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                         Contents
Preface............................................................2
Part One: Four Pillar Industries
1 Electronics & IT............................................3
2 Petrochemical..............................................10
3 Automobile.................................................18
4 Steel............................................................25
Part Two: Eight New Industries
1 Wind Power & Photovoltaic Equipment Ma-
nufacturing.....................................................32
2 Smart Grid & Power Automation...............44
3 Communication..........................................51
4 Energy Conservation & Environmental Pro-
tection............................................................59
5 Biopharmaceutical......................................69
6 New Materials.............................................74
7 UMT Equipment Manufacturing................81
8 Aviation.......................................................87
Part Three: Eight Modern Service Indus-
tries
1 Software & Service Outsourcing................94
2 Finance & Insurance.................................100
3 Modern Logistics......................................105
4 IT Service..................................................112
5 Tourism, Convention & Exhibition
  ...................................................................116
6 Culture & Creativity.................................122
7 Business Service......................................129
8 Commerce & Circulation. .......................134


               The Investment Overview of the Key Industries in Nanjing    1
            Preface


                              Preface
        Nanjing has become one of the most pro-
    mising cities in the Asian Pacific Rim, and the
    environment and services for investment in
    Nanjing have been improved enormously, gi-
    ving more advantages and better opportunities
    to investors. Nanjing is one of the top ten most
    competitive cities in mainland China. Accor-
    ding to Forbes, Nanjing is one of the top three
    best commercial cities in mainland China.
        With the “Scientific Outlook on Deve-
    lopment” as the guideline, Nanjing strives to
    achieve industrial upgrading, enhance urban
    function, promote scientific and technological
    innovation, and improve investment environ-
    ment.
        To strengthen Nanjing’s core competitive-
    ness and maintain sustainable development,
    here we provide investors with information
    about the key industries and investment op-
    portunities in Nanjing and cordially hope to
    establish win-win cooperation with friends at
    home and abroad.




2   The Investment Overview of the Key Industries in Nanjing
                                    Electronics & IT


      Part One: Four Pillar
           Industries
1.1 Electronics & IT
I. Overview
    Electronics & IT is one of the most com-
petitive industries in Nanjing. In recent years,
the electronics & IT sector in Nanjing has
maintained healthy and fast growth, registering
an annual output growth of over 30%—from
RMB 28.3 billion in 2002 to RMB 183.77 bil-
lion in 2009. The electronics manufacturing, in
particular, occupied 19% of the total industry
in Nanjing in 2009, up from 10.5% in 2002. In
2009, Nanjing’s electronics and IT sector ac-
counted for 11.1% of that of Jiangsu province,
and 3.0% of that of China. The output of the
electronics manufacturing sector amounted to
RMB 121.77 billion, accounting for 66.3% of
the Electronics & IT sector of Nanjing, or 8.5%
of that of Jiangsu province. The software and
system integration sector generated an output
of RMB 62 billion, about 33.7% of the Elec-
tronics & IT sector of Nanjing, or 3.8% of that
of Jiangsu province. In electronic products,
manufacturing capacity of medium-size LCD
module sector exceeded 100 million units; ma-

          The Investment Overview of the Key Industries in Nanjing   3
    Electronics & IT

    nufacturing capacity of mobile communication
    base station equipment sector exceeded 1.5
    million channels; manufacturing capacity of
    solar cell panel sector exceeded 300MW; and
    manufacturing capacity of large LCD TV sec-
    tor reached 3 million units.


    II. Advantages
        1.The enhancement of innovation and the
    enforcement of the IPR strategy: In Nanjing,
    a large number of IPR-based products are
    emerging on the market, and a great many re-
    search teams are established. Headed by SHEN
    Guorong, member of the Chinese Academy of
    Engineering, Nanjing Nanrui-Relays Electric
    Company is in the leading position in the fields
    of key technologies and products for power
    automation and control. Founded by a team of
    researchers, who got their doctor degrees from
    Australia, China Sunergy (Nanjing) has achie-
    ved a 16.5% photoelectric conversion rate for
    P-type solar cells, the highest in the world, and
    24.7% for the N-type, the best performance in
    China.
        2.The improvements of functions and pro-
    duct structures of Nanjing Industrial Parks: In
    Nanjing, with the rise of many world-known
    companies and business groups, “The Five

4   The Investment Overview of the Key Industries in Nanjing
                                   Electronics & IT

Sectors with Distinct Nanjing Features,” i.e.,
new display, modern communication, solar
energy/photovoltaic, digital appliance, and
software and system integration, are getting
mature; “Three Development Zones and Two
Industrial Parks” have become an important
platform for the electronics sector. Owing to
its achievements in new display products, Xin-
gang Development Zone was named “National
(Nanjing) Display Industrial Park” at the end
of the “10th Five-Year Plan” period of China
—one of the first of its kind to receive that
honor. So far, Xingang Development Zone has
established an integral LCD industrial chain
spearheaded by LG-Philips and HannStar. In
Jiangning Development Zone (JNDZ), Com-
munication Industry Park, including Ericsson
Panda and Compal Communications, has been
established, with a focus on communication
and terminal devices which grow at a rapid
speed. In Nanjing New and Hi-tech Industry
Development Zone, many companies working
on system integration are founded, and Jiangsu
Software Park and Nanjing Software Park have
achieved the sales revenue of over RMB10 bil-
lion.
    3.The expansion of the software sector: As
a powerful market infiltrator and growth am-

         The Investment Overview of the Key Industries in Nanjing   5
    Electronics & IT

    plifier, Nanjing’s software sector has been gro-
    wing at a stunning speed. In 2009, the total re-
    venue of the software sector amounted to RMB
    62 billion, up 31.9% year-on-year, ranking
    fourth in China, following Beijing, Shenzhen
    and Shanghai. There are over 1,200 software
    companies in Nanjing, among which 40 have
    passed CMM/CMMI Level-II certification; 14
    have been listed on domestic or international
    stock markets; 11 are named “Major Software
    Enterprises according to State Planning”; and
    8 rank among “Top 100 Software Companies
    in China by Revenue.” In February 2009, the
    Nanjing Municipal Government issued Opi-
    nions on Accelerating Undertakings toward a
    Well-known Software City in China in Three
    Years, announcing RMB100 billion as the re-
    venue target of the software sector in the next
    three years. Nanjing has established itself as
    one of the first-tier cities in terms of the size
    and development level of the software sector.
        4.The fast development of infrastructures:
    Nanjing has completed the deployment of the
    backbone, convergence and access layers of its
    broadband metropolitan area network (MAN),
    which covers almost the entire city. Nanjing’
    s radio and TV network is an important com-
    ponent of the national and provincial backbone

6   The Investment Overview of the Key Industries in Nanjing
                                    Electronics & IT

networks, enabling the city to take the lead in
this regard. In addition, Nanjing has initiated
its “wireless broadband city” program and de-
ployed 8,000 access points, enabling access to
the wireless broadband network in an area of
600km2. So far, Nanjing Telecom has deployed
over 1,700 WIFI hotspots across the city, and
provided wireless broadband access to govern-
ment agencies, hotels, and other public service
organizations. Currently, the wireless broad-
band network covers over 80% of the hotspot
areas, including hotels, recreation facilities,
office buildings and shopping centers. Nan-
jing Telecom is upgrading its C Network and
building a “C (CDMA) + W (WIFI)” network
with extensive coverage and mobile wireless
access to satisfy the public needs. In the mean-
time, Nanjing Mobile and Nanjing Unicom
are accelerating the development of their 3G
networks. Nanjing Mobile is deploying 1,800
TD-SCDMA base stations and an Indoor Dis-
tributed System so as to expand its coverage
beyond the main city to reach the suburban
districts (counties), and key expressways and
railways, and to provide its subscribers with
more convenient Internet and multimedia com-
munication services.


          The Investment Overview of the Key Industries in Nanjing   7
    Electronics & IT

    III. Objectives and Priorities
        The Objectives of Nanjing in the next three
    to six years will be to develop 100 major pro-
    jects with a total investment of over RMB 150
    billion. Sales of the electronics & IT sector
    would exceed RMB 450 billion by 2012 and
    RMB 650 billion by 2015, with the electro-
    nics manufacturing sector contributing RMB
    330 billion and RMB 450 billion respectively.
    Electronics & IT would become the first pillar
    industry for Nanjing by 2012, facilitating the
    optimization of Nanjing’s industrial structure
    and the transformation of Nanjing’s growth
    model, and help to escalate Nanjing’s economy
    to a substantially higher level.
        Priorities will be given to the building of
    Three Development Zones, Two Industrial
    Parks, Five Major Sectors, and Nine Chains of
    Competitive Products.
        Three Development Zones: Nanjing Eco-
    nomic and Technological Development Zone
    focuses on the development of the LCD Valley,
    the new display base, and the digital appliance
    manufacturing base. Jiangning Development
    Zone puts priorities on the construction of the
    wireless valley, the modern communication
    base, the sensor base, the new display base,
    and the power automation equipment manufac-

8   The Investment Overview of the Key Industries in Nanjing
                                    Electronics & IT

turing base. Nanjing New and Hi-tech Industry
Development Zone will become manufacturing
bases for computer and peripherals, IC, system
integration, and automobile electronics.
     Two Industrial Parks: Jiangsu Software
Park focuses on the development of software
testing service, e-government and informati-
on security solutions. Nanjing Software Park
concentrates on business operations around
systems, games and animation, and automobile
electronics solutions.
     Five Major Sectors:
     1. New display sector: LCD, PDP and
LED, and digital appliances;
     2. Modern communication sector: electro-
nics, special equipment, 3G, communication
terminal devices and cable products;
     3. Solar energy / photovoltaic sector: so-
lar cells and components, slicing technology,
advanced R&D;
     4. Sensor sector: intelligent industry, in-
telligent power grid, intelligent traffic, and in-
telligent logistics;
     5. Software and system integration sector:
power automation, telecom system manage-
ment, and digital manufacturing.
     Nine Chains of Competitive Products: FPD
product chains, digital appliance chains, LED

          The Investment Overview of the Key Industries in Nanjing   9
     Petrochemical

     display and lighting chains, mobile products
     chains, short-wave communication product
     chains, solar energy/photovoltaic product
     chains, power automation product chains, sen-
     sor product chains, and computer and periphe-
     rals product chains.


     1.2 Petrochemical
     I. Overview
         Nanjing has unique geographic advantages
     for the development of petrochemical industry.
     Nanjing adjoins Southern Jiangsu petrochemi-
     cal industry belt and is adjacent to Northern
     Jiangsu area and Anhui province, providing it
     with a wide consumer market. Nanjing has a
     solid industrial foundation for the development
     of petrochemical industry. Five ways for trans-
     portation—waterway, railway, highway, aviati-
     on, and pipeline—are available in Nanjing. The
     implementation of “The West-East Natural Gas
     Transmission Project” and the constructions
     of Shandong-Nanjing oil pipeline (20 million
     tons/year) and Ningbo-Shanghai-Nanjing cru-
     de oil pipeline (20 million tons/year) facilitate
     the transportation and supply of oil and gas.
         For a long time, petrochemical industry
     has been the leading industry of Nanjing. It ac-
     counts for over 30% of the industrial economy

10   The Investment Overview of the Key Industries in Nanjing
                                          Petrochemical

in Nanjing. In 2009, the output value of petro-
chemical industry amounted to RMB 204.37
billion, with an increase of 0.3%, accounting
for 30.2% of the total industrial output value.
The profits and taxes are RMB 28.7 billion,
with a net increase of RMB28.3 billion, ac-
counting for 41.1% of the total industry output
value. The profits are RMB 10.97 billion, with
a net increase of RMB16.01 billion, accounting
for 34.5% of the total industry output value.


II. Advantages
    1. Strong production capacity: In Nanjing,
petrochemical industry produces 21.5 million
tons of refined oil/year, 1.25 million tons ethy-
lene/year, 2.1 million tons aromatics/year, and
0.3 million tons benzene/year. The production
of these chemical materials—ethylene, benze-
ne, p-xylene, o-xylene, alkylbenzene, ethylene
glycol, epoxy ethane, propylene oxide, capro-
lactam, polyethylene, acetic acid, acrylic acid
and esters—takes up more than 10% of the
national production. The production of aroma-
tics, alkylbenzene, purified terephthalic acid,
caprolactam, and acetic acid is the largest in
China. The oil refining capacity and the pro-
duction capacity of ethylene is second only to
Shanghai.

          The Investment Overview of the Key Industries in Nanjing   11
     Petrochemical

         In fine chemical products, pesticide pro-
     ducts with high-quality and low-toxicity takes
     up a significant portion of the domestic market.
     The production of pyridine accounts for 55%
     of the national production in China, paraquat
     25%, chlorpyrifos 20%, imidacloprid 10%. The
     production of silane coupling agent accounts
     for over 40% of China’s national production.
     The production of isopropanolamine takes up
     20% of the world’s total production, or over
     50% of the domestic production in China.
         2. The national petrochemical base: In
     January 2003, the National Development
     Planning Commission of China approved the
     establishment of the national petrochemical
     base—Nanjing Chemical Industry Park, with
     an area of 45 square kilometers. In June 2005,
     The Ministry of Science and Technology ap-
     proved the establishment of the Torch Program
     —Nanjing Fine Chemical Industry Base. By
     2008, Nanjing Chemical Industry Park had
     completed a total investment of RMB 32.8
     billion in fixed assets, among which the invest-
     ment in infrastructures is RMB 16.1 billion.
     With comprehensive infrastructures, the Park
     has completed the construction of Changlu De-
     velopment Zone, with an area of the 26 square
     kilometers. Among the 195 enterprises in the

12   The Investment Overview of the Key Industries in Nanjing
                                          Petrochemical

Park, 116 are foreign-invested, with a total
project investment of 2.6 billion U.S. dollars.
Investors in the Park include the BASF (Ger-
man), DyStar, the BP (British), BOC, Albe-
marle (U.S.), Celanese, APCI, Itochu (Japan),
Samsung(South Korea) and Yangzi Petroche-
mical. The Park has complete industrial struc-
ture, covering petrochemical, fine chemicals,
pharmaceutical chemicals and forestry chemi-
cals.
    3. Large-scale petrochemical enterprises:
By 2008, there were 510 chemical enterprises
in Nanjing. Among them, 3 enterprises had
achieved sales revenue of over RMB 10 bil-
lion, 11 enterprises RMB 1 billion, and 20
enterprises RMB half a billion. The total sales
revenue of the 11 enterprises amounts to RMB
158.87 billion, accounting for 75.2% of the
total petrochemical industry in Nanjing. The
total sales revenue of three enterprises of Jin-
ling Chemicals, Yangzi Chemicals and Nanjing
Chemicals is RMB123.82 billion, accounting
for 58.6% of the national sales revenue of the
petrochemical industry.
    4. Strong scientific and technological
support: Nanjing has unique advantages in
chemical technology. The number of colleges
and universities in Nanjing ranks the third in

          The Investment Overview of the Key Industries in Nanjing   13
     Petrochemical

     China. There are 11 universities, 2 colleges
     and 5 technical schools that offer education
     and training of chemistry. There are more than
     170,000 chemical researchers and technicians,
     more than 40 chemical research institutes, and
     12 chemical design and construction compa-
     nies in Nanjing. In recent years, Nanjing has
     achieved remarkable progress in the produc-
     tion of pyridine, silane coupling agent, and iso-
     propanolamine.


     III. Objectives and Priorities
         Objectives: By 2012, the total output value
     of RMB 260 billion and the industrial added
     value of RMB 50 billion is to be achieved; the
     proportion of output value of fine chemicals is
     to increase to 45%; the investment in technical
     innovation is to account for over 6% of the to-
     tal sales revenue; the output value of new pro-
     ducts is to take up 45% of the petrochemical
     industry; and the total emission of COD, SO2,
     and ammonia is to be reduced by 8%.
         By 2015, the total output value of RMB
     300 billion and the industrial added value of
     RMB 60 billion is to be achieved; the propor-
     tion of output value of the fine chemicals is to
     increase to 50% of the petrochemical industry;
     the investment in technical innovation is to

14   The Investment Overview of the Key Industries in Nanjing
                                          Petrochemical

account for over 8% of the total sales revenue;
and the output value of new products is to take
up 50% of the petrochemical industry; the total
emission of COD, SO2, and ammonia is to be
reduced by 10%; and the overall production
capacity will reach 36 million tons oil refining/
year, 3 million tons ethylene/year, 3.8 million
tons aromatics/year, 2.9 million tons acetic
acid/year, 400,000 tons caprolactam/year,
140,000 tons methionine/year, and 250,000
million tons pesticides /year.
    Priorities: “Seven Industrial Chains of Fine
Chemicals” and “Ten New Technologies.”
    Seven Industrial Chains of Fined Chemi-
cals:
    1. Acetic acid industrial chain: Nanjing has
the production capacity of up to 1.7 million
tons/year before 2010; the key component of
this industrial chain is the development of the
production of EVA and PVA;
    2. Ethylene industrial chain: Ethylene is a
basic petrochemical raw material. Nanjing has
the production capacity of ethylene of 1.4 mil-
lion tons/year, taking the lead in China. In the
future, Nanjing shall focus on the development
of ethylene oxide, PTT, ultra-high molecular
weight PE, and the relevant chemical products;
    3. Propylene industrial chain: C3 industrial

          The Investment Overview of the Key Industries in Nanjing   15
     Petrochemical

     chain mainly includes synthetic materials such
     as epoxy resin, acrylic resin, super absorbent
     polymers, and ethylene-propylene rubber. It
     also includes such materials as polyurethane,
     polyether polyol, epichlorohydrin, acrolein,
     isopropanolamine and other intermediates, and
     methionine;
         4. C4 industrial chain: Nanjing will make
     use of its C4 resources to develop K-resin, bu-
     tadiene rubber, styrene-butadiene rubber, SBS
     elastomer, butyl rubber, nylon 66, and PMMA;
         5. C5 industrial chain: Nanjing will make
     use of the byproducts of C5 to produce Methyl
     butane rubber and C5 petroleum resins;
         6. Benzene industrial chain: The C6 resour-
     ces of Nanjing are mainly pure benzene. At
     present, Nanjing’s production capacity of ben-
     zene ranks first in China. The main derivative
     products are 100,000 tons of chlorobenzene,
     100,000 tons of aniline, 300,000 tons of alkyl-
     benzene, and 140,000 tons of caprolactam. The
     benzene industrial chain can be further divided
     into six sub-industrial chains of maleic anhy-
     dride, cyclohexanone, nitrobenzene, chloro-
     benzene, ethylbenzene, and cumene;
         7. Low-toxicity pesticides industrial chain:
     This industrial train can be further divided into
     heterocyclic pesticide industrial chain and py-

16   The Investment Overview of the Key Industries in Nanjing
                                          Petrochemical

rethroids insecticides industrial chain.
    Ten New Technologies:
    1. The coal gasification technology, the de-
sulfurization and decarbonization technologies
of MDEA and NHD, the technology to clean
CO and large particle, and the technology to
produce slow-release carbamide;
    2. The combinatorial chemistry technolo-
gy, resolution and transfer technology of bio-
enzymes, enzyme reactor technology, and di-
rected synthesis technology;
    3. C1 chemical synthesis and carbonyl syn-
thesis technology;
    4. Energy conservation supporting techno-
logy of metal anode diaphragm caustic soda,
ion-exchange membrane caustic soda techno-
logy, oxygen-chloride PVC technology and
other technologies;
    5. Technologies based on atomic econo-
mic reactions, novel reactor technology, novel
high-efficiency distillation technology, che-
mical coupling integration technology, novel
oxidation, nitration, sulfonation, fluorination,
reduction cell reaction technique;
    6. Engineering plastics production and
processing technology, general plastics modi-
fication technology, organic silicon, organic
fluorine and extended product technology;

          The Investment Overview of the Key Industries in Nanjing   17
     Automobile

         7. Supporting spare parts for automobile
     and equipment manufacturing, tires for high-
     grade automobile and aircraft, technology
     of low-profile all-steel heavy meridian tire
     without inner tube;
         8. Eliminating the “three wastes” polluti-
     on from the sources, promoting environment-
     friendly catalytic technology, green solvents
     technology, and other technologies for the es-
     tablishment of clean production technology;
         9. Catalytic technology, novel separation
     technology, fine processing technology, infor-
     mation technology, and energy-saving and en-
     vironmental technology;
         10. Bio-catalysis and conversion technolo-
     gies, separation and purification technologies
     of bio-processed products, and develop large-
     scale bio-processing products, processes and
     equipment technology.


