An Overview of the Major Regions in China

Beijing

Beijing is the capital of the People's Republic of China, and the country's political and cultural center. It has a long history that dates back more than 3000 years, and has served as the center of power for more than 500 of those years. Beijing is not only China's political center, but also its cultural one. The Chinese language dialect spoken in Beijing, putonghua, serves as the model for the rest of the country to follow, and is the language of instruction taught in schools across the country. All of China, ranging from the Western portions of the country to the Southern reaches, sets their clocks to Beijing time. Beijing is the model for a distinctively Chinese development, and is a city that has undergone drastic changes over the past 20 years; an example for the rest of China to emulate. These changes continue to keep pace today, and present a wide range of opportunities for foreign investment.

Beijing is also home to 475 research centers, and more than 60 institutions of higher learning, including Peking University and Qinghua University. Beijingers are perhaps the most well-educated in all of China, and are at the forefront of technological change and advancement in the country. Beijing is a city of more than 12.5 million inhabitants, a municipal area occupying 16,808 square kilometers. Together with Shanghai, Tianjin and Chongqing, Beijing is classified as a separate municipality with the same status and responsibilities as a province. This special status enables the Beijing municipal government to approve independent foreign investment projects up to a value of $30 million, making it an attractive location for foreign investment in China. The major industries in Beijing include tourism, electronics, chemicals, automobile, machinery, metallurgy, textiles, garments, and household appliances.

Shanghai

Shanghai covers the Consular District of Jiangsu, Anhui and Zhejiang provinces and the City of Shanghai. The region's GDP was over US$ 400 billion in 2004, accounting for roughly 25 percent of China's total GDP. The economy of this region, known as East China, is roughly equivalent to that of the Philippines. The GDP of Shanghai alone grew 11.1 percent to over US$ 109 billion in 2005, accounting for over five percent of China's total output. GDP per capita in Shanghai is over US$ 6,200.

Shanghai is the industrial, financial, and commercial center of China. It hosts a concentration of manufacturing activity in such key industries as automotive, electronics, telecommunications, machinery, textiles, iron and steel, and petrochemicals. Shanghai has a population of some 17.5 million, not including up to three million visitors who are in the city on any given day.

In 2005, exports from Shanghai to other parts of the world were US$ 90.7 billion, an increase of 23% over 2004, and constituting about 16% of China's total. About 25 percent of China's total exports pass through Shanghai's ports. Two-way trade between Shanghai and the U.S. was more than US$ 31 billion in 2005, a 19% increase over 2004. Foreign direct investment (FDI) in East China has been increasing steadily for several years. In Shanghai, contracted FDI in 2005 was US$ 14 billion, and actual realized investment was US$ 6.9 billion.

The U.S. is one of the top investors in Shanghai. The U.S. share of Shanghai’s cumulative FDI, at approx. US$ 9.5 billion, is roughly 10% of Shanghai's total. There are some 4,700 U.S.-invested projects in Shanghai. The American Chamber of Commerce in Shanghai is the largest in Asia, with over 3,000 members, and some 80 new members per month. Some 15,000 Americans are long-term residents of Shanghai, and many more work on short-term visas. The City of Shanghai has the status of a province and receives preferential treatment from the central government, particularly as an incubator for reforms and pilot projects. Costs tend to be somewhat higher in Shanghai than in nearby cities, but the business environment is generally more transparent. Sectors to watch in the region are IT, telecommunications services, transportation infrastructure (ports, metro and light rail), distribution services, environmental technologies, construction materials, architectural and engineering services, industrial equipment, machine tools and manufacturing process controls.

Guangzhou

The area generally referred to as Southern China covers the provinces of Guangdong, Fujian, Guangxi Autonomous Region, and Hainan Island. These four provinces have a population in excess of 200 million, and contain China’s richest cities, as the South was the first area in China to be opened to the outside world. Much of that development, especially in Guangdong, has been fueled by the region’s proximity to the Hong Kong Special Administrative Region (HKSAR) and Taiwan. HKSAR has provided much of the capital, technology and business savvy that has made the Pearl River Delta China’s most prosperous region. Meanwhile, Taiwanese firms are the leading investors in Fujian, which is home to two of China’s wealthiest and most developed cities, Xiamen and Fuzhou.

