China Country Report Guangxi Province

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China Country Report Guangxi Province Powered By Docstoc
					28 September 2006


                                         China Country Report :

                                       Guangxi Province




Source: chinatoday.com/city/a.htm



1. GEOGRAPHY

•    Total area: 236,700 km2 (approx. 337 times that of Singapore’s), accounting
     for about 2.5% of the total land area of China
•    It is the 9th largest province in terms of land area
•    Capital: Nanning
•    Administratively, Guangxi is divided into 9 autonomous municipalities and 6
     prefectures:

Autonomous Municipalities:                         Prefectures:
*   Nanning                *   Qinzhou             *   Nanning
*   Liuzhou                *   Fangchenggang       *   Liuzhou
*   Guilin                 *   Guigang             *   Guilin
*   Wuzhou                 *   Yuling              *   Hezhou
*   Beihai                                         *   Baise
                                                   *   Hechi



                                                                              1
Source: www.chinahighlights.com

2. SOCIO-DEMOGRAPHY

•   Population: 49 million in year 2004 (approx. 13 times that of Singapore’s) and
    accounting for about 4% of China’s total population
•   About 96% of Guangxi’s population are native Chinese while the remaining
    4% are overseas Chinese (from Hongkong and Macao) and expatriates
•   Population growth was about 2% CAGR over the 5-year period (2000-2005)
•   There are 12 main ethnic groups: Han (62% of total Guangxi’s population),
    Zhuang (32%), Yao (3%), Miao (1%) and others (2%)

                    Population in Selected Major Provinces, 2004 (mil)
                    (% figures are with respect to total population in China)
    100        92
    90                    87         86
    80         7%         7%         7%          74
    70
                                                 6%
    60
                                                            49
    50                                                                 47
                                                                                  42
    40                                                     4%          4%
                                                                                  3%
    30
    20
    10
      0
           Shandong     Sichuan   Guangdong    Jiangsu   Guangxi     Zhejiang   Liaoning


Source: CEIC




                                                                                           2
3. MOTOR VEHICULAR POPULATION AND GROWTH

•                                Guangxi ranked 22nd in 2004 in terms of vehicular population (490 000 units)
                                 among the 31 provinces and municipalities in China
•                                Vehicular population in 2005 was 636,000 units, rising by almost 30% yoy
•                                The 5-year CAGR from year 2000 to 2005 was almost 17%

                                           Guangxi: Vehicular Population and Growth, 2000-2005
                                  700                                                                                 35
                                                                                                         636
                                  600                                                                                 30
                                                                                              491
                                                                                                          30
    thousand units




                                                                                                                           yoy% change
                                  500                                         434                                     25
                                                        22          401
                                  400                  354                                                            20
                                          291                       13                        13
                                  300                                                                                 15
                                                                               8
                                  200                                                                                 10
                                  100                                                                                 5
                                    0                                                                                 0
                                         2000          2001        2002       2003           2004        2005

                                                 Vehicular Population [LHS]               yoy % growth [RHS]

Source: CEIC

4. INTERNET PENETRATION

•                                Guangxi ranked 19th in 2005 among the 31 provinces and municipalities in
                                 China in terms of the number of internet users
•                                There were a total of 27,121 internet users (or roughly 0.9% of the total users
                                 in China) in Guangxi in 2005 compared to 506,087 users in the neighbouring
                                 province of Guangdong (ranked 1st)

5. TELECOMMUNICATIONS

•                                Guangxi was ranked 28th (17.8 lines per 100) in terms of the number of fixed
                                 lines per 100 persons among the provinces in 2005 (Zhejiang has the highest
                                 penetration at 47.3 lines per 100 persons)
•                                Fixed lines per 100 persons mostly grew by double-digit in the last few years

                                            Guangxi: Fixed Line s Per 100 Pe rsons, 2000-2005
                                   20                                                                                           40
                                                                                                               17.8
    n . o lin s p r 1 0p r o s




                                                         35                                     16.7
     o f e e 0 es n




                                   16
                                                                                   13.5                                         30
                                                                                                                                         y y go th
                                                                                                                                          o% r w




                                   12                                10.8
                                                                                    25
                                                        9.11                                        24                          20
                                    8     6.76                        19

                                                                                                                                10
                                    4
                                                                                                                7
                                    0                                                                                           0
                                          2000          2001         2002      2003             2004           2005
                                             Fixed line per 100 persons [LHS]                   yoy% growth [RHS]

Sources: CEIC



                                                                                                                                                     3
•                      Guangxi was ranked 22nd (20.9 phones per 100) in terms of the number of
                       mobile phones per 100 persons among the provinces in 2005 (Guangdong
                       has the highest penetration at 77.2 phones per 100 persons)
•                      Except for the year 2005, mobile phones per 100 persons grew by double-
                       digit for most of the early part of this century

                                          Guangxi: Mobile Phones Per 100 Persons, 2000-2005
                        25                                                                                                  80
                                                     71
                        20
    mb p o e p r1 0




                                                                                                                20.9
     o ile h n s e 0




                                                                                                                            60




                                                                                                                                 o % ro th
                                                                       49            50             18




                                                                                                                                 yy g w
                        15
                                                                                     13.5                                   40
                        10
                                                                      9.02                         33
                                                                                                                            20
                          5                         6.04
                                                                                                                 16
                                       3.54
                          0                                                                                                 0
                                   2000             2001           2002            2003            2004         2005

                                          Mobile phones per 100 persons [LHS]                      yoy% growth [RHS]

Source: CEIC


6. GUANGXI ECONOMY

A. GDP

•                      Guangxi ranked 19th in GDP among the provinces and municipalities in 2005
•                      Its GDP grew by 18% yoy to reach RMB 406 billion (equivalent to slightly
                       more than 2% of the total GDP of China) in 2005