     1.3. Automobile
     I. Overview
         China’s automobile industry has main-
     tained fast development since the 21st century.
     In 2009, China surpassed the United States
     and Japan to become the largest auto market
     in the world, with a total output of 13.79 mil-
     lion units, up 48.3% from that of the previous

18   The Investment Overview of the Key Industries in Nanjing
                                             Automobile

year, and total sales of 13.65 million units, up
46.2%.
   In Nanjing, auto output totaled 398,000
units, up 120.9%, 72% above the national
average growth rate; and sales amounted to
389,000 units, up 115.3%, 69% above the nati-
onal average growth rate. With 126 large com-
panies, the auto sector in Nanjing generated
RMB 40.82 billion in revenue, up 57.1% year-
on-year.


II. Advantages
    1. Geographic location: Nanjing is at the
juncture of the Yangtze River, the most im-
portant east-west inland water transportation
route, and Beijing-Shanghai Railway, one of
the most important north-south land trans-
portation lines in China. In Nanjing, there is a
well-established network of airports, railways,
inland ports and IT infrastructures, including
the largest inland port in Asia and the fifth lar-
gest international cargo airport in China. Cur-
rently, the largest railway hub in Asia is under
construction in Nanjing. Within one hour’s
drive from Nanjing is a metropolis circle con-
sisting of a dozen cities, including Zhenjiang,
Yangzhou, Ma’anshan and Wuhu—a huge con-
sumer market with a total population over 31

          The Investment Overview of the Key Industries in Nanjing   19
     Automobile

     million.
         2. Industrial foundations: The history of
     Nanjing’s automobile sector dates back to the
     1950s. After half a century’s development, the-
     re are currently 6 auto makers and 16 special
     vehicle and coach manufacturers in Nanjing,
     with a complete product structure consisting
     of heavy-duty/medium/light trucks, minivans,
     cars, and special vehicles. The sector diffe-
     rentiates itself with leading equipment and
     technologies in China. The car-making sector,
     in particular, has world-leading equipments,
     technologies and products. SAIC MG has the
     only unmanned welding plant in China, in
     addition to a brand assembly line and sophi-
     sticated manufacturing equipments. Chang’an
     Ford Mazda’s Nanjing plant employs world-
     leading car-making technologies and automa-
     ted equipments. Its flexible assembly line can
     produce cars of up to eight chassis models si-
     multaneously. In addition, Nanjing is home to
     approximately 250 auto parts manufacturers,
     which supplies a wide range of parts, including
     car bodies, axles, gear-boxes, arresters, stee-
     ring gears, electronic devices, non-metal parts
     and rough pieces. Nanjing also has a good auto
     service sector.
         3. Research and innovation: Nanjing is

20   The Investment Overview of the Key Industries in Nanjing
                                             Automobile

known for a large number of leading research
institutes and universities. All of the major
auto makers, special vehicle and coach ma-
nufacturers and parts suppliers have their own
technology development centers, backed by a
huge hi-tech professional workforce. For exa-
mple, NAC Automotive Engineering Institute
is an officially designated national technology
center. Nanjing has a solid foundation for the
R&D of automobiles, important automobile
assemblies and carborne electronics products.
Currently, the automobile sector is accelerating
the R&D of new energy vehicles, including
new energy cars, electric mini-cars, pure elec-
tric-powered light buses and electric-powered
large buses. Nanjing Iveco’s pure electric-po-
wered engineering vehicle, which was awarded
“Best New Energy Light Bus” in 2009, is al-
ready available in the market in small batches.
NAC Research Institute has developed the pro-
totype of a high-performance light/medium-
grade hybrid car, and is currently working with
Nanjing Iveco to drive its commercialization.
Nanjing Jiayuan Electric Vehicles & Ship Ma-
nufacturing Co., Ltd. maintains a complete set
of proprietary technologies for key parts of
electric vehicles, including motors, controllers,
battery cells and battery management systems,

          The Investment Overview of the Key Industries in Nanjing   21
     Automobile

     as well as battery system integration techno-
     logies, fast recharge technologies, balanced
     recharge technologies and vehicle design and
     adaptation technologies.
         4. Industrial clusters: Nanjing has a unique
     edge along the automobile industrial chain. In
     the upstream, its electronics, steel, petroche-
     mical, and rubber sectors have strong market
     positions. Particularly, its electronics and soft-
     ware sectors are among the market leaders in
     China. In the downstream, it has solid foun-
     dations in auto insurance, parts supply, and
     car service sectors. Today, Nanjing is home to
     250 Chinese and international parts suppliers
     and auto design firms, which provide parts
     and services mostly to six major car makers,
     including SAIC MG, Nanjing Iveco, Nanjing
     Chang’an, Chang’an Ford Mazda Nanjing Co.,
     Ltd., SAIC-Volkswagen Nanjing Branch and
     Nanjing Xugong. A number of automobile and
     parts clusters are emerging fast in Jiangning
     Development Zone (JNDZ), Nanjing New and
     Hi-tech Industry Development Zone, and Lis-
     hui Economic and Technological Development
     Zone.


     III. Objectives and Priorities
         Objectives: By 2012, Nanjing’s automobile

22   The Investment Overview of the Key Industries in Nanjing
                                             Automobile

sector will make and sell 955,000 vehicles,
and generate RMB179 billion in revenue, in-
cluding RMB103 billion from the automobile
manufacturing sector and RMB76 billion from
the auto service sector. By 2015, output/sales
would increase to 1.56 million units, with a
total revenue of RMB310 billion, including
RMB177 billion from the automobile manuf-
acturing sector and RMB133 billion from the
auto service sector.
    Priorities of the upstream sectors: The
development of special steel, glass, electro-
nic products, new lighting systems, upscale
fabrics, paints, engineering plastics and other
supporting materials for vehicles. We are going
to introduce:
    1) A number of projects for the manufactu-
ring of primer, finish, water paint, coating var-
nish, and refinish products;
    2) Metal cutting machine tools, precision
forging lines and other test equipments, digital
cutting tools, and laser cutting and welding
equipments.
    Priorities of the core sectors: The esta-
blishment of standardized, serialized, general-
purpose parts manufacturing bases, and three
automobile industrial clusters with distinct
features in terms of car making, sales and ser-

          The Investment Overview of the Key Industries in Nanjing   23
     Automobile

     vices, and the development of the new energy
     vehicles. We are going to introduce:
         1) A number of gear-box, clutch and new
     energy power assembly projects;
         2) OBD automatic engine diagnosis sy-
     stems, diesel engine common rail systems and
     electric ejection systems;
         3) A number of key projects for the manuf-
     acturing of upscale interiors, car body electric
     stabilization systems, automated air condi-
     tioning systems, meter bus systems, air bags,
     intelligent seat belts, anti-collision systems,
     anti-burglar systems, carborne entertainment
     systems, and carborne communication sy-
     stems;
         4) Projects for the production of power
     steering systems, suspension systems, anti-skid
     systems, and ABS systems.
         5) A number of projects for the manufac-
     turing of carborne electronic systems, inclu-
     ding carborne computer systems, navigation
     systems, carborne communication systems and
     carborne internet systems.
         Priorities of the downstream sectors: The
     promotion of auto sales, maintenance, finance,
     insurance, consultation and auto-related pro-
     ducts; the development of Jiangning Automo-
     bile City and a number of multifunctional auto

24   The Investment Overview of the Key Industries in Nanjing
                                                        Steel

service parks at Daming Road, Ningnan Road
and Hongshan Road; and the development of
auto logistics and used vehicle recycling in the
three automobile industrial bases in Jiangning,
Pukou and Lishui.


1.4 Steel
I. Overview
    The Yangtze River Delta is a major steel
manufacturing base in China, as well as an
important steel market in the world. With 70%
of the products consumed by local users, the
steel sector of the region is known for a numb-
er of distinct features, including high input and
output, huge shipment volume, and convenient
access to port facilities. By retiring out-of-date,
small scale steel manufacturing facilities, Nan-
jing has managed to consolidate the foundation
of its steel sector on the basis of Nanjing Steel
Group (NSG) and Meishan Iron & Steel Co.,
Ltd. (a subsidiary of Baosteel). Steel output
increased from 6.2 million tons in 2002 to 10
million tons in 2009, accounting for 20% of
that of the entire province. In 2009, Nanjing’
s steel sector generated RMB56.44 billion in
gross output, RMB13.54 in industrial added
values, RMB56.48 billion in revenue, and
RMB3.2 billion in profits and taxes. Today,

          The Investment Overview of the Key Industries in Nanjing   25
     Steel

     steel industry of Nanjing is an important com-
     ponent of the steel sector of Jiangsu Province
     along the Yangtze River.


     II. Advantages
         1. Leading-edge manufacturing equip-
     ments: Nanjing is home to the most sophi-
     sticated “medium and heavy steel plate/coil
     ” manufacturing line in the world, as well as
     a number of world-class cold rolling lines.
     These state-of-art manufacturing facilities
     have helped improve the product development
     ability and increase the market share of the
     sector. Nanjing’s steel manufacturers supply
     10% of all shipbuilding steel plates in China.
     With continued improvements of the product
     structure, output of new products amounts to
     4.65 million tons. The number of new pro-
     ducts accounts for 77.5% of all product types.
     So far, the sector has developed over 40 new
     products, including the 9Ni steel for ultra low-
     temperature container, steel for special purpose
     pipes and maritime engineering projects, the
     H-Q195P and SG365 weather-resistant eco-
     nomic corrugated plates, and the X52 high
     impact resistance steel for pipelines. Eight pro-
     duct lines, including the hot-rolled structural
     steel plate series, the pressure vessel steel plate

26   The Investment Overview of the Key Industries in Nanjing
                                                        Steel

series, the bearing steel series and the maritime
engineering steel series have passed domestic
and international certification.
    2. An integral industrial chain: Based on
the key products, the steel sector in Nanjing
has been extending its industrial chain, speci-
fically, the heavy plate series including steel
plates for vessels, moulds, wind towers and
oil/gas pipelines, heat/shock-resistant plates,
and products for tall buildings; the medium
size series including steel products for springs
used in express railways, bearings, gears and
anchor chains; the high-speed wire series in-
cluding wire welding, steel wire, steel cable for
cable-stayed bridges; and the cold-rolled sheet
series including galvanized sheet, aluminum-
zinc alloy coated sheet and tinplate. This sector
is capable of manufacturing 5 million tons of
heavy plates and 3.45 million tons of cold-
rolled products each year.
    3. Well-established industrial bases: Lever-
aging existing port resources along the Yangtze
River, Nanjing’s steel sector has been adjusting
and optimizing its industrial structure. In view
of the features of the steel sector and the deve-
lopments of Nanjing, arrangements have been
made for the optimal allocation of port, dock
and road transportation resources along the

          The Investment Overview of the Key Industries in Nanjing   27
     Steel

     Yangtze River. Through overall scheduling and
     planning of these resources, we have facilitated
     the coordinated development of the steel sector
     along the Yangtze River, reasonable, adequate
     use of the resources, and the optimization and
     upgrading of the industrial structure of the
     steel sector.
         Jiangbei Steel Industrial Park: It occupies
     an area of 1,000 hectares, with Nanjing Steel
     Group as the leading company. With regard
     to the heavy plate series, the industrial park
     focuses on the development of steel plates for
     ships, pipelines, and pressure vessels, aiming
     to become the second largest supplier to the
     domestic shipbuilding plate market, among the
     top three in the domestic pipeline steel market
     and the top five in the domestic pressure vessel
     plate market. It would drive the development
     of a new industrial park for deep processing of
     heavy plates to produce a number of products
     based on existing deep processed color-coated
     plate series and galvanized pipe series for
     shipbuilding. Employing technologies for new
     product development, It will build a number of
     supporting facilities, including a steel product
     processing center and an integrated slag scrap
     recycled product warehousing and logistics
     center, as a part of its plan to build a first-class

28   The Investment Overview of the Key Industries in Nanjing
                                                        Steel

shipbuilding steel manufacturing base in Chi-
na.
    Jiangnan Steel Industrial Park: It occupies
an area of 1,000 hectares, with Baosteel Meis-
han as the leading company. With a number
of competitive advantages, including a large
underground iron ore mine, it is an important
hot-rolled and cold-rolled plate manufacturing
base in China. While trying to improve its hot-
rolled product structure, the industrial park
would focus on the development of the cold-
rolled plate series, the tinplate series, and the
medium/high-end building plate series. In the
meantime, it would increase the proportion of
brand products and improve its competitive
edge through cost reduction. Focusing on its
product lines for the automotive, appliance,
oil/gas pipeline and container sectors, it would
enhance new process, technology and product
research to develop a pool of IPRs for critical
technologies and to become a premium steel
industrial base with a powerful manufacturing
capacity. It would focus on the development
of a new industrial park for the deep proces-
sing of hot-rolled and cold-rolled plates. In the
meantime, it would build a number of deep
processing, warehousing and logistics facilities
for color-coated plate-based products with pro-

          The Investment Overview of the Key Industries in Nanjing   29
     Steel

     mising market potential.


     III. Objectives and Priorities
         Objective: Sales of Nanjing’s steel sector
     would increase to RMB100 billion by 2012
     and RMB150 billion by 2015.
         Priorities will be given to the following ca-
     tegories:
         Major equipments and technology develop-
     ment: The design, manufacturing system in-
     tegration technologies for steel manufacturers
     with a capacity over 10 million tons, and key
     hot-rolling and cold-rolling technologies.
         Steel Products: The development of steel
     products for express railways, high-strength
     machinery steel products, corrosion/deformati-
     on-resistant steel products for pipelines, high-
     strength steel products for cars, high-grade
     steel products for the power industry, high-
     strength steel products for buildings, high-
     grade steel products for moulds, and high-
     grade seamless steel pipes with special quality
     requirements.
         Recycling techniques and energy conser-
     vation/emission reduction techniques: The
     high-temperature, high-pressure dry quenching
     technology, the sintering heat utilization tech-
     nology, the sintering flue gas desulfurization

30   The Investment Overview of the Key Industries in Nanjing
                                                       Steel
technology, blast furnace processes and tech-
niques, the blast TRT technology, the dry dust
removal technology, the dry dust removal and
recycling technology for converter flue gas, the
integrated casting-rolling technology and inte-
grated energy management technology across
the industry.
    The Integration of automation and informa-
tion management systems: The development
of automatic control and information manage-
ment technologies for steel manufacturing pro-
cesses.




         The Investment Overview of the Key Industries in Nanjing   31
     Wind Power & Photovoltaic Equipment Manufacturing


               Part Two: Eight New
                    Industries
     2.1 Wind Power & Photovoltaic
     Equipment Manufacturing
     2.1.1 Wind Power

     I. Overview
         More than any other new energy sector,
     wind power is ready to be industrialized, and
     represents the direction of the energy sector
     as a whole in the 21st century. With a huge
     market, the wind power sector is attracting
     more and more attention from governments of
     various levels. After three years of sustained
     efforts, Nanjing has established an industrial
     chain in wind power equipment manufactu-
     ring, and is striving toward a first-rate indus-
     trial base in China for wind power equipment
     manufacturing.
         Spearheaded by Nanjing High-Speed &
     Accurate Gear Group (NHSAG), the wind po-
     wer equipment manufacturing sector has been
     expanding rapidly in its overall size and the
     number of enterprises. Along with the emer-
     gence of the industrial chain and industrial
     parks, a wind power equipment manufactu-

32   The Investment Overview of the Key Industries in Nanjing
 Wind Power & Photovoltaic Equipment Manufacturing

ring base with considerable scale, IPRs, and a
complete range of supporting sectors is taking
shape. The output of the sector amounted to
RMB1.2 billion in 2006, RMB2.5 billion in
2007, RMB4 billion in 2008, up 60% year on
year, and RMB5.5 billion in 2009, up 37.5%.
Currently, the sector maintains a wind turbine
gearbox manufacturing capacity of 6,000MW,
and has started mass production for blades, to-
wers, direct drive wind turbine generators, and
double-fed synchronous wind turbine genera-
tors.


II. Advantages
    1. The wind power industrial chain is ta-
king shape rapidly. In 2006, when Nanjing
started to build its wind power industrial chain,
only six companies were engaged in this field.
After three years of rapid growth, the sector
has built a considerable manufacturing capa-
city, putting in place an industrial chain cove-
ring a full range of the equipments for wind
farm development and operation, including
turbine blade, motor, gearbox, control system,
transformer, converter and turbine generator
assembly. Holding over 90% of the domestic
market, its wind turbine transmission systems
are exported to many overseas markets, too.

          The Investment Overview of the Key Industries in Nanjing   33
     Wind Power & Photovoltaic Equipment Manufacturing

     In addition, it holds an IPR pool for variable
     pitch, yawing, acceleration and other critical
     main drive technologies.
     ● Control systems: A wind power control
         system laboratory has been established.
         The prototype of large power converter
         control system has been developed and
         was in the initial stage of industrialization.
     ● Turbine generator systems: Based on
         the double-fed asynchronous wind turbine
         generator technology, this sector has deve-
         loped a manufacturing capacity of 4,000
         MW-grade generator units per year.
     ● Turbine blades: Currently, the MW-grade
         turbine blade has already realized large-
         scale production.
     ● Transformers and transformer substa-
         tions for wind farms: So far, this sector
         has successfully developed the YBF Wind
         Power Transformer Substation, and secu-
         red over 10 major contracts with a total
         value over RMB100 million.
     ● Wind farm development: This sector has
         won the bid for a 52.4MW wind farm pro-
         ject in Pakistan.


