Oktoberfest China. Cover Story: Record Number of Visitors at Oktoberfest IN THIS ISSUE: October - November Beijing Guangzhou Shanghai

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1 October - November 2008 Beijing Guangzhou Shanghai IN THIS ISSUE: Oktoberfest China Cover Story: Record Number of Visitors at Oktoberfest Beijing Financial Street Profile of German Expats in Shanghai WWII German Passports Found at Shanghai Fleamarket

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4 GCC Board The German Chamber of Commerce in China Beijing * All-China Board member Shanghai Guangzhou Siemens Ltd. China President and CEO Dr. Richard Hausmann * Chairman Lufthansa German Airlines Managing Director Greater China Mr. Arved von zur Mühlen * Chairman Trolli Confectionery Co. Ltd. Guangzhou General Manager Mr. Michael Stein * Chairman KPMG Huazhen Certified Public Accountants Partner Audit Mr. Andreas Feege Treasurer Bosch (China) Investment Ltd. Executive Vice President Mr. Elmar E. Weitzel Vice Chairman German Chamber Guangzhou Executive Director Ms. Alexandra Voss * Delegate & Chief Representative Delegation of German Industry & Commerce Guangzhou German Chamber Beijing Executive Director Ms. Jutta Ludwig * Delegate & Chief Representative Delegation of German Industry & Commerce Beijing Vossloh Fastening Systems (China) Co. Ltd. CEO Mr. Thomas Dorn Treasurer Lufthansa German Airlines Guangzhou General Manager, Southern China Mr. Nico Beilharz Deutsche Bank (China) Co. Ltd. Beijing Branch Director, Head of Corporate Banking Coverage, China Mr. Eddy Henning German Chamber Shanghai Executive Director Mr. Manfred Rothgänger * Delegate & Chief Representative Delegation of German Industry & Commerce Shanghai TCA Ltd. The Cable Assembler Dongguan CEO / President Mr. Frank Jaeger Gruner+Jahr (Beijing) Advertising Co. Ltd. General Manager & President Mr. Wolfgang Kohl Volkswagen (China) Investment Co. Ltd. Executive Vice President, Finance Department Dr. Jörg Mull Beiten Burkhardt Rechtsanwaltgesellschaft mbh Shanghai Representative Office Chief Representative Mr. Rainer Burkardt Siemens Shanghai Medical Equipment Ltd. President and CEO Dr. Rolf Hupke VA TECH ELIN Transformer Guangzhou Co. Ltd. (Siemens Group) General Manager Mr. Dirk Soete C. Melchers GmbH & Co. KG Guangzhou & Chongqing Representative Offices Inspirion GmbH Guangzhou Representative Office Chief Representative Ms. Renate Tietjen TUI China Travel Co. Ltd. CEO Mr. Marcel Schneider POLYMAX (Shanghai) Trading Co. Ltd. Chairman of the Board Mr. Ulrich Mäder Bayer (China) Ltd. Vice President, Corporate Social Responsibility Greater China Mr. William Valentino Allianz China Life Insurance Co. Ltd. CEO Mr. Christian Molt Daimler AG Executive Vice President Daimler Northeast Asia Ltd. Chairman & CEO Mr. Ulrich Walker Management Engineers China Ltd. Managing Director Ms. Brigitte Wolff October - November

