By Adam Livermore

DALIAN, Oct. 1 - Located further up the peninsula from the city center of Dalian, the development zone has turned into a major metropolis in its own right with a population of around 350,000. Normally it takes about 45 minutes to make the drive from the development zone to the Dalian city center, so although the road is lined with factories and shipbuilding docks, the development zone can be considered to be a separate metropolis. Indeed the main weakness of the zone is its poor transportation links with the city center. A light railway exists but trains only run every 10 -15 minutes and the service finishes quite early at night. There are only a couple of major road links between the two metropolises, and bottlenecks tend to form at the entrance to tunnels on the route. A major crash on one of the roads can paralyze traffic for hours during rush-hour. A ferry service has been suggested as one means of alleviating this problem, and longer-term plans are to include a 20km tunnel under the bay, but the transformation of the development zone into a fully-fledged city would seem to offer the best hope of improving the quality of life for expats working in the area – the commute into central Dalian is only going to get worse over the coming years.

The Dalian Development Zone has thrived due to the tax benefits and other incentives offered to the companies that have established there. As of 2008 these benefits will no longer be offered, and the companies that presently enjoy preferential treatment will see the benefits gradually phased out. However the development zone will still be an attractive place to invest for several reasons: (more…)

By Adam Livermore

DALIAN, Sept. 26 - Dalian is a city attracting a great deal of attention right now. Particularly newsworthy is the US$2.5 billion investment by Intel in a new semiconductor plant, and the expansion of the High-Tech Zone – Dalian is set to become the Bangalore of China. Major multinationals are spearheading the charge to take advantage of a large pool of skilled labor and excellent IT infrastructure. Growth in the service sector is happening with less fanfare, but at a similar high pace. This is evidenced by the arrival in Dalian of multinational real estate brokers (for example CBRE, Savills and DTZ), relocation specialists for expats (Santa Fe) and a proliferation of new five star hotels.

Yet in the minds of many western businesspeople Dalian remains a rather obscure Chinese provincial backwater. In fact, Dalian is nothing of the sort – it is an exceptional city for several reasons. In this series of articles I aim to introduce Dalian to the wider business community and explain why, if you are a provider of high-value added products or services, it should factor in your strategic visions for the future.

Part 1 – An overview of Dalian

The first thing that should be understood about Dalian is its location. Perched on the top lip of the Bohai Gulf (which provides sea access to northern China), its location has historically been important for both military and commercial reasons. In terms of international trade, the majority of products manufactured or processed in Liaoning, Jilin or Heilongjiang provinces (the traditional industrial heartland of the north with a combined population of over 100 million) are exported through Dalian. Domestically, a large amount of energy resources such as coal and oil are sourced from the northern provinces, flowing through Dalian on their way south by ship to power the energy-sapping factories in Zhejiang and Guangdong. Its proximity to Korea and Japan has ensured that a large amount of the trade with these countries involves Dalian in some way or another. It is not difficult to find fluent Japanese and Korean speakers in Dalian, especially among the huge ethnic-Korean population. (more…)

By Andy Scott

SHANGHAI, Sept. 11 - China’s new policy restricting processing trade, which took effect nationwide August 23, will most heavily impact Guangdong province. The booming Chinese economy, which has grown at over 10 percent for the last 15 years, has been largely driven by processing trade factories located in South China and the Yangtze River Delta region, importing tax-deductible raw materials to manufacture finished products for export. Of the over 90,000 processing trade firms operating on the mainland, nearly 70,000 are located in Guangdong province according to the National Bureau of Statistics.

However, in its continued efforts to develop the central and western regions which have not profited from China’s economic surge, Beijing has stipulated that the new regulations will not affect enterprises operating in those regions.

With that in mind, we decided to take a look at central China, an area that includes the six provinces of Anhui, Henan, Hubei, Hunan, Jiangxi and Shanxi. It includes 30 airports, 12 inland ports, 460,000 kilometers of highway and approximately 15,000 kilometers of railway. Would it be better for processing trade manufacturers to move their operations inland, or look for other possibilities to dealing with Notice 44? (more…)

Sept. 1 - Yingkou is a third-tier Chinese city located on the northeastern edge of the Bohai gulf, just a few hours drive from the regional powerhouses of Shenyang and Dalian. An otherwise fairly ordinary provincial Chinese city, Yingkou is set to capitalize on the increasing exporting power wielded by enterprises in Liaoning, Jilin and Heilongjiang provinces.

Most people associate Liaoning province with the port city of Dalian. Indeed Dalian is a thriving, cosmopolitan city that possesses one of the largest ports in China. The city of Yingkou has been left in the shadow of its big brother further down the peninsula and has not attracted the levels of foreign investment seen around many other ports in China. In particular, export processing has not flourished in the area, leaving Yingkou lagging behind many other ports in China in terms of its degree of internationalization. Recently however, the volume of traffic through the ports – Yingkou Old Port and Bayuquan New Port – has risen dramatically, with over 100 million tons of cargo expected to be handled in 2007. This expansion is attracting the attention of foreign investors due to the proximity of the inland manufacturing giant that is Shenyang, China’s fourth largest city by population.

