famous for its tea houses and spicy food. What is the best restaurant in town to experience Sichuan cai? What is Chengdu’s most famous dish?

  1. Yinxing Sichuan Food Restaurant (Cooked Sichuan Dishes)
  2. Hongxing Restaurant(Cooked Sichuan Dishes)
  3. Gongguan Restaurant(Cooked Sichuan Dishes)
  4. Longchaoshou Restaurant(Snacks)
  5. Laoma Hotpot Restaurant(Hotpot)

So there you have it. Overall, I would say that the answers they have given are without much of the typical quasi sales/ politcal hype. My dealings with Chengdu to this point have always been good, and why I am encouraged by Chengdu is that their team is focused. Like Suzhou and Tianjin, they are clear about their goals, and they are beginning to really convert their potential energy into kinetic.

I am currently wrapping up a city guide, so if you would like to learn more about that please send me a note.

As always, if you have experience in Chengdu, let us know your thoughts on the above questions.

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