Chengdu

Chengdu, the capital of Sichuan Province, is the most important commercial center in West China. This metropolis of 10.44 million lies 1,500 miles from China’s eastern seaboard. The city has a market reach of 200 million consumers and it is the distribution center for southwest China encompassing Sichuan, Yunnan and Guizhou Provinces, the Tibet Autonomous Region, and the Municipality of Chongqing. Sichuan Province boasts one of the most diversified industrial bases in the country and Chengdu is a key manufacturing center for the electronics, machinery, pharmaceuticals, chemicals, metallurgy and food processing industries. The IT industry has been designated as the Number One Project for growth in Sichuan Province. Sichuan is also the national headquarters for feed grain companies. In 2003, the city of Chengdu had a GDP of RMB 187.08 billion ($22.6 billion), a 13% increase over 2002.

Chongqing, the most recently established municipality directly under the Central Government since 1997, is the largest administrative municipality in China with a population of 30.9 million. Chongqing is strategically located in the upper reaches of the Yangzi River. According to current patterns of Chinese economic development, there are three economic belts: the eastern, western, and central belts. Chongqing has been identified as the connecting point between the eastern and western belts. Chongqing has received a great deal of financial and policy support from the Central Government, enabling its economy to grow rapidly and increasingly compete with Chengdu. Chongqing is famous for the scenic Three Gorges and the Three Gorges Reservoir. Once the construction of the Three Gorges Dam is competed, river navigation between Chongqing and Shanghai will become more reliable. Pillar industries in Chongqing are machine building, metallurgy, chemicals and pharmaceuticals. Since the early 1980’s, many companies in the national defense industry have shifted to manufacturing civilian products, playing an important role in the automobile and motorcycle industries in the city. With its strong heavy industry foundation, Chongqing is expected to become the automotive capital of western China. In 2002, Chongqing had a GDP of RMB 197.1 billion ($23.7 billion), a 10.3% increase over 2001. Southwest China’s economy has enjoyed relatively sustained growth in recent years and will continue to grow at 9 to 10% over the next few years.

Shengyang

Northeast China, historically known as Manchuria, is comprised of three provinces: Liaoning, Jilin and Heilongjiang. With a population of over 107 million people, the region is rich in natural resources and is known as China’s center of state-owned heavy industrial manufacturing. While reform of public sector enterprises continues to lag behind schedule throughout the region, provincial governments are encouraging development of private sector businesses in several sectors including information technology, telecommunications, environmental technologies, automobile parts, and tourism.

Regional leaders would like to see the Northeast become the fourth great coastal area to increase trade and draw in foreign investment. While it is well known that the Chinese government strongly encourages the economic development of the Southwest through its Great Western Development Initiative, it is little known that the Northeast is also a top priority.

In October 2003, the 16th Communist Party Congress endorsed the Rejuvenate the Northeast Initiative. In November, the National Development and Reform Commission announced its approval of 100 projects that are expected to require an investment of USD 7.3 billion (61 billion RMB). The Chinese central government plans to cover only 20% of planned investment by allocation of funds from the State treasury. The financing tools are expecting to primarily include interest subsidies on commercial loans from State policy banks and market liberalization to attract foreign and domestic investment. The projects will be unevenly distributed throughout the Northeast, with Liaoning having secured approval for 52 project proposals, Jilin with 11 projects, and Heilongjiang with 37 projects. Liaoning is home to about 10 percent of China’s large and medium size state-owned enterprises.

Shenyang, the capital of Liaoning Province, is considered the industrial center and transportation hub for Northeast China. Shenyang’s comprehensive manufacturing base is divided into forty sectors, including nonferrous metals, chemicals, automobiles, aircraft, machine tools, building materials, electronics, textiles, pharmaceuticals and light industrial products. The city’s GDP reached $16.9 billion (140 billion RMB) in 2002. Industrial production accounted for 43.9% of city GDP, while agriculture accounted for 6% and services for 50.1%. Liaoning’s GDP reached $66 billion (545 billion RMB), among which industrial production accounted for 47.8% of provincial GDP, agriculture for 10.8% and services 41.4%.

