Bosch and Siemens

Bosch and Siemens Home Appliances Group (BSH) (which is two great consumer brands as one company) is speeding up its second round of investment in China, thirteen years after it first started operations in China.

As the world’s number three, and Europe’s number one white goods manufacturer, BSH shows great interest in independent development in the Chinese market.

The company has decided on $160 million of additional investments in its expansion projects.

On March 9, 2005, the BSH Industrial Park laid a foundation stone in the Nanjing Economic and Technological Development Zone which was completed a year later. In April 2006, BSH’s largest top freezer project around the world broke earth in Chuzhou City of central Anhui Province.

In 2007, the company built a plant in the Nanjing Industrial Park, producing 800,000 big-volume tumble washing machines a year. As of the end of 2007, BSH’s investments in the country had reached $500 million.

The new investment will be to build a a tumble washing machine plant as well as an electric water heater plant in the industrial park.
Source: Trading Markets

Stamford-based Chilton Investment has opened offices in Chengdu to serve its major business zone.

In March 2006, the Ministry of Information Industry approved the establishment of the National (Chengdu) Electronic Component Park within the Chengdu Economic and Technological Development Zone. It can already boast companies such as Intel, IBM, Nokia, Microsoft and Xerox.

Chengdu High-Tech zone

Chilton, a manager of alternative investments with nearly $8 billion in assets, will file an application with Chinese authorities for permission for its Beijing subsidiary to operate a branch office there.

The office will serve as a central hub for Chilton’s strategy to pursue investment opportunities in western China — a region the firm said has tremendous growth potential and is under-served by investment specialists.

On the western edge of the Sichuan Basin, Chengdu was about 48 miles from the epicenter of the earthquake that killed more than 4,000 people in May, but the city sustained little damage.
Source: Greenwich Time

Zhangjiagang Zone

On the southern bank of the lower reaches of the Yangtze River and more than 50 kilometers long from east to west, 2 kilometers wide from south to north. Think of it as a long thin strip.

In the west the zone borders on to Zhangjiagang Free Trade Zone.
In the north is Nantong City on the opposite side of the river.
In the east it is connected with Shanghai Pudong Development Zone and Waigaoqiao Free Trade Zone.
To the south: Suzhou, Wuxi and Changzhou.

The area along the bank of the Yangtze River is suitable to build over 10,000-ton deep-water wharves because it never silts up or freezes.

Yangtze River’s transport capacity is as great as 7 railways. And, like railways, it has its branches extending in all directions.

Which means  goods can be easily transported to large and medium-sized cities in the lower reaches of the Yangtze River.

Added to that is the Yanjiang Highway, which is 24 meters wide and 51.8 kilometers long and runs through the whole zone connecting to No. 204 State Highway. And for air connections Shanghai Hongqiao Airport, Suzhou Guangfu Airport, Wuxi Shuofang Airport, Changzhou Benniu Airport and Nantong Xingdong Airport in a  sense surround the zone.
Source: CMW.com

Beijing Yanqi Economic Development Area is now working with Beijing Great Wall investment Development to increase the number of companies within the zone. All the necessary facilities to accommodate the establishment and growth of business are already in place. It is now ready to expand.

The zone was established in April of 1992 with the approval of Beijing Municipal Government. In December 2000 the government decided to accredit this area as one of the key industrial development zones under the direct jurisdiction of the municipality.

The area has a total planned area of 1,493 hectares and incudes the Beijing Yanqi Economic Development Zone Beijing Fengxiang Science & Technology Development Zone and Beijing Jingwei Industrial Zone. It is 55 kilometers drive from the urban district, 35 kilometers from Beijing Capital International Airport, and 170 kilometers from Tianjin Harbor.

So far more than 300 production enterprises have based their businesses in the area including more than 70 foreign owned enterprises coming from 17 countries or regions.

The Administrative Committee of Beijing Yanqi Economic Development Area has authorized Beijing Great Wall investment Development to develop, sell and transfer the right of land use of the zone.
Source: Invest Beijing

Development zones are named according to their different focuses, like ‘economic and technological development zone’, ‘economic development zone’, ‘high-tech industries development zone’ and ’science and technology park’.

There are also development zones at different levels depending on their supervising institutions, ranging from ‘national’ development zones to ‘provincial’ and ‘municipal’ ones. Development zones are often divided into several sections.

The central government has organized several campaigns to check development zones and the unqualified ones or those with poor performances are cancelled.

* From July 2003 to December 2006, the number of development zones were reduced from 6,866 to 1,568.
* Their total area was cut from 38,600 square kilometers to 9,949 square kilometers.