       2. A sizable industrial cluster is on the rise.
     Over the years, a wind power industrial cluster

34   The Investment Overview of the Key Industries in Nanjing
 Wind Power & Photovoltaic Equipment Manufacturing

has taken shape in Jiangning Development
Zone (JNDZ), which is home to 26 leading
enterprises, including NHSAG, Goldwind,
Changfeng New Energy, SINOMA, CEEG,
Guodian Nanjing Automation, NR Electric,
No. 14 Research Institute of CETC, SCIYON,
Phoenix Electric, Sunaige, Langjing Wind Po-
wer, Shengtang Power and Shenlong Wind Po-
wer. These companies provide a wide range of
products and services, including turbine gene-
rator assembly, transmission gearbox, turbine
motor, control system, variable pitch yawing
system, transformer substation, transformer
and inverter, as well as the development and
operation of wind farms, laying a solid founda-
tion for the wind power equipment manufactu-
ring base of the city.


   3. Innovation capacity of the sector has
been improving steadily. So far, the wind
power sector in Nanjing has established six
national engineering centers, two national
laboratories and four provincial engineering
centers. In 2009, wind power equipment ma-
nufacturers across the city invested RMB300
million in their R&D. So far, these companies
have obtained 532 patents, including 257 in-
vention patens. JNDZ, which is named a “

          The Investment Overview of the Key Industries in Nanjing   35
     Wind Power & Photovoltaic Equipment Manufacturing

     National Renewable Energy Industrial Base,
     ” has signed a cooperation agreement with the
     Institute of Electrical Engineering of Chinese
     Academy of Sciences for the establishment of
     a wind power technology exchange center to
     provide wind power companies with technolo-
     gical exchange and high-end training services.
     In addition, it has also launched a number of
     wind power training programs with Southeast
     University, Nanjing University of Technology,
     and Nanjing University of Aeronautics and As-
     tronautics.


     III. Objectives and Priorities
         Objectives: Sales of the sector shall incre-
     ase to RMB12 billion by 2010, RMB36 billion
     by 2012, and RMB54 billion by 2015.
         Priorities: We shall continue to expand the
     business scale and improve the competitive
     edge of the wind power equipment industrial
     base by implementing a number of R&D and
     manufacturing projects in the fields of turbine
     generator units, turbine control system, lar-
     ge power transmission system, large power
     turbine blade, inverter and transformer. In
     the meantime, we would foster and support a
     number of leading enterprises to further extend
     the industrial chain, with a focus on the fol-

36   The Investment Overview of the Key Industries in Nanjing
 Wind Power & Photovoltaic Equipment Manufacturing

lowing fields:
● 3MW level (and larger) maritime and land
    wind turbine generator units;
● Monitoring systems, main control systems,
    variable pitch control systems, inverter
    control systems, and grid-connection con-
    trol systems for MW level (and larger) tur-
    bine generator units;
● Key parts for 3MW level (and larger) wind
    turbine generator units, including gearbox,
    yawing bearing, generator and inverter;
● Key accessories for 3MW level (and larger)
    wind turbine generator units, including, in-
    cluding blades, and special fiber glass; and
● Principal axis, flange and other critical
    components of 3MW level (and larger)
    wind power generator units.


2.1.2 Photovoltaic
I. Overview
    Nanjing’s photovoltaic (PV) sector has
maintained high-speed development in the
recent years. Along with the fast growth of a
number of leading enterprises, such as China
Sunergy, this sector has been expanding rapid-
ly, boosting the establishment of an industrial
chain. With gradual increase in the key invest-
ment projects, breakthroughs have been made

          The Investment Overview of the Key Industries in Nanjing   37
     Wind Power & Photovoltaic Equipment Manufacturing

     in a number of critical fields, bringing inno-
     vative capacity to a higher level. In a word,
     the photovoltaic sector has exhibited a strong
     growth momentum.
         Currently, there are over 40 photovoltaic
     manufacturers in Nanjing, with a business
     scope ranging from wafers to solar cells, com-
     ponents, system integration, applications and
     accessories, including PV glass and Silane gas.
     In 2009, the PV sector generated RMB6 billion
     in sales and 180MW of solar cell output. Cur-
     rently, it maintains a manufacturing capacity of
     500MW of solar cell components and 500,000
     tons of PV glass. China Sunergy, for example,
     has established a 20MW power station in Xuz-
     hou, the largest of its kind in China.
         Nanjing’s photovoltaic sector is gradual-
     ly clustering toward Jiangning Development
     Zone, which was named a “National Re-
     newable Energy Industrial Base under China
     Sparkle Program” by Ministry of Science and
     Technology of China in 2009. The fast deve-
     lopment of a number of hit-tech enterprises,
     including Jiangsu Photovoltaic Engineering
     Technology Center (an affiliate of CEEG), Ji-
     angsu Photovoltaic Application Engineering
     Technology Center, China Electric Equipment
     Group (CEEG), Zhonghuan Photovoltaic Sy-

38   The Investment Overview of the Key Industries in Nanjing
 Wind Power & Photovoltaic Equipment Manufacturing

stem Co., Ltd., Daqo Group and NARI, has
greatly boosted the growth of Nanjing’s photo-
voltaic sector.


II. Advantages
    1. Policies: To meet the challenge of the
financial crisis, the Central Government of
China and Jiangsu Provincial Government
have issued a series of policies to stimulate
domestic demand, effectively promoting the
growth of the photovoltaic sector. To support
the application of the photovoltaic power gene-
ration technology and the industrialization of
key technologies, the Ministry of Finance, the
Ministry of Science and Technology, and the
Ministry of Housing and Urban-rural Develop-
ment of China have respectively issued Interim
Rules for the Management of Fiscal Assistance
Fund for the Application of Solar Photoelectric
Technology in Buildings and Notice on the Im-
plementation of the Golden Sun Pilot Project,
offering a subsidy of RMB0.2/W. To boost the
development in its photovoltaic sector, Jiang-
su Provincial Government has issued Jiangsu
Province Guidelines for the Restructuring and
Resurrection of the New Energy Sector and Ji-
angsu Province Opinions on Promoting Photo-
voltaic Power Generation, announcing its goal

          The Investment Overview of the Key Industries in Nanjing   39
     Wind Power & Photovoltaic Equipment Manufacturing

     to increase its installing capacity from 170MW
     to 400MW by 2011. In accordance with the
     provincial government’s commitment to the
     reduction of CO2 emission by 40-45% from
     2005 to 2020, low-carbon economy and green
     energy will remain in the spotlight for a long
     period of time.
         2. Regional position: Jiangsu has the largest
     photovoltaic industrial cluster in China. As the
     capital city of Jiangsu Province, as well as a
     transportation hub in the Yangtze River Del-
     ta, Nanjing holds a competitive edge in terms
     of first-rate science and education resources.
     The Second Summer Youth Olympic Games,
     which is to be held in Nanjing in 2014, will
     boost the expansion of photovoltaic and other
     new energy sectors. In addition, China Solar
     VP2010 will be held in Nanjing International
     Expo Center in November 18-20, 2010, and is
     expected to consolidate the advantageous posi-
     tion of the city in the photovoltaic market.
         3. Service and support: According to the
     current industrial planning, we will accelerate
     the development of the photovoltaic industrial
     park, and the national photovoltaic test and pu-
     blic service platform. In particular, we will fo-
     cus on the development of JNDZ Photovoltaic
     Industrial Park to guide the clustering of the

40   The Investment Overview of the Key Industries in Nanjing
 Wind Power & Photovoltaic Equipment Manufacturing

sector. We will also enhance inter-agency coor-
dination and service for the major projects. Wi-
thin the authority of the municipal government,
we will give high priority to and establish a
fast track for the approval, planning, environ-
mental assessments, land use permission and
other procedures for these projects. We will es-
tablish a photovoltaic industrial association as
a platform to provide enterprises with premium
service. While encouraging local companies to
participate in leading international trade fairs,
we will work with relevant authorities and
organizations to host high-end photovoltaic
events and symposiums in Nanjing.


III. Objectives and Priorities
    Objectives: Relying on our advantages in
science, education, human and industrial re-
sources, we will take market-oriented actions
to improve the core competitive power, promo-
te the industrial upgrading, optimize the struc-
ture, and drive the growth of the photovoltaic
sector. With such measures, we will build a “
4-in-1” photovoltaic industrial base with inter-
national influence in terms of its R&D, manuf-
acturing, service and training. Eventually, we
will build the photovoltaic sector into a stra-
tegic, leading industry and an emerging pillar

          The Investment Overview of the Key Industries in Nanjing   41
     Wind Power & Photovoltaic Equipment Manufacturing

     industry in the next round of economic growth
     of the city. We will develop a solar cell sector-
     centered photovoltaic industrial chain, with an
     aim at increasing the output of the photovoltaic
     sector to RMB100 billion by 2015.
         Priorities: Relying on the advantages of
     Nanjing’s photovoltaic sector, we will focus on
     a number of key links in the industrial chain,
     including manufacturing equipment, silicon
     wafer, solar cells and components, accessories
     and system integration.
         With regard to the manufacturing equip-
     ment, we will focus on the solar cell cleaning,
     etching, diffusion, coating, screen printing and
     picking equipments. In the field of silicon wa-
     fer, we will focus on the development of large
     wafer and slurry recovery technologies, while
     enhancing innovation for casting, laminating,
     cutting and other key technologies.
         In terms of solar cell and components, our
     focus is on the development of cost-effective
     crystalline silicon cells, hull cells and other
     critical technologies/products. We will enhance
     R&D activities for other innovative solar cells,
     including solar cells with flexible substrates,
     concentrator solar cells, HIT heterojunction
     solar cells, organic solar cells, non-crystalline
     silicon nano solar cells, tandem solar cells and

42   The Investment Overview of the Key Industries in Nanjing
 Wind Power & Photovoltaic Equipment Manufacturing

a-Si/μ C-Si tandem solar cells. We will promo-
te the development of solar cell components
for buildings, including semi-translucent com-
ponents, components interchangeable with tho-
se of the buildings, photovoltaic glass curtain
walls and photovoltaic shading systems.
    In terms of accessories, we will focus on
the DC/AC inverter for non-grid connected or
grid connected photovoltaic power generation
systems, low-iron tempered glass, EVA, syn-
thetic film for the packaging of the back side of
solar cells, silver/aluminum slurry and welding
strips.
    In terms of system integration, we are
going take effective actions to expand the pho-
tovoltaic system integration market. With our
strength in the fields of general contracting of
electric engineering projects and architectural
design, we will push photovoltaic companies
to enter solar energy-building integration and
grid-connected photovoltaic power generation
markets. In the meantime, we will expand the
application of photovoltaic power generation
systems in the fields of communication, mete-
orology, long-distance pipelines, railways, and
highways.




          The Investment Overview of the Key Industries in Nanjing   43
     Smart Grid & Power Automation

     2.2 Smart Grid & Power Automation
     I. Overview
         Currently, Nanjing has three smart grid
     R&D and manufacturing bases, located in Ji-
     angning Development Zone (JNDZ) and Nan-
     jing New and Hi-tech Industry Development
     Zone (NHZ), and along Xinmofan Road. Spe-
     cifically, JNDZ is home to a secondary power
     equipment R&D and manufacturing cluster.
     NHZ is known for a primary power equipment
     R&D and manufacturing cluster. Relying on
     the resources of universities and research insti-
     tutes located around it and taking NARI Group
     and Guodian Nanjing Automation as its cen-
     ter, Xinmofan Road is recognized as a leading
     block of scientific innovation in the smart grid
     industry in China. In 2006, JNDZ was awarded
     the title of “National Electric Power Industrial
     Base” by the Ministry of Science and Techno-
     logy of China.
         Along with the fast growth of Nanjing’s
     smart grid sector, a number of product chains
     and manufacturer clusters have emerged in the
     power generation, transmission and distribu-
     tion areas across the city. These sectors boast
     advantages in both technologies and scales in
     the fields of grid safety and stability analysis
     and control relay protection, automated control

44   The Investment Overview of the Key Industries in Nanjing
              Smart Grid & Power Automation

and IT system integration. Particularly, ba-
cked by world-leading technologies, its relay
protection products holds over 60% of the do-
mestic market, and are exported to more than
30 countries/regions. In 2009, total sales of
the enterprises in the smart grid sector reached
RMB28 billion, up 17% year-on-year. Profits
and taxes of the sector totaled RMB4 billion,
up 23%.


II. Advantages
    1. Taking lead in smart power technology
in China: With the fast growth of a number of
leading enterprises, such as NARI, the overall
R&D and innovative capacity of Nanjing’s
smart grid sector has been improving steadily.
With sustained breakthroughs, the smart grid
sector has been sharpening its edge in terms of
overall size and key technologies. Currently,
its smart power technology dominates the do-
mestic market, while its relay protection tech-
nology is also in the leading position. A numb-
er of local companies, including NARI, NARI-
Relay and Guodian Nanjing Automation, have
risen as leading enterprises in China.
    2. A sizable cluster of manufacturers and
products: Nanjing is home to dozens of smart
grid equipment manufacturers with outputs of

          The Investment Overview of the Key Industries in Nanjing   45
     Smart Grid & Power Automation

     over RMB100 million each. These manufac-
     turers include NARI, NARI-Relay, Guodian
     Nanjing Automation, CEEG, Nanjing Turbine
     & Electric Machinery, Nanjing Electric Group,
     Liye Power Transformer, Daji Iron Tower, and
     Jinzhi Technology. Main products of these
     enterprises include steam turbines, transfor-
     mers, relay protection systems, transformer
     substation automation systems, power MIS sy-
     stems, iron towers for power transmission, in-
     sulators and high-voltage transformers. Among
     these product categories, many Nanjing enter-
     prises hold the lion’s share in the domestic
     market.
         3. Industrial clusters as a driving force:
     Currently, a number of industrial clusters are
     taking shape in JNDZ, NHZ, and along Xin-
     mofan Road. Specifically, JNDZ, which has
     been officially named a “National Power Au-
     tomation Industrial Base,” is home to about 40
     influential and competitive power automation
     research institutes and manufacturers. Current-
     ly, a power automation product structure cove-
     ring power generation, transmission and distri-
     bution, with reasonable market division among
     the enterprises, is already in place. In the field
     of relay protection, for example, Guodian
     Nanjing Automation, NARI and other major

46   The Investment Overview of the Key Industries in Nanjing
              Smart Grid & Power Automation

enterprises focus on 220KV or higher-voltage
products, while SMEs in the surrounding area
provide 35KW and lower-voltage products. As
a result of the labor division and cooperation,
two “industrial proliferation areas,” one with a
radius of 20km (Nanjing) and the other 200km
(southern and northern Jiangsu areas) are ta-
king shape, highlighting the clustering effect
of the sector.
    4. Close cooperation between the industrial
and academic communities, with abundant hu-
man resources: knowledge and capital-inten-
sive, smart grid is the result of integration of
modern communication, computer and micro-
electronics technologies in the field of energy
production. The universities and research in-
stitutes in Nanjing play an important role in
the development of this sector. Leading enter-
prises generally maintain joint R&D, training
and fieldwork programs with universities and
research institutes. For example, NARI and
Guodian Nanjing Automation have joint post-
graduate programs with Southeast University,
while Jiangsu Power Electric has established a
joint laboratory with Electric Power Research
Institute (EPRI). In the meantime, Nanjing
University, Southeast University, Nanjing
University of Science & Technology, Nanjing

          The Investment Overview of the Key Industries in Nanjing   47
     Smart Grid & Power Automation

     University of Aeronautics and Astronautics,
     Nanjing University of Technology and Nanjing
     Institute of Technology provide a large number
     of graduates to these sectors each year.


     III. Objectives and Priorities
         Objectives: Industrial output (current price)
     of the sector would increase to RMB50 billi-
     on by 2012 and RMB100 billion by 2015. We
     would facilitate the coordinated development
     of six production lines, i.e., grid automation,
     relay protection, automatic clean energy-based
     power generation and control, IT and commu-
     nication, automated marketing and micro-po-
     wer grid and smart primary electric equipment.
     NARI, Guodian Nanjing Automation, and
     CEEG would strive toward an annual output
     of RMB10 billion. The smart grid sector aims
     at becoming one of the emerging sectors with
     production capacity of over RMB100 billion,
     providing world-leading products in general.
         Priorities: Relying on the strength of the
     smart grid sector, we would focus on network
     monitoring systems, control systems and safety
     protection equipment, smart transformer sub-
     stations and electric equipments, EHV and DC
     transmission equipments, special transformers,
     online primary equipment monitoring and dia-

48   The Investment Overview of the Key Industries in Nanjing
              Smart Grid & Power Automation

gnosis systems in the near future. Particularly,
we would support the R&D and manufacturing
of renewable energy and new energy-based
grid access technologies, high-efficiency ener-
gy storage devices and power supply systems
for electric vehicles.
    In terms of renewable energy and new
energy-based grid access products, we would
focus on the automation systems for hydraulic
power plants, automated flood and damn in-
spection technologies and grid access systems
for renewable energy and new energy sources,
while taking actions to develop recharging/
discharging systems for electric vehicles. We
would research grid access technologies for
micro-CHP projects. Particularly, we would try
to introduce or develop high-efficiency energy
storage devices.
    With regard to power transmission and
distribution products, we will focus on EHV/
UHV AC/DC primary and secondary equip-
ments, concentrated transmission/distribution
line monitoring technologies and flexible AC
transmission/distribution technologies and
EHV AC/DC grid relay protection devices. In
the meantime, we will develop smart trans-
former substations, high-voltage switches and
sensors, and carry out R&D activities for UHV

          The Investment Overview of the Key Industries in Nanjing   49
     Smart Grid & Power Automation

     and EHV transformers and cables, EHV AC/
     DC insulation devices and metal equipments.
         With regard to power electronics, we will
     focus on UHV line inspection systems, ener-
     gy management system, IPSS smart wireless
     grid monitoring devices, power sensors, smart
     meters, load control devices and switches, and
     broadband communication equipments and de-
     vices for smart grids and power lines.
         In terms of automated dispatch products,
     we will develop new-generation smart grid
     supporting systems, and secondary system sa-
     fety protection systems for smart grids, while
     at the same time enhancing the R&D and de-
     velopment of dispatching support technologies
     and systems.
         With regard to communication and soft-
     ware products, we will develop high-speed key
     communication transmission networks with
     multi-failure-resistance and smart self-recovery
     capacities. We would support the development
     of integrated data centers and public informa-
     tion service platforms that support mass data
     storage, mass processing and mass computati-
     on. In order to ensure the safe operation of the
     communication and information platforms of
     the smart grids, we would build an in-depth in-
     formation security defense system and integra-

50   The Investment Overview of the Key Industries in Nanjing
                                     Communication

ted operation/maintenance system capable of
addressing complicated operating environment
of smart grids. We would conduct R&D for po-
wer management and distribution/transmission
management packages.



2.3 Communication
I. Overview
    Along with the globalization of the world
economy and the rapid development of the in-
formation network, continued breakthroughs
have been achieved for modern communica-
tion technologies. Today, communication is the
most converged, most promising and fastest
growing sector of the world economy. Over the
years, Nanjing’s modern communication sec-
tor has maintained a strong development mo-
mentum. Boosted by the industrial clustering
effect, a number of industrial chains have been
on the rise. With sustained growth, the sector
is expanding its share in the electronics & IT
industry. In 2009, sales of the modern com-
munication equipment manufacturing sector
amounted to RMB27.57 billion, accounting for
22.6% of that of the electronics & IT industry.