                                              2005 GDP: Top 20 Provinces and Municipalities (RMB bil)
                  Guangdong                                                                                             2170 (15%)
                       Shandong                                                                            1847 (23%)
                        Jiangsu                                                                            1827 (19%)
                        Zhejiang                                                          1337 (19%)
                         Henan                                                 1054 (23%)
                          Hebei                                              1012 (20%)
                       Shanghai                                          914 (13%)
                        Liaoning                                   801 (20%)
                                                                                                       Figures in paratheses
                        Sichuan                                  739 (16%)
                                                                                                       represent yoy% change
                         Beijing                               689 (14%)                               in GDP
                          Fujian                              656 (8%)
                          Hubei                               648 (15%)
                         Hunan                                647 (15%)
                Heilongjiang                               551 (4%)
                          Anhui                            538 (12%)
                         Shanxi                      412 (35%)
                        Guangxi                      406 (18%)
                         Jiangxi                    406 (17%)

                                   0                 500                1000                1500             2000             2500
                                                                                                                             RMB bil

Source: CEIC



                                                                                                                                             4
                                             Guangxi: GDP Growth, 2000-2005
              500                                                                                                    30
                                        GDP [LHS]                                        26              406
              400                                                                                                    25
                                        yoy% growth [RHS]                                343
                                                                                                         18          20




                                                                                                                          yoy% chg
                                                                        274
    RMB bil



              300
                                                          246
                                            223                                                                      15
                             205                                        11
              200                                         10
                                             9                                                                       10
              100                5
                                                                                                                     5

                 0                                                                                                   0
                             2000           2001          2002         2003             2004             2005

Source: CEIC


B. PER CAPITA DISPOSABLE INCOME

•             Guangxi ranked 12th in terms of annual per capita disposable income in 2005
•             Per capita disposable income has been growing strongly since 2000

                       China: Annual Per Capita Disposable Income (RMB) of Top 20 Provinces, 2005

               Shanghai                                                                                           8668 (12%)
                 Beijing                                                                                     8691 (11%)

               Zhejiang                                                                              8786 (10%)

          Guangdong                                                                             8914 (13%)

                 Tianjin                                                             9107 (15%)

                  Fujian                                                           9108 (14%)

                Jiangsu                                                            9137 (12%)

              Shandong                                                      9266 (4%)

              Chongqing                                                  9287 (7%)

                 Hunan                                                9431 (4%)
                                                                                   Nationwide = RMB 10,493 (11%)
                     Tibet                                           9524 (11%)
                                                                                              Figures in paratheses
                Guangxi                                              10243 (11%)            represent yoy% change
                Yunnan                                               10745 (11%)

Inner Mongolia                                                      12319 (18%)

               Liaoning                                             12321 (10%)

                  Hebei                                             12639 (10%)

                 Shanxi                                            14770 (8%)

                  Hubei                                            16294 (12%)

                     Jilin                                         17653 (13%)

                 Henan                                             18645 (12%)

                             0       2000   4000   6000     8000    10000    12000      14000    16000    18000    20000


Source: CEIC



                                                                                                                                     5
                              Guangxi: Per Capita Disposable Income, 2000-2005
           10000                                                                                 9287     16
                                          14
            9000                                                                      8690
                                                                                                          14
                                                                       7785
            8000                                        7315                           12
                                                                                                          12
            7000                         6666
                                                        10
                          5834                                                                            10




                                                                                                                 y% g
            6000




                                                                                                               yo ch
    R B
     M




            5000                                                         6                         7      8
            4000                                                                                          6
            3000
                                                                                                          4
            2000
                                 Per capita disposable income [LHS]                  yoy% change [RHS]    2
            1000
               0                                                                                          0
                          2000           2001           2002           2003           2004       2005

Source: CEIC

•         Nanning, the capital of Guangxi, ranked 23rd in terms of per capita disposable
          income among the major provincial capitals and cities in China in 2005

                          China: Per Capita Disposable Income of Major Provincial
                                        Capitals/Cities, 2005 (RMB)

          Shenzhen                                                                                28665
          Shanghai                                                           18644
     Guangzhou                                                               18288
            Beijing                                                      17653
            Ningbo                                                      17408
          Hangzhou                                                     16597
            Xiam en                                                    16405
            Nanjing                                              14993
                                                                         Average per capita disposable
              Jinan                                            13578
                                                                         income of 35 major cities in 2005
           Qingdao                                         12922         = RMB 13,079
            Fuzhou                                        12751
           Tianjing                                       12639
            Hohhot                                        12542
          Changsha                                       12441
             Dalian                                      11994
          Chengdu                                       11360
     Zhengzhou                                      10898
            Wuhan                                   10848
           Taiyuan                                  10478
          Nanchang                                 10302
      Chongqing                                    10245
          Shenyang                                 10100
           Nanning                                 10085

                      0           5000          10000        15000           20000      25000     30000       35000


Source: CEIC




                                                                                                                        6
C. GDP BY INDUSTRY TYPE

•    The tertiary industry sector was the major contributor (41%) to Guangxi’s
     economy, followed by the secondary industry sector (37%) and primary
     industry sector (22%)


                    Guangxi: GDP by Industry, 2005                                             CHINA: GDP by Industry, 2005

                                                      Prim ary Ind,
                                                                                                                               Prim ary Ind,
    Tertiary Ind,                                      RMB 90 bil
                                                                             Tertiary Ind,                                     RMB 2,272 bil
    RMB 166 bil                                          (22%)
                                                                             RMB 7,339 bil                                        (12%)
       (41%)
                                                                                (40%)


                                                                                                                             Secondary
                                        Secondary                                                                             Ind, RMB
                                       Ind, RMB 151                                                                            8,621 bil
                                         bil (37%)                                                                              (48%)


Source: CEIC

Note:      Primary Industry: Agriculture (farming, forestry, animal husbandry, fishery etc)
           Secondary Industry: Processing & Manufacturing (mining, manufacturing, electricity, gas, construction etc)
           Tertiary Industry: Service-based (wholesale & retail, trade, finance, insurance, real estate, health care etc)