5 The German Chamber of Commerce in China 3 October - November 2008

6 Preface The German Chamber of Commerce in China South China Congratulates Local Medalists, Gears up for Germany and China Event Series The GC Ticker is the internal bi-monthly newsletter of the German Chamber of Commerce in China. Publisher German Chamber of Commerce in China Managing Editor Ms. Kristen Robinson (Shanghai) Editorial Team Mr. Walter Jansen (Beijing) Mr. Kilian Becker (Guangzhou) GC Ticker is free of charge. For subscription or extra copies please your nearest Chamber office Other issues of the magazine can be found on our website: For editorial or sponsorship inquiries please contact: German Chamber of Commerce in China Beijing Office German Chamber of Commerce in China Beijing 0811 Landmark Tower 2, 8 Dongsanhuan (N) Rd. Chaoyang, Beijing Tel: ext. 308 Fax: jansen.walter@bj.china.ahk.de Guangzhou Office German Chamber of Commerce in China Guangzhou 2915 Metro Plaza, Tianhe (N) Rd. Guangzhou Tel: DL: Fax: becker.kilian@gz.china.ahk.de Shanghai Office German Chamber of Commerce in China Shanghai 29F, POS Plaza, 1600 Century Ave. Pudong, Shanghai Tel: , ext Fax: robinson.kristen@sh.china.ahk.de Dear Member, As host of the 2008 Olympic Games, China has been under close watch from the whole world throughout the year. Expectations ran high due to the tremendous changes implemented over the past 30 years during China s reform policy. Chinese leaders, as well as the organizers of the Games, were well aware that the Beijing Olympics would affect the way the world looks at China, and they successfully presented an open, modern country at arm s length from industrialized nations. Undoubtedly great efforts were made to display the best of the country, foremost in the nation s capital. In South China people watched the games right from the start with enthusiasm, and beamed with pride when Guangzhou native Chen Xiexia won the first gold medal for the Chinese team. At 152cm in height, the 25-yearold weightlifter set an Olympic record by lifting a total of 212kg. It was the first of 13 medals won by athletes from Guangdong province. One of the stars of the Games, Zou Kai, hails from Sichuan province. In fact, the 20-year-old gymnast from Luzhou is the second Chinese to receive three gold medals at a single Olympic Games. Winning the team gold and individual gold medals in the floor exercise and the horizontal bar, he has given the people in Sichuan a reason to celebrate. The earthquake in Zou Kai s home province overshadowed the run up to the date of the opening ceremony on 8 th August. The vast support and help offered by numerous countries after the tragic earthquake clearly underscored that China can rely on its partners and that whatever happens here is of relevance to the rest of the world. The member companies of the German Chambers of Commerce in China raised a significant sum to alleviate the situation and transferred supplies and equipment to those in need. A charity concert during the Chongqing station of the event series Germany and China Moving ahead together was appreciated and enjoyed enthusiastically by the Chinese audience. We are looking forward to making the upcoming station of Germany and China Moving ahead together in Guangzhou with its German Esplanade from 7 th -15 th November a big success. The event will definitely signal Germany s consolidated interest in partnering with China and further strengthen the mutually beneficial exchange between our two countries. The German Chamber of Commerce Guangzhou will, together with its local partners, take a leading role in the organization of economic events during this time. Among other activities, we will organize a conference on small and medium enterprises that will focus on business promotion issues and bilateral development opportunities. Another example of the activities planned is a forum on vocational training which will serve as a platform for the presentation of Germany s duale system and the identification of cooperation opportunities in South China. We hope members and friends of the German Chamber of Commerce will use the opportunity of this major event series to visit Guangzhou and look forward to meeting you at one of the various business and cultural activities! German Chamber of Commerce in China. No part of this publication may be reproduced without the publisher s prior permission. While every effort has been made to ensure accuracy, the publisher is not responsible for any errors. Views expressed are not necessarily those of GIC/GCC. Mr. Michael Stein Chairman of the German Chamber of Commerce in China, Guangzhou General Manager of Trolli Confectionery Co. Ltd. Guangzhou October - November

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8 Chamber Teams The German Chamber of Commerce in China Join Our Growing Network Beijing Now at Half Price Ms. Katja Sassi-Bucsit Executive Chamber Manager Tel: Ms. Lina Sun Chamber Affairs Management Tel: ext Ms. Claudia Barkowsky Regional Manager North China Tel: ext Mr. Walter Jansen Publications Manager Tel: ext Guangzhou Take advantage of our comprehensive, Chinawide network of German companies. Six month memberships lasting through December 2008 available at half price. Contact your local Chamber for details. Shanghai Mr. Kilian Becker Manager Membership & Events Tel: Fax: Ms. Esther Hu Chamber Assistant Tel: ext. 217 Fax: Beijing Ms. Katja Sassi-Bucsit Guangzhou Mr. Kilian Becker Shanghai Ms. Heidrun Buss ext Ms. Anna-Lisa Hartmann Senior Manager Chamber Affairs Tel: ext Fax: ext Ms. Heidrun Buss Project & Event Manager Shanghai Tel: ext Fax: ext Ms. Kristen Robinson Publications & Marketing Manager Tel: ext Fax: ext Mr. Ferdinand Pillenstein Regional Manager Zhejiang & Jiangsu Provinces Tel: ext Fax: ext Ms. Li Yandi Project Manager Tel: ext Fax: ext Ms. Liu Li Chamber Team Assistant Tel: ext Fax: ext June October - July - November

9 The German Chamber of Commerce in China Contents Community Knocking on the Door of International Finance Beijing s Financial Street brings banking to a new level in China Just How International is Shanghai? What does the average expat look like? Where do Germans fit in? Regional Spotlight: Yingkou Yangtze River Kunming 16 Imagine China 10 Olympics Olympics & Paralympics a great success for China and Germany Expo in Brief Education & Training Sports As a martial art, sport, and dance, Capoiera brings the spirit of Brazil to China Health Chamber News Beijing Olympics bring visitors from around the world, Germany puts best foot forward throughout the events Guangzhou Happy Hour guests warm up for Oktoberfest Shanghai Around Town Cover Story: Oktoberfest a hit in China, festivals launched through the country break record number of visitors Environment China s wetlands crucial to averting environmental damage, protection measures implemented Giving Back The 7 th Shanghai Charity Carnival invites residents to have fun for a noble cause New Books Travel Experience the famed Balinese culture cycling tours offer an insider s view Food & Restaurants Bakery culture comes to China and makes itself at home Art & Culture Beijing Embassy elaborately decorated for Olympics Beijing Guangzhou Shanghai Special: German History in Shanghai Shanghai member finds passports of Jewish refugees, returns the memoirs to descendants 66 Members Mix 63 City Tour Qibao an authentic antidote to Yu Gardens Meet the Member Member News: Beijing Guangzhou Shanghai 64 Chinese Course & Benefit Program Update Community Events & Sudoku Chamber Events Calendar October - November 2008