         The Investment Overview of the Key Industries in Nanjing   51
     Communication

     II. Advantages
         1. Leading-edge technologies: Nanjing is
     home to a number of leading enterprises inclu-
     ding Panda, Huawei Software, ZTE, Lenovo,
     Motorola Nanjing Software R&D Center, as
     well as many national research institutes, in-
     cluding No. 14 and No.28 Research Institutes
     of CETC. These organizations lead the dome-
     stic market with their R&D capability in the
     fields of 3G mobile communication, antenna
     and microwave communication, satellite com-
     munication, telecom OSS/BSS systems, air
     traffic control systems and emergency com-
     mand communication systems.
         2. Diversified products: With a solid foun-
     dation, Nanjing’s modern communication
     equipment manufacturing sector has establis-
     hed an industrial chain covering communica-
     tion software, equipment manufacturing and
     terminal devices. Key products include hand-
     sets, communication base stations, program-
     controlled switches, satellite communication
     systems, and communication software. This
     sector is capable of making 120 million hand-
     sets each year, accounting for 8% of the world
     total, and 1 million channel worth of wireless
     base stations. In addition, it holds 40% of the
     domestic communication software market.

52   The Investment Overview of the Key Industries in Nanjing
                                      Communication

    3. Highly competitive enterprises: In 2009,
there were about 40 large-scale communi-
cation equipment manufacturers in Nanjing.
Among them, a number of leading enterprises
have been continuously sharpening their com-
petitive edge. Currently, Panda is one of the
largest satellite communication R&D and ma-
nufacturing bases in China. Ericsson Panda's
wireless base station holds the largest share in
the mobile communication system market, and
its 3G base stations bear 30% of the 3G traffic
volume of China Unicom. Nanjing Putian's ca-
ble distribution frame is generally recognized
as the best of its kind in the domestic market.
Lianchuang tops all peers with 30% of the
communication management software market
share. Compal Communications and Inventec’s
handset manufacturing capacities amount to 60
million and 23 million units respectively.


III. Objectives and Priorities
    Objectives: By 2012, sales of the sector
will increase to RMB58 billion. There will be a
number of corporate groups with international
competitiveness, including leading enterprises
with sales over RMB10 billion each. By 2015,
sales of the sector would amount to RMB100
billion. Along with the shaping of the commu-

          The Investment Overview of the Key Industries in Nanjing   53
     Communication

     nication clusters, a large number of IPR-ba-
     cked brands, technologies and products would
     emerge in the market. The “wireless valley of
     Nanjing, China” would eventually rise as a
     wireless mobile communication R&D center
     and an industrialization base with distinct lea-
     dership in the domestic market and significant
     influence in the world market.
         Priorities: In view of the current situation
     of the sector, we will focus on the development
     of four major communication product families.


     1. Mobile communication product family:
         We will focus on the development of mobi-
     le communication, transmission, switching and
     terminal equipments, particularly 3G products.
     In response to the boom of broadband and
     mobile communication, we will focus on the
     high-end, wireless communication equipments,
     particularly optical fiber, cable feeders, optical
     transmission equipments, program-controlled
     switches, WCDMA handsets, TD-SCDMA
     handsets, access devices, base stations and
     controllers, base station antennas, core net-
     work equipments, and key accessories and test
     instruments for the next generation communi-
     cation systems.
         We will try to extend the industrial chain

54   The Investment Overview of the Key Industries in Nanjing
                                      Communication

toward accessory products by encouraging the
involvement of SMEs. Specifically, such acces-
sory products may include electronic compo-
nents, communication power supply, antennas,
multi-layer PCBs, housing of communication
equipments, aluminum products and ferrules.


2. Satellite communication product family:
    While making full use of the existing sa-
tellite orbit and frequency resources, we will
try to explore new frequency ranges, integrate
digital transmission services and develop mo-
bile satellite communication systems. By 2012,
the sector will generate sales of RMB8 billion
with a manufacturing capacity of 3,000 satel-
lite communication systems (units) and acces-
sories.
    We will accelerate the research on the stan-
dards for virtual portable radio satellite com-
munication terminals, multi-service satellite
transmission systems, integrated multi-channel
(IP, satellite, short wave, wireless access, etc.)
communication platforms and emergent satel-
lite communication platforms, multi-standard
satellite communication systems. In the mean-
time, we will push the localization, standardi-
zation and clustering of satellite communica-
tion systems and equipments.

          The Investment Overview of the Key Industries in Nanjing   55
     Communication

         We will focus on medium/low-orbit satel-
     lite communication systems, Ka-band satellite
     communication systems, satellite positioning
     terminals, mobile satellite communication
     systems, hand-held/portable satellite com-
     munication terminals. We would promote the
     development of C/Ku/Ka/S/L- band satellite
     communication (broadcasting) land systems,
     large-scale manufacturing of digital satellite
     TV receiving devices (IRD), low-cost VSAT
     systems, and microwave channel modules,
     digital terminal modules, satellite communi-
     cation network administration packages, thin-
     route VSAT systems, satellite navigation and
     positioning systems, mobile target monitoring,
     dispatching, control, management and securi-
     ty control systems. In the meantime, we will
     develop cost-effective VSAT earth-stations for
     the “telephone network access in every village
     ” program, ultra-large scale IC, ASIC and SDP
     circuits.


     3. Special communication product family
     (including IP communication products)
         We will focus on the development of new-
     generation high-speed broadband information
     network products, high-performance digital vi-
     deo conferencing systems, network administra-

56   The Investment Overview of the Key Industries in Nanjing
                                      Communication

tion and test equipments/software, and smart
network equipments.
    We will put emphasis on the development
of National Digital Switching system Engi-
neering & Technology R&D Center (Nanjing
Station). We will develop high-performance
IPv6 routers with IPRs for all of the key tech-
nologies.
    We will enhance the R&D of emergent
communication gateways and multi-protocol
conversion and networking solutions, inclu-
ding the networking between satellite, micro-
wave, 3G mobile, WAN, shortwave, optical
fiber, wire line access and other emergent com-
munication means. We would focus on the de-
velopment of emergent city command commu-
nication systems with relevant communication
equipment and software integration capability.
We would support the construction of general
design, manufacturing base development for
emergent city command communication sy-
stems to address the needs of civil air defense,
earthquake, flood, fire, hygiene and quarantine,
emergent communication, and the maintenance
of public security.


4. Communication chip and software pro-
duct family:

          The Investment Overview of the Key Industries in Nanjing   57
     Communication

         Relying on the existing military-civil tech-
     nologies and military technology transfers,
     we will enhance the development of special
     communication chips, particularly high-end
     general-purpose and special chips, to eventu-
     ally build a family of high-performance com-
     munication products with IPRs for all the key
     technologies. We plan to increase communica-
     tion chip sales to RMB2 billion by 2012. We
     will build an advanced IC Design Center that
     will take the lead in China, focusing on the de-
     sign of high-end ICs, including RFIC, mixed
     analog-digital chips, SOC, and high-end DSP
     chips. In the meantime, we will to focus on
     the development of communication RF chips,
     communication ICs with integrated RF and
     digital base band processing capabilities, ultra
     high-performance, low power consumption,
     embedded multi-core SDP processors for rou-
     ters, gateways and switching equipments. With
     these means, we will be able to promote the
     development of accessory providers and even-
     tually develop a family of high-performance
     communication products with IPRs for all of
     the key technologies.
         We will put emphasis on the develop-
     ment of 3G and 4G mobile communication
     OSS/BSS, service solutions, network and

58   The Investment Overview of the Key Industries in Nanjing
Energy Conservation & Environmental Protection

system management solutions, information
security management solutions, and commu-
nication middleware. We would develop new-
generation network systems and equipments,
such as soft switching technologies. We would
ensure the development of embedded software
products for modern communication, handset
software products and Internet-based commu-
nication software products. Our target is to
increase sales of the communication sector to
RMB15 billion by 2012.



2.4 Energy Conservation & Environ-
mental Protection
I. Overview
    Nanjing’s energy conservation & envi-
ronmental protection sector burgeoned in the
1980s. After over two decades of sustained
development, it has become an integral part
of both the manufacturing industry and the
service industries of the city. As of the end of
2009, there were over 400 energy conservation
and environmental protection companies in
Nanjing, including 120 energy conservation
equipment manufacturers, 130 environmental
protection equipment manufacturers, and 150
energy conservation and environmental protec-

          The Investment Overview of the Key Industries in Nanjing   59
     Energy Conservation & Environmental Protection

     tion service providers.
         In 2009, sales of the energy conservati-
     on & environmental protection sector totaled
     RMB27 billion, up 19.5% year-on-year, ac-
     counting for 4% of that of the industry as a
     whole—a share 0.5 percentages above that of
     2008. Profits and taxes of the sector amounted
     to RMB6.2 billion, and the total profit was
     RMB2 billion. Specifically, sales of energy
     conservation equipment manufacturers, envi-
     ronmental protection equipment manufacturers
     and energy conservation and environmental
     protection service providers were RMB13.6
     billion, RMB9.2 billion, and RMB 4.2 billion,
     accounting for 50.37%, 34.07%, and 15.56%
     of that of the sector respectively.


     II. Advantages
         1. The energy conservation & environmen-
     tal protection sector has the best R&D capacity
     in Jiangsu Province, thanks to its advantage in
     human resources. Nanjing has a unique posi-
     tion in terms of energy conservation and envi-
     ronmental protection technology and product
     development. Home to Nanjing University,
     Southeast University, Nanjing University of
     Science & Technology, Nanjing University
     of Technology, as well as a number of well-

60   The Investment Overview of the Key Industries in Nanjing
Energy Conservation & Environmental Protection

known research institutes, including Jiangsu
Provincial Academy of Environmental Sci-
ence, MEP Nanjing Institute of Environmental
Science and SGCC Nanjing Electric Environ-
mental Protection Science Research Institute,
Nanjing has a large number of high-end pro-
fessionals.
    2. The energy conservation and environ-
mental protection sector has developed a
number of market-leading technologies and
products. So far, the world-leading flue gas
desulfurization technology of Zhonghuan
(China) Engineering Co., Ltd. has enabled
the coal-burning power plants to treat 19.50
million KW worth of generator units. Nanjing
University has won the “National Science and
Technology Progress Award” and the “State
Technological Invention Award” with its “large
pore resin-based high-concentration organic
wastewater treatment” technology. The “low
heat value gas-steam combined generator units
” and “residual heat/pressure-based power
generation equipment” of Nanjing Turbine &
Electric Machinery (Group) Co., Ltd., which
is the largest provider of similar products in
China, are extensively used in steel, petro-
chemical, and cement industries. Through the
partnership with Tsinghua University, Guodian

         The Investment Overview of the Key Industries in Nanjing   61
     Energy Conservation & Environmental Protection

     Nanjing Automation Co., Ltd. has successfully
     developed a world-leading high-power fre-
     quency control system.
         3. Along with the fast development of the
     energy conservation & environmental protec-
     tion service sector, the development of an in-
     dustrial cluster is on the rise. Nanjing is home
     to approximately 150 energy conservation &
     environmental protection service providers,
     ranking first in Jiangsu Province in terms of
     the number of such enterprises with revenue
     over RMB100 million. Notably, these enter-
     prises have established an industrial structure
     with mutually supporting products and techno-
     logies. Local companies and research institutes
     hold a strong position in the electric environ-
     mental protection market, with revenues of
     Zhonghuan (China) Engineering, Co., Ltd.,
     Nanjing CEC Environmental Protection Co.,
     Ltd., SGCC Nanjing Electric Environmental
     Protection Science Research Institute and En-
     vironmental Engineering Co., Ltd. each excee-
     ding RMB100 million.


     III. Objectives and Priorities
         Nanjing’s energy conservation & environ-
     mental protection sector aims at sales targets of
     RMB50 billion by 2012 and RMB100 billion

62   The Investment Overview of the Key Industries in Nanjing
Energy Conservation & Environmental Protection

by 2015.
    Priorities will be given to the development
of key technologies, the formation of industrial
chains, and the fostering of service section.


Key technologies:
    1. We will focus on the development of key
energy conservation technologies and equip-
ment for the electromechanical sector as our
top priority, and for the steel, petrochemical,
building materials, and major energy-consu-
ming sectors as well. We would provide large,
professional energy conserving equipments
and engineering services in an effort to impro-
ve the overall technology and equipment level
of the sector.
    2. We will take concentrated actions to
overcome key challenges in the field of envi-
ronmental treatment. Particularly, we would
focus on the development of flue gas desulfu-
rization, denitration and denitrification tech-
nologies and equipments, while accelerating
the development of key technologies for the
utilization of desulfurized gypsum and other
solid waste. We will explore Urban solid waste
and biomass treatment technologies, hazmat
treatment and utilization technologies, urban
wastewater reuse technologies and equipment

          The Investment Overview of the Key Industries in Nanjing   63
     Energy Conservation & Environmental Protection

     and drinking water security technologies, and
     convert these technologies into productivity as
     soon as possible.
         3. We will conduct R & D in energy con-
     servation and environmental protection tech-
     nology. We will focus on the development of
     technologies for bio-based material synthesis,
     carbon capture, ion flue gas denitration, phy-
     toremediation of contaminated soil, and bio-
     degradable plastic materials to narrow the gap
     between Nanjing and leading countries/regions
     and to build a sustainable innovation system in
     the field of energy conservation and environ-
     mental protection technologies and products.
         4. We will develop environmentally sound
     technologies and processes. We would increase
     the application of cutting-edge technologies in
     traditional industries, enhance R&D and appli-
     cation of clean production and environmentally
     sound technologies, drive the restructuring and
     upgrade of traditional industries, and enhance
     energy conservation and emission reduction.
     We will open up new market through the de-
     velopment, manufacturing and distribution of
     environmentally sound products.


     Industrial chains:
        1. Energy-saving electric equipments: Whi-

64   The Investment Overview of the Key Industries in Nanjing
Energy Conservation & Environmental Protection

ling focusing on our most important products,
including the high/low-voltage inverter series,
the energy-saving motor series, the ceramic
permanent magnetic motor series, the 110KVA
and higher-power energy-saving transformer
series and the hydrodynamic cooling tower
series, we will promote the development of
SMEs in an effort to develop an industrial clu-
ster and a range of key energy-saving electric
products.
    2. Residual heat/pressure recovery equip-
ments: We will focus on key technologies and
products, including low heat value gas-steam
combined generator units, residual heat/pres-
sure-based power generation equipments, and
high-efficiency thermal rod and thermal tubes,
with an aim at enhancing mutual product sup-
port among local companies to be capable of
providing one-stop residual heat/pressure reco-
very services, ranging from R&D, production
to general contracting.
    3. Energy-saving industrial boil (kiln):
Based on key projects in the fields of high-
efficiency residual heat boilers, regenerative
energy-saving kilns, and solid waste incinera-
tors, as well as existing engineering supporting
facilities, we will accelerate the development
of energy-saving industrial boiler (kiln) series.

          The Investment Overview of the Key Industries in Nanjing   65
     Energy Conservation & Environmental Protection

          4. Energy conservation for buildings:
     We will focus on the development of energy-
     saving products for buildings, particularly
     central air conditioning systems, integrated
     heat-insulating and shading windows and heat-
     insulating wall materials. With our strengths
     in solid waste-based new building material
     technologies and products, we will encourage
     cooperation between manufacturers, univer-
     sities and research institutes to accelerate the
     development and mass deployment of energy-
     saving products for buildings.
         5. High-performance lighting: While conso-
     lidating the positions of the leading enterprises,
     and with support from Nanjing University and
     other university and research institutes, we
     will build a high-performance, green lighting
     industrial chain and manufacturing base for
     manufacturers of components, lighting systems
     and lamps, as well as general contractors of
     engineering projects.
         6. Exhaust treatment equipments and
     materials: Based on our key products, inclu-
     ding high temperature/corrosion-resistant
     exhaust treatment materials and equipment,
     environmental-friendly honeycomb ceramic,
     desulfurization, denitration and dust absorption
     equipments, as well as existing exhaust treat-

66   The Investment Overview of the Key Industries in Nanjing
Energy Conservation & Environmental Protection

ment engineering ability, we will accelerate
the development of special exhaust treatment
equipments and materials.
    7. Wastewater treatment equipments and
materials: We will build a R&D and manufac-
turing base for wastewater treatment and water
remediation equipment, products, materials,
and related test/monitoring instruments. Based
on our key products, including organic ultra-
filtration membrane, ceramic membrane, water
remediation equipments and the sewage pump
series, as well as the existing wastewater treat-
ment projects, we will accelerate the develop-
ment of wastewater treatment equipments and
material industrial chain.
    8. Integrated utilization of resources: Fo-
cusing on low input, high output, hi-tech pro-
ducts, we will drive the development of the
waste recycling and re-use sector to build an
integrated “three-wastes” reutilization industri-
al chain.


Service sector:
    Energy conservation services: We will ac-
celerate the development of energy conservati-
on services workforce. In addition to compre-
hensive energy contract management, energy
audit and clean production services, we would

          The Investment Overview of the Key Industries in Nanjing   67
     Energy Conservation & Environmental Protection

     provide enterprises with one-stop energy con-
     servation services ranging from consultation
     to planning, engineering design and general
     contracting. Through transactions in the capi-
     tal market, we will build an integrated service
     platform to provide energy conservation com-
     panies with technology transfer, product pro-
     motion and project release services. Particu-
     larly, we will develop comprehensive services
     throughout the value chain, including solution
     development, engineering consultation and de-
     sign, and project contracting.
         2. Environmental protection services: While
     focusing on environmental impact assessment,
     consultation, engineering design and general
     contracting, we will accelerate the develop-
     ment of environmental technology consultati-
     on and service sectors. With the resources of
     leading enterprises and research institutes, we
     will develop a number of industrial parks into
     provincial environmental protection service
     clusters and international environmental tech-
     nology R&D bases. While consolidating the
     leadership of major enterprises and improving
     the roles of SMEs, we will enhance the capa-
     city of the environmental protection service
     sector, and foster a number of companies with
     recognized leadership in Jiangsu Province and

68   The Investment Overview of the Key Industries in Nanjing
                                 Biopharmaceutical

considerable influence in the China. We will
expand the scope of environmental protection
services and shift the business model from
single-type service to integrated, diversified
services. In the meantime, we will expand the
fields of environmental protection services
from the electric industry to other applicable
industries.



2.5 Biopharmaceutical
I. Overview
    With continued efforts to enhance innova-
tion, optimize product structure and develop
industrial clusters, Nanjing’s biopharmaceu-
tical sector has maintained fast, healthy, and
stable growth in the past years. In 2009, sales
of the sector totaled RMB26 billion, up 23.8%
year-on-year. Particularly, sales of the drug
manufacturing sector amounted to RMB9.5
billion, up 20%. An integral industrial system
consisting of the API and drug manufacturing
and drug circulation sectors is already in place.


