China Law Blog

Situated between Dalian and Qingdao it's certainly got the good air and good water vibe, plus a decently educated population.

It's just tiny. Far from a 2nd tier city but this place is leading the league table in 4th tier cities despite a numerous very large amount of dodgy real estate development a couple of years back.

It is small town, sometimes county-level appointed hicks running business in a smaller town is not good news, I do hope Yantai is over it.

Looking at leading indicators I'd suggest it is.

The wording suggests Yantai is pretty clean. So lack of good infrastructure and local officials that give foreigners the jitters may be the reason why no one has "flocked" there. No doubt seasoned foreigners in China have learned to trust their gut feeling when talking to local officials.

Yantai struck me as a great place for retirees, but your average foreign investors might not be so crazy about it. But "bad history" and "not Han enough"? That's just odd.

Dan: It’s always encouraging to learn that the results of surveys like this actually bear some resemblance to reality. Yantai sounds like a great place, and Adam Minter notes that one of the other Shandong “high satisfiers,” Linyi, has “been a laboratory for the development of recycling and solid waste methods for several years now. In a decade, when people think of ‘e-scrap’ and ‘China,’ they won’t be thinking of the environmental catastrophe in Guiyu, they’ll be thinking about the innovations and partnerships in Linyi.” Shandong Province is doing something right to encourage these kinds of environmental stand outs.

Looking at our own figures, Yantai scores impressively on things like openness to foreign trade and FDI, and in GDP per head. But as people have said, it's very small in terms of overall GDP and is still pretty underdeveloped. To go into depth on that last one: it's got a high proportion of agricultural output in GDP and low proportion for services; the number of retail/catering and bank outlets per head is also low. Meanwhile, it's got a very poor level of internet and water/gas infrastructure going by official data. It's showing on things like education spending and higher education is also well below average.
Clearly a lot of these things are changing rapidly, but I'd guess that the above are factors in its below-radar presence at the moment...

The "not Han enough" could be because Yantai has an unbelievably large Korean population, rumor is its around 30%, but not sure of the accuracy of that.

Why does nobody go to Yantai? It's not attractive to Western businessmen. There is very little community for them and on top of that, if you need quality employees, you aren't going to attract top Chinese (or even foreigners) graduates to Yantai, no matter how much you offer. There are so many better choices that are underutilized (just look at Qingdao and Dalian), Yantai isn't (and won't) even be on the map.

When I was working in Fuzhou it became clear that going from 1st tier to 2nd tier cities it becomes vastly more difficult for Western firms to do business. The labor pool is much shallower, the local government is not as friendly to foreign firms, and logistics are an order of magnitude more difficult.

I'm not saying it can't be done in a place like Yantai. To succeed a western firm would have to go in with eyes wide open and accepting of the challenge.