10 Chamber Notices The German Chamber of Commerce in China ALL CHINA Membership Directory New Edition! An indispensable reference, the Membership Directory details all the contacts of the German Chamber of Commerce in China. This year s edition will be released during the month of November. Each member will receive a complimentary copy; additional copies may be purchased. Please contact your local Chamber to place an order. BEIJING GUANGZHOU German Chamber Welcomes New Consul General As of 26 th August, Mr. Eberhard Schuppius is the new Consul General of Germany in Guangzhou. The German Chamber of Commerce welcomes Mr. Schuppius who was previously stationed as German Ambassador in Riga, Latvia, before coming to South China. Guangzhou huanying nin! Celebrate the Spirit of Flower Power at the 8 th German Ball 2008! 1 st November 2008 at 6.00pm Venue: Kempinski Hotel Beijing Lufthansa Center 50 Liangmaqiao Road, Chaoyang District Tel: Fee: RMB 1090 /1290 member/non-member Language: all Contact: Ms. Miriam Rudolph Tel: ext. 305 Fax: rudolph.miriam@bj.china.ahk.de Web: upcoming-events Tickets now on sale - call or today! New Chamber Manager in Beijing The German Chamber of Commerce Beijing welcomes Ms. Katja Sassi- Bucsit as the Chamber s new Executive Manager. She has recently worked in management positions at the Beijing Goethe-Institut and at SportsMark Event Management. Ms. Katrin Loch has moved on to new challenges in her career. We thank Ms. Loch for her outstanding service and wish both ladies the best of luck for the new tasks they face. At the same time, the GCC expresses its gratitude to his predecessor, Mr. Friedrich-Carl Bruns for the excellent cooperation over the past three years. Bonne chance à Bordeaux! SHANGHAI 11 th German Ball: A Night in Black & White 15 th November 2008 at 7.00pm Venue: Grand Hyatt Shanghai Jinmao Tower After the ticket raffle at the September Chamber Meeting, all tickets have been sold out. Winners of the tickets should come to the Chamber office to pick up their tickets. We look forward to welcoming you to a dazzling night in black and white this November! Shanghai IT Day Postponed to 22 nd October This fall s Shanghai IT Day has been moved to 22 nd October. We hope to see you there for a third successful event in Shanghai! Please contact Heidrun Buss for more details. October - November