II. Advantages
    1. Well-established new drug R&D Plat-
forms: Currently in Nanjing, approximately 30
universities/colleges and research institutes are

          The Investment Overview of the Key Industries in Nanjing   69
     Biopharmaceutical

     involved in biopharmaceutical research and
     development, including China Pharmaceutical
     University, Nanjing University of Traditional
     Chinese Medicine, Nanjing University, Sou-
     theast University and Nanjing Medical Univer-
     sity, National Pharmaceutical Biotechnology
     Laboratory, National Biochemical Enginee-
     ring Technology Research Center, New Drug
     Screening Center of China Pharmaceutical
     University, Jiangsu Center for Pharmacodyna-
     mics Research and Evaluation and Jiangsu Key
     Laboratory of Drug Metabolism and Pharma-
     cokinetics.
         2. Industrial clusters on the rise: Nanjing
     Economic and Technological Development
     Zone and Pukou Biopharmaceutical Industrial
     Base are rising as important industrial clusters
     in terms of both size and market influence.
     In 2009, industrial outputs of these two bio-
     pharmaceutical industrial bases amounted to
     RMB2.8 billion and RMB2.9 billion respec-
     tively. Jointly, they accounted for 60% of total
     output of the biopharmaceutical sector of the
     city.
         3. Fast growing enterprises: With the fast
     growth of a number of hi-tech enterprises with
     R&D, research result commercialization and
     manufacturing capacity, an industrial cluster-

70   The Investment Overview of the Key Industries in Nanjing
                                Biopharmaceutical

centric growth pattern is taking shape.
    4. Continuously improving product struc-
ture: While 250 drugs and 320 APIs have
passed GMP certification, the sector has ob-
tained 1,343 drug approval numbers and appro-
ximately 1,000 new drug certificates, including
about 150 for class-I and class-II new drugs.


III. Objectives and Priorities
    Objectives: Sales of the biopharmaceuti-
cal sector will increase to RMB40 billion by
2012 (including RMB12 billion from the drug
manufacturing sector) and RMB70 billion by
2015, averaging an annual growth rate of over
25%.
    Priorities will be given to the following
sectors:
Biopharmaceutical:
    We will escalate our research efforts to
overcome challenges for a number of critical
common technologies for the bioconversion
of phosphoryl compounds, antibody huma-
nization, eukaryote cell expression and drug
delivery and release. We will try to make
breakthroughs for core production processes
including whole-cell catalyzed high-energy
phosphoryl compound preparation, large-scale
cell culture, separation and purification.

         The Investment Overview of the Key Industries in Nanjing   71
     Biopharmaceutical

        We will accelerate the industrialization
     of major innovative drugs, including RHAP,
     TRAIL variant and YCP, and focus on the de-
     velopment of new substitutes for existing che-
     mical drugs for tumors, immune diseases, and
     cardio-cerebral vascular diseases.


     New chemical drugs:
         While consolidating our competitive edge
     in three drug families, i.e., “the anti-tumor
     drug family, the cardio-cerebral vascular drug
     family and the anti-infection drug family”, we
     will enhance the screening of small molecu-
     le drugs, the assessment of drug effects and
     safety performance, and the research on phar-
     macokinetics, and drug quality evaluation. In
     addition, we will try to make breakthroughs in
     the fields of innovative drug synthesis, crystal
     purification, and formulation process industria-
     lization.
         We will focus on the R&D of a number of
     anti-tumor drugs, including rh-Endostatin, len-
     tinan for injection, Nedaplatin for injection and
     paclitaxel injection. We will develop a number
     of cardio-cerebral vascular drugs, including
     edaravone injection, tanshinone II A sodium
     injection and anti-infection drugs, including
     Biapenem for injection and amoxicillin.

72   The Investment Overview of the Key Industries in Nanjing
                                 Biopharmaceutical

Modern TCM
    While focusing on the re-development of
a number of premium TCM drugs, including
Paishi Granules and Tongsaimai Tablets, we
will conduct TCM drug screening, drug effect
assessment, safety assessment, clinical evalua-
tion and adverse reaction monitoring. In additi-
on, we will perform research and development
for TCM manufacturing processes and techno-
logies, as well as quality control.


Medical equipments:
     We will focus on the development of me-
tal, alloy, metal synthetic and other biomedical
metal materials, interventional catheters and
biomedical materials. We will encourage com-
panies to introduce world-leading technolo-
gies, and invest in the R&D and manufacturing
of coronary stents.
     Particularly, we will encourage the produc-
tion of high-performance X-ray tubes, high-
frequency high-voltage X-ray generators,
high-performance image intensifiers, image
archiving and communication systems, special
medical diagnostic X-ray machine, radio fre-
quency ablation systems and radiation therapy
equipments.


          The Investment Overview of the Key Industries in Nanjing   73
     New Materials

     2.6 New Materials
     I. Overview
         Since the beginning of the “11th Five Year
     Plan”, Nanjing’s forefront new materials sector
     (“new materials sector” hereafter) has main-
     tained a roughly 3% share in the total industri-
     al output of the city. Obviously, there’s a solid
     foundation for the fast development of this
     sector. In 2009, the new materials sector ge-
     nerated RMB18 billion in sales, up 20% year-
     on-year, RMB3.47 billion in profit and tax, up
     22%, and RMB1.93 billion in total profit, up
     34%. Currently, five distinct clusters, i.e., spe-
     cial metal materials, special synthetic fibers,
     metal-based synthetic fibers, new magnetic
     materials, ultra-fine compound particles and
     nanophase materials are emerging, along with
     their product families and industrial bases with
     distinct features.


     II. Advantages
         1. Steadily growing industrial leaders:
     Based on the fast growth over the years, a
     number of large enterprises are emerging as
     market leaders. Currently, 28 companies have
     new materials sales over RMB50 million each,
     including 12 with sales of RMB100-500 milli-
     on, two with sales of RMB500million-RMB1

74   The Investment Overview of the Key Industries in Nanjing
                                       New Materials

billion, and six with sales over RMB1 billion.
As the largest special synthetic fiber material
R&D and manufacturing base in China, Sino-
ma Science & Technology dominates the high-
end synthetic materials market. In 2009, its
sales amounted to RMB1.37 billion, up 34%
year-on-year. The rapid growth of the indus-
trial leaders has laid a solid foundation for the
new materials sector of the city.
    2. Substantial improvement to the equip-
ment level: Based on the technology introduc-
tion and upgrade efforts in the recent years,
significant improvement has been made to the
overall equipment level of the new materials
sector, which is generally at the same level of
leading players in the international market in
the later 1990s. Some companies are even on
the same level of leading international rivals.
Specifically, Nanjing Welbow Metals Co.,
Ltd. has invested RMB500 million to install
a world-leading environmental friendly ver-
tical magnesium and strontium retorting line.
Nanjing Hongbaoli’s supercritical synthesis
process has been granted a national invention
patent. Upon completion of its 50,000t/a plant,
it will become the largest IPA manufacturer in
Asia and the third largest in the world. Nanjing
Baotai Special Material Co., Ltd. has invested

          The Investment Overview of the Key Industries in Nanjing   75
     New Materials

     RMB250 million to expand the capacity of its
     Ti-Zr material production line to 2,000t/a, one
     of the largest of its kind in China.
         3. Significantly improved innovative ca-
     pacity: In 2008, Nanjing's special materials
     sector had three national, eight provincial and
     a number of municipal corporate technology
     centers (or engineering technology centers). As
     of the end of 2009, it maintained a pool of 219
     patents, including 56 invention patents.


     III. Objectives and Priorities
         Objectives: Total sales of new materials,
     particularly new metal materials, special syn-
     thetic fibers, metal-based synthetic fibers, new
     magnetic materials, ultra-fine compound par-
     ticles and nanophase materials will increase
     at an annual rate of 25% to RMB30 billion by
     2012, and further expand to RMB50 billion by
     2015.
         Priorities: With the strength of Nanjing’s
     new materials sector, we will focus on the de-
     velopment of five distinct product clusters.


     Special metal materials:
        In the field of functional metal materials,
     we will focus on new electronics materials,
     high-performance battery cells, energy storage

76   The Investment Overview of the Key Industries in Nanjing
                                       New Materials

materials, superconducting materials, shape
memory alloys, amorphous nanocrystalline
materials, titanium and titanium alloys and rare
earth materials.
    In the field of high-purity metal materials,
we will focus on high-purity semimetal, pre-
cious metal and scattered metal, and heavy and
nonferrous metal.
    With regard to high-performance structural
materials and surface materials, we will focus
on cold-rolled high-performance steel plates,
high-performance steel pipes, high-perfor-
mance medium/heavy steel plates, high-perfor-
mance stainless steel, high-purity bearing steel,
new magnesium-aluminum alloy and high-
performance copper alloys, hot dip galvanized
steel sheets, electro-galvanized steel sheets,
coated steel wires, alloy-coated plates and tin
copperbelt.
    With regard to ultrafine processed mate-
rials, we will focus on precision steel alloy,
ultra-thin nonferrous metal and foil materials.
    In terms of new mould materials, we will
focus on high-performance mould steel, high-
performance hard alloy moulds and rollers.


Special synthetic fibers:
   In the field of special fiberglass materi-

          The Investment Overview of the Key Industries in Nanjing   77
     New Materials

     als, we will focus on special fiberglass, high-
     performance carbon fibers, high-strength, high
     modulus polyethylene, aramid, polysulfona-
     mide, polyphenyl thioether, PAN-based carbon
     fiber and polyolefin fluoride.
         With regard to high-performance enginee-
     ring plastics and synthetic fibers, we will focus
     on the amanium, eurelon, polyformaldehyde,
     Noryl and polycarbonate polyester series.
         In terms of ceramic-based synthetic ma-
     terials and products, we will focus on syn-
     thetic belt materials, synthetic rods, ceramic
     membranes, hyperfiltration membranes and
     reverse osmose membranes.
         With regard to resin-based synthetic mate-
     rials and products, we will focus on synthetic
     materials and products for the aviation/ ae-
     ronautics equipments and weapons, vessels,
     electronics products, electromechanical pro-
     ducts, civil engineering projects, biochemical
     applications and chemical and environmental
     protection applications, as well as enhanson
     for high-performance synthetic materials.
         In the field of functional polymers, we will
     focus on functional optical, electric and ma-
     gnetic materials, new absorption, exchange and
     separation materials, and biomedical polymers.


78   The Investment Overview of the Key Industries in Nanjing
                                      New Materials

Metal synthetic materials:
    In the field of aluminum, magnesium and
alloys, we will focus on high-precision alumi-
num, magnesium alloy sheets, belts and foils,
as well as new, high-performance aluminum,
magnesium alloys and heat/corrosion/fire-
resistant materials.
    With regard to titanium and alloys, we will
focus on seamless titanium pipes and titanium
alloy pipes (e.g., Ti-Al-V alloy, and Ti-Mo-Ni
alloy), ultra-long alloy tubes with high wall-
diameter ratios, thin-walled titanium pipes,
titanium pipes for nuclear power stations and
coastal power stations, large precision casted
parts for aviation equipments, heavy titanium
profiles for vessels, and titanium vessels.
    In terms of metal-based synthetic materials
and products, we will focus on fiber-reinforced
metal-based synthetic materials, discontinuo-
us reinforced metal-based synthetic materials,
functional metal-based synthetic materials and
products, high-strength, low-density aluminum
or magnesium-based synthetic materials for
aerospace applications, instrument-grade car-
borundum particle/aluminum-based synthetic
materials, and particle/short firber-reinforced
aluminum/zinc-based wear-resistant synthetic
materials.

         The Investment Overview of the Key Industries in Nanjing   79
     New Materials

     New magnetic materials:
         With regard to ferrites, we will focus on
     high-performance M-ferrite with rare earth,
     high-performance W-ferrite, rare earth ferrites
     with high working temperatures and anisotro-
     py, nano-synthetic rare earth ferrites.
         In the field of soft magnetic materials, we
     will focus on high-frequency, low-loss, isoPO-
     WER ferrites, nanocrystals and amorphous soft
     magnetic materials, membranes, membrane
     granulose high-frequency soft magnetic mate-
     rials.
         With regard to other important magnetic
     materials, we will focus on Magnetronic sen-
     sors, wave-absorbing materials, magnetostric-
     tive materials and medical-purpose magnetic
     materials with promising market outlook.


     Ultrafine compound particles and nanopha-
     se materials:
         With regard to nanophase powder and coa-
     ting materials, we will focus on transparent
     nanophase coating materials, nano-oxide pow-
     ders, nanophase attapulgite powder and slur-
     ry, nanophase material-modified epoxy resin,
     unsaturated resin, nylon, polypropylene, PIPs,
     and high-performance nano-synthetic plastics
     with anti-reunion agents.

80   The Investment Overview of the Key Industries in Nanjing
         UMT Equipment Manufacturing

    In the field of nanophase materials, we will
focus on quantum dot nanocrystalline mate-
rials, nano-metal oxides, water-based hybrid
nano-emulsion, nanophase materials for op-
toelectronic and microelectronic applications,
nanostructured membrane materials and nano-
phase materials for biomedical applications.
    In terms of ultrafine compound particles,
we will focus on silicon monocrystal substrate
mateirals for large integrated circuits, gallium
arsenide substrate materials, semiconducting
materials made of gallium arsenide and indium
phosphide compounds, 8-12” silicon monocry-
stal and epitaxial membrane materials, and 4-6
” gallium arsenide monocrystal materials.



2.7 UMT Equipment Manufacturing
I. Overview
    Nanjing is one of the first provincial ca-
pitals in China to develop metro systems and
UMT equipment manufacturing sectors. With a
fast growth, its UMT equipment manufacturing
sector has established an integral industrial
chain consisting of a number of highly concen-
trated industrial clusters. With 38 major UMT
equipment manufacturers, the sector holds the
largest shares in the integrated UMT control

          The Investment Overview of the Key Industries in Nanjing   81
     UMT Equipment Manufacturing

     system and automatic railcar door system mar-
     kets. In general, it leads the domestic market
     with a total revenue of RMB7 billion, a profit
     and tax of RMB700 million and a total profit
     of RMB400 million in 2009, up 40%, 40% and
     33% year-on-year respectively.


     II. Advantages
         1. An integral UMT industrial chain is ta-
     king shape. After years of development, an
     integral industrial chain consisting of a number
     of sectors is taking shape, including project
     financing, investment, development, operation
     and consultation, initial preparation, enginee-
     ring and design, section and station enginee-
     ring, vehicle system, power supply system,
     communication/signal/integrated automation
     systems, ticket system, fire protection system,
     air conditioning system, water supply, drainage
     and other systems, and operation consultation
     and information integration services. Particu-
     larly, this sector leads the domestic market in
     terms of overall size and development level.
         A number of major players with considera-
     ble size and competitive edge have emerged
     along the UMT equipment manufacturing in-
     dustrial chain, including: (1) vehicle system
     providers: CSR Nanjing Puzhen Rolling Stock

82   The Investment Overview of the Key Industries in Nanjing
          UMT Equipment Manufacturing

Works, which is a designated UMT vehicle ma-
nufacturer in China, Nanjing Huashi Electronic
Scientific Co., Ltd., which is a supplier of elec-
tronic equipment for vehicles, Nanjing Kangni
New Technology of Mechanitronic Co., Ltd. ,
which is a UMT equipment supplier, and Nan-
jing Gaochuan Electromechanical Equipment
Co., Ltd.; (2) UMT engineering project general
contractor and signal system provider: CETC
Research Institute No.14; (3) automatic ticket
service and clearance system provider: Pan-
da Electronics Group; (4) integrated control
system and power control system providers:
NARI and Gudian Nanjing Automation; (5)
fire protection system providers: Nanjing Fire
Protection Technology Co., Ltd., and Nanjing
Fire Group, both industrial leaders; (6) venti-
lation and air conditioning system provider:
Tica Air-conditioning Co., Ltd., and Wuzhou
Refrigeration Group; and (7) water supply and
drainage system provider: Nanjing Lanshen
Group, which is a leading manufacturer of
pumps and water treatment equipments.
    2. Significant improvement ha been made
in the innovation and integration capacities of
individual enterprises. Most innovative com-
panies, major RMT equipment manufacturers
in Nanjing are expected to benefit from the

          The Investment Overview of the Key Industries in Nanjing   83
     UMT Equipment Manufacturing

     government’s industrial policies aimed at in-
     creasing domestic supply of UMT equipment.
     Through independent innovation, integration of
     existing innovative technologies and re-inno-
     vation through digesting the introduced tech-
     nologies, these companies have implemented a
     number of national research programs, as well
     as provincial programs for the industrialization
     of major research results over the past years.
     In addition, they have successfully developed
     a number of critical systems, including UMT
     vehicle systems, signal systems, integrated
     control systems, and vehicle traction systems
     based on proprietary technologies. Particular-
     ly, 77.6% of all components of Class-A metro
     trains and 95% of those of Kangni railcar doors
     are made in China. Currently, Nanjing Huashi
     is the only Chinese vehicle traction system
     supplier. Developed with proprietary techno-
     logies, certified by authoritative organizations
     as being one of the best-in-class worldwide
     and protected with complete IPRs, this system
     is in operation in many vehicles. NARI’s new
     integrated control system has won the bids for
     Nanjing’s Metro Line 2, Chongqing’s Metro
     Line 3 and Guangzhou’s Zhujiang Xincheng
     Projects. Having won the bids for the general
     contracting of UMT Line 1 in Karachi, Paki-

84   The Investment Overview of the Key Industries in Nanjing
         UMT Equipment Manufacturing

stan and the light rail project of Jordan, No.14
Research Institute of CETC has managed to
improve its innovative capacity and competi-
tiveness through continued exploration in the
field of UMT general contracting.
     3. The advantage of co-operation in UMT
sector is burgeoning. In 2006, 33 organiza-
tions of different ownerships across the UMT
equipment manufacturing, UMT operation,
technology consultation, research and invest-
ment sectors jointly established Nanjing Urban
Mass Transit Industry Association to serve
as an important platform for communication,
cooperation and business development of
member companies. Headed by senior officials
from the municipal government, delegations of
Nanjing's UMT sector visited Xi’an, Chengdu,
Harbin, Chongqing, Suzhou, Changsha and
Ningbo in the last three years, carrying out
marketing campaigns to improve the overall
image and increase the market share of the sec-
tor.
     4. Admirable achievements have been
made in overseas UMT projects. Nanjing’s
UMT equipment manufacturing sector is an
important supplier of not only domestic me-
tro and light rail projects in Nanjing, Shang-
hai, Beijing, Tianjin, Guangzhou, Shenzhen,

          The Investment Overview of the Key Industries in Nanjing   85
     UMT Equipment Manufacturing

     Chongqing, Chengdu, Shenyang, Xi’an, Wu-
     han, Hangzhou, Dalian, Hong Kong, Chang-
     chun, and Suzhou, but also in many overseas
     metro markets, including Singapore, Thailand,
     India and Iran.


