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                           – Presentation of Chengdu and Chongqing

 The SCTC Business Meeting Program will take the
 participants to the south-western cities of Chengdu and
 Chongqing. This document aims to give a brief
 introduction of the region and the two cities. We hope this
 information will help the participants get a basic
 understanding and thereby get more out of the visit.

 Sichuan province and Chongqing municipality are known for spicy food and panda bears, but that
 is not all. Sichuan is one of the most densely populated areas in China and have 87.2 million
 inhabitants. Sichuan and Chongqing used to be one province until 1997 when Chongqing was
 separated into a municipality. Today Chongqing city is counted as one of the largest cities in the
 world, with a population of 31.2 million. But in all fairness, the city center “only” inhabits 5 million
 people, and the rest live in the countryside surrounding the city.

 In 1999 the Chinese government launched the “Go West” campaign, encouraging investments in
 the western part of China. Despite this encouragement, involving a combination of infrastructure
 development, tax incentives and public promotion, the foreign direct investment (FDI) have not yet
 really taken off. It has been hard for the development zones in inland cities, offering similar tax
 incentives as their counterparts on the coast, to compete with the latter due to reasons such as
 better-developed infrastructure, more experienced administrative officials, richer local markets and
 easy access to the world. However, Chengdu seems to be the exception with a growing high-tech
 industry and Chongqing has a thriving automotive industry, which are the two industries of focus for
 this visiting program. Chengdu and Chongqing are regarded as the most interesting cities in
 China’s western region for setting up a business and they both have national-level economic and
 technological development zones (ETDZ) and high-tech development zones (HTDZ).

 Below you find a table with key indicators of the economies of Chengdu and Chongqing:

 2004 key indicators – interior cities
                 GDP per capita (RMB)               Annual GDP growth (%)            Utilized FDI (USD million)
 Chengdu                         20,625                              16.8                                  330
 Chongqing                         9,608                             18.4                                  405
 (Source: EIU)

Swedish Trade Council, 205 A Dongwai Diplomatic Office Building, 23, Dongzhimenwai Dajie, Beijing 100600, P.R. China
  Tel: +86 (0)10 6532 1857 Fax: +86 (0)10 6532 3803 E-mail: Web:
 Below you can see the investments made from 2000 to 2004 by foreign companies in the two cities.

       FDI in Chengdu and Chongqing
       million USD
                     581.9     555.8
    600 436.9
                                         412.3              405
    400                   256.5               260.8
                244.4               195.8                         Chengdu
    200                                                           Chongqing
             2000       2001      2002      2003      2004        Source: EIU

 The city has an urban population of 3.5 million people or 11.3 million if you count the surrounding
 suburbs, and is renowned for its many traditional tea houses. In the city you find many small
 restaurants serving the spicy dishes characteristic for this region. The reason for eating such spicy
 food is the moist climate, and in order to keep you body in balance you need to eat something that
 makes you sweat.

 Chengdu is located in the Chengdu Basin, a rich agricultural area but also China’s biggest natural
 gas producing region. Chengdu is more commercially savvy than Chongqing, and has attracted
 more FDI even though being smaller and with far less of an industrial tradition. Among the high-
 profile project you find Toyota’s USD 99 million bus-manufacturing venture and a Motorola
 semiconductor factory and research center. Intel has also constructed a USD 200 million chip
 testing and assembly plant.

 Sichuan’s very large population is the greatest challenge and the province has the lion’s share of
 China’s 130 million-strong surplus labor force. Chengdu can therefore offers low-cost labor, but
 also have a better than average education system with more than 30 universities providing skilled

 Chengdu is connected to Chongqing by the 340-km Chengdu-Chongqing Expressway but also to a
 cluster of flourishing mid-sized cities in the region by newly built expressways. Chengdu is also a
 major hub with railways connecting to Xi’an, Beijing, Kunming and more. The city also has a
 international airport with flights to Hong Kong, Thailand, Singapore, Japan and South Korea.

 Swedish companies present
 In April 2004, Ericsson announced it was setting up a research and development centre in the
 region, which would also serve as the company’s purchasing base for Sichuan. Other Swedish

Swedish Trade Council, 205 A Dongwai Diplomatic Office Building, 23, Dongzhimenwai Dajie, Beijing 100600, P.R. China
  Tel: +86 (0)10 6532 1857 Fax: +86 (0)10 6532 3803 E-mail: Web:
 companies present are ABB (China) Ltd., Alfa Laval (Shanghai) Technologies Co., Ltd., Atlas
 Copco, Sandvik China Ltd., SKF China Limited, Stora Enso China Sales, Tetra Pak China Ltd.

 The city is known as one of China’s three furnaces, with summer temperatures exceeding 40ºC. It
 also used to be the Kuomintang’s wartime capital from 1938 to 1945 when they retreated to Taiwan.
 Chongqing became a provincial municipality in 1997 and was off to a slow start, but has since 2001
 had an average growth rate of 11% each year. The city is ranked as the top industrial city in
 China’s south-west and has great plans connected to the building of The Three Gorges Dam.
 Cheap electricity from the dam and faster communication to Wuhan and Shanghai is very likely to
 boost the city’s industries and kick-start economic growth throughout the whole south-western

 The economy in Chongqing suffers from aged and heavily polluting industry that includes chemical,
 steel and automotive plants. There are not that many foreign investors, but you have large
 companies present and operating such as Suzuki, producing mini-cars since the mid 90s and Ford
 with a USD 49 million investment set up in 2003 producing Fiestas. The FDI is still just a fraction of
 the investments done in coastal cities, and the investments furthermore have a disproportional
 focus on heavy industry.

 When it comes to Chongqing’s infrastructure, it needs a big upgrade even though being the south-
 western transport hub. In 2005 a highway to the southern port of Zhanjiang in Guandong was
 completed. Access to Chongqing will also be greatly improved by 2007 when the 2,000-km
 Shanghai-Chengdu expressway will be completed. Chongqing is also connected to Shanghai by
 the Yangze River, and can carry vessels up to 2,000-dwt (dead weight tons), and will in 2009 be
 able to handle vessels of 10,000-dwt.

 Swedish companies present
 During the summer of 2006, the first cars will roll out of Volvo’s factory in the city. Among other
 Swedish companies with offices or production in Chongqing you find ABB (China) Ltd., Ericsson
 (China) Co., Ltd., Ericsson Communications Co., Ltd., Ericsson Technology Co., Ltd., Atlas Copco,
 Sandviken China Ltd. and SKF China Limited.

 Prepared by the Swedish Trade Council
 March 24, 2006

Swedish Trade Council, 205 A Dongwai Diplomatic Office Building, 23, Dongzhimenwai Dajie, Beijing 100600, P.R. China
  Tel: +86 (0)10 6532 1857 Fax: +86 (0)10 6532 3803 E-mail: Web:

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