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12 Cover Story The German Chamber of Commerce in China Beijing Knocking on the Door of Global Finance Planning a Grand Future Standing at the corner of West Beijing s Financial Street, you might think you were standing on Wall Street in New York City. Glistening skyscrapers soar above Beijing s West Second Ring Road and beyond. Stylish hotels and boutiques pack modern buildings. Demand for new office space outruns the pace of construction. Financial Street, the name of Beijing s bustling new showpiece, used to be a place of old alleys and courtyards. Today, it is home to China s top financial regulators, the headquarters of domestic financial institutions, and of more than 500 global financial institutions. Earlier this year Beijing s Municipal Government announced its ambition to become not only a financial hub in Beijing, but also a domestic and possibly global financial center. As a result the city will put forth vigorous efforts to become a financial management, information, and service base. A Quiet Advance For a long time, Beijing had defined its role as a political and cultural locus serving the country. As Shanghai and Shenzhen grew assertive in their financial goals, Beijing cautiously avoided any financial center designation as such, to avoid criticism of allegedly redundant construction. The city stayed tight-lipped: Although Beijing never made its ambitions known, it has actually risen to become China s financial center, and is on solid ground in its drive toward internationalization, Li Yang, Director with the Institute of Finance and Banking under the Chinese Academy of Social Sciences (CASS) told the Beijing Youth Daily. Zhou Chunsheng, a professor at Cheung Kong Graduate School of Business, also remarked to the same publication: As a financial base, Beijing is unparalleled in access to information and pools of professionals, and is knocking on the door to be let in by the world s financial players. The financial sector has been significant in Beijing s economy. It contributed 12.5% to the city s total GDP in the highest proportion among Chinese cities. In the first quarter of 2008, the percentage of Beijing s tax revenues from the financial sector ballooned to a dizzying 88.7% over the previous year, surpassing all other industries. Currently, over 80% of China s capital goes through Beijing for processing. Over 80% of China s banks, insurance companies, and securities firms are headquartered in Beijing, which boasts the regional branch offices and research organizations of 293 Fortune 500 enterprises. Fig. 1 Beijing vs. Shanghai in 2007 Beijing Financial sector worth RMB bn (USD16.1bn) Shanghai 12.5% of GDP 10% of GDP Financial sector worth RMB bn (USD 17.1bn) Home to 677 financial institutions: Home to 604 financial institutions: 234 banks 109 banks 59 securities firms 94 securities firms 117 insurance companies 261 insurance companies From left to right, Mr. Werner Lauk, at that time German Deputy Chief of mission to China, Mr. Wu Jian, President of Hua Xia Bank, Dr. Hugo Bänziger, Chief Risk Officer, Member of the Management Board and the Group Executive Committee at Deutsche Bank, and Mr. Xie Chaobin, Deputy Governor of Chaoyang District Government with traditional lions at the opening of Deutsche Bank Tower in Beijing Even more importantly: Beijing is the birthplace of China s financial policies, where the Central Bank (People s Bank of China), China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission make their decisions. With strained land resources and environmental protection pressures, Beijing is not ideal for labor-intensive manufacturing, but is perfect for the high-end service industry. Finance is bound to be a future pillar of its economy, added Zhou. Beijing or Shanghai? Beijing s financial commitment has made some other Chinese cities nervous, especially Shanghai, which has long sought to become an international financial center. Some feel Beijing s rise might blunt the prospects for Shanghai and dilute China s competence as a whole. Others argue that Shanghai will pursue its own dream on the back of a buoyant financial market. However, neither of the two cities seems capable of overshadowing the other. (Fig. 1) Undeniably, the Shanghai Stock Exchange is the beating heart of Chinese finance, much like the New York Stock Exchange is for the USA. The Shanghai Gold Exchange and Futures Exchange also add importance. In contrast, Beijing is handicapped by lack of an influential financial platform despite numerous financial institutions, Qi Bin, Director of the Research Center under the China Securities Regulatory Commission said to the 21 st Century Business Herald. However, Shanghai s development does not come at Beijing s expense. Shanghai s development can breathe life into finance in the whole country, as it will deliver better financial services to institutions in other locations, Tu Guangshao, Vice Mayor of Shanghai said at the Shanghai Lujiazui Forum. Vice Premier Wang Qishan stated he believed that Shanghai s financial blueprint would eventually come true as China s financial reforms continue. A Win-Win Game Many argue that China might need more than one financial center to drive its domestic economy. Shenzhen and Hong Kong will become the financial powerhouses for South China, and Shanghai drives the development of East China. As China s financial control center, Beijing will extend financial support to northern areas as well, Niu Fengrui, a October - November

13 The German Chamber of Commerce in China Cover Story researcher with the CASS, told the 21 st Century Business Herald. Each financial center has different positioning, leaving the opportunity for cooperation. Given implementation of a full-fledged market economy, competition can optimize the efficiency of resource allocation, added Niu. The USA also has multiple financial centers: New York leads the world in stock and energy futures, while Chicago is recognized as the global financial derivatives trading center. The Road Ahead Beijing has obviously sensed its opportunity. Working closely with Tianjin, which aims to set up China s first over-the-counter stock exchange, it is pursuing pilot funding programs to help small and medium-sized enterprise startups. A private equity fund council will also be created. Meanwhile, Beijing s three economic pillars - Financial Street, the Central Business District, where Beijing s 2 nd financial district is now growing promoted by the Chaoyang District Government, and the Zhongguancun Science Park - will continue to expand, adding to Beijing s financial strength. Beijing is increasingly unleashing its financial potential by stepping up favorable policies. CITIC Securities told the 21 st Century Business Herald it has decided to relocate its headquarters from Shenzhen back to Beijing. Additional fund management companies are also reportedly considering the move. Nevertheless, markets should not be underestimated in creating a financial center. Philadelphia was originally the financial center of the USA, but was gradually replaced by New York. It s the markets that call the shots on where the financial center will be, not the government, Zhou Ziheng, a researcher with the CASS told Beijing Youth Daily. Zhou also pointed out that China should not rush to create a financial center based on immature markets and cautioned that China s financial security could easily become vulnerable to foreign speculators. Finance Experts on Banking in Beijing Mr. Lee Zhang, Chairman of Deutsche Bank China: The opening of Deutsche Bank Tower in Beijing is a result of concerted support from the regulators in China, the municipal government of Beijing, and the Chaoyang District Government, who have provided excellent infrastructure and a favorable business environment for Deutsche Bank China to thrive. Mr. Michael M. Reichel, General Manager, Commerzbank Shanghai Branch: After opening a branch in Hong Kong (1979) and in Shanghai (1994) as well as being the first German bank with a representative office in Beijing (1981), we are currently preparing to open a further branch in Tianjin. Commerzbank China offers SMEs as well as multinationals commercial banking products and solutions that meet their needs. We are their creative relationship bank. Chris Devonshire-Ellis Senior Partner - Dezan Shira & Associates info@dezshira.com Web: October - November 2008