In the Law on Urban and Rural Planning approved by the lawmakers in October 2007, it was stipulated that no development zone should be set-up outside the established plan for the city layout.

Meanwhile, the urban infrastructure of the Chinese cities has been stepped up in the last three decades. And most of them are now very investor-friendly. Much more on this HERE.

The author, Sun Shiwen, is a professor at College of Architecture and Urban Planning at Tongji University.
Source: China View

The port city of Dalian has launched a set of new policies to attract more IT talent to the region.

Currently, there are over 60,000 IT professionals working in more than 700 IT companies in Dalian.

Xia Deren, mayor of Dalian, said, ‘If we can achieve an annual output value of 100 billion yuan in 2018, we will need 300,000 to 500,000 IT professionals. Obviously, there is a huge talent shortage.’

Dalian intends to build public facilities for training institutions, construct apartments for IT workers in the city, and provide subsidies for senior professionals in the industry. All to allow the further development of the Dalian Hi-tech Industrial Zone.

Xia Deren, mayor of Dalian, said, ‘The software and IT service outsourcing sector is developing rapidly in Dalian. However, the lack of talent is becoming a serious problem which restricts this development.’

The city’s software sector has on average seen an annual 68.2% rise over the last decade. Last year, its software sales revenue reached RMB21.5 billion ($3.14 billion), while the exports rose to $720 million.

Xia Deren described the initiative as ‘an extra-ordinary measure taken by the local government’.
Source: China Daily

[photopress:zone_sez.jpg,full,alignright]A researcher at distribution warehousing giant ProLogis says leaders in Western nations can learn from China’s use of special business zones.

The special economic zones, first set up around port cities by the People’s Republic nearly 30 years ago, have been a resounding success. Last year, merchandise exports from SEZs totaled $1.2 trillion, trailing only Germany and the U.S.

Leonard Sahling, Prologis’ first vice president of research and an expert on trade zones said although zones like Shenzhen are well-known to executives at multinational corporations, few outsiders truly understand how the sites operate.

In China, the zones typically include spacious roadways and modern infrastructure and operate as relatively insular communities. Some even have their own worker housing.

Leonard Sahling, said, ‘They’re like cities that have all been master-planned. They’re beautiful. One looks like a Disney park.’

Tenants can range from Chinese importers, exporters or manufacturers to American and European companies. But Asian-based businesses, particularly those from Japan and Taiwan, dominate.

Some of the special districts are designated economic trading zones (ETZs) and others economic and technological development zones (ETDZs).

Five of the ETZs are treated as being ‘outside of China,’ thus eliminating levies such as value-added taxes and customs duties.

[photopress:zone_sez2.jpg,full,alignleft]There are 54 ETDZs. Foreign enterprises establishing operations in these zones are granted tax breaks, the ability to repatriate profits and capital investments, below-market lease rates for land, government financing for hiring and training, employee housing and various customs exemptions.

‘I think China has proved that economic reform through the use of trade zones can play a huge part in a nation’s economic success,’ Leonard Sahling said.
Source: Financial Week

[photopress:zones_ChengduMap.jpg,full,alignright]The earthquake in China was a great human tragedy. Everything else connected with it is, in comparison, of minor importance. It is the people who suffered.

The epicenter of the quake was in Wenchuan, about 55 miles northwest of Chengdu.

Chengdu is China’s fifth largest city and has, over the last 20 years, established a high-tech industrial development zone where companies such as IBM, Symantec, Microsoft, Intel, Fujitsu, Corning, Ericsson, Semiconductor Manufacturing International Corp. (SMIC), Nokia and Monolithic Power Systems, among others, have established operations.

The earthquake disrupted power and cut cell phone communications throughout the region. Although not a major region for semiconductor production, Intel and Monolithic Power Systems have significant microchip manufacturing and testing facilities there.

Intel had to stop production at its factory located 55 miles southeast of the epicenter because of a lack of electricity and water. An Intel spokesman said the factory was not damaged and its 2000 employees were not injured, but the facility was operating critical systems only on backup power. The company said it didn’t expect there to be any major supply disruptions because of the earthquake.

Monolithic Power Systems, a fabless manufacturer of analog and mixed-signal semiconductors, said in a statement that there was no immediate damage to its Chengdu facility.

According to its Web site, SMIC has an assembly and testing facility in Chengdu in addition to semiconductor fabs in Shanghai, Beijing and Tianjin. SMIC evacuated a fabrication plant and halted production as a result of the quake. It is back in production.

Freescale Semiconductor shut down its design center in Chengdu. It has now reopened.