Industry                  Guangxi             as % of                   China                 as % of        Guangxi’s as a
                         (RMB bil)           total GDP                (RMB bil)              total GDP        % of China’s
Primary                     90                  22%                     2,272                   12%                4%
Secondary                  151                   37%                   8,621                   48%                  2%
Tertiary                   166                   41%                   7,339                   40%                  2%
TOTAL                      407                  100%                   18,232                 100%                  2%
Source: CEIC


                            Guangxi: GDP by Industry, 2000-2005 (RMB bil)

    400               Tertiary Industry
                      Secondary Industry
    320                                                                                                166
                      Primary Industry
                                                                                      122
    240
                                                                      107
                                                  100
                    76            88                                                                   151
    160                                                                               129
                                                      86              101
                    75            79
     80
                                                      60               65              81              90
                    54            56
       0
                2000             2001             2002                2003            2004            2005

Source: CEIC



                                                                                                                         7
•    Growth in the secondary industry sector was generally high and exceeded
     that of the other two industries between 2003 and 2004

                      Guangxi: Growth by Industry Type, 2000-2005 (yoy%)
    40
                                                                                                            36
    35                Primary Industry
                      Secondary Industry                                                  28
    30
    25                Tertiary Industry
                                                                                               24
    20                                                                 17                                   17
                              15                     14                                   14
    15
                9                                     9
    10                        6                                              10
                                                                                                            11
     5          7                                                       8
                               4                     6
     0       -3
     -5     2000             2001                2002                  2003              2004              2005

Source: CEIC



7. FOREIGN TRADE

•    Guangxi is a net exporting country, posting an average trade surplus of
     US$600 million between 2001 and 2004.

                    Guangxi: Exports and Imports (US$ bil), 1995-2004
     3

                             2.4         2.4                    Exports           Imports                   2.4
    2.5   2.2
                     1.9                                                                            2.0
     2                                                                                                           1.9
                                                                 1.5                     1.5
    1.5                                              1.2                     1.2                      1.2
            1.0        0.9                                                                  0.9
     1
                                   0.7         0.6                                 0.6
                                                          0.5          0.5
    0.5

     0
          1995       1996    1997        1998         1999        2000        2001       2002       2003     2004

Source: CEIC



•    Growth in exports averaged 25% in the last 3 years, while imports grew at a
     faster rate of 51%.



                                                                                                                       8
                                            Guangxi: Growth in Imports & Exports, 1995-2004 (% yoy change)
                80
                                                         3-yr (2002-04) average growth:
                                                                                                                        64                 55
                60                                       exports: 25% imports: 51%
                                       e xports                                                        imports                  32
                40                           40
                                                                                                                   22            31        22
                                       13                           24
                20                                                                                   20
                                                    -5                         1                             3
                              0                                                     -11          8
                                       1995        1996       1997         1998     1999        2000      2001     2002      2003      2004
        -20                                                                                                  -17
                                                   -15                     -17

        -40                                                   -25
                                                                                          -48
        -60
Source: CEIC

Major Trading Partners: By Countries (2004)
Exports to   US$ mil % of total       Imports from                                                           US$ mil            % of total
Vietnam        454          19        Vietnam                                                                   298                  16
EU             400          17        USA                                                                       216                  11
HongKong       286          12        Australia                                                                 188                  10
USA            281          12        EU                                                                        181                  10
Japan          254          11        India                                                                     124                   7
Netherlands     99           4        Japan                                                                     107                   6
Korea           87           4        Korea                                                                      99                   5
Taiwan          86           4        Germany                                                                    91                   5
Italy           61           3        Taiwan                                                                     66                   3
Thailand        55           3        Canada                                                                     59                   3
Source: Guangxi Statistical Yearbook, 2005


•                             Exports to South Korea, Thailand, Vietnam and Japan exhibited rapid growth
                              between 2000 and 2004.

                                             Guangxi: Export Volume & Growth for Major Export Partners, 2004
                              25
                                              S. Korea
                              20                  Thailand
    4-Year (2000-2004) CAGR




                                                                                     Vietnam
                                                                   Japan
                              15                                                                             ASEAN
                                            Latin America
                              10
                                            Taiwan                  HK              N. America
                                  5
                                                               USA                  EU
                                  0
                                       0          100        200         300       400      500        600       700      800        900        1000
                                  -5
                                                     Netherlands
                              -10
                                                                                                                                           USD mil

    Source: Guangxi Statistical Yearbook, 2005



                                                                                                                                                       9
•                             Imports from India, Australia and Latin America exhibited fastest growth
                              between 2000 and 2004.

                                           Guangxi: Import Volume & Growth for Major Import Partners, 2004
                              100
                                                                                                                                                                    Latin America
                                                                                               India
                               80
    4 Year (2000-2004) CAGR




                                                                                                                   Australia
                                                       Canada

                               60
                                                                                                                              USA                   North America
                                                                    Germany
                               40
                                                                                                                                                                    Vietnam
                                                                                      Japan
                               20                                                                                                                                                               ASEAN
                                                                                                                      EU
                                              Taiwan                        S. Korea
                                0
                                     0                    50                  100                  150                 200                   250            300                   350                400
                              -20                                                                                                                                                        USD mil

Source: Guangxi Statistical Yearbook, 2005



•                             Major exports: mechanical and electrical products (19% of total), garments
                              (8%), unwrought metals (7%), porcelain (4%), resin and resin acids (3%)
•                             Major imports: soybean (21%), Mechanical and electrical products (21%), iron
                              ore (13%), high and new tech products (7%)


 Exports of Principal Commodities, 2004 (US$ Mn)                                                                                                                    Imports of Principal Commodities, 2004 (US$ Mn)
                                                                                mechanical &
                                                                             elect rical pdt s, 452, garment s & clot hing                                                    Line Telephonic or
                               Ot hers, 1114, 46%                                     19%            accessories, 198, 8%                                                         Telegraphic
                                                                                                                                                                                                           Ot hers, 323, 17%
                                                                                                                                                                                   Swit ching
                                                                                                                                                                                                                                       Soybean, 420, 21%
                                                                                                                Unwrought Met als,                      Cat t le Hide &         Apparat us, 17, 1%
                                                                                                                      156, 7%                         Horsehide, 29, 2%