14 Sino - German Business The German Chamber of Commerce in China Just How International is Shanghai? Shanghai has been home to residents from a wide variety of cultures and ethnic backgrounds over the last 170 years. In fact, looking at the cityscape, you could say many areas were built by expatriates. Over the years, relatively accurate records have been kept on the numbers and nationalities that have called Shanghai home - right down to the last Albanian. Yet, at no point in the last 100 years has this number been as difficult to pinpoint as today. If one thing is certain, it s that Germans have played an important part within China s expatriate community, particularly in Shanghai. In fact, it s widely acknowledged that Germans and Americans outnumber all non-asian expats. This is no surprise, when you consider that Germany is China s largest economic and trade partner in Europe, or that many of the largest German investors in Asia are based in Shanghai. Immigration Over the Years Out of total 2,235 international residents, 175 were German The foreign settlement and concession area housed 20,924 foreigners predominantly British merchants, missionaries and physicians. The number of Germans had increased to 1, Census revealed there were nearly 30,000 foreign residents, consisting 3.5% of the population. While the Japanese made up the largest group, the German population was rapidly increasing The German expatriate community outnumbered the French, at 1,430 residents throughout the International Settlement, external roads and French Concession Shanghai was the world s 6th largest city, with a foreign population of 70,000. Most were Japanese or Russian, but Germans still outnumbered the French Shanghai s pre-1949 foreign population peaked at 150,931. Snapshot of a City s Growth In the early census days, a complete breakdown of the nationalities was available. However, today the situation is no longer clear, with a number of different authorities responsible for keeping records. These include the Shanghai Municipal Labor Bureau, the Public Security Bureau as well as the various foreign Consulates. While in the 1930s foreigners required neither visas nor passports to enter Shanghai, today s complicated requirements span a wide range of visas and residence permits. Resident Status The F visa also known as a business visa is the case which causes the most confusion. Some F visas holders visit China strictly to conduct business for a short period of time. They stay in hotels and don t stray much beyond the Bund, Pudong and Yuyuan Gardens. Others remain here a little longer, and extend their stay a few times until they count essentially as residents, but how many of these cases are there? How have recent visa changes affected this group? The answer is uncertain. According to the Shanghai Municipal Statistics Bureau, by late 2006, Shanghai s total population (not including itinerant or migrant residents) had grown to 18m. According to the Municipal Labor and Security Bureau, legally registered international residents numbered Fig. 1 Japan 30% 29,326 America 13% 15,877 South Korea 12% 17,020 Singapore 6% 6,336 Germany 5% 5,636 France 4% 5,437 Canada 4% 4,572 Australia 3% 3,927 Malaysia 3% 4,097 UK 3% 3,725 Other 17% 23, ,876, constituting around 0.7% of the total population, and more than 50% of China s total international population. In mid 2006, the Shanghai Municipal Labor and Social Security Bureau announced there were 51,000 foreigners working in Shanghai. (Fig.1) As these statistics reveal, Western expatriates constituted a mere 32% of the international community in Shanghai. Regional expats from Japan, Korea, Singapore and Malaysia made up 52%. There were also a further 20,000 permit holders from Hong Kong, Taiwan and Macau listed as permanent residents. If you include those working in China without a work permit (usually living here on an F visa), estimates of the total number vary greatly and rise to as high as 600,000 but this is an impossible number to validate. Since 2004, annual increases have been between 25-35%. Apparently, the long-term goal of the Shanghai Municipal Government is to establish an international community that constitutes 5% of the city s total population. The question, nervously being asked by expatriates and other foreign residents, is will the gates be shut once that goal is reached? Recently, a tightening of F visa regulations has been one indicator. Germany in Shanghai C. Melchers & Co. enters Shanghai German Consulate General built First German business delegation in Shanghai German School of Engineering built at the Tongji University German Cultural Center established in Shanghai consisting of the German Community Center, the Kaiser Wilhelm School and the new German Protestant Church Germany established official diplomatic ties with the People s Republic of China German Business Association is founded with 13 members Hamburg and Shanghai become sister cities Trade volume between Shanghai and Germany totals USD3.6 bn China attracted direct investment from 1,600 German companies, 650 of which had set up their joint ventures or representative offices in Shanghai. Second Generation Expats The majority of Shanghai s international population consist of the employees of multinational corporations and their families. Over the last 3 years, the number of expatriate children has risen by more than 30%, an increasing number of which were born in Shanghai and know no other home than China. As the number of children increases, so do the education resources and schools that cater to them. The German School Shanghai was October - November