     III. Objectives and Priorities
         With years of preparation and development,
     Nanjing’s UMT sector has both the foundation
     and the potential for further development. With
     the release of internal demand-stimulating
     policies, the UMT sector faces unprecedented
     opportunities for fast growth. Nanjing Munici-
     pal Government is committed to building the
     city into a leading UMT equipment R&D and
     manufacturing base with a high reputation in
     the world market. Revenue of the sector is ex-
     pected to increase to RMB18 billion by 2012
     and RMB50 billion by 2015.
         Priorities will be given to the following
     areas:
         1. In terms of vehicle systems, we will
     focus on the development of AC traction sy-
     stems, drive and control systems, braking sy-
     stems and power supply systems.
         2. In terms of UMT general contracting,
     we will try to attract a number of world-known
     consultation, financing and investment institu-

86   The Investment Overview of the Key Industries in Nanjing
                                                 Aviation

tions, UMT engineering companies, key equip-
ment suppliers and operators.
    3. In terms of technological exchange and
cooperation, we will focus on industrial design
technologies for the 200km/h passenger trains,
vibration and noise performance improvement
technologies for bogie systems used in inter-
city train sets and bogie wheel-rail systems, as
well as braking technologies for metro trains.



2.8 Aviation
I. Overview
    Aviation holds an important position
in Nanjing. It is one of the most-supported
emerging sectors of the city. Thanks to efforts
aimed at planning overall market resources,
optimizing its industrial structure and driving
its leap development, the aviation sector has
maintained a rapid growth, with an integral
product structure and industrial chain on the
rise. As of the end of 2009, the sector had a
workforce of over 50,000 researchers and
workers, and over 60 companies, research in-
stitutes and colleges/universities, including a
number of national companies with established
market positions. In 2009, output of the sector
amounted to RMB19 billion.

          The Investment Overview of the Key Industries in Nanjing   87
      Aviation

     II. Advantages
         1. Desirable geographic location: Located
     at the juncture of the China's coastal region
     and the Yangtze River Delta economic area,
     Nanjing is a critical hub for Jiangsu's strate-
     gies of opening-up along the coastal line, the
     Yangtze River and key railways, as well as the
     “go-east” strategic vision of China’s civil avia-
     tion industry. As an important industrial center
     in the Yangtze River Delta, Nanjing sits close
     to Shanghai, which is emerging as a manufac-
     turing base of wide-body civil airplanes. In a
     word, Nanjing is an ideal choice for the natio-
     nal aviation industry.
         2. An integral industrial chain on the rise:
     Nanjing has developed a number of industrial
     sectors in the fields of aircraft environmental
     control system, hydraulic system, fuel system,
     APU system, pilot and navigation systems,
     target identification system, airborne radar
     and equipment manufacturing, as well as light
     aircraft engine and unmanned aircraft ma-
     nufacturing. Nanjing’s new material and new
     technology-oriented neo-industry provides the
     aviation sector with necessary resources in the
     upper stream of this industrial chain. The ex-
     pansion of the unmanned aircraft, light aircraft
     engine and airborne equipment sectors has laid

88   The Investment Overview of the Key Industries in Nanjing
                                                 Aviation

a solid foundation for the development of an
aviation industrial chain. The "Aviation Tech-
nology City” program, particularly the aviation
research, product service, international coope-
ration and marketing efforts, have paved way
for the development of the downstream of this
industrial chain.
    3. Competitive products: Nanjing’s light
aircraft engine sector has a particularly promi-
sing outlook. Light aircraft engine technologies
and products from Aviation Industry Corpora-
tion of China (AVIC) are the most competitive
in the domestic market, and are used to build
power systems for general purpose airplanes
and unmanned aircrafts made in China and
elsewhere in the world. Nanjing has a solid
industrial foundation in the field of airborne
electronic systems. The only airborne hydrau-
lic system research center in China, Nanjing
Engineering Institute of Aircraft Systems of
Jincheng Group, has six major product lines:
airborne electronic control systems, aircraft en-
vironmental control systems, hydraulic pressu-
re control systems, fuel systems, auxiliary po-
wer systems, and power distribution systems.
Nanjing’s airborne aviation electronic system
manufacturing sector is a leader in the dome-
stic market, as evidenced by the achievements

          The Investment Overview of the Key Industries in Nanjing   89
      Aviation

     of the CETC subsidiaries in the city.
         4. Emerging industrial bases: With years
     of efforts, Nanjing has established around Lu-
     kou International Airport a 20km2 aviation
     equipment manufacturing base, which is now
     home to all major aviation equipment manuf-
     acturers in the city. In the meantime, prepara-
     tions are being made for the development of a
     400,000m2 science park in an effort to attract
     top aviation R&D institutions in China and el-
     sewhere in the world.
         5. Abundant human resource supply: As
     an important education and research base in
     China, Nanjing has approximately 400,000
     technology professionals and 700,000 college
     students. Particularly, Nanjing University of
     Aeronautics and Astronautics is one of the top
     three aviation universities in China, offering
     major disciplines in the fields of aviation and
     astronautics, including the best courses for
     smart materials and structures, aviation elec-
     tric and electronics in the country. Each year,
     over 1,000 postgraduates leave their campus,
     forming a sustained flow of R&D talents into
     the aviation industry. In addition, Nanjing
     University, Southeast University and Nanjing
     University of Science & Technology also offer
     aviation-related courses, with an established

90   The Investment Overview of the Key Industries in Nanjing
                                                 Aviation

reputation in terms of aviation talent develop-
ment, R&D ability and new product develop-
ment.


III. Objectives and Priorities
    By 2010, the aviation sector will achieve
an industrial output of RMB24 billion, and
the R&D and manufacturing ability for key
airborne electronic and aviation electronic
equipments. By 2012, the sector will generate
RMB40 billion in output and will be capable
of developing and manufacturing accessory
systems for commercial planes, unmanned air-
crafts for civil purposes, and light aircraft en-
gine systems. By 2015, the output of the sector
will further increase to RMB70 billion, along
with new R&D and manufacturing capacity in
the fields of light aircrafts and other general
purpose airplanes to put in place an integral
aviation sector.


Industrial planning:
   In line with the status and objectives of
Nanjing’s aviation sector, a general blueprint
has been developed with a focus on “one in-
dustrial base and one industrial park”. The
purpose of the plan is to build a number of
aviation industrial clusters with a leading com-

          The Investment Overview of the Key Industries in Nanjing   91
      Aviation

     petitive edge.
         Specifically, the “one industrial base” re-
     fers to an integrated aviation industrial base
     with R&D, manufacturing, assembly and test
     capacities in Jiangning Development Zone and
     Lishui Economic Development Zone.
         “One industrial park” refers to the avi-
     ation science park to be built in the former
     manufacturing facilities of Jincheng Group to
     accommodate R&D, prototyping, incubation
     and exhibition of research results, international
     communication and cooperation, market deve-
     lopment and marketing, as well as other produ-
     cer services for the aviation sector.


     Key technologies and products:
         In the field of airplane manufacturing, we
     will focus on light aircrafts (light business pla-
     nes and unmanned aircrafts for civil purposes),
     which require less investments and have shor-
     ter time-to-market. We will try to establish an
     integral R&D and manufacturing system with
     aircraft design, assembly, airworthiness test
     and maintenance abilities.
         With regard to aircraft engine system,
     we are going to focus on the development of
     the 100 Hp -500Hp piston engine series, the
     1000daN and smaller power turbojet/turbofan

92   The Investment Overview of the Key Industries in Nanjing
                                                Aviation

engine series and the 1MW and smaller power
gas turbine series and auxiliary power systems.
Eventually, we will structure an R&D and ma-
nufacturing system for light aircraft engine,
ejection power and auxiliary power systems.
    With regard to airborne electronic systems,
we are going drive the development of air,
hydraulic, fuel and auxiliary power systems
in synch with development of commercial air-
planes.
    With regard to aviation equipments, we are
going to focus on the development of airborne
radar systems, automatic air traffic control
systems, satellite communication systems,
satellite-based positioning systems, flight con-
trol systems and identification systems, with an
aim to establish an integral aviation equipment
cluster.




         The Investment Overview of the Key Industries in Nanjing   93
     Software & Service Outsourcing


        Part Three: Eight Modern
            Service Industries
     3.1 Software & Service Outsourcing
     I. Overview:
         In 2009, Nanjing’s software sector gene-
     rated RMB63 billion in sales, up 33.5% over
     last year. Currently, the sector has 785 certified
     software companies, about 45.8% of the total
     number of the Jiangsu Province, and a work-
     force of over 120,000. So far, the sector has
     developed 3,844 certified software products,
     amounting to 50.8% of the province’s total.
     Across the city, there are 240 software compa-
     nies with sales over RMB10 million, including
     70 with sales over RMB100 million.
         In 2009, contract sales of the 486 service
     outsourcing companies in Nanjing amounted
     to US$2.21 billion, an increase of 178% over
     last year and accounting for 39% of the pro-
     vince’s total, among which offshore contract
     sales reached US$1.32 billion, up 192%. Actu-
     al revenue of service outsourcing was US$1.79
     billion, up 253% year on year and accounting
     for 41% of the province’s total, among which
     offshore revenue amounted to US$1.03 billion,
     up 232% over last year.

94   The Investment Overview of the Key Industries in Nanjing
         Software & Service Outsourcing

II.Advantages:
    Nanjing is known for its strength in science
and education. With 41 colleges/universities
and 523 research institutions, the city has
the highest ratio of college students in every
10,000 people in China, and an abundant sup-
ply of software R&D and other professionals.
Nanjing is also proud of its desirable business
environment for the software sector. It is home
to six of the “Top 100 Software Companies in
China by Revenue”, nine of the “Top 10 Soft-
ware Companies in Jiangsu Province by Reve-
nue”, nine of the “Top 10 Tax-paying Software
Companies in Jiangsu Province” and all ten of
the “Top 10 Software Companies in Jiangsu
Province by R&D Input” — all by 2009 ran-
kings. Nanjing’s software outsourcing sector
maintains its leadership in Jiangsu Province by
key indicators. The city now ranks as the fore-
runner among the top 20 service outsourcing
cities in China.


III. Objectives:
     Our objectives are to build Nanjing into
a “famous software city in China”, as well as
an international service outsourcing base that
leads the domestic market and has a compe-
titive edge in the international market. Reve-

          The Investment Overview of the Key Industries in Nanjing   95
     Software & Service Outsourcing

     nue of the software sector would increase to
     RMB120 billion by 2012, and over RMB200
     by 2015, making Nanjing a top 4 city in this
     regard in China. In the meantime, the offshore
     service outsourcing sector would strive to re-
     ach total contract sales of RMB32 billion by
     2012 and over RMB70 billion by 2015.


     IV. Priorities:
         While consolidating its competitive edge
     in the fields of electric power automation,
     communications and intelligent transporta-
     tion, Nanjing’s software sector would focus
     on the development of imbedded software,
     applications, and enterprise software products
     for the IT, petrochemical, vehicle manufac-
     turing, power, electromechanical equipment,
     UMT, biopharmaceutical and steel industries.
     In addition, it would boost the development
     of application software for modern service
     sectors, including e-government, digital home
     and community, modern logistics, culture
     and entertainment, business, trade and tou-
     rism, healthcare, social security, urban safety
     and public traffic. Leveraging the appeal of
     the model international service outsourcing
     center, Nanjing would focus on international
     outsourcing of software service, R&D and

96   The Investment Overview of the Key Industries in Nanjing
          Software & Service Outsourcing

design, game and animation, supply chain ma-
nagement, pharmaceutical R&D, and financial
services to build a number of leading brands in
the world market with Nanjing’s own features.


V. Industrial Bases:
    Industrial bases in this sector include Nan-
jing Software Park, Xuzhuang Software Park,
Jiangdong Software Park, Ningnan IT & Soft-
ware Industrial Base and Jishan Software Park.
According to their blueprints, total land area of
these industrial parks amounts to 21.2km2. So
far, 1.6 million square meters of construction
areas have been completed.
● Nanjing Software Park focuses on system
     software, gaming and animation solutions
     and car-borne software products.
● Xuzhuang Software Park has identified
     software testing service, e-government and
     information security solutions, IC design,
     biomedical solutions, and manufacturing
     solutions as its priorities.
● Jiangdong Software Park aims at informati-
     on technology outsourcing (ITO), business
     process outsourcing (BPO) and knowledge
     process outsourcing (KPO).
● Ningnan IT & Software Industrial Base
     focuses on communications solutions and

          The Investment Overview of the Key Industries in Nanjing   97
     Software & Service Outsourcing

       service outsourcing.
     ● Jishan Software Park on the export and
       outsourcing of large-scale software solu-
       tions and BPO.


     VI. Policy Environment:
         Each year, the Nanjing Municipal Govern-
     ment allots RMB100 million to a special fund
     established in support of the software sector.
     The government also pledges to gradually
     increase its input to encourage local software
     companies to expand their business and hone
     their competitive edge. The city also pledges to
     support their R&D, industrialization, certifica-
     tion, brand building, export and IPO efforts.
         Nanjing welcomes software companies
     both home and abroad. Subsidies from the
     district (county) governments and develop-
     ment zones are available to companies for their
     rent or purchase of business premises for self-
     use. The amount of subsidies depends on their
     actual amount of investment or tax-payment.
     For Global 500 and leading Chinese and inter-
     national software companies seeking to invest
     or set up headquarters or regional headquarters
     or R&D centers in Nanjing, we will try our
     best to satisfy their preferential choices for site
     selection, so long as their requirements comply

98   The Investment Overview of the Key Industries in Nanjing
         Software & Service Outsourcing

with our general land use planning and urban
planning. In addition, we will give them prefe-
rential consideration during the auction of the
land needed.
    We also encourage the export of proprieta-
ry software products. Companies are entitled to
a subsidy of RMB0.1 for each US$1 of incre-
mental export value year on year as evidenced
by the customs declaration forms, export con-
tracts and exchange memos. (Source: Policies
of the Nanjing Municipal Government on
Promoting the Development of the Software
Sector, NJG Issue [2008] No. 82).


VII. Development Plan:
    We will continue to optimize the industrial
structure of “Two Software Parks and Multiple
Industrial Bases”. With Jiangsu Software Park,
which is a national software park, and Nanjing
Software Park as the leader, we will drive the
development of a number of other software
industrial bases in Xuanwu, Gulou, Yuhua, Ji-
angning and Pukou Districts and build a numb-
er of software industrial clusters with distinct
features.
    In the meantime, we will boost the deve-
lopment of the service outsourcing sector in
line with the “5+1” blueprint, i.e. five natio-

          The Investment Overview of the Key Industries in Nanjing   99
      Finance & Insurance

      nal model service outsourcing bases (located
      in Nanjing New & High-tech Development
      Zone, Gulou District, Xuanwu District, Yuhua
      District and Jiangning Development Zone),
      and one science park (Hexi New Town Science
      Park in Jianye District).



      3.2 Finance & Insurance
      I. Overview:
          In 2009, value added of Nanjing’s fi-
      nance sector amounted to RMB34.21 billion,
      up 10.5% over last year and accounting for
      15.8% of that of the city’s entire service sec-
      tor. Currently, there are 38 banks and four
      non-banking financial institutions (trust, lease
      and finance companies) in Nanjing. In total,
      these banks have 1,011 banking offices and
      28,000 employees. In addition, there are three
      Nanjing-based securities companies, 76 se-
      curities trading floors, and 67 provincial and
      higher-level branches of major insurance com-
      panies in the city. As of December 31, 2009,
      RMB and foreign currency deposit and loan
      balances of these financial institutions totaled
      RMB1108.84 billion and RMB944.45 billion
      respectively. In the meantime, Nanjing’s con-
      sumer credit market has also maintained rapid

100   The Investment Overview of the Key Industries in Nanjing
                              Finance & Insurance

growth. By the end of 2009, private consumer
loan balance stood at RMB100.898 billion, up
45.3% from the beginning of the year. Nanjing
’s 13,000 POS terminals and 1,752 ATMs rank
the fourth in China.


II. Advantages:
    Nanjing is home to one of the nine trans-re-
gional branches of the People’s Bank of China,
in addition to a large number of financial insti-
tutions. The influence and services of the city
’s finance sector extends well beyond Jiangsu
Province to cities in the northern part of the
Yangtze River Delta. In terms of overall size,
Nanjing’s finance sector is by far the largest in
Jiangsu, accounting for one fourth of that of
the entire province.


III. Objectives:
    Our objectives are to build Nanjing into an
important regional financial center in East Chi-
na, powerful enough for mutual complement
with Shanghai which positions itself as an
international financial center. Value added of
the finance & insurance sector would increase
to RMB60 billion by 2012, and over RMB100
billion or 18% of that of the city’s entire ser-
vice sector by 2015.

          The Investment Overview of the Key Industries in Nanjing   101
      Finance & Insurance

      IV. Priorities:
          We will introduce innovative means to
      attract more financial institutions to Nanjing,
      and facilitate the reform of existing financial
      enterprises. In the meantime, we will make all-
      out efforts to include Nanjing in the list of pilot
      cities for the innovation program of the insu-
      rance sector. We will build a multi-tier SME
      guarantee system, accelerate the development
      of the venture capital system, and continue to
      shape and improve the financial service system
      in the rural areas. We will encourage the Bank
      of Nanjing, Nanjing Securities Co., Ltd., rural
      commercial banks and other local financial in-
      stitutions to expand their businesses and shar-
      pen their competitive edge. Currently, we are
      also preparing for the establishment of a local
      insurance company. We encourage foreign fi-
      nancial institutions to open offices in Nanjing,
      or transform local branches into independent
      corporate organizations. In addition, we will
      provide Chinese and international financial in-
      stitutions with strong incentives to move their
      headquarters to Nanjing.


      V. Industrial Bases:
          Major industrial bases in this sector include
      Hexi CBD Financial Cluster, Hongwu South

102   The Investment Overview of the Key Industries in Nanjing
                             Finance & Insurance

Road-Zhongshan South Road Financial Cluster
and Greenland Financial Center. Of the 1.63
million square meters of construction projects
scheduled, 930,000 square meters have already
been completed.
● Hexi CBD Financial Cluster aims at do-
    mestic and foreign financial corporations,
    provincial branches and regional headquar-
    ters of major financial institutions, head-
    quarters of listed companies and invest-
    ment institutions (funds), regional equity
    exchanges, accounting firms, law firms,
    credit rating agencies and other high-end
    intermediary service providers. Eventually,
    it would become a modern financial cluster
    with a complete array of financial business
    modes, sound financial services and well-
    established commercial facilities.
● Hongwu South Road-Zhongshan South
    Road Financial Cluster focuses on the
    development of feature blocks. While con-
    solidating and improving the traditional
    financial and commercial blocks, it would
    try to build a number of integrated finan-
    cial service blocks.
● Greenland Financial Center is designed for
    the development of a cluster of emerging
    financial business modes.