Other companies, including Microsoft and Motorola, reported minor damage to facilities, according to the Associated Press, and financial analysts said the damage is likely to have only a limited impact on major microchip production there.
Source: Photonics.com

[photopress:zones_Pakistan.jpg,full,alignright]In starting its concept of special economic zones back in the seventies China was thinking inside the country. It was planning the industrialization of China.

Especially since the 3rd Plenary Session of the 11th CPC Central Committee in 1978, the PRC government reformed the national economic setup.

During the 1980s, the PRC passed several stages, ranging from the establishment of special economic zones and open coastal cities and areas, and designating open inland and coastal economic and technology development zones. It is a process the continues but is undoubtedly a massive success, albeit with attendant problems which are being dealt with in an orderly manner. The success of these zones has not escaped the attention of other countries.

In Peshawar, the administrative center of Pakistan, Provincial Minister for Industries Syed Ahmed Hussain Shah said a ‘national trade corridor’ would be established on N-35, Malakand, in the name of China City to enhance trade with China.

He said the establishment of the proposed ‘Reconstruction Opportunity Zones’ (ROZ) in the border regions of Pakistan and Afghanistanwould improve the provincial economy, generate employment opportunities, and help stem terrorism in the area.

Meanwhile Sindh Minister for Industries and Commerce in Pakistan, Rauf Siddiqui has suggested establishing a 100km long industrial zone on the land lying between Karachi and Hyderabad.

Syed Ahmed Hussain Shah said that to eliminate rising unemployment in the country and strengthening local economy, we had to convince foreign investors including China and other countries to invest in Pakistan.

Dr Junaid Ahmed, Advisor to the Finance Ministry called on the government to establish Pak-China, Pak-Korea, Pak-Iran, Pak-Arab Economic Zones, in which industrialists from these countries could be provided opportunities to invest. When China started special economic zones it started a world revolution.
Sources: The News and Trading Markets.

[photopress:zone_sez_china.jpg,full,alignright]Sometimes it is difficult to understand all the terms used. This is a brief primer.

Special Economic Zones (SEZs) are, for the moment, always located in mainland China. The government gives SEZs special economic policies and flexible governmental measures. This allows SEZs to utilize an economic management system that is especially conducive to doing business.

All of which seems pretty clear. And it has been going on since 1978 when the government decided to reform the national economic setup. Our illustration shows Shenzen, an early starter.

Since 1980, the PRC has established special economic zones in Shenzhen, Zhuhai and Shantou in Guangdong Province and Xiamen in Fujian Province, and designated the entire province of Hainan a special economic zone.

In 1984, the PRC further opened 14 coastal cities to overseas investment: Dalian, Qinhuangdao, Tianjin, Yantai, Qingdao, Lianyungang, Nantong, Shanghai, Ningbo, Wenzhou, Fuzhou, Guangzhou, Zhanjiang and Beihai.

Since 1988, mainland China’s opening to the outside world has been extended to its border areas, areas along the Yangtze River and inland areas.

(For the record Hainan Island is China’s biggest special economic zone.)

Shortly afterwards, the State Council expanded the open coastal areas, extending into an open coastal belt the open economic zones of the Yangtze River Delta, Pearl River Delta, Xiamen-Zhangzhou-Quanzhou Triangle in south Fujian, Shandong Peninsula, Liaodong Peninsula (Liaoning Province), Hebei and Guangxi.

In June 1990 the PRC government opened the Pudong New Area in Shanghai to overseas investment, and additional cities along the Yangtze River valley, with Shanghai’s Pudong New Area as its head.

Since 1992, the State Council has opened a number of border cities, and in addition, opened all the capital cities of inland provinces and autonomous regions.

Now it get a bit complicated because the nomenclature changes along with the developments.

At that time 15 free trade zones, 32 state-level economic and technological development zones, and 53 new- and high-tech industrial development zones were established in large and medium-sized cities. What are the differences between these categroies. They tend to have different preferential policies although the general aim is always the same — building up trade.

The five special economic zones are foreign-oriented areas which are primarily geared to exporting processed goods, integrating science and industry with trade. In 1999, Shenzhen’s new-and high-tech industry became one with best prospects, and the output value of new-and high-tech products reached RMB81.98 billion, making up 40.5% of the city’s total industrial output value.

To sum up the attractions (and they have seriously worked because these zones have been a great success are:

1. Special tax incentives for foreign investments in the SEZs.
2. Greater independence on international trade activities.
3. Economic characteristics are represented as 4 principles:

a. Construction primarily to rely on attracting and utilizing foreign capital.
b. Primary economic forms to be Sino-foreign joint ventures and partnerships as well as wholly foreign-owned enterprises.
c. Products to be primarily export-oriented.

d. Economic activities primarily driven by market forces.