15 The German Chamber of Commerce in China Sino - German Business Fig. 2 established in 1995 to cater to German students. As the largest German school in China, it is now responsible for 850 students, from kindergarten to the Abitur. (Fig.2) Becoming a World Class City So where do all these foreigners fit in to Shanghai s plans to become a world class city? Most metropolitan, international cities have an average of 4.3% expatriate residents. According to official statistics, Shanghai s foreign population has yet to reach even half of this figure and recent changes to visa application procedures make it difficult to predict when that figure will be reached. In the categorization and ranking of world cities, GaWC assessed major world cities based on advanced producer services provided by international corporations, such as accountancy, advertising, finance and law. They defined Shanghai as a minor global city in 1999, on par with Singapore and Hong Kong, which attracted large foreign businesses and a related expatriate community. Since then, Shanghai has become the regional and corporate headquarters for more than 500 multinational companies. In March this year, the Shanghai Personnel Bureau stated that the city now has 70,000 expatriates, with another 70,000-plus returned overseas Chinese also working in the city. While Shanghai may not be a world class city yet, it definitely has potential. The Average Expat 67% of international residents granted work permits hold mid-level or senior management positions in foreign invested enterprises, while only 14% work for domestic firms. 90% have university degrees. Expatriate staff hired on the ground in China represent more than 50% of all international residents, compared with only 26% in Over half are employed in the service sector Source: Shanghai Municipal Labor and Social Security Bureau History reveals that Shanghai was most definitely a global city prior to WWII, particularly in the 1930s. Where does it stand today? The Globalization and World Cities Study Group and Network (GaWC) provides a categorization and ranking system of world cities. The top four cities in the world are widely acknowledged as London, New York, Paris and Tokyo. Laura Mitchelson is Strategic Director of Amber, a Shanghaibased consultancy specializing in market and competitive intelligence and business analysis in China. Laura Mitchelson lmitchelson@amberinsights.com 13 October - November 2008

16 Yingkou - North China The German Chamber of Commerce in China Yingkou Province: Liaoning Population: 2.3m Area: 5,402km² Coastline: 96km Geography Yingkou is a coastal city on the east bank of Bohai Bay, where one of the largest rivers in China, the Liaohe, empties into the Bohai Sea. The city is equidistant from Shenyang and Dalian, located roughly 170km away from each. Infrastructure The Port of Yingkou is an international seaport consisting of three separate dockland areas: Yingkou Old Port at the mouth of the Liaohe River, Bayuquan Port, and Xianren Island Energy & Chemical Industry Port on the Bohai Sea. Xianren Port is still under construction. Yingkou is the second-largest port in northeastern China (after Dalian) and is one of China s 14 key national ports. It has 31 berths, of which 19 exceed 10,000-ton capacity. In 2007, the port achieved a record volume of 120m tons, 27% higher than the 2006 volume. The aim is an annual throughput of 200m tons by The operator, Yingkou Port Group, is seeking a listing on the stock exchange. The Shenda Expressway, a 400km expressway that connects the provincial capital Shenyang with the famous harbor city Dalian, passes through Yingkou. Built between 1984 and 1990, it lays claim to being the first expressway in mainland China. Originally, it had 4 lanes but was rebuilt recently as an 8-lane configuration. Two railways run through Yingkou: the Changchun-Dalian Railway, and the Harbin-Dalian Railway, which mainly transports coal, oil, agricultural products and wood. A new Harbin-Dalian railway is under construction, scheduled to open in Shenyang and Dalian International Airports are easily accessible from Yingkou, each about a 90min drive away. Yingkou does not have its own airport, but plans for one exist. Industry GDP was RMB 5.68bn in 2007, ranking 4th in Liaoning Province behind Shenyang, Dalian and Anshan. The main industries in Yingkou include: metallurgy, magnesia materials, petrochemical, equipment manufacturing, textile and paper. More than 680 foreign-invested enterprises have settled in Yingkou, among them four from Germany. including a 5m-wide steel plate mill. The Minmetals Yingkou Medium Plate extension project with a total investment of RMB 4.72bn, and a planned annual production of 1.5m tons, is under construction. Yingkou is adjacent to the Liaohe oil field, the third largest in China. The surroundings have rich oil and natural gas deposits, and refined oil and gas can be transferred to Yingkou s port through two pipelines. Development Zones Yingkou Economic & Technological Development Zone (YK-ETDZ) is a national economic and technical development zone in Bayuquan District in the south of Yingkou city, approved by the State Council in Of a planned 145km², 30km² are currently developed. Power is supplied by Huaneng Yingkou Power Plant, one of the state s key projects during the 8 th Five-Year Plan. It has a capacity of 1,840MW, which will be expanded to 3,000MW by The Liaoning (Yingkou) Coastal Industrial Base is an important part of the development strategy of the Bohai Rim Economic Circle and the revitalization of the old industrial base in Northeast China. The development of this region is strongly supported by the Central Government and Liaoning s Provincial Government. The Yingkou Coastal Industrial Base is located between Yingkou s downtown and Bayuquan Port. The planned area of 120km² will be developed in 3 phases. It includes an industrial area, with special zones for different industries, and an urban area. Until 2010, industrial clusters will be formed in equipment manufacturing, electronic communication technology, fine chemicals and modern logistics. Yizhou Fossil & Geology Park In 2004, a farmer from Yixian County near Jinzhou, Liaoning, accidentally discovered the remains of a beautifully preserved dinosaur, later identified as a Jinzhousaurus. German veterinarian, Dr. Burkhard Pohl, whose passion for dinosaurs is internationally known (Wyoming Dinosaur Center & Dig Site), heard the news and came to Liaoning just weeks after the discovery. Pohl and his team created the first joint venture company of its kind in China with the local government and Liaoning provincial government. With a 51% stake for the German side, the Sino-German Yizhou Fossil & Geology Park was born. The museum also became the first environmentally-friendly museum in China. 2,000 trees of local species were planted in the park, recyclable and non toxic materials were used for the museum s construction, energy needs are covered by solar and wind power, and a 100% recycling program was put in place for all of the museum s wastes. Natural resources in Yingkou are rich and of high quality. More than 30 kinds of metal and non-metal minerals have been verified. Magnesite reserves rank first in the world, while talcum and boron rank first in China. This makes Yingkou an ideal location for the sourcing of raw materials. Two of China s biggest steel mills have projects in Yingkou: Angang Steel Corporation has a major mill, with a capacity of over 10m tons, The collection from China and around the world ranges from the world s oldest mammals to the largest turtle ever found (a giant 4.5m Archelon - the only specimen in China). Mr. Damien Leloup Mob: Museum office: October - November