         The Investment Overview of the Key Industries in Nanjing   103
      Finance & Insurance

      VI. Policy Environment:
          To encourage financing through the capital
      market, the Nanjing Municipal Government
      allots RMB10 million each year to a special
      guidance fund, which is supplemented by the
      district (county) governments and the three
      national development zones by the ratio of 1:1.
      The fund is used primarily to subsidize enter-
      prises for the intermediary service expenses
      incurred in financing activities on the capital
      market.
          The Municipal Government provides
      RMB30 million each year through a special
      fund set up to support major guarantee insti-
      tutions on the list of government support pro-
      gram.
          The Municipal Government maintains a
      RMB200 million VC guidance fund to gui-
      de the establishment and development of VC
      enterprises, particularly those set up by the
      district and county governments, development
      zones and private companies through means of
      equity investment, and the provision of finan-
      cing guarantee. VC institutions are encouraged
      to make investments in startups in Nanjing.
          By 2010, the Municipal Government has
      allotted RMB50 million each year for several
      years for the establishment of a special fund in

104   The Investment Overview of the Key Industries in Nanjing
                                  Modern Logistics

support of the finance sector in Hexi Financial
Cluster. The special fund is used primarily to
provide one-off subsidies to financial institu-
tions for their opening of operations, renting or
purchase of business premises for self-use, and
to vice presidents or higher-ranking officials of
financial institutions, or principals of their regi-
onal headquarters for the renting of residential
properties in Hexi Financial Cluster. (Source:
Policies of the Nanjing Municipal Government
on Accelerating the Development of Nanjing’s
Finance Sector, NJG Issue [2008] No. 148])


VII. Development Plan:
    Nanjing has developed a blueprint of “
one core and two districts” (i.e. the core area
of Hexi Financial Cluster for headquarters
and back offices of financial institutions and
emerging financial businesses, plus the tra-
ditional financial and commercial districts in
Xinjiekou and along Hunan Road-Zhongyang
Road) in an effort to build its integrated finan-
cial service clusters.


3.3 Modern Logistics
I. Overview:
    In 2009, value added of Nanjing’s trans-
portation, warehousing and post service sectors

          The Investment Overview of the Key Industries in Nanjing   105
      Modern Logistics

      totaled RMB21.82 billion, up 10.7% over last
      year and accounting for 10.1% of that of the
      city’s entire service sector. All together, ports
      across the city handled 121 million tons of car-
      go and 1.21 million standard containers, while
      the airport of the city reported 10.84 billion
      passenger arrivals/departures, in addition to a
      cargo throughput of 200,000 tons. Passenger
      and cargo throughputs through road transporta-
      tion amounted to 260 million passenger arri-
      vals/departures and 150 million tons respec-
      tively.


      II. Advantages:
          Nanjing is an important transportation hub
      and regional logistics center in China. Port
      of Nanjing is the largest inland port in China,
      while Lukou Airport is the second largest inter-
      national airport in East China. Nanjing South
      Railway Station, which is currently under
      construction, would be the largest passenger
      rail hub in Asia once completed, connecting
      11 railways and covering a population of 100
      million. In addition, an expressway network
      consisting of “two ring roads and 12 other ex-
      pressways running along different directions”
      is basically in place.


106   The Investment Overview of the Key Industries in Nanjing
                                  Modern Logistics

III. Objectives:
    Our objectives are to build Nanjing into a
regional logistics center and a national logi-
stics node in China. Value added of the trans-
portation, warehousing and post service sec-
tors would increase to over RMB32 billion by
2012, and over RMB54 billion or over 10% of
that of the entire service sector by 2015.


IV. Priorities:
    Targeting at the interaction of the indus-
trial belts along the Yangtze River, the inland
ports and sea ports, the airport and the railway
stations, we are driving the development of in-
tegrated infrastructure, transportation and con-
trol systems to eventually build an IT-backed
logistics system featuring seamless integration
of multiple transport means. Based on the exi-
sting export processing zones, logistics bases
and bonded logistics centers, we are going to
accelerate the development of port logistics,
particularly bonded logistics services. We will
develop the industry-specific logistics, parti-
cularly third-party logistics in line with sup-
ply chain management and modern logistics
ideas. We will also highlight the development
of e-commerce-oriented urban delivery and
logistics services to support the development

          The Investment Overview of the Key Industries in Nanjing   107
      Modern Logistics

      of the city and the upgrade of its consumption
      structure.


      V. Industrial Bases:
      ● Key industrial bases in this sector include
          Longtan Logistics Base, Airport Logistics
          Park, Yuhua Integrated Logistics Park,
          Jinagbei Chemical Logistics Park, Jiang-
          ning Binjiang Logistics Park and Nanjing
          Agricultural and Sideline Products Logi-
          stics Center. According to their blueprints,
          total land area of these industrial parks
          amounts to 22.3km2. So far, 1.63 milli-
          on square meters of construction areas
          have been completed. Nanjing Longtan
          Logistics Base has a total planned land
          area of 10.5km2, of which 100,000m2
          of warehousing facilities are already in
          place. Leveraging the business opportu-
          nities brought by Longtan Port, the base
          would focus on the development of bon-
          ded logistics service, particularly container
          logistics and other integrated logistics ser-
          vices, with an aim of becoming a regional
          logistics center.
      ● Occupying a total land area of 3.66km2,
          the Airport Logistics Park has already
          completed the construction of approxima-

108   The Investment Overview of the Key Industries in Nanjing
                                  Modern Logistics

    tely 500,000m2 of warehousing facilities.
    Its specialties include bonded airport logi-
    stics, express delivery service, and special
    logistics service for manufacturing compa-
    nies in Jiangning Development Zone and
    the surrounding areas.
●   Yuhua Integrated Logistics Park has a total
    planned land area of 2.46km2, of which
    640,000m2 of warehousing facilities have
    been completed. Benefiting from Suning
    Logistics Base, Red Sun Industrial Mate-
    rial City and Mingfa Industrial Material
    City, it focuses on the development of mo-
    dern logistics services.
●   Designed as a supporting facility of Nan-
    jing Chemical Industrial Park, Jiangbei
    Chemical Logistics Park is committed to
    the development of third-party chemical
    logistics, with an aim of becoming a che-
    mical logistics center in East China.
●   With a planned land area of 3.64km2,
    Jiangning Binjiang Logistics Park is en-
    gaged primarily in industrial logistics ser-
    vices, particularly for the steel sector.
●   Nanjing Agricultural and Sideline Product
    Logistics Center has a planned land area of
    2km2. So far, 385,000m2 of facilities are
    already in place. Its target is to become a

          The Investment Overview of the Key Industries in Nanjing   109
      Modern Logistics

            modern agricultural and sideline product
            logistics center with influence over sur-
            rounding areas 300km around Nanjing.


      VI. Policy Environment:
          New enterprises engaged in logistics tech-
      nology and consultation services, and logi-
      stics information services are entitled to tax
      exemption and rebates pursuant to relevant
      laws, regulations and policies. (Source: Poli-
      cies of the Jiangsu Provincial Government on
      Accelerating the Development of the Modern
      Service Sector, JSG Issue [2005] No.17)
          We will focus on logistics bases in Long-
      tan, Lukou and Dingjiazhuang, as well as the
      Jiangbei Chemical Logistics Park. Among the
      various charges for the transfer of land plots
      for the development of logistics bases, only
      those mandated by relevant policies are colle-
      cted. Other incomes from land transfer and the
      municipal government’s share in charges coll-
      ected for the development of new vegetable
      fields are used as share capital of state-owned
      investment institutions for the development
      of relevant infrastructure. The above logistics
      base development projects are exempted of the
      municipal government’s share of the planning
      fees. Logistics bases have higher priority in

110   The Investment Overview of the Key Industries in Nanjing
                                  Modern Logistics

obtaining farmland or a portion of the annual
quota for non-farming use of farmland based
on adequate compensations.
    We support the development of large logi-
stics projects. With due approval, charges for
the use of public utilities infrastructure and for
the interim use of the roads by logistics pro-
jects with total investment above US$30 mil-
lion could be deferred to later terms. (Source:
Nanjing Municipal Government’s Guidelines
for Accelerating the Development of Nanjing’s
Service Sector, NJG Issue [2005] No. 132)


VII. Development Plan:
    We have envisioned a modern logistics
landscape with inland/sea ports, airports, and
railway and highway stations as the hubs,
Longtan, Lukou Airport, Ma’an Airport,
Wangjiawan (Dingjiazhuang), Jiangbei Che-
mical, Yuhua and Jiangning logistics bases and
a number of logistics and delivery centers as
the key nodes, and the “3-3-1 network” (i.e.
delivery in 30 minutes for destinations within
the main city, three quarters for those within
the city area and one hour for those within the
“Nanjing Metropolis Circle”) as the delivery
paths.


          The Investment Overview of the Key Industries in Nanjing   111
      IT Service

      3.4 IT Service
      I. Overview:
          IT service sector’s share in Nanjing’s ser-
      vice sector stands at about 6%. Consisting of
      information transmission (23%), computer
      service and software (60%) and information
      and content (17%), Nanjing’s IT service sector
      has developed into a well-established indus-
      trial system with a promising outlook. Across
      the city, there are more than 6,000 IT service
      companies, employing approximately 100,000
      people. Along with continued expansion and
      upgrade of the IT infrastructure, numerous new
      IT business modes and services, including 3G
      network service, gaming phone, music service,
      video phone, digital map, mobile financial ser-
      vice and TV-on-demand have emerged. IT ser-
      vice is rising as a new driving force of Nanjing
      ’s economic growth.


      II. Advantages:
          Nanjing is a traditional communications
      center in China. As one of the five major regio-
      nal communications hubs, and one of the eight
      national nodes of chinanet, the city is known
      for powerful communications, transmissi-
      on, and Internet exchange capabilities, well-
      established infrastructure and abundant digital

112   The Investment Overview of the Key Industries in Nanjing
                                                IT Service

resources.


III. Objectives:
    Value added of the IT service sector will
increase to over RMB25 billion by 2012, and
over RMB45 billion or 8% of that of the entire
service sector by 2015.


IV. Priorities:
    Focusing on information transmission and
Internet-based IT service, we will focus on the
development of industry/consumer-oriented
services. We will accelerate the development of
the value-added telecom service sector through
technology and service innovation, and boost
the development of the e-commerce, digital
media, online video/audio, online gaming, di-
gital design and creativity and digital content
sectors. We will improve the digital authentica-
tion, e-payment and online payment technolo-
gies to stimulate the growth of the e-commerce
sector. We will enhance IT infrastructure deve-
lopment in suburban districts and counties to
enable modern IT services, including remote
agricultural technology service, and remote
education for rural citizens. We will also esta-
blish public information platforms to provide
information about product quality, food safety

          The Investment Overview of the Key Industries in Nanjing   113
      IT Service

      and community services.


      V. Industrial Bases:
          Industrial bases in this sector include Xin-
      cheng Science Park, Jiangsu Industrial Design
      Park, and Baixia Hi-tech Zone. Total planned
      land areas of these industrial parks exceed
      35km2, of which 2.3 million square meters of
      buildings and facilities are already in place.
          Xincheng Science Park has a planned land
      area of 4km2, of which 300,000m2 of buil-
      dings have already been completed. With an
      international hi-tech incubator and a hi-tech
      innovation center under construction, it aims at
      becoming an industrial transfer destination of
      foreign and domestic communication software
      sectors. Currently, it is the largest industrial
      park in the main city, as well as an important
      industrial belt in Hexi New Town.
          With a planned land area of 6.3km2, inclu-
      ding 240,000m2 of buildings in place, Jiangsu
      Industrial Design Park focuses on the commu-
      nication, electronics, software, system engi-
      neering and power automation sectors. Upon
      completion, it will become an innovative block
      of over five million square meters in total
      construction area.
          Baixia Hi-tech Zone has a planned land

114   The Investment Overview of the Key Industries in Nanjing
                                                IT Service

area of 3.14km2, of which 200,000m2 of buil-
dings and structures have been completed.
With a focus on IT and Opto-mechatronics,
it is designed to be a modern environmental
friendly hi-tech industrial park.


VI. Policy Environment:
    Efforts shall be made to boost the deve-
lopment of value-added IT services based on
digital TV, mobile communication and broad-
band multimedia platforms. With the approval
of the municipal government, IT infrastructure
projects are entitled to exemption or reduction
of relevant fees and charges. (Source: The
Nanjing Municipal Government’s Guidelines
for Accelerating the Development of Nanjing’s
Service Sector, NJG Issue [2005] No.132)
    Certified IT service companies are entitled
to preferential policies for hi-tech and software
companies. (Source: The Nanjing Municipal
Government’s Views on Accelerating the De-
velopment of Nanjing’s IT Service Sector, NJG
Issue [2009] No.25)


VII. Development Plan:
   A number of IT service industrial bases and
clusters with “R&D, transaction, training and
incubation” functions will be built in the main

          The Investment Overview of the Key Industries in Nanjing   115
      Tourism, Convention & Exhibition

      city and the suburban districts to guide the
      concentration of the IT service sector.



      3.5 Tourism, Convention & Exhibition
      I. Overview:
          In 2009, Nanjing’s tourism sector genera-
      ted RMB82.22 billion in sales, up 15.1% over
      last year. With 55.19 million domestic tourist
      arrivals and 1.13 million international tourist
      arrivals, the city created US$840 million in
      foreign exchange income. Meanwhile, Nan-
      jing’s convention & exhibition sector has also
      maintained rapid expansion as it reported an
      annual increase of over 30 percent in terms
      of the number of events, exhibition area, and
      share in economic growth for several conse-
      cutive years. A number of self-brand events,
      including Nanjing Major Project Investment
      Consultation and Talks, China Nanjing Gol-
      den Autumn Economic and Trade Fair, China
      (Nanjing) International Software Product Expo
      (CIS), and the Asia Outdoor Trade Show are
      getting increasingly attention. In 2009, over
      10,700 conferences, exhibitions and festival
      activities were held in Nanjing, up 30.5% over
      the previous year. Total exhibition area excee-
      ded 1.60 million square meters, up 37% from

116   The Investment Overview of the Key Industries in Nanjing
       Tourism, Convention & Exhibition

the year before. Among these events, 1,032
were of large scales, including 19 with more
than 1,000 booths, totaling an exhibition area
of 600,000m2.


II. Advantages:
    Nanjing is a National Tourist City with
unique appeal known for its mountains, waters,
ancient city walls, forests, culture, history, and
modern metropolitan attractions. Currently,
there are 43 national tourist resorts in Nanjing,
including one “AAAAA” resort and nine “
AAAA” resorts. In addition, there are 131 star-
rated hotels, including 21 4-star and 13 5-star
ones. With a high reputation in the convention
and exhibition market, Nanjing is among the “
Top 10 Most Influential Convention and Exhi-
bition Cities in China”.


III. Objectives:
    Nanjing’s goal is to become a famous tou-
rism, convention and exhibition destination
in China. Total revenue of the tourism sector
would increase to RMB110 billion by 2012
and RMB150 billion by 2015. In the mean-
time, domestic and international tourist arrivals
would increase to 70 million by 2012 and 80
million by 2015.With an annual growth rate of

          The Investment Overview of the Key Industries in Nanjing   117
      Tourism, Convention & Exhibition

      25%, both the number of events and exhibition
      area would double in every three years(i.e.,
      by 2012 and 2015 respectively).


      IV. Priorities:
           We will improve the structure of tourism
      products by boosting the development of
      feature tour programs including leisure and
      holiday-spending travels, country tours, eco-
      tours, sports and entertainment tours, science
      and education tours, religion tours and festival
      tours. We will also focus on the building of
      tourism brands to improve the overall compe-
      titiveness of the tourism sector. Further actions
      would be taken to integrate the tourism resour-
      ces in Nanjing and the member cities within
      the Nanjing Metropolis Circle and the Yangtze
      River Delta, to jointly build regional tourism
      brands and promote in an all-round way the in-
      ternationalization of Nanjing’s tourism sector.
      In the meantime, we will actively develop the
      convention and exhibition market, and provide
      support to a number of companies with com-
      petitive edge. We will also plan and host more
      national, international exhibitions and events,
      and cultivate and develop branded events with
      proprietary IPRs.


118   The Investment Overview of the Key Industries in Nanjing
       Tourism, Convention & Exhibition

V. Industrial Bases:
    Nanjng’s tourism industrial bases mainly
include “one core, two belts and seven areas”:
    “One core” refers to the core tourism re-
sorts, including the ancient city, the Zhongshan
Mountain Scenic Area, the Yuhuatai Scenic
Area and the Juhuatai Scenic Area.
    “Two belts” refer to the Yangtze River In-
ternational Tourism Belt featuring scenery and
cultural resorts along the Yangtze River, and
the Qinhuai River Scenic Belt featuring river-
side ecological scenery.
    “Seven areas” include the north Luhe
Sight-seeing Area, the Chu River Sight-
seeing Area, the Pukou Sight-seeing Area, the
Tangshan-Qinglongshan Sight-seeing Area, the
Niushou-Yuntaishan Sight-seeing Area, the Li-
shui Sight-seeing Area and the Gaochun Sight-
seeing Area.
    Major convention and exhibition facilities
in Nanjing include Nanjing International Expo
Center and Nanjing International Exhibition
Center. Nanjing International Expo Center
has a total land area of 540,000m2 and a total
construction area of 360,000m2. Nanjing Inter-
national Exhibition Center has a total land area
of 126,000m2 with a floor area of 108,000m2.


          The Investment Overview of the Key Industries in Nanjing   119
      Tourism, Convention & Exhibition

      VI. Policy Environment:
          New tourism enterprises based in Jiangsu
      Province and affiliates of tourism enterprises
      based elsewhere but qualified as enterprises
      income tax payers are entitled to exemption or
      rebate of enterprise income tax for one year, or
      for three years given that 60% of their emplo-
      yees are newly hired people waiting for em-
      ployment, or that 30% are newly hired laid-off
      workers.
          Entity or individual organizers of exhibition
      events may pay business taxes for their income
      from the payments of the participants under
      the title of “service sector—brokerage sector”.
      (Source: Policies of the Jiangsu Provincial Go-
      vernment on Accelerating the Development of
      the Modern Service Sector, JSG Issue [2005]
      No.17)
          The Municipal Government encourages
      investment in large tourism projects, and pro-
      vides "project-specific" preferential policies for
      tourism projects with total investments over
      RMB100 million, given that they comply with
      policy guidance of the government. Travel
      agencies may arrange transportation, lodging,
      catering and meeting services for approved
      business activities of government agencies,
      enterprises and social groups. Invoices issued

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       Tourism, Convention & Exhibition

by travel agencies are accepted as reimburse-
ment vouchers. The Municipal Government
encourages the upgrade of tourist vehicles. For
each level upgrading (e.g., from medium level
to high level), their operation right is extended
for one year. Fixed-line urban tourist trans-
ports are exempted of passenger transportation
surcharges (plate numbers provided by the ow-
ners and verified by regulatory authorities).
    With the approval of the Municipal Go-
vernment, large convention and exhibition
facility development projects are exempted of
public utilities infrastructure fees. Enterprises
or entities having organized branded exhibition
events with national or international influence
for three consecutive times are entitled to one-
off subsidies. (Source: The Nanjing Municipal
Government’s Guidelines for Accelerating the
Development of Nanjing’s Service Sector, NJG
Issue [2005] No. 132)


VII. Development Plan:
    The tourism sector would focus on the
development of “one core, two belts and se-
ven areas”. Cultural tourism and urban leisure
tourism will be the key themes of the urban
district travels, while eco-tourism and leisure
and holiday spending will be the highlights

          The Investment Overview of the Key Industries in Nanjing   121
      Culture & Creativity

      of travels in suburban districts and counties.
      Using the resources of Nanjing International
      Expo Center and Nanjing International Exhi-
      bition Center, the convention and exhibition
      sector would accelerate the development of a
      number of medium/small facilities to build a
      pool of facilities with different sizes, capacities
      and features.