In November 2003, the central government released statistics that clearly demonstrate the comparative strength of the Northeast over the Southwest in terms of international trade activity. In 2002, total trade value for the Northeast reached $ 29.79 billion, which represented 4.7 percent of China’s total trade. The Southwest accounted for $ 9.17 billion, which was 1.5 percent of China’s total trade in 2002. With regard to foreign direct investment, the Southwest utilized $1.08 billion, while the Northeast utilized $5.18 billion. Liaoning typically attracts about 75% the Northeast region’s foreign direct investment.

Source: http://www.buyusa.gov/china/en/introduction.html

Are You China Ready?

Go to http://hq-intranet04.usfcs.doc.gov/bid/chinabic_questionnaire.asp (a courtesy of export.gov) to assess your market readiness. Export.gov, supported by the U.S. government provides useful and up-to-date information and resources dedicated to assisting U.S. companies to explore business opportunities at the same time addressing challenges to doing business in China. The International Trade Center, conveniently located in the downtown UTSA campus is also available to provide you and your business with no-cost, confidential consulting services as well as the latest import and export info on China. Please visit http://www.texastrade.org/ for more information.

Resources for Trade and Cultural Information - Texas

San Antonio

Alamo Asian Chamber of Commerce- Business/Economic Development
http://www.alamo-aacc.org/

The Alamo Asian American Chamber of Commerce is a not-for-profit organization that supports the advancement of the Asian American community in business, cultural and leadership endeavors.

Chinese Society of San Antonio - Education and Cultural Preservation
http://www.sachinese.org

The organization, established in 1984, has been a sponsor and participant in many cultural and social activities in the San Antonio area since. The mission of the CSSA is to promote the understanding and communication of the Chinese community, to voice the concerns of the Chinese community, and to achieve a sense of community by sponsoring social and cultural activities. The CSSA is non-religious, non-political, and non-profit organization.

Other organizations in Texas

Austin Asian American Chamber of Commerce (AAACC), Austin, TX - Business/Economic Development
http://www.austinaacc.org/

The Austin Asian-American Chamber of Commerce was created to serve the Asian-American business community in Austin. AAACC hosts meetings and mixers, workshops, classes and training seminars on various business subjects. The organization is also invovled in the development of an Asian-American Resource Center (AARC) with NAAO, city officials and other community organizations, as well as ethnic, cultural, arts charitable activities, and annual charity and fundraising events.

Benefits of joining the organization include networking opportunities relationship building with governmental entities and other Chambers of Commerce, developing contacts with community organizations and leaders, access to listing in the membership directory, discounts to events, seminars, and workshops, periodical newsletters, free business training. For non-profit organizations, benefits also include international business development opportunities, access to conference facilities, and possible grants. As for corporate sponsors, benefits further extend to logo advertising on the website with web link, recognition at events, sponsorship opportunities, as well as listing in business directory.

Asian Chamber of Commerce, Houston, TX - Business/Economic Development
http://www.asianchamber-hou.org/

The Chamber has the dual purpose of promoting trade between Houston and Asia and to foster economic development in the Houston area Asian-American communities. The Chamber was incorporated on June 20, 1990 as a Texas non-profit corporation. The Chamber hold professional seminars and speaker's series on topics related to Asia and the Asian-American community as well as provide networking opportunities through regular activities such as meetings, seminars and luncheons. The Chamber also participates in trade shows and trade missions.

Asian Pacific American Heritage Association, Houston, TX - Culture Awareness
http://www.apaha.org/

The Asian/Pacific American Heritage Association (APAHA) was formed in 1992 to "promote awareness and increase understanding of the Asian/Pacific American culture and its diversity through education and celebration". APAHA has collaborated with various community and educational entities to provide ongoing educational, cultural and scholarship programs to the Asian/Pacific and Greater Houston communities. As a non-profit, 501(c)3 organization, APAHA’s main objectives include enhancing racial harmony in our city, promoting cross-cultural awareness, education and appreciation between and among Asian/Pacific Americans and other ethnic groups by outreaching to schools, businesses, and other institutions.

APAHA provides many of its sponsored events to its members and the community. These gatherings are aimed to educate, inform, and entertain the public on Asian/Pacific American arts, culture, and heritage.