17 The German Chamber of Commerce in China 15 October - November 2008

18 Kunming - South China The German Chamber of Commerce in China ancestors may have been part of the Mongol army or the builders, craftsmen and traders that followed them. More prominent in Kunming are only the Yi, with a population of 400,000. Overall there are 24 minorities living in the city which is almost half the total number of minorities in China. Industry As for Kunming s economy, the city is blessed with vast natural resources like copper, lead, and zinc that led to the foundation of big enterprises like the Yunnan Copper Group, the Kunming Iron & Steel Company, and Yunnan Metallurgical Group. Around the city you will find one of the largest salt and phosphate mines in China. Kunming A Pearl in China s Southwest This city of 6.2m is the capital of China s southwestern province, Yunnan, which borders Laos, Vietnam and Myanmar. Many Chinese refer to it as the Spring City thanks to its temperate climate, which is free from bitter cold winters and scoring hot summers. The city is situated in the center of Yunnan province next to Lake Dian which is one of the biggest freshwater lakes of Asia, at a height of almost 1900m. Tourism Hub For many tourists, Kunming serves as the starting point for visiting towns such as Dali or Lijiang with their picturesque buildings and beautiful scenery reminiscent of the fictional paradise Shangri-La. Although Dali and Lijiang are far away from Kunming in the western part of the province, there are numerous tourist attractions within a 15km radius of the city, such as the Bamboo Temple or the Golden Temple. Very famous is the Stone Forest some 120km away from Kunming. Shilin, as it is called in Chinese, is a massive collection of grey limestone pillars weathered by wind and rain reaching up to 30m in height. In the northwest corner of the city lies Cuihu, or Green Lake Park. The tranquil lake surrounded by greenery is home to the statue of one of China s most famous composers, Nie Er, who wrote the national anthem of the People s Republic, The March of the Volunteers. Nie died at age 23 when he fled from the national troops of Chiang Kai-shek. Cultural Diversity Minorities make up one third of the total population in Yunnan. When Mongol forces under Kublai Khan entered China on horseback in the 13 th century, they brought their culture with them. Even today there is a sizeable Muslim (Hui) population of 150,000 in the city whose Kunming is also a center for agricultural products and horticulture. It is the largest flower export base in Asia with many Dutch experts having transferred knowledge and technology to the area. The tobacco industry is very strong as well, and famous national brands such as Hongta and Honghe have their headquarters here. Rounding out its economic base, a sizeable chemical industry focuses on fertilizers as well as plastics, cement, and textiles. Infrastructure Development Two years ago, the Chinese government approved the construction of an almost 3,000km-long oil pipeline from the port of Sittwe in Myanmar to Kunming. This will not only shorten oil transportation from Africa and the Middle East to the energy hungry industries in China by two weeks, but will also see associated industries such as the petrochemical industry expand. As part of the ambitious Asian highway program, construction of the 264km-long Hanoi Kunming highway has begun. From Kunming, traders will have direct access to Vietnam s ports of Hai Phong and Cai Lan. The transportation network will integrate both markets and spur economic growth. Society & Standard of Living According to official statistics the living standard of Kunming s population has risen continuously as real wages have increased. However, despite two high-tech development zones, the Kunming High-tech Industrial Development Zone and the Kunming Economic and Technology Development Zone, the city still lags behind other big Chinese cities in this regard. Nevertheless, major retailers are turning more and more attention to the city, and it is one of China s most promising second-tier retail markets. Over the past few years, many well known foreign retailers have opened up business here with supermarkets and convenience stores as well as luxury brands taking root. This is clearly a sign that as competition along the eastern coast becomes increasingly fierce, China s inner provinces will receive more and more attention. October - November