      3.6 Culture & Creativity
      I. Overview:
          Nanjing’s culture sector accounts for about
      7% of the city’s entire service sector. Current-
      ly, there are approximately 40 hi-tech, design
      and creativity industrial parks, and a workforce
      of 100,000 in Nanjing. Amid fast growth of the
      culture and creativity industry, particularly the
      creativity and design sectors, Nanjing has esta-
      blished a sound industrial system consisting of
      radio, film and TV, publishing, performing art,
      arts and crafts, animation and games, architec-
      tural design, advertisement design, industrial
      design and fashion design sectors.


      II. Advantages:
          As one of the most famous historical and
      cultural cities in the world, and one of the four

122   The Investment Overview of the Key Industries in Nanjing
                             Culture & Creativity

major ancient capitals in China, Nanjing is
proud of its cultural resources which include
the cultural heritages of the Six Dynasty Peri-
ods, the Republic of China, and along the Qin-
huai River. In addition, most of Nanjing’s 41
universities/colleges offer courses on design
and creative industry, and over 70,000 students
are majoring in these programs, giving the city
a rich supply of human resources.


III. Objectives:
    Nanjing’s goal is to become an important
culture and creativity industrial base in China.
Value added of the culture sector would incre-
ase to RMB32 billion or 10% of that of the en-
tire service sector by 2012, and RMB65 billion
or 12% of the entire service sector by 2015.


IV. Priorities:
    We will take positive action to drive the
development of design and creativity service
sectors (including industrial design, architec-
tural design and fashion design), art creativity
service sectors (including film, TV and media,
publishing, planning, and cultural and art pro-
duction), and Internet and IT creativity service
sectors (including animation production, online
gaming and advertising), in an effort to build a

          The Investment Overview of the Key Industries in Nanjing   123
      Culture & Creativity

      number of new culture and creativity industrial
      clusters. We will accelerate the transformation
      of the radio, film and TV, audio/video, publi-
      shing, newspaper and periodical sectors from
      traditional media to new culture and creativity
      sectors, with an aim of fostering a number of
      leading mainstream media companies. We will
      also continue to open the culture market, capi-
      talize cultural resources through market-orien-
      ted approaches, and boost large-scale input and
      output of the culture sector.


      V. Industrial Bases:
          Key industrial bases include “Chenguang
      1865” Creativity Industrial Park, “East Eight
      Zone” Creativity Industrial Park, Jiangsu
      Creativity & Culture Industrial Base, Jiangsu
      Broadcasting Corporation Film and TV Base
      and Zidong International Creativity Indus-
      trial Park. In total, these facilities occupy a
      land area of 10km2, of which 200,000m2 of
      construction areas have been completed.
          “Chenguang 1865 Creativity Industrial
      Park” occupies a total land area of 210,000m2.
      As many buildings in the area were built in the
      Republic of China time, 67,000m2 of these
      have been renovated. The industrial park aims
      at becoming an integrated fashion, life and

124   The Investment Overview of the Key Industries in Nanjing
                             Culture & Creativity

creativity exhibition center, a landmark with
reputable hi-tech, culture, business and travel
services in the China and world markets.
    With a total land area of approximately
110mu (7.33 hectares), “East Eight Zone”
Creativity Industrial Park is designed to be a
creativity industrial cluster for the architectu-
ral design, advertising, planning, consultation,
artistic creation, arts design, animation and on-
line game development sectors.
    Covering a total land area of 3,800mu (ap-
proximately 253.33 hectares), Jiangsu Creative
Culture Industrial Base is engaged in the pro-
vision of creativity, culture, performance, edu-
cation, entertainment and leisure services.
    With a planned land area of 10,000mu
(approximately 666.67 hectares) Jiangsu
Broadcasting Corporation Film and TV Base is
intended to be a first-class film and TV produc-
tion base in China with distinct flavors of the
recent/modern history.
    Zidong International Creativity Industrial
Park, which occupies a total land area of 67
hectares, focuses on various creativity and de-
sign sectors.


VI. Policy Environment:
   The Municipal Government allots RMB15

          The Investment Overview of the Key Industries in Nanjing   125
      Culture & Creativity

      million each year as the special fund in support
      of Nanjing’s culture sector.
           Advertising expenses of animation soft-
      ware development, online game development,
      sports and culture enterprises could be ded-
      ucted from their taxable incomes within the
      limit of 8% of the sales (revenue) of each tax
      year. The part beyond the above limit could
      be carried forward to the follow-on tax years
      for an indefinite period. With the approval of
      the taxation authorities, advertising expense of
      hi-tech online game development enterprises
      may be deducted from taxable incomes in full
      amount for 5 tax years starting from the date
      of registration. Export of animation software,
      online gaming software and cultural products
      qualified as computer software export are en-
      titled to tax exemption, providing that the input
      tax is not deducted or rebated. (Source: The
      Economic Policies of the Nanjing Municipal
      Government on Accelerating the Development
      of the Culture Sector, NJG Issue [2006] No.
      172)
           With the approval of State Administration
      of Radio, Film and Television and appraisal of
      expert panels, original animation series pro-
      duced by Nanjing-based studios are entitled
      to incentives depending on their quality and

126   The Investment Overview of the Key Industries in Nanjing
                             Culture & Creativity

influence after going on show. The incentives
range from RMB800 to 1,500/minute for 2D
and RMB1,500 to 2,500 for 3D animation se-
ries shown on Nanjing-based TV channels. The
maximum incentive for those series is limited
to RMB1 million each. For those shown on
CCTV, the criteria are RMB1,500-2,500/minu-
te for 2D and RMB2,500-3,500 for 3D series,
with a maximum of RMB2 million each. For
an animation series shown on a number of
TVs, incentives will be provided in accordance
with the highest criteria, but shall not repeat.
    With the approval of State Administration
of Radio, Film and Television, original anima-
tion films produced by Nanjing-based studios
are entitled to incentives of 10%-15% of their
production costs depending on their influ-
ence after going on show, with a maximum of
RMB2 million each.
    Cartoon books produced and published in
Nanjing are entitled to incentives of 5%-10%
of their sales, with a maximum of RMB1 milli-
on each. (Source: Policies of the Bureau Radio,
Film and Television of the Nanjing Municipal
Government on Encouraging and Supporting
the Development of the Animation Sector,
NJGGO Issue [2009] No. 1)


          The Investment Overview of the Key Industries in Nanjing   127
      Culture & Creativity

      VII. Development Plan:
          In the main city, we will try to build an
      industrial structure of “three circles and four
      belts”:
          “Three circles” refer to Xinjiekou Cultural
      Consumption Circle, Hunan Road Cultural
      Consumption Circle, and Hexi New Town Cul-
      ture Industrial Circle.
          “Four belts” include Binjiang Tourism,
      Culture and Leisure Industrial Belt, Qinhuai
      River Historical Culture and Creativity Indus-
      trial Belt, Ming Dynasty City Wall Historical
      Culture Industrial Belt, and Zhongshan Eco-
      culture and Leisure Industrial Belt.
          In the meantime, we will accelerate the de-
      velopment of three sub-centers:
          “Pukou Sub-center” will be built into a cul-
      ture product consumption corridor along the
      Yangtze River, a culture industry development
      core area north of the River and a highland of
      Nanjing’s calligraphy and painting sector.
          Xianlin Sub-center is designed to be a cen-
      tral intelligence zone with perfect integration
      of natural and human, hi-tech and industrial
      resources. In the meantime, it will be a high-
      level talent education center, and a technology
      communication center and an industrial incu-
      bator in the Yangtze River Delta and even East

128   The Investment Overview of the Key Industries in Nanjing
                                    Business Service

China as a whole.
    Jiangning Sub-center will be developed
into a multifunctional modern science park, a
modern culture and leisure cluster, a suppor-
ting cultural service center for the main city.
In addition, it will be a critical node for the
southward expansion of Nanjing’s culture sec-
tor with the functions of business, academy,
research, tourism, lodging and entertainment.
    We will also drive the development of two
groups:
    The Luhe Group will be developed into a
featured urban agricultural, ecological leisure
area with a number of functions, including ag-
ricultural travel, tourism, leisure, culture and
exhibition as well as the home to the Yuhua
Pebble Culture.
    Lishui-Gaochun Group will be built into
an agricultural, ecological, and leisure tourist
resort and a film and TV industrial cluster
combining agricultural sight-seeing, lakeshore
leisure and folk custom performance.


3.7 Business Service
I. Overview:
    Currently, the business service sector holds
6% of shares in the city’s entire service sector
in terms of value added. Boasting 170 office

          The Investment Overview of the Key Industries in Nanjing   129
      Business Service

      buildings with a floor area of over 10,000m2
      each, or over 7 million square meters in to-
      tal, Nanjing has desirable hard and soft envi-
      ronment for the development of its business
      service sector. The headquarters economy
      sector has also been on the rise. A total of 259
      corporations now have their headquarters in
      Nanjing, including 87 transnational companies
      which base their regional headquarters in the
      city. Nanjing ranks No.6 in China in headquar-
      ters economy development.


      II. Advantages:
          Nanjing is a regional business center. The
      influence of its business service sector, which
      offers management consultation, engineering
      consultation, technology consultation, accoun-
      ting, law, brokerage, agency, planning, finan-
      cing and lease services, has reached majoring
      cities around.


      III. Objectives:
          Our objectives are to build Nanjing into
      a business service center that interacts with
      Shanghai and provides services to the surroun-
      ding regions, and a first-class home base of
      corporate headquarters that joins the east and
      the central parts of the country. Value added

130   The Investment Overview of the Key Industries in Nanjing
                                    Business Service

of the business service sector will increase to
RMB25 billion by 2012 and RMB45 billion,
or 8% of that of the city’s entire service sector
by 2015. Total number of Chinese and inter-
national corporate headquarters in Nanjing are
expected to reach 600 by 2012 and 1,500 by
2015.


IV. Priorities:
    We encourage the accounting, law, apprai-
sal, certification, brokerage, agency, planning,
advertising, financing, lease, investigation, de-
sign, technical intermediary, and other business
service sectors to expand their business and ex-
cel. We will take aggressive actions to develop
the consultation sector, including economic,
planning, investment, technology, engineering,
management and decision-making consultati-
on, to build a modern business service system
with complete business modes capable of con-
verging with the world market and meeting the
needs of the Nanjing Metropolis Circle. We
encourage research institutions and enterprises
to reform into market-oriented business service
intermediaries with autonomous business ope-
ration and independent profitability. We will
also develop the corporate headquarters sector
by offering attractive incentives for leading

          The Investment Overview of the Key Industries in Nanjing   131
      Business Service

      Chinese and international transnational com-
      panies to move their regional headquarters or
      R&D centers, and for financial institutions and
      famous modern service groups and corpora-
      tions to relocate their headquarters to Nanjing.


      V. Industrial Bases:
          Major industrial base in this sector is Hexi
      CBD, which has a total planned land area of
      2km2 to be completed in two phases. Phase
      One includes 13 projects, 16 landmark buil-
      dings with a total construction area of 2.41
      million square meters of office, hotel and shop-
      ping facilities.


      VI. Policy Environment:
          Local government subsidies are available
      for office premises built, purchased or rented
      by corporate headquarters, regional headquar-
      ters, sourcing centers and R&D centers of
      leading Chinese or international service provi-
      ders. Corporate headquarters or regional head-
      quarters of banks and insurance companies
      are entitled to one-off government subsidies.
      (Source: Policies of Jiangsu Provincial Go-
      vernment on Accelerating the Development of
      the Modern Service Sector, JSG Issue [2005]
      No. 17)

132   The Investment Overview of the Key Industries in Nanjing
                                    Business Service

    Positive actions will be taken to encou-
rage leading international service brands and
transnational companies to move their corpo-
rate headquarters or regional sourcing center
to Nanjing. Subsidies are granted for the cost
of self-use office premises purchased, or ren-
ted in Nanjing for over three years within the
Nanjing Municipal Government's share of tax
income paid by these enterprises.
    World leading law firms, accounting firms,
asset appraisers, consultation companies, large
financial lease companies, head hunting com-
panies, and professional service providers, in-
cluding training, research and other service in-
stitutions and software companies, are entitled
to housing or rent subsidies. Local district
government and public security authorities
will consider as higher priorities the needs of
senior management and professionals of these
enterprises, with regard to children’s school
enrollment, spouses’ employment, medical
insurance, household registration changes and
entry-exit services. (Source: Nanjing Munici-
pal Government’s Guidelines for Accelerating
the Development of Nanjing’s Service Sector,
NJG Issue [2005] No. 132)




          The Investment Overview of the Key Industries in Nanjing   133
      Commerce & Circulation

      VII. Development Plan:
          We will take aggressive actions to build
      three major service clusters in Xinjiekou, Hexi
      New Town and the South New Town. In the
      meantime, we will accelerate the development
      of major business clusters along the Yangtze
      River Belt, the Zhongyang Road-Hunan Road-
      Gulou Belt, the Changjiang Road-Zhujiang
      Road Belt, the Qinhuai River Belt, and the
      Purple Mountain Ring Belt.



      3.8 Commerce & Circulation
      I. Overview:
          In 2009, value added of Nanjing’s whole-
      sale and retail sector totaled RMB46.72 billion,
      while that of the accommodation and catering
      sector amounted to RMB8.19 billion, up 11.5%
      and 9.2% over last year and accounting for
      21.5% and 3.85 of that of the city’s entire ser-
      vice sector respectively. Total retail sales of so-
      cial consumer goods amounted to RMB196.16
      billion, up 18.8%, while commodity trading
      market turnover totaled RMB171.2 billion, up
      15% over last year. With a fast growing chain
      operation sector, Nanjing is home to two of the
      “Top 10 Chain Store Operators in China”. Par-
      ticularly, sales of Suning Appliances amounted

134   The Investment Overview of the Key Industries in Nanjing
                      Commerce & Circulation

to RMB120 billion in 2009.


II. Advantages:
    As a commerce center in East China, Nan-
jing ranks No. 1 in Jiangsu Province and No.
2 in East China in terms of total retail sales of
social consumer goods. Nanjing is known for
of its considerable number of large shopping
facilities and the presence of many leading in-
ternational brands. Today, Xinjiekou has one of
the most densely clustered shopping malls and
leading international brand-intensive blocks
in China. In addition, Nanjing has one of the
most developed chain operation sectors among
all major cities in the country.


III. Objectives:
    Our goal is to consolidate and improve
Nanjing's position as a regional commercial
center. Value added of the commerce & circu-
lation sector will increase to RMB75 billion by
2012 and over RMB115 billion, or 20% of that
of the city’s entire service sector by 2015. In
the meantime, total retail sales of social consu-
mer goods will increase to RMB295 billion by
2012 and RMB450 billion by 2015.




          The Investment Overview of the Key Industries in Nanjing   135
      Commerce & Circulation

      IV. Priorities:
          We will accelerate the development of
      wholesale markets to build a multi-tier, multi-
      form wholesale system, as well as a modern
      sourcing transaction platform with diversified
      functions of product exhibition, information re-
      lease, pricing, and e-commerce. We will boost
      the development of the chain operation sector,
      and encourage the M&A by major enterprises
      to foster a number of industrial leaders. We
      will accelerate the development of e-commerce
      to improve the IT level and modernization of
      the commerce and circulation sector, and will
      also try to attract more top-class department
      stores, leading international franchise brands
      and international entertainment and leisure
      enterprises. Leveraging Nanjing’s commerce
      sector as a driving force of the metropolis cir-
      cle, we will promote the integration of the re-
      gional market.


      V. Industrial Bases:
          Industrial bases in this sector include three
      municipal commerce centers, four municipal
      sub-centers and a number of commerce centers
      in new towns across the city. The three muni-
      cipal commerce centers are Xinjiekou, Hexi
      and Nanjing South Railway Station-Honghua

136   The Investment Overview of the Key Industries in Nanjing
                      Commerce & Circulation

Airport commerce centers.
    Xinjiekou Commerce Center focuses on
the high end of the value chain, with an aim
of becoming a first-class commerce center in
China, a business center with strong impact on
the economic development of the surrounding
regions, as well as a well-known urban sight-
seeing block in China and even the world mar-
ket.
    With a number of premium department
stores, large shopping malls and franchise
stores, flagship and chain stores of leading Chi-
nese and international brands, Hexi Commerce
Center will eventually become a commerce
block with unique features, as well as a new
urban district and landmark zone that mixes
modern civilization with the distinct scenes
along the Yangtze River.
    Nanjing South Railway Station-Honghua
Airport Commerce Center focuses on retail
and wholesale, as well as product exhibition
and leisure tourism sectors, with an aim at be-
coming a brand new commerce cluster in the
south of the city.
    The four municipal sub-centers, located in
Dongshan, Pukou, Xianlin and Hunan Road re-
spectively, will focus on upgrading commerce
functions, highlighting local features, and im-

          The Investment Overview of the Key Industries in Nanjing   137
      Commerce & Circulation

      proving services to the surrounding areas.


      VI. Policy Environment:
          Starting from 2005, the Municipal Govern-
      ment allots RMB15 million each year as a spe-
      cial fund in support of influential, promising,
      fast-growing chain store operators that rank
      among the top 10 in the province or the top
      50 in the country. (Source: Regulations of the
      Department of Finance of Jiangsu Provincial
      Government on the Management of Special
      Fund in Support of Business Expansion and
      Capacity Building of Chain Store Operators in
      Jiangsu Province, JSGF ISSE [2005] No .14)
          The Municipal Government encourages the
      development of chain store operators. Head-
      quarters of chain stores may apply for approval
      of relevant regulatory authorities to open ope-
      rations in the tobacco, drug, publications and
      audio/video product sectors, while affiliates
      involved in the businesses are not required to
      do so separately. With the certification of the
      regulatory authorities, logistics and delivery
      centers of chain store operators are entitled to
      relevant preferential policies. Headquarters of
      trans-regional chain store operators may pay
      taxes for outlets in different regions, providing
      that business operation and accounting are or-

138   The Investment Overview of the Key Industries in Nanjing
                      Commerce & Circulation

ganized by the headquarters, no independent
settlement account or financial statement and
book is kept by such outlets, the computer sy-
stems of the outlets are connected with those
of the headquarters for uniform and regulated
management, the approval of finance and ta-
xation authorities have been obtained, and in-
cremental taxes payable are distributed among
different regions in accordance with their sales.
    Actions will be taken to accelerate the de-
velopment of the rural circulation system. Lar-
ge commerce enterprise groups are encouraged
to open outlets in the rural market to provide
rural citizens with services, daily consumer
goods, and agricultural production materials.
Operators that open stores in towns and vil-
lages, establish new delivery centers in subur-
ban counties or participate in the “Reassurance
Project” in the rural areas are entitled to fund
support and incentives. (Source: The Nanjing
Municipal Government’s Guidelines for Acce-
lerating the Development of Nanjing’s Service
Sector, NJG Issue [2005] No. 132)


VII. Development Plan:
    We will develop a five-tier commerce cen-
ter system consisting of the municipal com-
merce centers, municipal sub-centers, local

          The Investment Overview of the Key Industries in Nanjing   139
      Commerce & Circulation

      (new town) commerce centers, community
      (township) commerce centers, and grassroots
      community (village) commerce centers.




140   The Investment Overview of the Key Industries in Nanjing

				
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