Chinese Community Center, Houston, TX - Education and Culture Preservation
http://www.ccchouston.org/

Established in 1979 as a Chinese Language School, the Chinese Community Center (CCC) today serves nearly 5,000 families each year through educational, cultural, and social service programs. The Center is a non-for-profit social services agency IRS 501(c)(3) organization in which funding and support come from individuals, public and private sector sources and the United Way of the Texas Gulf Coast.

The Center now serves the very young through the Child Development Program; youth through after-school tutorials, Summer Camp, and Chinese Language School; adults through the Adult Education Program that includes ESL, GED, job training and computer classes; and senior adults are assisted through Community Service, the Adult Day Program, and the employment program. The Center now serves as a center stage for the major events in the Chinese community in Houston.

Greater Dallas Asian American Chamber of Commerce (GDAACC), Dallas, TX - Business/Economic Development
http://www.gdaacc.com/

The Greater Dallas Asian American Chamber of Commerce (GDAACC) is the largest Asian American Chamber in the United States with over 1,200 members currently. GDAACC is positioned to be the focal point of Asian American economic development and cultural exchange.

The organization has developed Leadership Tomorrow, a program created for emerging Asian American leaders in the DFW area who are interested in developing their leadership skills, as well as other job training, entrepreneur development programs. GDAACC also hosts the Texas Asian American Business Symposium in Dallas, Texas. The symposiums are designed to emphasize business opportunities for Asian Americans as well as business opportunities in the Asia Pacific region for American Companies.

FYI: Cultural Considerations

China has a long history of more than 5,000 years and has experienced feudalism, communism, civil war, invasion and now a booming market economy. Since 2001, following its entry into WTO, China offers huge potential market for investment, sales, and cultural exchanges. More and more organizations are venturing or looking to venture into China. There are four key Chinese values one should keep in mind for a smooth and successful transaction.

- Mian–zi (literally means face)

Mian-zi is the personal pride and is the basis of a person’s reputation and his or her social status in any given situation. In the Chinese business culture context, “saving face” or “losing face” and “giving face” are essential for successful business exchanges. Causing someone to lose face through public humiliation can damage business relationships. On the other hand, praising someone (in moderation) in the presence of his or her professional or social group is a way to “give face” and earns respect and loyalty.

- Guang-xi (literally means relationships or connections)

Guang-xi is the network of elaborate relationships promoting cooperation/trust and, for centuries, has been and continues to be the primary vehicle for accomplishing everyday tasks.
These are sincere, supportive relationships based on mutual respect. Guang-xi is a fundamental aspect of Chinese culture. In the world of business, possessing the right guang-xi is necessary for surviving the difficulties and frustrations that are often encountered in life, as well as in business.

- Keqi (literally means guest behavior)

Keqi, meaning guest (ke) and behavior (qi) translates as “thoughtful, courteous and refined behavior”. In business terms, this simply means that you must demonstrate humility and modesty. In negotiations especially, humbleness and patience are key.

- Confucianism

This is an ethical belief system based on the teachings and writing of the sixth century philosopher, Confucius. In this system, emphasis is placed on the concept of relationships with total and complete respect for personal responsibility and obligation.

This philosophy has been the most vital cultural factor in the development of Chinese society, and it remains effective in Chinese business culture today. Confucianism is responsible for the preservation of surface harmony and the collective good.

Sources
Asia Times - http://atimes.com/
Asia Pacific Management Forum - www.apmforum.com/news.htm
South China Morning Post - http://www.scmp.com/
Time, Asia - www.time.com/time/asia

Best Prospect Sectors in China

Aerospace and Aviation

Over the next twenty years, China predicts that its air transportation passenger volume will grow annually by 11%. It will become the world's second largest aviation market and will require an additional 1,790 aircraft to handle the increased volume. Expansion of airport infrastructure will also continue with 49 airports slated for new construction and 701 airport expansion projects under China's current five-year plan, which began in 2006. Furthermore, a new system of regional control centers and full conversion from program to radar based air traffic control will be introduced over the next 5-10 years.

At present, CAAC is drafting the 11th Five-Year Plan and 2020 Vision for the aviation industry. It is expected that the annual growth rate will be 14%. By 2010 (the end of the 11th Five-Year Plan), the China expects to have 186 airports, which includes 3 national hubs, 7 regional hubs, 24 medium hubs, 28 medium airports and 124 small-size airports. The total investment will be $17.7 billion. It is estimated that the number of airports with scheduled airlines will be 260 by 2015.