19 The German Chamber of Commerce in China 17 October - November 2008

20 Yangtze River - East China The German Chamber of Commerce in China In the research for the book Yangtze Transport 2008: Accessing China s Interior scores of manufacturers with existing plants in major port cities from Jiangsu to Sichuan were interviewed. The way they are coping with the logistical challenges of getting components in and finished goods out in a timely and safe manner, are instructive for other foreign investors that may be looking to the interior in the face of higher costs along the coast. Yangtze River Gateway to China s Interior Already the world s largest cargo-carrying river, the Yangtze will soon offer year-round shipping for barge fleets of up to 10,000dwt between Chongqing and Shanghai. By summer 2009, when the Three Gorges Dam project is completed, the average river journey between the two cities will be halved to no more than 7 days. Currently, a non-stop container service exists that takes as little as 5 days. As companies expand domestically, accessing China s interior will become crucial not only for sourcing, but also for delivering to customers. Connecting Shanghai to Chongqing To support an anticipated surge in shipping activity, the river s major ports are being expanded and modernized. Chongqing, for example, which is located further upstream than any other significant port on the Yangtze, is building a new container terminal 6km from the city center. Named Cuntan Terminal, it will be the largest and most modern container terminal on the upper Yangtze upon completion in Large sums of money are being spent to build a Riverside Expressway, a Riverside Highway and a Riverside Railway - all connecting Shanghai to Chongqing, running parallel to the Yangtze. The Riverside Expressway, due to be operational by the end of 2010, will cut the journey time by car between the two municipalities to around 24 hours. It will complement the 2,500km Riverside Highway, which currently has a section between Wanzhou (Chongqing) and Yichang in (Hubei) that is a particular bottleneck due to its state of repair. It currently takes around 14 hours to cover the 560km stretch. The Riverside Railway project will cost RMB 20bn and is scheduled to be completed by Investing in the Interior The question that all these initiatives pose for foreign companies in China is to what extent will they make inland cities more viable destinations for direct investment? Distribution Channels Still Problematic While it remains true that that the logistics problems facing FIEs in the interior are greater than those found near the coast, many have been able to successfully adapt their operations and thereby maintain reasonably high levels of efficiency. Just outside Shanghai, in Taicang, Weiss-Voetsch runs a whollyowned environmental testing instruments plant. A little over half of the company s output is sold in China. Since its domestic clients are spread across the country, all its products are delivered by truck. In the past the company experienced problems with domestic trucking companies, due to poor protection from the elements and a lack of proper loading and unloading equipment. Consequently, the company is now paying a little extra to ensure that there is no intermediate handling. Trucks are loaded by Weiss-Voertsch s staff and taken directly to the client. Weiss-Voetsch exports slightly less than half its total output. The quality of roads between Taicang and Shanghai is good and the port is efficient in handling cargo, so few problems have been experienced in this area. In urgent cases, the company air freights products overseas via Pudong Airport. However, this is not a straightforward process due to the heavy weight of the products. Loading can take so much time to arrange that in the in end it is sometimes just as quick to sea freight cargo bound for Asian markets such as South Korea. Auto parts manufacturer ThyssenKrupp Tailored Blanks operates a wholly foreign-owned plant in Wuhan. Between 2005 and 2006, the company shipped its finished products by container via the Yangtze to Chongqing and Shanghai. However, the long barge journeys were not conducive to supplying its auto assembly customers, which operate on a just-in-time basis. Furthermore, a 7-day journey by river can be covered by truck in just 24 hours. River transport requires significant additional investment in the steel pallets on which the products are loaded, since it takes much longer for the pallets to be returned to the plant. Short lead times are a vital competitive advantage in the many sectors. In future, ThyssenKrupp may use the strategy of building additional facilities in China so as to be even closer to its clients. To serve major auto assembly plants in the leading cities, it uses subcontractors for warehousing and just-in-time deliveries. David Lammie Editor - Yangtze Transport Business Services Ltd. Tel: dl@yangtzebusinessservices.com Web: October - November

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