11/15/2010 Top Five Cities for Business in China - B…

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15 Nov 2010

Top Five Cities for Business in China 2 China CDS Produ cts Sta rt Trading Friday

John Meléndez,Logan King 3 China 's October CPI Jum ps to 4 .4%, a 25-
Month High

4 China 's Property Prices Rise 8.6 % in October

5 Release of 1 6 0 Property Projects in 1 4

Chinese Cities Delay ed in October

A recent Fortune Magazine report nam es Dalian, Qingdao, Suzhou, Ningbo, and Shenzhen as China’s best overall search
business des tinations. “China's 5 Best New Cities for Business” are located on or near mainland China’s eas tern
coast. All of them flaunt relative ease-of-access for resourcing and dis tribution both inland and to lands abroad.
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As a former expatriate res ident and frequent busines s traveler to China, I proffer additional observations on the Talk Business & Industry Opinion
Middle Kingdom ’s five favored business cities. Joining m e in this contribution is longtim e Shanghai resident and Breaking news
China bus iness expert Logan King.

Dalian

Dalian is a m edium -sized city with a favorable environm ent 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 com mercial and cultural
ties with Korea, Japan, and Mongolia. Dalian is geographically positioned to offer acces s to the industrial base of
China’s production in the Northeas t, but without as significant pollution as other cities in the region.

The Dalian governm ent has consistently sought a better balance between the natural environment and
comm ercial interests. With large plots of green s pace 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 fam ilies. Because the government is active in s tim ulating foreign investm ent, Dalian also ranks highly as an
attractive place to es tablish a business.

Depending on the industry and intended m arket for a company’s products, Dalian could be the ideal city to
establis h a pres ence in China. As it is with any locale, there are drawbacks. While the provincial environment is
quite pleasant, the city its elf lacks somewhat in cultural and social activities . Also, even though the weather is quite
pleas ant during the sum mer, winter can be bitterly cold.

Qingdao

The city of Qingdao has many of the positive attributes of Dalian, but with a more interes ting 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
establis h profitable operations to access m arkets in China.

The colonial architecture of Qingdao is beautiful, with nearby beaches and mountains serving as an appropriately
pleas ant and natural ens concement. 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 Chines e cities. The city’s most fam ous event is the
annual beer festival which draws tourists from all over China and the world.

For a pleasant working environm ent with lower cost acces s to major markets in China, Qingdao is a superior
location to es tablish business. Additionally, the governm ent offers many incentives for foreign investm ent. The only
downside to operating from Qingdao is that it is s till only a m edium -size city som ewhat distant from the m ajor
metropolises of Beijing and Shanghai.

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11/15/2010 Top Five Cities for Business in China - B…
Suzhou

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 becom e almost negligible. With the new high
speed rail connections, one can easily com mute from Suzhou to Shanghai – or vice versa.

For the last two decades, Suzhou has success fully sought to attract investm ent by major m ultinational
corporations in chemicals, technology, and comm unications . In the region around Shanghai, this city is definitely
the m ajor 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 busines ses in the region.

As for the living environment, the city of Suzhou is am ong thos e most s ought-after in the world. The city enjoys the
nam e “Venice of the East” for its water canals and lavishly beautiful gardens. Tourism within the city is a major
indus try, attracting mos tly local Chinese. While visiting parks and tem ples can certainly be relaxing, one m ay crave
more diverse entertainm ent. As an alternative to the com paratively easygoing pace in Suzhou, the fast-paced life of
Shanghai is only a s hort train ride away.

Ningbo

Ningbo has been a major city of indus try and comm erce for m any centuries . Becaus e of its sea port and
prom otion by the Chinese governm ent, Ningbo developed as a major hub for m anufacturing and export before
many other cities in the region began to open up. Ningbo is a favorable bas e of operations to launch into the
Chinese m arket, es pecially because of its acces s 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 developm ent has cut the travel time from Ningbo to Shanghai significantly, which is of direct
benefit to the city. However, when com pared to other cities Ningbo still remains isolated from dis tribution and
touris m. Thus , the mos t attractive business to operate from Ningbo rem ains m anufacturing for export. Zhejiang
province is a m ajor m anufacturing location for all types of industry, and Ningbo continues to be one of the best
cities for m anaging sourcing and manufacturing operations.

While Ningbo city offers a reasonably good living environment, it lacks the outward charm of Qingdao or the
cultural his tory of Suzhou. New developm ents in restaurants and entertainm ent are making the city more livable,
but thes e liken it to a miniature version of nearby Shanghai.

Shenzhen

Unlike the previous four cities m entioned in this report, Shenzhen is a relative newcom er by Chinese s tandards. In
itself the city of Shenzhen is a curious success story.

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

Shenzhen came into being for prim ary 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 chos en for development
greatly because of convenient access to Hong Kong. Whereas Hong Kong serves as a clearing house for
international procurem ent orders, nearby Guangzhou and up-and-com ing 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-b ased journalist and former expatriate resident of China. Mr. Meléndez is also a technical
writer specializing in b ioscience 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.

Tags: China, business

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