Along with passenger airport equipment, large growth has been seen in the air cargo sector. China also plans to improve aviation security systems and equipment, computer information management, settlement ticketing systems, global distribution systems and E-commerce. Airport retail concessions are also a new concept for Chinese airport authorities. As airports are faced with the challenge of making money they are considering bringing in partners via food and other retail concessions. Finally, safety equipment - including emergency vehicles - continues to be an area of interest for Chinese airport authorities. Priority will be given to foreign investment, which will be directed toward airport infrastructure construction, technology upgrade and management training. China is a fast-growing market for air traffic control equipment. Over the past 10 years, CAAC has spent approximately $1 billion on air traffic management (ATM) infrastructure improvements.

Agribusiness and Food

China is now the world’s fourth largest importer of agricultural goods and its imports are expected to continue growing. China Customs records for 2004 indicate the country imported over $35 billion in agricultural, fishery, and forestry commodities. Presently, U.S. agricultural, fishery, and forestry exports to China are at their all-time greatest levels; China Customs records indicate the value was $8.1 billion in 2004.

Automotive

China is set to become the world’s second largest new automobile growth market by the end of 2006 and this growth is spurring demand for U.S. automotive parts, services, and aftercare products. The total output value of the automotive sector for the first three quarters of 2006 was $143 billion dollars.

China encourages the development of clean and fuel efficient vehicles in an effort to sustain continued growth of the country’s automobile industry. By the end of 2007, China plans to reduce the average fuel consumption per 100 km for all types of vehicles by 10%. The proportion of vehicles burning alternative fuel will be increased to help optimize the country’s energy consumption. Priority will be given to facilitating the research and development of electric and hybrid vehicles as well as alternative fuel vehicles. Major cities like Beijing and Shanghai already require Euro III emission standards. Currently auto parts and accessories enjoy lower levels of tariffs than cars (the average tariff is 10-13% for parts/accessories and 25% for cars). China has agreed to lower tariffs on imported auto parts and accessories to 10%.

The Chinese Government is in the midst of a massive upgrade of its transportation infrastructure. Ports are being improved for greater use of China’s waterways, and airports are being improved across the country. All of these projects bring opportunities to U.S. construction equipment, engineering, and electronics and safety devices companies, especially for projects funded by the World Bank, Asian Development Bank, OECF, and similar multilateral lending agencies that use transparent bidding procedures.

In the past few years, China has been rapidly developing its highway system. The investment for highway construction has increased enormously from 2000 owing to increased government attention. US$4.25 billion was invested in Beijing’s infrastructure in 2004, and another US$22 billion will be invested before the 2008 Olympics to improve Beijing’s traffic congestion issues. Improving infrastructure has facilitated the increased use of automobiles.

Moreover, China has sixteen major shipping ports with a capacity of over 50 million tons per year. Combined China’s total shipping capacity is in excess of 2,890 million tons. By 2010, 35% of the world’s shipping is expected to originate from China.

Construction Materials and Services
Consumer Goods/Recreation
Energy
Environmental Technologies
Information Technologies
Machine Tools
Medical and Pharmaceutical
Security/Safety Equipment
Services
Telecommunication Equipment and Services
Transportation and Infrastructure

Source: www.export.gov/china

China: Factors to winning the bid for the 2008 Olympics

Two events in the late 20th century and early 21st century will go down in history as events of historic significance for China. One was the smashing of the Gang of Four and launching of the reform and opening-up. The other is Beijing's hosting the 2008 Olympics. The winning bid to host the Games is a symbol of China’s rising standing among its world peers. In the contest to become a host for the Olympics, countries must compete with each other in areas of economic power, development potential, cultural tradition, education and science as well as international image. Since 1993 when China lost to Sydney in hosting the Game, China has made extensive and intensive changes in all areas in which impacted the rest of the world as well. This is how they won the bid for the 2008 Olympics.

