Chongqing, China. Ka-ching?
Got an email the other day on Chongqing that went as follows:
Long-time reader _________from Chongqing here. Hope all has been well with you.
First, I'm not sure how this could work into a post, or whether it is simply of interest, but there has been fascinating political and cultural developments here in Chongqing over the last year, mostly due to the entrance of new(ish) general secretary Bo Xilai. He has made headway into cleaning up the city's notorious controlling mafia (possibly an un-spoken reason MNCs had historically chosen Chengdu over Chongqing for their base in western China???), pushed to clean up mafia-related and property-related corruption within the city government (the deputy director of the city's PSB was just arrested), and has made a cultural impact through his push for "5 Chongqings" (Forested Chongqing, Healthy Chongqing, Smooth Transportation Chongqing, Safe Chongqing, and Liveable Chongqing) - an attempt at establishing an underlying philosophy for future policies and decisions, and the encouragement of sending Maoist slogan text messages and singing Communist revolutionary songs. While some have compared this last policy as a new "cultural revolution", it has seemingly been well received by the public at large. A friend summarized Bo Xilai's current M.O. as "cleaning the local government of the filth, while still trying to maintain the average people's faith in that same government".With that said, these sorts of changes should affect the business environment of Chongqing, possibly to a great degree. And what have I seen on the ground? There are more foreigners in town than before, more MNCs, more companies establishing businesses, and more entrepreneurial small-medium sized businesses getting started. Granted, most of these businesses are in established industries (mostly auto supply and manufacturing, industrial manufacturing, and logistics), but there is growth you can feel. Whether foreign companies were affected by the Chongqing mafia in the past or present is not something of which I have any knowledge. I understood the minimum capital requirements for a WFOE were recently lowered as well. Whatever the cause, it feels like there is growth here.
In hindsight, my firm has been seeing the same thing in that over the last six months or so we have definitely had a pickup in business involving Chongqing, though I have to admit we were starting at a pretty small base. Much of our work has been related to the transportation/logistics sector.
What are you seeing out there? Is Chongqing really going to be the next big thing.
UPDATE: China Translated just did a post on Chongqing, entitled, "Make No Little Plans." It is a guest post by someone named "Don Johnson." I have a China client with that name. Same person?
Comments (5)
Read through and enter the discussion by using the form at the endStefan - September 30, 2009 11:15 PM
Interesting post. I spent a couple of months in Chongqing last year and definitely saw the potential for foreign business. I still get the sense that only the big MNCs will be going there for a while because it really does not have much of an infrastructure in place yet for smaller companies.
James G - October 1, 2009 6:36 AM
Isn't it odd that the biggest municipality in China hasn't been a starter all this time? Chongqing was down towards the end of the bench. Even for Chinese it seems that Chongqing is an afterthought, if a tasty and attractive one.
Just on size and potential alone, I predict that Chongqing might be all-conference in a couple of years. Whatever catching up they need to do, "you can't teach size", as any coach or sportscaster will tell you.
Dan - October 2, 2009 1:10 AM
Stefan,
I agree. A few years ago, I was at a crappy China conference (friend got me a VIP ticket and I needed the CLE credits) and two people were touting Chongqing as the next great place to go because Ford (I think it was) had gone there. I told them that what they were saying did not mean much to SMEs and that Chongqing lacked the infrastructure a most US SMEs would need. I still think that.
Dan - October 2, 2009 1:14 AM
One cannot teach size in basketball, that is true. But size isn't speed and it isn't skill either. And there is a flaw in your analogy as well. Size when it comes to cities is not immutable. Detroit keeps shrinking while Seattle keeps growing. I would put my money on quality not quantity.
Don Johnson - January 15, 2010 9:20 AM
Hi -
I've got CLB on RSS, which apparently doesn't show updates, so I only just noticed your note above. I'm the China Translated guest columnist, but sadly not your client; I'm an economic planner based in Shanghai. (Check out the latest guest post, also about Chongqing.) There are quite a few Don Johnsons.
In any case, I do see a big future for Chongqing. The infrastructure is still not comparable to the coast, but improving rapidly. The industrial base is strong and high value-added (cars, motorcycles, heavy machinery) and poised for the kind of investments and innovations that could make it globally competitive - I understand the motorcyle industry already sells all over the world. And there's the logistics - Chongqing is well placed to be the link between the Chinese coast, SE Asia (road and rail line planned via Kunming to Singapore!) and Central Asia. Perhaps the biggest thing holding it back now are its local governance issues, but it seems the central government is taking an interest in that as well. I think it's a place to watch.