China Market Brief

China's 1999 imports were valued at US$117.6 billion, which was a 19.3% increase over the previous year. 1999 exports were US$137.0 billion, a 2.1% increase over the previous year. By 2010, it is estimated that there will be over 500 million middle-class consumers in China. China has nearly one quarter of the world's population.

In China's state-run economy, the government is the largest customer. Government purchasing decisions are governed by local laws, regulations and directives. Procurement practices are designed to benefit domestic suppliers, products and services. Government tenders are often inconsistent and difficult to understand. In general, contract worth less than US$100,000 are awarded without being tendered. Once the restrictions are removed, government contracts can be a very lucrative venue for foreign companies.

Regional Markets
The regional markets within China are becoming increasingly separate, each with its own development policy, and competing to attract foreign investment and technology. China is a land of greatly diverse geography and culture, and the characteristics of its economy vary greatly from region to region, in economic structure, level of development and growth prospects.

China is best viewed as a collection of regional markets, each operating in a distinct and often autonomous fashion. There are six regions in Mainland China, each with a population of over 100 million and a GDP of more than $30 billion, in addition to the Hong Kong and Macau SARs. 

Northeast China
This region is comprised of the three provinces of Heilongjiang, Jiln and Liaoning. 

Northwest China
This region is comprised of four autonomous region: Xizang, Xinjiang, Ningxia and Inner Mongolia, and two provinces: Qinghai and Gansu. It is one of the poorest regions in China, and the economy is less developed than the rest of China. 

Central Plain
China's central plain is a hybrid region composed of three fairly homogeneous economic sub-regions:

• The Beijing-Tianjin axis and Hebei province
• Shandong province
• The provinces of Henan, Shanxi and Shaanxi.

Beijing, the national capital, and the Beijing-Tainjin axis, are the economic heart of the region. Both municipalities have a provincial level decision making authority. Because of its role as China's political centre its well-developed infrastructure, the Beijing-Tianjin axis is often the first choice of foreign companies locating in China. Given the economic strength and diversity of the industrial and service sectors in Beijing, Tianjin and Shandong in particular, foreign companies should consider this region as one of the most suitable places to do business in this country.

Following are links to various regional Web sites:

• Beijing Vista
• Shanxi
• Shaanxi.

Upper Yangtze & Southwest China
This region is comprised of the five provinces of Yunnan, Sichuan, Guizhou, Hunan and Hubei, and one newly established provincial-level municipality, Chongqing.

Because of this region's relatively underdeveloped infrastructure and lower growth rates, the central government has a number of preferential policies to encourage foreign investors. In addition, many international financial institutions (IFIs) are now funding transportation, agricultural, energy and training projects in this region. 

For many foreign companies that are already familiar with China's coastal regions, this area provides additional opportunities for market development, although the consumer base is still relatively small.

For more information on the Chongqing region look at CCPIT & CCOIC web site under China's Investment Climate.

Shanghai & the Yangtze Delta
This comprises Shanghai, Jiangsu and Zhejiang and Angui. With 200 million people and one quarter of China's economy on a land base half the size of Alberta, the Yangtze Delta is one of the most concentrated markets in the world. Centred on the cosmopolitan port city of Shanghai, the Yangtze Delta leads the country in terms of size of market, economic output and regional GDP per capita.

Opportunities exist across the business spectrum. There is already significant business in the Yangtze Delta in areas not normally associated with developing economies. Jiangsu province is China's largest investor overseas, luxury consumer goods sell briskly from deluxe department stores. All these factors make the Yangtze Delta an excellent beachhead for companies interested in the China market. Shanghai is China's largest commercial and financial centre. Per capita, Shanghai leads the country in almost every economic measure.

