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15 Nov 2010

Top Five Cities for Business in China

John Meléndez,Logan King

Five Cities for Business in China John Meléndez,Logan King A recent Fortune Magazine report names Dalian,

A recent Fortune Magazine report names Dalian, Qingdao, Suzhou, Ningbo, and Shenzhen as China’s best overall business destinations. “China's 5 Best New Cities for Business” are located on or near mainland China’s eastern coast. All of them flaunt relative ease-of-access for resourcing and distribution both inland and to lands abroad.

As a former expatriate resident and frequent business traveler to China, I proffer additional observations on the Middle Kingdom’s five favored business cities. Joining me in this contribution is longtime Shanghai resident and China business expert Logan King.

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Dalian

Dalian is a medium-sized city with a favorable environment for both living and doing business. Not only is it a major gateway for trade with one of the busiest sea ports in China, it also enjoys close commercial and cultural ties with Korea, Japan, and Mongolia. Dalian is geographically positioned to offer access to the industrial base of China’s production in the Northeast, but without as significant pollution as other cities in the region.

The Dalian government has consistently sought a better balance between the natural environment and commercial interests. With large plots of green space in the city, access to beach resorts on the ocean, and vacation spots in the mountains, the city provides a comfortable living environment for both businesspeople and their families. Because the government is active in stimulating foreign investment, Dalian also ranks highly as an attractive place to establish a business.

Depending on the industry and intended market for a company’s products, Dalian could be the ideal city to establish a presence in China. As it is with any locale, there are drawbacks. While the provincial environment is quite pleasant, the city itself lacks somewhat in cultural and social activities. Also, even though the weather is quite pleasant during the summer, winter can be bitterly cold.

Qingdao

The city of Qingdao has many of the positive attributes of Dalian, but with a more interesting cultural environment. Like Dalian, Qingdao is a hub for regional trade with Japan and Korea. Whereas Dalian offers more access to China’s industrial production in the Northeast, Qingdao is geographically situated between Beijing and Shanghai. With an overall lower cost of operation than seen in either of these major cities, Qingdao offers a good location to establish profitable operations to access markets in China.

The colonial architecture of Qingdao is beautiful, with nearby beaches and mountains serving as an appropriately pleasant and natural ensconcement. In preparation for hosting Olympic events, the government made large investments in infrastructure which have clearly improved the quality of life. In addition, there are more entertainment options to enjoy in Qingdao than in comparable Chinese cities. The city’s most famous event is the annual beer festival which draws tourists from all over China and the world.

For a pleasant working environment with lower cost access to major markets in China, Qingdao is a superior location to establish business. Additionally, the government offers many incentives for foreign investment. The only downside to operating from Qingdao is that it is still only a medium-size city somewhat distant from the major metropolises of Beijing and Shanghai.

11/15/2010

Suzhou

Top Five Cities for Business in China - B…

In contrast to Qingdao, Suzhou is very close to Shanghai. With the new infrastructure that China has developed in the last few years, the time to travel from Suzhou into Shanghai has become almost negligible. With the new high speed rail connections, one can easily commute from Suzhou to Shanghai – or vice versa.

For the last two decades, Suzhou has successfully sought to attract investment by major multinational corporations in chemicals, technology, and communications. In the region around Shanghai, this city is definitely the major hub for technological development and production. Suzhou has one of the highest per-capita incomes in China because of its highly educated and productive employees of the various businesses in the region.

As for the living environment, the city of Suzhou is among those most sought-after in the world. The city enjoys the name “Venice of the East” for its water canals and lavishly beautiful gardens. Tourism within the city is a major industry, attracting mostly local Chinese. While visiting parks and temples can certainly be relaxing, one may crave more diverse entertainment. As an alternative to the comparatively easygoing pace in Suzhou, the fast-paced life of Shanghai is only a short train ride away.

Ningbo

Ningbo has been a major city of industry and commerce for many centuries. Because of its sea port and promotion by the Chinese government, Ningbo developed as a major hub for manufacturing and export before many other cities in the region began to open up. Ningbo is a favorable base of operations to launch into the Chinese market, especially because of its access to major centers of wealth in the region: Zhejiang and Jiangsu provinces, as well as Shanghai. However, it is not as easily accessible from Shanghai as either Suzhou or Hangzhou.

New infrastructure development has cut the travel time from Ningbo to Shanghai significantly, which is of direct benefit to the city. However, when compared to other cities Ningbo still remains isolated from distribution and tourism. Thus, the most attractive business to operate from Ningbo remains manufacturing for export. Zhejiang province is a major manufacturing location for all types of industry, and Ningbo continues to be one of the best cities for managing sourcing and manufacturing operations.

While Ningbo city offers a reasonably good living environment, it lacks the outward charm of Qingdao or the cultural history of Suzhou. New developments in restaurants and entertainment are making the city more livable, but these liken it to a miniature version of nearby Shanghai.

Shenzhen

Unlike the previous four cities mentioned in this report, Shenzhen is a relative newcomer by Chinese standards. In itself the city of Shenzhen is a curious success story.

Starting as a fishing village with a modest population of 30,000 residents, former China President Deng Xiaoping founded Shenzhen in 1979. Since its inauguration only three decades ago, Shenzhen’s population boasts nearly 9 million permanent residents.

Shenzhen came into being for primary two reasons. Firstly the city was one of the first cities allowing foreign investment after China began to open up in the early 1980s. Secondly, Shenzhen was chosen for development greatly because of convenient access to Hong Kong. Whereas Hong Kong serves as a clearing house for international procurement orders, nearby Guangzhou and up-and-coming Shenzhen serve as the fulfillment centers for these orders.

In recent years Shenzhen has become a powerhouse in its own right. With government incentives to lure people in from all parts of China and abroad, Shenzhen now holds the reigns to a pool of inexpensive labor and is home to sizable technological and industrial resources.

John Meléndez is a US-based journalist and former expatriate resident of China. Mr. Meléndez is also a technical writer specializing in bioscience and medical device documentation. Contact John Melendez at:

johnm@journalist.com .

Logan King is a long-term China resident and expert in supply chains for many types of consumer products and manufactured goods. Contact Logan King at: lking@thechinafactor.com.

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Tags: China, business

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