                                                                                                                                                      Machine Tools, 32,
                                                                                                                          Porcelain, 95, 4%
                                                                                                                                                               2%
                                                                                                                                                                                                                                                Mechanical &
                                                                                                                             Resin & Resin Acids,         Mot or Vehicles &
                    Barit e, 35, 1%                                                                                                                                                                                                         Elect rical Pdt s, 399,
                                                                                                                                   60, 3%                  Chassis, 54, 3%
                                                                                                                                                                                                                                                     21%
              Rolled St eel, 41, 2%                                                                                     Fresh, Dried Fruit s &         Edible Veget able Oil,
                                                                                                                             Nut s, 55, 2%                     63, 3%                   Manganese Ores,High and New Tech
              Zinc Oxide & Zinc                                                                                                                                                                                                Iron Ore, 242, 13%
                                                                               High & new t ech                                                                                             119, 6%    Product s, 126, 7%
                                                                                                             Fireworks,                                          Coal, 69, 4%
                Peroxide, 43, 2%                    Spin Yarn, & Fabrics,
                                                                               product s, 49, 2%       Firecrackers, 49, 2%
                                                           48, 2%

Source: Guangxi Statistical Yearbook, 2005




                                                                                                                                                                                                                            10
8. FOREIGN DIRECT INVESTMENTS (FDI)

•             FDI in Guangxi grew by double digits between 2003 and 2004 to reach US$
              1.1 billion in 2004

                               Guangxi: Foreign Direct Investment, 1999-2004
              1200                                                                          1100         80
                             FDI: Contract Value [LHS]           FDI: yoy% chg [RHS]         71
              1000                                                                                       60

               800                                                                                       40




                                                                                                               yoy% growth
                                     710
                      674                                                     643
    US$ mil




                                                    587
               600                                                            31                         20
                                                                 492
                                        5
               400                                                                                       0

               200                                               -16                                     -20
                                                    -17

                 0                                                                                       -40
                      1999          2000         2001           2002          2003          2004

Source: CEIC

•             Growth in investments in fixed assets in Guangxi mirrored that of FDI,
              particularly in the years 2003 and 2004

                               Guangxi: Fixed Assets Investments (FAI), 1999-2005
               200                                                                                             45
                                                                                                   173
               180             FAI [LHS]              yoy% chg [RHS]                                           40
               160                                                                   124           40
                                                                                                               35
               140                                                                   34                        30
    RMB bil




                                                                                                                             yoy% chg
               120
                                                                        92                                     25
               100
                                                          75                                                   20
                80                             66                       23
                      58           58                                                                          15
                60
                                                           14
                40                             12                                                              10
                20                  1                                                                          5
                 0                                                                                             0
                     1999         2000        2001        2002         2003          2004         2005

Source: CEIC




                                                                                                                                   11
9. ECONOMIC POLICIES/ STRATEGIES

•   The Guangxi government has embarked on developing five economic zones
    to exploit the locational and economic endowments in each zone to advance
    the province regionally and globally

•   The five economic zones are:

       o Southern Guangxi Coastal Economic Zone which focuses on port
         development, marine and high-tech industries;
       o Central Guangxi Economic Zone which emphasizes industrial
         development;
       o Northern Guangxi Economic Zone which focuses on tourism,
         farming and forestry industries;
       o Eastern Guangxi Economic Zone which concentrates on modern
         agriculture, township enterprises and export-oriented industries and
       o Western Guangxi Economic Zone which centers on the agriculture
         and mining industries




•   The main thrusts of the new economic strategies are to:

       o Harness the geographical advantages of the coastal and border cities
         to expand commerce and trade with other economies;


                                                                          12
       o Attract foreign investments, technology, personnel and management
         expertise and
       o Develop export-oriented industries in the economic zones

•   The coastal cities of Nanning, Beihai, Qinzhou and Fangchenggang will act
    as new industrial bases in southwestern China and serve as gateways to
    trade with the Southeast Asian markets

•   The Guangxi government will undertake major projects covering agriculture,
    forestry, water conservancy, power generation, telecommunications, tourism,
    trade, urban development, environmental protection, and science and
    technology


10. KEY INDUSTRIAL DEVELOPMENT ZONES IN GUANGXI


A) Nanning High-Tech Industrial Development Zone (NHTIDZ)

•   Set up in 1992 with the approval of the State Council, NHTIDZ is located in
    the urban centre of Nanning city (3 km away from city centre) and occupies a
    planned area of 18 km2
•   The NHTIDZ is situated in the south-central part of the province and is well-
    served by major highways and transportational routes
•   It also has good telecommunication facilities and is surrounded by universities
    and research institutes
•   Main emphases of NHTIDZ are in bio-technology, electronics, optic-
    machinery, new/alternative energy sources and technological upgrading of
    traditional industries
•   NHTIDZ can provide a comprehensive range of services covering industrial
    and commercial registration, tax and legal advisory, finance, customs,
    security, exhibition, conferencing and residential facilities and amenities


B) Guilin National New-Tech Industrial Development Zone (GNNIDZ)

•   The GNNIDZ is located in the scenic tourist city of Guilin in the northeastern
    part of Guangxi
•   Occupying an area of 22 km2, the Zone is well supplied by energy from 3
    power stations with a total capacity of 183,000 kW
•   Major industries within the Zone focus on rubber, pharmacy, electronics,
    machinery, light industry, textile, food and art and handicrafts
•   GNNIDZ is supported by 30,000 specialists and technicians and 23,000
    students from 13 universities and colleges, 13 research institutes, 8 state-
    ministerial products inspection centers
•   It also houses 9 international trade and exhibition centers


                                                                                13
•    As one of the pioneering state-approved industrial development zones,
     GNNIDZ qualifies for all preferential policies accorded by the central as well
     as local government


C) Liuzhou High-Tech Industrial Development Zone (LHIDZ)

•    Located in Liuzhou city – Guangxi’s largest industrial city
•    LHIDZ occupies an area of 16 km2 and enjoys all preferential policies
     accorded by the Guangxi government and Liuzhou municipal authorities
•    Liuzhou is regarded as a model economically reformed experimental city in
     China
•    Main emphases of LHIDZ are mechanical, biological, chemical and electrical
     engineering, electronics, material science and energy


11. PILLAR INDUSTRIES


Overview:

•    Rich in minerals and agricultural produce, Guangxi’s key industries include:
     sugar manufacturing and processing, smelting of ferrous/non-ferrous metals
     and manufacturing of the following products: machinery, automobiles, building
     materials, food and beverages and chemicals.