Yingkou is, and will remain, primarily a port responsible for the processing and transportation of products manufactured in the heartland of Liaoning (the cities of Shenyang, Fushun, Benxi, Haicheng, Liaoyang etc.). However, it is also strategically important for the distribution of oil, grain and fertilizer around China. Two pipelines connect Yingkou with the Daqing oilfields of Heilongjiang province, and Bayuquan port is expanding its capacity for oil storage in anticipation of further future growth. (more…)

By Adam Livermore 

DALIAN, Aug. 24 - Dalian is hosting a prestigious three-day meeting for fast-developing multinational companies beginning September 6. Entitled the “Inaugural Annual Meeting of the New Champions” and informally dubbed the “Summer Davos” because of its perceived similarity to the Swiss summit held every winter. The event is attracting CEOs from companies all over the world.

Some of the participants are already well-established global powerhouses. Intel will be represented by their chairman, Craig R. Barrett, PWC by Global CEO Samuel DiPiazza Jr., Citibank by President William R. Rhodes, WPP by Group CEO Sir Martin Sorrell and British Telecom by CEO Ben Verwaayen. However many of the participants will come from the major corporate powers in emerging countries, principal among them representatives from India and the Gulf states – nations that are rapidly increasing their levels of investment in China.

From India offshore software development giants Infosys and HCL Technologies are represented. Dubai Holding and Shamil Bank of Bahrain are a few of the major Gulf state players looking to develop further links through this conference. Of course there will also be a star-studded list of Chinese CEOs and the obligatory rafts of government ministers in attendance, headed by commerce minister Bo Xilai (coincidentally also previously Mayor of Dalian). In short, it may be the largest collection of powerbrokers ever to descend on a city in China. (more…)

Shenyang is currently a hotbed for foreign investment, particularly in the high-end retail, real estate and manufacturing sectors. When establishing a company or a branch office the State Tax Bureau requires a Certificate of Tenancy to be issued by the Housing Management Bureau. This sounds straightforward enough, however in order to obtain this document a foreign invested enterprise must present the following documents to the Housing Management Bureau:

1. A statement issued by the parent company (in Chinese) indicating that their Shenyang company/branch is entitled to use the outlet that the parent company leased from the landlord. The Housing Management Bureau requires two originals of this document chopped with the stamp of the parent company.
2. A statement issued by the parent company (in Chinese) indicating that the parent company signed the lease contract for its Shenyang entity because the Shenyang entity is not able to sign any contract before the issuance of its business license, and the parent company authorizes the Shenyang branch to apply for the certificate of tenancy. One original, chopped by the parent company, must be provided.

These two similar documents must be submitted separately. As the period between issue of the business license and completion of post-license registrations should not exceed one month (fines may be imposed by the tax bureau if this deadline is not met) it is recommended that investors prepare these documents in advance as the approval procedure and issuance of this Certificate of Tenancy can take time. (more…)

By Andy Scott 

SHANGHAI, Aug. 13 - Hainan Airlines has applied to operate non-stop flights between Beijing and Seattle starting next June authorities at the Civil Aviation Administration of China (CAAC) announced.

Hainan Airlines will become the fourth carrier to operate flights between the mainland and the United States, joining Air China, China Eastern, and China Southern. The propoesed Beijing-Seattle route would be the first non-stop service between the two cities.

The application follows a recent agreement between China and the United States on doubling the number of passenger flights between the two countries by 2012. According to Xinhua, Hainan Airlines, China’s fourth largest carrier, has applied to operate the Beijing-Seattle route using Airbus A330 planes. (more…)

Flights between Shanghai and Beijing just got faster and more reliable, at least that’s the word from five Chinese airline companies who launched an express air service between the two cities yesterday.

Operated by Air China, China Eastern, China Southern, Hainan Airlines and Shanghai Airlines, a total of 36 express flights taking off almost every half hour between Shanghai Hongqiao International Airport and Beijing Capital Airport are available.

The Civil Aviation Administration of China (CAAC) is promising a maximum three-hour turnaround from final check-in to baggage claim. According to a CAAC spokesman, the service includes dedicated express check-in, security check, boarding gates and baggage claims at the two airports. (more…)

The Tianjin municipal government has signed and agreement with the Ministry of Information Industry to construct a wireless broadband network in the Binhai New District of Tianjin.

The Binhai district will be a trial location for China’s comprehensive reform of its computer networks according to ChinaTechNews.com. Tianjin’s push to create a wireless city zone has made it one of the most powerful cities in the national wireless sector, attracting the attention of more and more international wireless service provider giants.

According to local media, advanced wireless enterprises including Google are conducting research in Tianjin on laying out wireless networks.

The Tianjin Bonded Zone is seeing a lot of construction these days as the port is dredged and streets leading to the zone are dug up to lay cables and pipelines for telephone, electric and gas facilities to feed the new logistic parks under construction.

By the end of 2007, according to an article in Cargonews Asia, the first batch of six container berths with a draught of 18 meters will be completed at Tianjin’s Dongjiang port. The sixth berths, run by a joint venture of Tianjin Port and PSA of Singapore and costing US$871.5 million, will have a capacity of four million TEUs a year.

The article goes on to say that the current bonded port and zone will become the Dongjiang Free Port and the Tianjin Free Trade Zone, according to a blueprint drawn up by the Tianjin municipal authority.

The current Tianjin registered an annual growth of 30 percent since it began operation in 1991, making it the top bonded zone in the country for four years in a row in terms of foreign investment as well as input of fixed assets. The zone’s GDP grew 34.7 percent in the first five months of this year with imports and exports rising nearly 30 percent to US$12.2 billion. (more…)