Shanghai is home to China's key biotechnology R&D centre, 7 national-level R&D centres and laboratories and 6 national engineering research centres. The Shanghai municipal government is currently building a pharmaceutical/biotechnology complex in Pudong. Biotechnology R&D is also being undertaken in Beijing and Guangdong, but to a lesser degree. China's largest international biotechnology park is being built in Hangzhou, in Zheijang Province and will complement the development at Pudong. The park is being developed by the Beijing Global Biotechnology Centre, a subsidiary of the Chinese Academy of Sciences. Following are links to various regional Web sites:

• Shanghai Vista
• Welcome to Shanghai on the Internet
• Guide to Life and Business in Shanghai
• Guide to Shanghai
• Shanghai

South China is comprised of the provinces of Guangdong, Fujian and Hainan, as well as the Guangxi Autonomous Region. This region has accounted for over 50% of the foreign investment into China over the past 20 years.

All of the five national Special Economic Zones (SEZs) are located in South China. SEZs were set up by the central government not only to attract investment, but also to provide experience with experimental policies, such as modified tax regimes, visas-on-arrival, and relaxed requirements regarding foreign investment in traditionally controlled sectors. The five SEZs are:

• Shenzhen, one of the most successful zones, borders Hong Kong and has grown from a small fishing village less than 20 years ago to a modern cosmopolitan city of over four million.
• Shantou attracts interest from Southeast Asian investors and business people
• Xiamen rides a successful wave of investment from Taiwanese investors, see CCPIT & CCOIC web site (www.ccpit.org/engVerion/), under China's Investment Climate for more information.
• Zhuhai, the "Green City" is located opposite Macau
• The entire province of Hainan island operates with SEZ privileges.

Guangdong
This is the country's wealthiest consumer market and the largest market for infrastructure. For more information see the CCPIT & CCOIC web site under China's Investment Climate. In addition to the SEZs of Shenzhen and Zhuhai, the State Council has also mandated two other Economic and Technological Development Districts:

• Guangzhou Economic and Technological Development District (GETDD) in the deep seaport at Huangpu
• Nansha Economic Development and Technological Zone at the tip of the west bank of the Pearl River Delta.

The key areas of potential for foreign companies in Guangdong province are:

• Telecommunications
• Road construction -- over the next 20 years, plans are to add 2200 kilometres of railways, 3300 kilometres of highways and 611 marine berths.
• Airports, including flight simulators, flight training centres and air traffic control systems.
• Energy -- in particular, coal and exploitable water power resources
• Environment - especially waste water and air pollution. 
• Agri-Business
• Construction -- the region has shown an average 20% growth in this sector, making it the largest construction materials market in China. Building South China is the major trade event held each year in Guangzhou. 

Guangxi Zhuang Autonomous Region
This is one of China's five Minority Autonomous Regions. The province possesses considerable natural resources. The key areas of potential in Guangxi Province are:

• Tourism development
• Food processing
• Energy and power project equipment and services
• Infrastructure, transportation equipment and services
• Hydrology management
• Environmental protection technology, equipment and services
• Forestry management techniques and training.

Fujian Province
Fujian has abundant forestry, mineral and hydroelectric resources. In 1980 Xiamen was designated as a SEZ. It is now Fujian's most developed area and is the primary focus of foreign investment. The provincial capital, Fuzhou, has an Economic and Technological Development Zone located around the port of Mawei.  Areas of opportunity include:

• Environmental protection technology, equipment and services
• Waste disposal and management
• Energy resources
• Information technology
• Telecommunications
• Transportation equipment and services
• Tourism development, including construction and infrastructure
• Forestry, including sawed timber products, small-scale machinery, paper and paper products, forestry management techniques and training

Hainan Province
This is China's largest SEZ and China's second largest island. Yangpu Economic Development Zone is located in the northwest part of the island. Areas of opportunity in the province include:

• Tourism management
• Information technology
• Telecommunications
• Energy, natural gas
• Ports
• Air and road transportation
• Petrochemical processing
• Agriculture and fisheries management.

