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Suzhou Industrial Parks: SND- An Alternative to SIP 11/30/2010

SND Suzhou National New & Hi-Tech Industrial Development ZoneAfter doing a post on the Suzhou Industrial Park earlier this month, I found that people have been very interested in the topic. So I decided to write a blog on the SIP’s main competitor, the Suzhou National New & Hi-Tech Industrial Development Zone (SND).

In case you didn’t read my earlier post on Suzhou Industrial Parks, I will re-cap some of the main points on Suzhou and then get into the detail of SND. Suzhou, China is located in the Jiangsu Province and is about a two-hour drive from Shanghai. Suzhou proper is also only about 2.5 hours away by car to the Shanghai Pudong International Airport and only about 20 minutes away by train to the Shanghai Hongqiao Airport.

Suzhou is abundant in human resources with over 24 universities and colleges in the region that produce over 500,000 students each year. Suzhou boasts over 15,000 foreign invested companies in many different industries

SND is located in the western region of Suzhou and began in 1990. Initially it was only about 52 km2 (about 32 sq. miles) By 2002, it grew to over 258 km2 (about 161 sq. miles) and is now home to over 1,738 foreign companies and USD 25 billion in FDI. There are over 150 American companies and 160 European companies with facilities in the SND. Over 55 of the Fortune 500 also have a presence in SND.

The most common industries of SND are IT, chemicals, environmental protection, new materials and precision machinery. There are now over 2,000 companies in the molding industry and 10% of China’s sensor revenue comes from Suzhou as well.

Below is a roadmap of what to expect if you are thinking of setting up Greenfield operations in SND. The SND provides free services to encourage foreign investment and assist with licensing, permits and registrations. Below is an approximate time-line of the establishment period that must be take place with the local government:

• Name verification: 1 working day
• EHS (Environmental Health & Safety Division) Pre-approval of environment impact: 5 working days
• EHS Detailed environmental assessment form: 1 week-1 month
• EHS Detailed environmental assessment report: 1-2 months
• Investment approval: 3 working days
• Business license: 5 working days

Below is a list provided by SND of things you will need to obtain a legal business license in SND:

1. Business License of parent company – 2 copies
2. Notarization and certification for the Business License of Parent Company – 2 originals
3. Authorization Letter –  2 originals
4. Credit Status of parent company Issued by Bank – 2 originals
5. Application – 2 originals
6. Application Form of Name Registration – 1 original
7. Environmental Impact Form –  5 originals
8. Application Letter for WFOE Registration –  1 original
9. Recommendation Letter for Directors and Supervisor – 2 originals
10. Recommendation Letter for GM and Deputy GMs – 2 originals
11. Articles of Association – 2 originals
12. Land Transfer/Building Leasing Contract –  1 original
13. Copy of Passports of Directors, GM, Deputy GMs and Supervisor – 2 copies

And lastly, if you are interested in Investing in China, please visit our partner site for more information on Incorporating a Business in China.

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Hyundai Expands China Operations 11/29/2010

hyundai china expansionHyundai began building its third manufacturing plant in Beijing today. The two existing Beijing plants could not keep up with the rising demand. As reported in the Xinhua News, the new plant will cost about 6.5 billion RMB (about 1 billion USD) and will be able to produce 400,000 cars each year.

This new factory is expected to bump Hyundai’s production u p to 1 million cars per year in China. The two existing facilities can currently produce around 600,000 cars per year, but orders for 2010 are expected to be upwards of 700,000. This new factory in eastern Beijing will be operational in 2012, reaching full capacity in the years following.

The new factory is said to be the largest and most sophisticated of all of Hyundai’s 27 overseas manufacturing facilities.

Full article

Picture source

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China Wage Comparison Resource 11/29/2010

Our company’s partner site, Understand-China, has spent the past year compiling and researching China wages. They have put together a nice chart comparing China’s different regions that shows the wages in both RMB and USD. The rates are for skilled manufacturing/direct employees.

Did you know? China has no standard national minimum wage. However, nearly all of its various provinces and other local jurisdictions have enacted legislation designating a minimum wage for full time and part time employees.

Keep in mind that it is difficult to calculate the exact cost of a direct employee due to things like benefits, social insurances and holiday pay, but this chart is a great starting point to learn which regions are more costly in terms of labor than others. Remember that the cost of labor is only one factor to consider when starting or expanding a business in China: property and real estate costs, labor supply and skill sets, utility costs, logistics and access to ports/airports are just a few other things to keep in mind.

The rates below are monthly wages for Skilled Manufacturing/Direct Employees.  All wages provided are estimates.  For the most recent data, please contact Understand China.

