A Primer on the Region Jay D. Gatrell John Conant.

A Primer on the Region

Jay D. GatrellJohn Conant

•Geographical Context & Weather•Local Economy•Finally….

Geography•Liaoning province is located in Northeast China and is home to over 42,000,000 residents•Major Cities

• Shenyang (over 7 million residents)• Dalian (over 5.6 million residents)

• The port at Dalian has increasingly been recognized as the primary gateway to Northeast China

• Anshan (over 3.5 million residents)

Geography• Locational advantages relative to Dalian’s Port…

• Koreas & Japan• Access to NE and Central

China

Train to Beijing

Dalian Port

WeatherDalian

Highs Mid to Upper 40sLows Upper 20s-Lower 30s

Beijing—Slightly Colder than DalianHighs Upper 30s-Upper 40s

Lows Mid to upper 20s-Lower 30s

Economy•The province is China’s 8th largest economy in GDP and ranked 8th per capita (2003)•Over 32,000 firms

• 1587 large to medium firms• 85% privately held• 5.3% of firms include FDI

•Shenyang ranked 11th nationwide on a city survey of overall economic competitiveness (2005)•Liaoning Province is China’s largest and most significant heavy manufacturing base. The region’s industry is dominated by machine tools, metals, chemicals/petrochemicals, electricity, and refining. Additionally, the province has a growing electronics industry

• Specialized metals produced for engines and advanced machine tools

EconomyAgriculture

• Provincial agriculture is known for specialty fruits including apples and peaches—as well as soybeans, cotton, silk and maize

• $550 million USD earmarked by provincial government to expand agricultural infrastructure

• Anticipates importing 1000 variety of crops to supplement the local market in 2005

• Potential for Indiana exports Traditional Farming in Liaoning

Economy•Liaoning home to over 120 automotive firms associated light trucks and large/medium passenger vehicles

• Strategic investments and collaboration with GM, BMW, Mitsubishi, & Toyota

• Shenyang’s JinBei Motor Company is a affiliated firm of China’s largest automotive firm, Chengchun

BMW Brillance-JinBei Operations in Shenyang

Economy

Industrial Clusters by Major City• Shengyeng: Machinery, Chemicals,

Pharmaceuticals, Automotive, & Metals

• Dalian: IT, Automotive, Electronics, & Biotechnology

• Anshan: Steel, Petrochemicals, and Advanced Materials

Dalian’s Zhongshen Square

Economy• Robust Economic Indicators

• Large market with higher levels of GDP and GDP per capita compared to special economic zones in the south--Guangxi, Fujian, Hainan

• Economy continues to expand• Eagerness to work with foreign firms and unmet demand for FDI relative to more

developed regions• A key issue as FDI growth across China reached a plateau in early 2005• Potential for more aggressive economic development packaging• Fewer potential suitors

EconomyExtractive Industries

• Coal• Iron ore• Salt

Integrated Mining & Processing facilitynear Anshan

Indicator Liaoning Shenyang Dalian

Gross Regional Produce (10,000 yuan) 16,033,795 16,325,900

Gross Industrial Output Value (10,000 yuan) Current prices 10,643,612 15,468,641

Total Investment in Fixed Assets (10,000 yuan) 5,568,516 4,065,425

Savings Deposits (10,000 yuan) 14,229,575 13,101,986

Total Wages of fully employed workers (10,000 yuan) 1,521,548 1,442,215

Gross Output Value of Farming, Forestry, Animal Husbandry, and Fishery (100 million yuan)

1215

Foreign Funded Industrial Enterprises (100 million yuan)

Number 1488

Gross Industrial Output Value 1451.01

Value Added of Industry 388.9

Total Capital Held 595.48

Total Assets 1611.2

Total Circulating Funds 830.92

Foreign Direct Investment (USD 10,000) 341,168

Total Value of Imports (USD 10,000) 1,192,982

Total Value of Exports (USD 10,000) 1,457,935

Finally…Liaoning is relevant• Dalian is “China’s Flat City” (Friedman 2005)

• Region a major outsourcing venue for Japan• Capacity for growth in Beijing & Shanghai inherently limited and infrastructure in province can meet demand

• Major foreign firms (including GE, Dell, Sony, SAP, & HP) have already began to redirect investment to cities such as Dalian & Shenyang

SourcesCIA. 2005. World Factbook. http://www.cia.gov Friedman, T. 2005. The World is Flat. A Breif History of the 21st Century. New York:Farrar, Straus

and Giroux.Indiana Economic Development Corporation. Industry specific initiatives.

http://www.in.gov/iedc/initiatives/ Indiana State University, Office of Public Affairs. Various dates. LNNU Partneship Press

Releases.Ministry of Science and Technology, People’s Republic of China. 2005.National Bureau of Statistics, People’s Republic of China. 2003. Liaoning Economic Data.Northeast Network, http://english.nen.com.cn US-China Business Council. 2004. 2004 China Briefing. http://www.uschina.orgU.S. Department of Commerce, China Business Information Center. 2005.Wang, C. 2006. Beijing is coming apart at the seams. Dalian News. January, 6.

http://Daliannews.com Wu, C. 2003. 2003. China, Peoples Republic of Market Development Reports China Logistics

Profile. A report prepared for the U.S. Department of Agriculture.