China Law Blog

I previously blogged (here) on the benefits of foreign companies setting up or expanding operations in China's second tier cities, including Tianjin.  The Wall Street Journal recently ran a very favorable article on companies setting up shop in Tianjin, entitled "Tianjin Shines in China's North."

The article attributes Tianjin's favorable investment climate to its pro-business mayor, Dai Xianglong.  Since Mr. Dai became mayor in 2003, the city has used favorable investment policies to attract multinational companies.   Mr. Dai is a former banker and he has used his "banking connections to bring in hundreds of billions of yuan in loans to rejuvenate Tianjin. Just last month, the central government pledged to make development of the city's Binhai New Area, an investment zone that is already home to foreign companies like Motorola Inc. of the U.S., a priority over the next five years:"

Traditionally seen as the economic center of northern China, Tianjin has long had a well-established industrial base and one of the country's finest ports. In 1984, the central government included the city among 14 coastal open cities enjoying more market-oriented policies. But Tianjin still lagged behind Beijing and other cities to the south, especially as central leaders focused on developing Shenzhen and other special economic zones in southern China in the 1980s, and then Shanghai and its Pudong New Area in the 1990s.

All that is changing. Utilized foreign investment in Tianjin has surged by an annual average of 32% over the past five years, totaling $10.3 billion for the period. Investments in roads, factories and other fixed assets have doubled in the same period over the previous five years, to a total of 534 billion yuan ($66.7 billion). And last year, the economy grew 14.5%, compared with the national average of 9.9%.

The article goes on to talk about how how the city has built modern high rises, luxury-housing complexes, widened its roads and is building a subway system.  "New museums are under construction and parks have opened along the Hai River running through the center of the city."

Bottom Line:  If you are considering (as you should) setting up or expanding your China operations in one of China's so-called second tier cities, consider the dynamism of the city government in making your choice.