Province/Region
Avg..RMB/month Avg..USD/month
Hong Kong n/a n/a
Beijing 3000 441
Hainan 2100 309
Gansu 2046 301
Binhai 2000 294
Shanghai 1996 294
Sichuan 1925 283
Zhejiang 1870 275
Chongqing 1866 274
Hebei 1838 270
Jiangsu 1800 265
Heilongjiang 1750 257
Shenzhen 1750 257
Xiamen 1750 257
Tianjin 1640 241
Liaoning 1633 240
Henan 1590 234
Guangdong 1530 225
Fujian 1510 222
Shantou 1408 207
Macau 1400 206
Zhuhai 1400 206
Hubei 1200 176
Pudong 1120 165
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Nice China Business Resource 11/25/2010

China Export ShipThe other day I came across this nice little checklist to help businesses considering whether or not they are ready to enter the China market. It is provided by the U.S. government and focuses on exporting to China, but has a lot of good tips and advice for doing business with China in general, whether it be sourcing, investing or exporting. The checklist has a lot of questions to ask yourself and includes a lot of things that you may have not even considered: from things like product and intellectual patents and trademarks to things as simple as getting your money to go to the right place. The article also includes a lot of  additional resources that are very helpful when doing your research.

In addition to the checklist, the rest of the site has a lot more great information that will help you learn more out the China marketplace.

Source: Are you China Ready?

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2011 Spring Canton Fair Dates & Information 11/24/2010

The 2011 Spring Canton Fair will be here before we know it and if you are planning to attend Asia’s largest import and export fair you will need to do some planning. If you have never been before, here are the basics for getting into the fair:

First, you need to get “invited” to attend, so you apply for the invitation through their portal here. After reviewing your application, which takes about one week typically, you will receive your invitation and confirmation number. Make sure to print this out and bring with you to the fair on your first day. Once at the fairgrounds, you will need to allow about 30-40 minutes for the registration process, in which you are administered your pass (you will need a passport photo or you can take one there for a few dollars). Once you have your pass, you can use this for as many years as you want (as long as the photo is still valid). Oh, and admission is free! Now you are good to spend time wandering through the 50,000 plus exhibits over the 15 day span of the fair.

2011 Canton Fair Essential Information:

When is the 2011 Spring Canton Fair?
Phase 1: April 15-19, 2011 | 9:30-18:00
Phase 2: April 23-27, 2011 | 9:30-18:00
Phase 3: May 1-5, 2011 | 9:30-18:00

Where is the Canton Fair held?
China Import and Export Fair Complex
No. 380, Yuejiang Zhong Road, Guangzhou, China

Which phase are you going to check out?

Phase 1: April 15-19, 2011 | 9:30-18:00
* Electronics & Household Electrical Appliances
* Lighting Equipment
* Vehicles & Spare Parts
* Machinery
* Hardware & Tools
* Building Materials
* Chemical Products
* International Pavilion

Phase 2: April 23-27, 2011 | 9:30-18:00
* Consumer Goods
* Gifts
* Home Decorations

Phase 3: May 1-5, 2011 | 9:30-18:00
* Textiles & Garments
* Shoes
* Office Supplies, Cases & Bags, and Recreation Products
* Medicines, Medical Devices and Health Products
* Food & Native Produce
* International Pavilion

Fun Fact: 2010’s Spring Session brought in over $34 Billion (yes, with a B) in business turnover.

A more detailed breakdown of the types of products in each phase can be found at The Canton Fair’s website.

Also a nice promotional video is posted on their site if you want to get excited about going: Video

2011 Canton Fair

A brief overview from the 2010 Fall Canton Fair:

Date: Phase 1: October 15-19, 2010
Phase 2: October 23-27, 2010
Phase 3: October 31- November 4, 2010
Venue: China Import and Export Fair Complex
Sections: Electronics & Household Electrical Appliances/Lighting Equipment/Vehicles & Spare Parts/Machinery/Hardware & Tools/Building Materials/Chemical Products/International Pavilion
Consumer Goods/Gifts/Home Decorations
Textiles & Garments/Shoes/Office Supplies, Cases & Bags, and Recreation Products/Medicines, Medical Devices and Health Products/Food & Native Produce
Exhibition Space: 1,130,000 M2 (More than 200 football fields combined!)
Number of Booths: 57,136 standard booths
Business Turnover: coming soon
Number of Overseas Buyers: 200,612
Number of Exhibitors: 23,599 exhibitors

Source: http://www.cantonfair.org.cn/en/index.asp

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Caterpillar to build new Engine Plant in Tianjin 11/23/2010

China Manufacturing - Caterpillar Buckets

China Manufacturing - Caterpillar Buckets

Caterpillar Inc., one of the leading heavy industrial equipment companies in the world, has recently announced their new plan to further expand their manufacturing operations in China. Set to open in 2013, Cat will build a $300M engine manufacturing plant in Northern China to produce their 3500 series of large engines to be used in their oil-and-gas, marine, and electric power sectors. The Tianjin plant will be Caterpillar’s third manufacturing site for the 3500 series engines.

Opening a plant in Tianjin will allow Caterpillar to be better positioned to compete in the global marketplace as well as support their growing customer base in China and throughout Asia.

This is not Caterpillar’s first endeavor in China however. Earlier this year they announced a new logistics center to improve its regional supply chain, to be built in Suzhou. They also revealed plans to build a plant in Wujiang for hydraulic excavators and another plant for excavator production in Zuzhou.

