Economic Zones

1
Economic Zones

• Presentation Outline
• Special Economic Zones (SEZs)
• Economic and Technological Development Zones
  (ETDZs)

2
Economic Zones

• Special Economic Zones (SEZ)Shenzhen,
  established in 1980Zhuhai, Shantou
  XiamenHainan Island
• Purpose -- restrict the contagion effect (if any)
• Special tax status
• favorable investment climate for foreign investors

3

• SEZ continued
• low wage, cheap land and convenient geographic
  location (water and air transportation)
• export tax waived
• import duties and other taxes waived
• after-tax profits to be repatriated without
  penalty
• decentralization of authority (red-tape reduced)

4
Shenzhen

• Set up as the special economic zone in 1980
• Testing ground for market socialist economy
• Close to Hong Kong
• No price control
• No mandatory production goals
• Ambition to be the main export and
  foreign-exchange earnings center
• Base for technology, finance and banking center

5
Shenzhen- continued

• Migration of foreign-owned industries
• falling work efficiency
• fewer preferential policies
• more red tape compared with other cities
• increasing higher labor and material costs

6
Xiamen

• City close to Taiwan
• special zones targeted to Taiwanese investors
• 1992, Ziaman s GDP/capita grew 5 times a decade
  ago and 3 times the national average
• Used to have limited port facility. Now new
  wharf (built) financed by World Bank and a Hong
  Kong company
• Infrastructure projects (highway, railway,
  airport funds from local and central
  governments-- increasing difficult

7
Xiamen--continued

• Favorable terms for foreign investors
• large pool of unskilled workers
• weak on high-tech expertise

8
Shantou

• City between Guangdong and Fujian province
• Investments come from Hong Kong (mainly) and
  other countries such as Singapore, Malaysia, and
  Indonesia.
• Factory rent is low (1/3 of Shenzhen) and low
  labor cost
• Economic and cultural centers
• Extensive infrastructure projects
• Traffic is a problem

9
Hainan

• Ambition to be a second Hong Kong
• Economic activity centers on property and finance
• 1992, first stock market trading in 4 property
  companies and an import-processing firm -- later
  on closed
• Airport links to Hong Kong and Southeast Asian
  capitals
• tourist and finance center.

10
Zhuhai

• Smallest of all SEZs, closer to Macao (used to be
  a Portuguese colony)
• good port facility handling 30,000 ton vessels
• Good road links to Guangzhou
• trade Agricultural products
• light industries such as toys

11
Economic and Technological Development Zones

• 14 coastal cities
• more skilled and better educated work-force
• better communications
• better industrial infrastructure
• a tradition of commerce

12
Guangzhou

• Political, economical and cultural capital of the
  Southeast China
• vibrant and fun-loving city
• Port city
• Many foreign banks to set up offices there
• broad industrial base with strength in light
  industries (textiles, electronics,
  pharmaceuticals)

13
Shanghai

• A City with more than 13 million people
• 1 of Chinas population contributed to 1/5 of
  industrial output and 2/3 of international trade
• New Development area- Pudong
• Lujiazui Finance and Trade zone
• Jinquao Export Processing Zone
• Waigaoquio Free Trade Zone
• Zhanjiang Hi-tech Park

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Shanghai-continued

• Competitive factors
• Strategic location - good port and middle of
  China
• Unique characteristics - heritage
• preferential treatments
• access to market
• quality of management

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Lujiazui Finance and Trade Zone

• Catalyst for Pudong development
• central district business area
• future for Shanghai stock Exchange building
• central bank and other banks offices

16

• Jinqiao Export Processing
• industrial center
• served by two ports
• Waigaoquio Free Trade Zone
• small no. of firms (least successful)
• uncertain tax and tariff regime
• Zhangjiang Hi-Tech Park
• bio-technical engineering, microelectronics,
  laser computer and software and
  telecommunications

17
Tianjin

• Gateway to Beijing
• low taxes, cheap land and cheap labor
• Closer to South Korea, which is an important
  investor in that city
• Good port

18
Dalian

• Once occupied by Japan, somewhat influenced by
  Japanese culture
• more international scope --Korean and Hong Kong
  firms are moving in the city
• good port and airport
• focus on entreport
• predominance of money losing state-owned
  enterprises