Some web sites that provide further information on these regions are:

• Dalian Municipal Government (http://www.dalian-gov.net/ and http://www.ccpit.org/ site under China's Investment Climate)
• Nanjing City Pages www.chinapages.com/jiangsu/nanjing/nanjing.htm.
• Shantou
• Suzhou

For more information on Shenyang and Zheyiang go to the CCPIT & CCOIC web site under China's Investment Climate:

Hong Kong SAR
Hong Kong has a population of 6.7 million and is the world's eighth-largest trading economy. It is China's largest port. The sectors of greatest promise to foreign investments include high-value food products, including fruits and vegetables, seafood, and processed animal products; IT and telecommunications goods and services; education goods and services, particularly innovative IT-based learning systems and content; construction materials; and public transportation equipment and services. Doing Business in Hong Kong Web site.

Macao SAR
Macau is located at the entrance of the Pearl River Delta, 144 kilometres southeast of Guangzhou and 64 kilometres southwest of Hong Kong. Macau is a free port and an open market, with a low taxation level (corporate tax less than 15%). As a duty-free port, Macau levies no import duties. Raw materials and capital equipment are not liable to any taxation, nor are there any quantitative restrains on imports.

The China Council for the Promotion of International Trade lists its regional branches and investment climate of numerous cities and regions.

Special Economic Zones
The Chinese government decided in 1984 to establish economic and technological development zones (ETDZ) in 14 coastal cities, including Dalian, Tianjin, Shanghai, and Guangzhou. Today, such zones have grown into inland provinces encompassing major municipalities across the country, all becoming unique economic districts with special vitality. ETDZs are by far one the fastest-growing areas in China with a heavy concentration of investment from both home and overseas.

The Office for Special Economic Zones of the State Council of the People's Republic of China is the government agency responsible for guiding and administrating ETDZs.

ETDZs mainly cater to new and high-tech industries, offering significant tax reductions and lower infrastructure costs. With sophisticated infrastructure and human resources in place, they provide excellent environments for scientific research and technological development and production. In order to assist research and innovation, some ETDZs have established scientific and technical incubators, Scientific and Technological Pioneering Centres, and risk funds for scientific research.

	The Economic and Technological Development Zones
	1. Dalian		17. Shanghai Caohejin		33. Jiujiang
	2. Shenyang		18. Shanghai Hongqiao		34. Nanchang
	3. Changchun		19. Nantong		35. Changsha
	4. Harbin		20. Lianyungang		36. Yueyang
	5. Yingkou		21. Suzhou Industrial Park		37. Huangshi
	6. Xi'an		22. Kunshan		38. Guangzhou
	7. Urumqi		23. Hangzhou		39. Zhanjiang
	8. Tianjin		24. Ningbo		40. Huizhou
	9. Beijing		25. Wenzhou		41. Nansha
	10. Qinhuangdao		26. Xiaoshan		42. Dongshan
	11. Qingdao		27. Ningbo Daxie		43. Rongqiao
	12. Yantai		28. Hefei		44. Fuzhou
	13. Weihai		29. Wuhan		45. Kunming
	14. Shijiazhuang		30. Chongqing		46. Nanning
	15. Huhhot		31. Nanjing		47. Guiyang
	16. Shanghai Minhang		32. Wuhu		48. Chengdu

Homepages for each of the ETDZs can be found on the Office for Special Economic Zones Web site. The China Invest web site also provides links to many of the SEZs.

Regional Development Zones
A list of homepages for each of the regional development zones listed below can be found on the China Invest Web site.

	Regional Development Zones
	Beijing		Jiangsu		Hubei
	Shanxi		Fujian		Guizhou
	Heilongjiang		Hunan		Hebei
	Anhui		Yunnan		Jilin
	Guangxi		Xinjiang		Shandong
	Sichuan		Shanghai		Guangdong
	Gansu		Liaoning		Henan
	Tianjin		Zhejiang		Shaanxi
	Neimenggu		Jiangxi

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