How will this impact the current production facilities? Caterpillar has said that the new production plants are not expected to impact existing employees (such as those in the Lafayette, Ind. plant) due to the increase in demand from China and the surrounding regions.

Full Article

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New China Map Resource 11/22/2010

China Map - Sichuan

China Map - Sichuan

Our company’s partner site, Understand-China just released an extensive online library of high quality China Maps. The easy to navigate, organized gallery highlights China with maps on everything from municipalities, special administrative regions, and special economic zones. There are more than 25 maps highlighting the top FDI regions. View the full China Map Gallery here

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China Food Prices: Still on the Rise 11/22/2010

China Food Prices- Farmers Market in BeijingThis morning, an article out of the Sydney Morning Herald in Australia reports on the climbing food prices that continue to be seen in China. Farmers Markets throughout China have seen a spike in prices this year.

Some say the rise in feed and seed costs are responsible, starting a chain reaction: farmers must charge the suppliers more for the raw commodities,  who then turn around and truck it to the markets on trucks fueled with highly priced diesel, who pass on their costs on to the merchants, who then pass it on to the customers.

This food price inflation can be seen across the board, from the cost of a dozen eggs , that has risen almost 50% since the summer months, to the price of leeks that has doubled in the past year, according to one shopkeeper in Beijing. The annual food-price inflation hit 10.1% in October compared to 2009.

Causes? Economists worry that the economy is now starting to overheat as a result of the two year stimulus and the excess money floating through the economy.

Last week Premier Wen Jiabao announced food price controls on certain commodities including cotton, grain, oil and sugar and has introduced subsidies to some low-income families. Although some analysts believe these actions are designed to be symbolic, as a way to reassure the poor, they do reflect the government’s efforts to combat inflation.

The question looming in many boardrooms this month is what the impact these price increases will have on importer’s supply chains.  With China exporting billions of dollars a year of food products to companies in the United States, these increases could present an interesting challenge to this industry as a whole.  I’d be very interested in hearing what food importers are seeing out there and welcome any additional insight….

Full Article

Picture Source: AFP

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Suzhou Industrial Park (SIP) Overview: Investment in Suzhou 11/18/2010

The China-Singapore Suzhou Industrial Park is located in Suzhou, China – approximately a 2 hour drive from Shanghai.  I had never been to Suzhou before, but I was working on a project for one of our firm’s customers who is looking at setting up a greenfield facility there.  To be honest, I had spent little time in Jiangsu province for the last 5 years and was blown away at the development that had taken place since my last visit. The number of foreign companies invested in the SIP region is quite impressive.  Check out the list below that I pulled from the SIP Website:

Suzhou Industrial Park Quick Facts:

  • Suzhou Industrial Park covers an area larger than 288 sq km
  • More than 75 Fortune 500 companies have invested there
  • Infrastructure in SIP rivals all major modern industrial parks in China
  • SIP is easily accessed via the Shanghai – Nanjing High Speed Train, by car via Shanghai. Closest airports are the Shanghai Hongqiao International Airport, Wuxi Airport and Shanghai Pudong International Airport.

I also found a great video about SIP on youtube.  Check it out!

Last but not least, if you are considering investing in China, you might find this page on Incorporating a Business in China helpful.

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St Regis Shanghai Hotel Review: Just OK. 11/16/2010

The St Regis Hotel in Shanghai wasn’t quite what i had hoped it would be.  I checked in after a long flight from Los Angeles, and I knew when I found myself getting my own bags out of the trunk of the taxi at 10pm Sunday evening that this St Regis was not going to live up to the St Regis quality that you expect from properties that bear its infamous name.  I booked the room largely due to my love for St Regis properties in other geographies, and the rate – at $225 USD per night I thought I was getting a great deal on what i expected to be a GREAT hotel in Puding district in Shanghai. After checking in and heading to my room I was again disappointed to find that the room was a pretty standard “upscale” hotel room that you would find in most major cities in Asia.  And that was the problem.  When I book a room at a St Regis (especially in a city like Shanghai), I expect it to WOW me.  Maybe I’m just spoiled from staying at some of the Regis’s nicer properties, but i was slightly disappointed nonetheless.

With all that being said, the room was nicely decorated and the bathroom was well sized.  The bed however was somewhere in between hard and kind of soft – not exactly what I’m looking for after a 15 hour journey.  Breakfast in the morning is “served” in the primary restaurant, which unfortunately feels like its located inside the main section of the lobby itself.  The food was average at best.

Ill wrap up this review by noting that the staff are all very friendly and helpful.  Head to this hotel if you get a good rate.  Otherwise I would look at one of the other Starwood properties in the city.

The search for the great (and reasonably priced) Shanghai Hotel continues….if anyone has any additional feedback or hotel suggestions i would love to hear about them!

Phone :  +86 (22) 2627 8888  Address:  Phoenix Shopping Mall, East Haihe Road, Hebei District, Tianjin  (Near ‘Eye of Tianjin’)

Bottom Line:  Brand New (2008).  Very good place to stay.  Great location.  Breakfast is OK.

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