     Industrial Output Category (2004)                           RMB bil   % of total

     Farm & Products Processing and Food & Beverage Production    34.1        14
     Transport Equipment Manufacturing                            30.3        13
     Automobile Manufacturing                                     29.1        12
     Smelting & Pressing of Ferrous Metals                        21.1        9
     Smelting & Pressing of Non ferrous Metals                    13.8        6
     Raw Chemical Materials & Chemical Products                   13.0        5
     Production & Supply of Electric Power & Steam                12.2        5
     Nonmetal Mineral Products                                     9.9        4
     Electric Power Production                                     7.4        3
     Special Purposes Equipment Manufacturing                      6.9        3
     Medical & Pharmaceutical Products                             5.8        2
    Source: Guangxi Statistical Yearbook, 2005




                                                                                        14
A) Food and Beverage Production


i) Canned Foods

Overall market

•      Total sales of canned foods in China rose by 84% to RMB 22.17 bil in 2004
       from 1998
•      The rise in demand for convenience foods spurred the demand for packaged
       foods, including ready-to-go meals and soups in cans. Growth in recent
       years has been robust, averaging 21% between 2002 and 2004
•      Guangxi has a market share of about 3% and ranks 15th in terms of retail
       sales value of canned foods in China in 2004
•      Annual growth between 1999 and 2004 was 84%, faster than Guangdong,
       Zhejiang and Anhui and comparable to the national average of 85%


Value of Retail Sales of Canned Foods in China (RMB mil)
                     China: Canned Food Current Retail Sales Value, 2004
    Guangdong                                                                                 2324
      Zhejiang                                                                   1813
         Anhui                                                            1648
     Shandong                                                      1431
      Liaoning                                              1241
         Hubei                                              1233
         Hebei                                        1138
       Sichuan                                        1116
        Henan                                        1061
       Jiangsu                                 937
        Hunan                                884
        Fujian                           798
       Beijing                         702
      Shanghai                   587
      Guangxi                    582                                                      RMB Mil

                 0         500               1000                  1500            2000         2500

Source: Access Asia Limited, 2006




                                                                                                       15
Market Share & Retail Sales Growth of Canned Foods in Major Provinces
      Province                        2004 Market Share                        1998-2004 (Annual Growth)
 Guangdong                                  11%                                           81%
 Zhejiang                                     8                                            82
 Anhui                                        7                                            75
 Shandong                                     6                                           115
 Liaoning                                     6                                            89
 Hubei                                        6                                            98
 Hebei                                        5                                            80
 Sichuan                                      5                                            85
 Henan                                        5                                            84
 Jiangsu                                      4                                            71
 Hunan                                        4                                            90
 Fujian                                       4                                            94
 Beijing                                      3                                            86
 Shanghai                                     3                                            60
 Guangxi                                      3                                            84
 Others                                      20                                             -
 TOTAL                                      100                                            85
Source: Access Asia Limited, 2006



•                 In volume terms, Guangxi ranks 12th in the sales of canned foods. Its 5-year
                  (1999-2004) CAGR of 14% is comparable to growth in other leading
                  provinces and in line with average national growth of 13%.

                                 China: Canned Food Retail Sales ('000 tonnes)
         100                     93   91                                                                                       18
                       94                                                                                        Volume
                  90                            83        82                                                     Grow th       16
                                 17                                  80         78                 15
                  80                       14                                             76
                                                                                                   75                 14       14
                                                     13                   13                            13
                  70        13
                                                                                                                                   5 Year (1999-2004) CAGR
                                                               12                    12                 61                     12
    '000 tonnes




                  60                                                                                             10
                                                                                                                 48       48   10
                  50                                                                           9
                                                                                                                               8
                  40
                                                                                                                               6
                  30
                  20                                                                                                           4

                  10                                                                                                           2

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    Source: Access Asia Limited, 2006

Key market players: Lipu Dafa Food and Beverage Co Ltd, Guangxi Meilong
Food Co Ltd, Guangxi Halve Food Co Ltd


                                                                                                                                                             16
ii) Canned Fruits

•   Canned fruits are manufactured in 21 out of China’s 31 provinces and
    municipalities. Based on industry revenue, Zhejiang, Shandong, Guangxi and
    Hunan are the most important production bases in China.


Revenue and Profits of Leading Canned Fruit Producers in China, 2002
    Province          No. of        Total no. of   Total Revenue   Total Profit
                    Companies       Employees        (RMb mil)      (RMB mil)
 Zhejiang              30             17,010           1,233           137
 Shandong              21              6,111             483            -2
 Guangxi               21              4,074             229             4
 Hunan                 11              4,719             216             7
 Hubei                  9              3,735             189             3
 Hebei                  7              2,065             186             4
 Liaoning               7              1,099             110             3
 Guangdong              7               777               59             2
 Anhui                  4              1,144              34            -1
 Henan                  4               340               32            3
 CHINA                 141            43,786           20,207          158
Source: Access Asia Limited, 2006

Key market players: Lipu Dafa Food and Beverage Co Ltd, Guangxi Meilong
Food Co Ltd, Nanning Canned Food Co


iii) Soft Drinks

•   Guangxi is a major sugar processing province in China.
•   Most sugar is not consumed on its own; the main uses of sugar are in the
    food processing industry due to strong demand for soft drinks, confectionary,
    sweetened fast foods etc. Sugar consumption in China grew by 40% between
    1999 and 2005.
•   Retail sales of soft drinks vary by region. East and South of China, such as
    Beijing, Tianjin and especially Guangdong and Shandong, is where the soft
    drinks market is most highly developed.
•   With a 3% market share in terms of retail sales value, Guangxi is the 14th
    largest soft drinks retail market in China.