Significant Progress
· China’s GDP has risen 2.5 fold, ranked 4th at 2.7 trillion USD (2006), compared to U.S. at 13.3 trillion USD ranked 1st, followed by Japan and Germany.
· China is Asia’s fastest growing economy over the past 20 years
· In 1985, average income in China was $280 USD; in 2005 the average income had increased to $1,290 USD.
· China's transportation and communications infrastructures had been significantly improved.
- The recent railway infrastructure in the Western regions, particularly Xinjiang and Tibet, China’s most remote regions helped reunite China.
- China is working on more plans for infrastructure development in these regions in roads, railways and oil pipe lines.
- The railway infrastructure significantly boosts tourism in China which brought 8 million U.S. dollars to Xinjiang, a year-on-year growth of 40.6 percent.
· The construction of sports venues and environmental protection projects had also made impressive progress.
· Hong Kong and Macau returned to the sovereignty of China and were functioning smoothly as two special administrative regions of China, which helped enhance China's international status.
· Internationally, the country's relations with the United States and European countries began to develop in directions favorable to China, thanks to effective diplomatic strategy and policy.
· China adopted effective monetary policies in response to the impact of the 1997 Southeast Asian financial crisis, including maintaining the stability of the RMB foreign exchange rate. This helped keep the crisis from spilling over to larger areas, while maintaining the stability of China's own economy.

The Official Website of the Beijing 2008 Olympic Games

http://en.beijing2008.cn/

Sources:
www.worldbank.org
http://english.peopledaily.com.cn
www.wikipedia.com

China's growth on export and import sector

China’s global competitiveness has been rising since the 1990’s. Import and export with the United States reflected that. In early 90’s, China replaced South Korea and Taiwan as the largest footwear supplier for the United States. China has also replaced Hong Kong, Taiwan, and South Korea as the largest toys and sports supplier through the past 10 years. According to New York Times, 80% toys in the U.S. are made in China. In 2005, China has become the largest supplier for consumer appliances and IT hardware products. Previously, Japan and Mexico were the largest suppliers for the United States for those sectors.

Other than growth in export, import sector has grown rapidly at the same time, especially components to be assembled into finished products. China’s import was $53.4 billion in early 1990’s. In 2005, it has grown to $295 billions, which is an average growth rate of more than 15% per year. In 2006, China imported more than 400 billion dollars, exceeding the Japanese for the first time. China becomes the third’s largest importing country.

China has tripled its economy in the past decade or so and still has a lot of potential to grow. The question is how much will the economy expand and how much of the global market will the Chinese take over in the next ten, twelve years?

Useful links for doing business with China

East Asian Civilization has always been a mystery to most. For years, most Americans looked at China as nothing more than just a communist country on the other side of the ocean. As China opened up more and more since the 1990’s, Americans have seen growing business opportunities within, espeically import and exports start to arouse. Due to the cheap labor and cheap material, China became a very popular market for both importers and exporters.

In the eyes of American businesses, China is full of opportunities to gain profit. Yet, there are many challenges American businesses have to face when going into this market. For example, American businesses tend to run into language issues, different business norms and regulation issues. What should American business consider before going into importing/exporting business with China? Because of the long history the Chinese have, many Americans still see Chinese as somewhat a communist country with a highly controlled economy. Because of all the negative issues from the Tinanmen Massacar in 1989 to the recent toothpaste recall, Americans tend to have doubts about the political side of China. Culturally, Chinese have their unique sets of believes and customs. Nevertheless, what is the actual situation?

Research is one of the very first steps to gain a basic understanding of any new market. However, where to find information? Here are some helpful links to begin

http://www.export.gov
The U.S. Government Export Portal. The China country commercial guide on the site gives a good general overview.

http://www.export.gov/china
There are more categories regarding different issues.

http://www.customs.gov.cn/YWStaticPage/7019/50b0697a.htm
General Administration of Customs of the People’s Republic of China
Regulations regarding importing and exporting.
(The Chinese version has more information then the English one)

http://www.china-customs.com/customs-tax/
HS number for Chinese

http://big5.mofcom.gov.cn/
Ministry of Commerce of the People’s Republic of China

http://www.aqsiq.gov.cn/
General Administration of Quality Supervision, Inspection and Quarantine of the People’s of Republic of China

http://www.chinese-culture.net/html/chinese_business_culture.html
Some article about Chinese business cultural and other related articles.

http://www.china-embassy.org/eng/
Embassy of People’s Republic of China in the United States of America

The Iternational Tade Center can also help provide more extensive market research. You can contact us as 210.458.2470 or via www.texastrade.org