                                                                                  17
                                        China: Soft Drinks Retail Sales Value, 2005
                  6,000                                                                                                                                    18
                                                  17                                                Retail Sales               Grow th
                              5                                                                                                                            16
                  5,000                                                                                                                         13
                             13   13                    13     13       13        13                            13                 13
                                                                                                                                                           14




                                                                                                                                                                     5-yr (2000-2005) CAGR
                                                                                           11           11
                  4,000           3.8                                                                                                                      12
                                            3.3                                                                          12
                                                                                                                                                     12
    RMB bil




                                                                                                                                                           10
                  3,000                                2.6     2.4     2.4                                                                                 8
                                                                                 2.2       2.1       2.1
                                                                                                               1.8
                  2,000                                                                                                  1.5     1.5        1.5            6
                                                                                                                                                     1.1
                                                                                                                                                           4
                  1,000
                                                                                                                                                           2

                        0                                                                                                                                  0




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    Source: Access Asia Limited, 2006



•                 In volume terms, Guangxi is the 11th largest consumer of soft drinks with a
                  4% market share. Guangxi’s 5-year (2000-2005) CAGR of 12% was slightly
                  higher than the national average of 11%.

                                             China: Soft Drinks Retail Sales Volume, 2005
                  500                                                                                                                                          16
                            445
                  450             430                                                                                Volume                Grow th
                                                                                                                                                               14
                            15
                  400                         372            372       369                                                                            12
                                                                                                                           12
                                                                                                                                                               12




                                                                                                                                                                    5-yr (2000-2005) CAGR
                                                                                    340
                  350                                                                            322            310                        10
                  300              11         11             11         11           11                                                                        10
                                                                                                                           269
    '000 tonnes




                                                                                                                10                      247
                  250                                                                               9                                                          8
                                                                                                                                                     197
                  200                                                                                                                                          6
                  150
                                                                                                                                                               4
                  100
                   50                                                                                                                                          2

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Source: Access Asia Limited, 2006



•                 Guangxi’s RMB per capita expenditure on soft drinks grew by 10% per annum
                  from RMB 14 to RMB 23 between 2000 and 2005




                                                                                                                                                                                 18
                                 China: Per Capita Expenditure on Soft Drinks, 2005
          120                                                                                               18
                106
                      100                                       16             Expenditure        Grow th
                            15                                                                              16
          100




                                                                                                                 5-Year (2000-2005) CAGR
                                                           12                                               14
                            90         12   12        12             12           12              12
                                  11                                                   11
          80                                     11                       11                                12
                      12                                                                     10        10
                12
                                  76   62                                                                   10
    RMB




                                            60
          60
                                                 43                                                         8
                                                      38   37   36
          40                                                         35                                     6
                                                                          29     29    29    28   27
                                                                                                       23
                                                                                                            4
          20
                                                                                                            2
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    Source: Access Asia Limited, 2006



B) Sugar Processing/Refining

•         Production: Guangxi is a leading province for sugar processing, accounting
          for nearly 40% of China’s sugar production in 2003
•         Revenue: Guangxi accounted for 47% of China’s sugar production revenue
          in 2003


Leading Sugar-Producing Cities in China, 2003
City                              Province             % of total
                                                      production
Chongzuo                          Guangxi                 11
Nanning                           Guangxi                  2
Laibin                            Guangxi                  7
Zhanjiang                        Guangdong                 7
Liuzhou                           Guangxi                  6
Dehong                            Yunnan                   4
Baise                             Guangxi                  3
Lincang                           Yunnan                   3
Dongguan                         Guangdong                 3
Foshan                           Guangdong                 2
Others                               -                    52
TOTAL                                                    100
Source: Access Asia Limited, 2006



•         Retail Market: Guangxi has a market share of about 4% in China’s sugar
          retail market. It is one of the fastest growing province with a 5-year (2000-
          2005) CAGR of 8%, higher than the national average of 5%.




                                                                                                                              19
                                                      China: Sugar Retail Market
                    400                                                                                                               10.0
                           367         365
                                              353                                                  Volum e            Grow th
                               9                                                                                                      9.0
                    350
                                                          318      311       308         298                                      8   8.0
                                                                                                  297   291




                                                                                                                                             5-year (2000-2005) CAGR
                    300
                                        6                                                                                             7.0
                                                                                          6                        242
                    250
                                                                                  5                                                   6.0
    ' 000 tonnes




                                                                                                                      6       196
                    200                                   5                                        4       4                          5.0
                                                  4                    4
                                                                                                                                      4.0
                    150
                                                                                                                                      3.0
                    100
                                                                                                                                      2.0
                     50
                                                                                                                                      1.0

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Source: Access Asia Limited, 2006



Leading Sugar-consuming Provinces in China (kg/capita)
                   Provinces                 1999                  2005                   1999-2005
                                                                                        Annual Growth
 Liaoning                6.5                                           6.8                  - 3.1%
 Zhejiang                6.5                                           6.0                   + 0.6
 Hubei                   4.9                                           5.9                  + 25.9
 Beijing                 6.0                                           5.6                   + 0.6
 Hainan                  4.0                                           5.4                  + 42.7
 Hebei                   4.1                                           4.6                  + 14.1
 Anhui                   3.8                                           4.6                  + 35.8
 Fujian                  4.1                                           4.5                  + 20.1
 Shanghai                5.1                                           4.4                   - 19.9
 Tianjin                 5.5                                           4.4                   - 15.8
 Guangdong               4.1                                           4.4                   + 7.0
 Jilin                   4.3                                           4.2                   + 6.7
 Guangxi                 3.3                                           4.0                   +33.2
Source: Access Asia Limited, 2006


•                  Although Guangxi currently ranks 13th in terms of per capita consumption of
                   sugar, it is ranked 3rd in terms of consumption growth from 1999 to 2005
•                  In 2003, the total share of the revenue and profit of the top 3 sugar
                   manufacturers in China were 10% and 37% respectively
•                  Leading sugar manufacturers in Guangxi: Nanning Sugar Company (6% of
                   total industry revenue), Guangxi Fengtang Biochemistry Co Ltd (2%),
                   Guangxi Funan East Asia Sugar Co Ltd (2%), Guangxi Laibin Qianjiang
                   Sugar Industry Group Co Ltd (2%).


                                                                                                                                                                       20
C) Automobiles

               •       Guangxi was the 6th largest producer of automobiles in China in 2004.
                       With a 5-Year (1999-2004) CAGR of 28%, it is the 3rd fastest growing
                       automobile manufacturing province. Growth was also faster than the
                       national average of 22%.

                                            China: Automobile Production in Top 10 Provinces, 2004
               700                                                                                                                                                  80
                           646                                                                                   75                          Production
               600                     560                                                                                                                          70




                                                                                                                                                                                              5 Year (1999-2004) CAGR
                                                   539                                                                                       Grow th
                                                                                                                                                                    60
               500                                               437
                                                                                                                                                                    50
 ' 000 Units




               400                                                              336                                                                    38
                                                       32                                       285        277                                                      40
               300                                                                                                        244            223           218          30
               200          19          17                                                      28
                                                                     15                                                                                             20
                                                                                                                          23                 12
                                                                                    9
               100                                                                                                                                                  10

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Source: CEIC


               •       Guangxi is the 7th largest market for automobile sales in China, growing by
                       13% between 1998 and 2003. However, growth in retail sales was less
                       than the national average of 22% in the same period

                                            China: Automobile Sales in Top 10 Provinces, 2004
               700                                                                                                                                             45
                           639         606                                                                 Sales                             42
                                                                                                                                                               40
               600                                                             35                          Grow th
                                                                                                                                                                    5 Year (1998-2003) CAGR
                                                                                                                                                               35
               500
                                                       419                                                                                                     30
                                                                387                                                                                       28
 '000 Units




               400          22                         23                                                                                                      25
                                        21                                     337              20
               300                                                                                                                                             20
                                                                                             221        209           196            195           191
                                                                 17                                                                                            15
               200
                                                                                                           13                11
                                                                                                                                                               10
               100
                                                                                                                                                               5
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 Source: CEIC


               •       In terms of sales value, Guangxi ranks 13th presumably due to the lower
                       average selling prices of cars as compared to the other provinces



                                                                                                                                                                                                                        21
                          China: Automobile Sales Value in Top 13 Chinese Provinces
                   180                                                                                                            60
                         165
                   160                                               54
                                                                                        Sales                 Grow th




                                                                                                                                       5 Year (1999-2004) CAGR
                                                                                                                                  50
                   140
                                    116   112                                                                           41
                   120                                                                                                            40
                                                                                                34
    RMB Bn


                   100         33          30            27                             28                                        30
                    80                            68
                                                          60                25
                    60                                          53     52        49                                          25   20
                                                                                                              19
                                    18            20                                    37
                    40                                                           14             25       24        23        21   10
                    20
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Source: CEIC


•              The province is largely self-sufficient, producing enough automobiles for
               domestic consumption and exports. Sales growth has picked up in recent
               years, averaging 26% between 2000 and 2003 as compared to the 4%
               growth between 1997 and 1999


                                     Guangxi: Automobile Production & Sales , 1995-2003
                   250                                                                                                            70
                                           Production                         56                                        209 209 60
                                           Sales                                   51                                           50
                   200                     Production Grow th                                           183 180
                                           Sales Grow th                                                                          40




                                                                                                                                                      % YOY Change
                                                                                                         34
                                                                                                                                  30
                   150
      '000 Units




                          16              17            19                               137 136                             16
                                                                            128 128                        32                     20
                                                          16
                                          15                                                                                 14   10
                   100                             113111       82 85                               7
                                                                                                                                  0
                                          97 93                                                 6
                          82 81                                                                                                   -10
                   50                                                 -24                                                         -20
                                                                     -27                                                          -30
                    0                                                                                                             -40
                          1996            1997         1998     1999         2000            2001        2002            2003

     Source: CEIC



•              Investment in Guangxi’s automobile sector decreased substantially from
               the previous high of RMB 980 mil in 1995 to RMB 130 mil in 2001.It picked
               up subsequently in the last few years to reach RMB 1.21 bil in 2004.




                                                                                                                                                                     22
                         Guangxi: Investment in Automobile Sector, 1995-2004
            1.4                                                                                   400
                                        Inves tm ent                           354        1.21
                                                                                                  350
            1.2
                                        Growth                                                    300
                  0.98
             1




                                                                                                           O hne
                                                                                                  250




                                                                                                         %Y YC a g
     M n
    R BB




            0.8                                                                    0.73           200
                                                                            0.58                  150
            0.6                                                                                   100
                          0.45   0.44
                                        0.38                                                 66
            0.4                                  0.28                                             50
                                  -1
                                         -14            0.18   0.13                  26           0
            0.2           -54
                                                 -26    -34           -31                         -50
             0                                                                                    -100
                  1995   1996    1997   1998   1999     2000   2001         2002   2003   2004

    Source: CEIC

D) Machinery and Heavy Equipment

•          Guangxi specializes in the manufacture of transport machinery, special
           purposes equipment, electric equipment and general purpose equipment.
•          Between 2000 and 2004, manufacture of special purposes equipment
           registered the highest growth of 43%, followed by transport equipment
           manufacturing (34%).

Gross Industrial Output of Machinery Sector, current prices (RMB billion)
 Category                                     2004        2000      4-yr CAGR
                                                                   (2000-2004)
 Transport Equipment Manufacturing             30.3        9.4           34
 Special Purposes Equipment Manufacturing       6.9        1.6           43
 Electric Equipment & Machinery                4.3         2.8           11
 General Equipment Manufacturing               4.2         4.8           -3
Source: Guangxi Statistical Yearbook, 2005

•          Key Players: Yuchai Machinery Group Co, Liuzhou Engineering Machinery
           Ltd

E) Ferrous and Non-Ferrous Metals

•          Guangxi is well known as the base of non-ferrous metals in China. The
           province ranks first in the production of 14 varieties of metals: Manganese,
           indium, hafnium, tin, antimony, scandium etc
•          The province ranks 2nd -6th in China for the following metals: aluminium, zinc,
           talcum, barite, silver etc
•          During the 10th 5-Year plan, annual production of non ferrous metals in
           Guangxi will be increased to 1.5 million tons.
•          Smelting of non-ferrous metals grew by 14% on a 4-year (2000-2004) CAGR
           basis from RMB 8.2 billion in 2000 to RMB 13.8 billion in 2004.
•          Smelting of ferrous metals grew by 50% on a 4-year (2000-2004) CAGR
           basis from RMb 4 billion in 2000 to RMb 21 billion in 2004.
•          Leading player: Pingguo Aluminium Industry Group


                                                                                                                     23
X.   KEY PREFERENTIAL                          POLICIES          ACCORDED              TO      FOREIGN
ENTERPRISES IN GUANGXI*

•   Foreign enterprises of a productive nature operating in Beihai, Nanning
    (excluding Wuming and Yongning), Fangchenggang, Wuzhou, Yulin, Qinzhou
    (excluding Pubei, Lingshan), Changwu, Hepu, Pingxiang and Dongxing, shall
    be levied a reduced income tax rate of 24%.

•   Foreign enterprises that provide FDIs in energy, communications, port or
    dock, or in projects that are technology-intensive or knowledge-intensive, or
    for which the amount of FDI is US$30,000,000 or more, shall be levied a
    reduced income tax rate of 15%, subject to the approval by the authority.

•   Dividend, interest, rent, fee or other proceeds originating from operations in
    Beihai, Nanning, Fangchenggang and received by the foreign businessmen
    who have not established office in China will be allowed a reduction of income
    tax by 10%. Additional reduction or exemption may be granted to foreign
    investors who provide capital, equipment, or transfer advanced technology,
    by the municipal government.

•   Enterprises of a productive nature established in frontier economic
    cooperative zone and engaged in export-oriented businesses shall enjoy a
    reduced income tax rate of 24%.

•   High-tech enterprises established in high-tech development areas in Nanning
    and Guilin shall be levied a reduced income tax rate of 15%. If the annual
    output value of exported products of these enterprises makes up 70% or
    more of the annual output value, these enterprises shall be exempted income
    tax for two years, upon the approval of the company’s application.

•   Joint ventures newly established in these high-tech development areas with
    an operational term of ten years or more, upon approval of an application,
    shall be exempted from income tax for the first two profit-making years.

•   Export produced by high-tech enterprises established in the high-tech
    development areas of Nanning and Guilin shall be exempted from export
    duties.

•   Foreign enterprises established in the national tourist area of Beihai shall be
    levied a reduced income tax rate of 24%, if they are engaged in vacation and
    travel services

* for a complete listing of Preferential Policies in Guangxi, please refer to the Guangxi People’s Government
website at www.gxi.gov.cn




                                                                                                         24
                                                      APPENDIX A




Source: Guangxi People’s Government, www.gxi.gov.cn




                                                              25
                                                      APPENDIX B




Source: Guangxi People’s Government, www.gxi.gov.cn



                                                              26
                                                             APPENDIX C

Contact Details of Selected Official Agencies:


1) Economic and Trade Commission of Guangxi Zhuang Autonomous
Region

Address: No. 1 Minle Rd, Nanning, Guangxi, China 530012
Tel: 86 771 280 3666
Fax: 86 771 2800166
Web: www.gxjm.gov.cn


2) Foreign Trade and Economic Co-operation Department of Guangxi
Zhuang Autonomous Region

Address: No. 137 Qixing Rd, Nanning, Guangxi, China 530022
Tel: 86 771 5331 7441
Email: ftecgxl@public.nn.gx.cn


3) The Foreign Investment Administration Office of Guangxi Zhuang
Autonomous Region

Address: No. 137 Qixing Rd, Nanning, Guangxi, China 530022
Tel: 86 771 533 1249
Fax: 86 771 531 4247
Email: wzb@investgx.gov.cn
Web: www.investgx.gov.cn


4) The Industrial and Commercial Administration Bureau of
Guangxi Zhuang Autonomous Region

Address: No. 137 Yibin Rd, Nanning, Guangxi, China 530022
Tel: 86 771 553 1120
Fax: 86 771 533 1200




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SOURCES:

•   An Introduction to China’s Provinces, Municipalities and Autonomous
    Regions, www.china.org.cn
•   Access Asia Limited Reports
•   CEIC database
•   Guangxi People’s Government, www.gxi.gov.cn
•   Guangxi Statistical Yearbook, 2001, 2002 and 2005
•   Guide To Investment in Guangxi, www.cbw.com
•   Guide To Investment in Guangxi, P.R. China
•   China Internet Network Information Center, 18th Statistical Survey Report on
    the Internet Development in China (July 2006)




Prepared by:
Research and Corporate Communications Division
Singapore Manufacturers’ Federation (SMa)


Contact:
Myca Tan                                                            Linnette Lim
Director                                                            Manager
Research and Corporate Communications                               Research and Corporate Communications
(65) 6826-3057                                                      (65) 6826-3052
mycatan@smafederation.org.sg                                        linnettelim@smafederation.org.sg


Disclaimer: The information contained in this report is for general information only. This report is prepared from data
believed to be correct and reliable at the time of issue of this report, and does not purport to contain all the information
that a manufacturing company may require. While every effort has been made to ensure accuracy, the Singapore
Manufacturers’ Federation does not make any guarantee, representation or warranty, expressed or implied, as to the
adequacy, accuracy, completeness, reliability or fairness of any such information and opinion contained in this report. The
Singapore Manufacturers’ Federation shall not be liable, in any manner whatsoever, for any consequences of any reliance
thereon or usage of the report. Selling, re-distributing or reproducing the information in this report without prior permission
from the Singapore Manufacturers’ Federation is prohibited.




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