Opportunities in 2 nd and 3 rd tier Cities Netherland Business Support Offices Bas Ovetooom Chief Representative of the NBSO in Dalian May, 2014
Feb 25, 2016
Opportunities in2nd and 3rd tier Cities
Netherland Business Support Offices
Bas OvetooomChief Representative of the
NBSO in Dalian
May, 2014
Living in the city
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The Economist 26 April 2014
Source: Economist Intelligent Unit
Upcomings regions
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WHY – 2nd TIER
- Focus of Urbanization - Lower costs
- Less competition- Different needs- Fastest growth
Pos Province Avg. GDP growth (08-12)
1 Shaanxi 14.59%2 Chongqing 14.52%3 Hubei 14.45%4 Ningxia 14.23%5 Anhui 14.23%6 Guizhou 13.98%7 Tianjin 13.92%8 Hunan 13.90%9 Hainan 13.70%10 Sichuan 13.63%11 Inner Mongolia 13.33%13 Jilin 13.19%16 Fujian 12.73%17 Liaoning 12.70%22 Jiangsu 11.78%27 Shandong 10.09%28 Zhejiang 10.06%29 Beijing 9.97%30 Guangdong 9.17%31 Shanghai 7.48%
National average 11.58%
Source: National Bureau of Statistics of China Source: Economist Intelligent Unit
China’s new ‘hubs’
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*Logistic hubs* Knowledge hubs* Retail hubs (middle-class)
* Different timing / stages of development* Overall challenges: Transportation, Education,Pollution & Healthcare
Source: Economist Intelligent Unit
Pro’s and Con’s – 2nd tier vs 1st tier
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Advantages
• “Chinese” investment environment• Even small/medium company receives attention• Lower salaries• Less restrictions on production/manufacturing projects• Lower costs for purchase and rent of land and buildings• Less competition
Disadvantages
• “Chinese” investment environment• Less “foreign-investment friendly” • Less established administration• Less knowledge of law and complex transactions• Higher risk of corruption• Lower qualification of staff• Less legal certainty• Living environment expats
Pro’s and Con’s – 2nd tier vs 1st tier
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Advantages
• “Chinese” investment environment• Even small/medium company receives attention• Lower salaries• Less restrictions on production/manufacturing projects• Lower costs for purchase and rent of land and buildings• Less competition
Disadvantages
• “Chinese” investment environment• Less “foreign-investment friendly” • Less established administration• Less knowledge of law and complex transactions• Higher risk of corruption• Lower qualification of staff• Less legal certainty• Living environment expats
WHERE IS YOUR MARKET
China – Netherlands Business Support Offices
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NBSOs- Hands-on support in new areas- Part of Embassy network- Local government contacts- Local business network- Market knowledge- Language & culture expertise
Location NBSOs in China- Chengdu, Sichuan (8th pos GDP)- Dalian, Liaoning (7th pos GDP)- Jinan, Shandong (3rd pos GDP)- Nanjing, Jiangsu (2nd pos GDP)- Qingdao, Shandong (3rd pos GDP)- Wuhan, Hubei (9th pos GDP)
Liaoning – the North East
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The old industrial baseRevitalization of the North-East program (2003)
Sectors• Equipment manufacturing / heavy industry• Shipping building• Mining• IT Outsourcing• Agri-food • Luxury market (Shenyang & Dalian)• Automotive• Petro-chemical
Current developments• High-speed train• Airport developments• 5 points-one-line program• Shenyang bigger metropolitan area
Heilongjiang
Jilin
Liaoning
Dalian
Shenyang
Changchun
Harbin
400km
300km
250kmPopulation: 27 m
GDP : Eur 138b
Population: 38 mGDP : Eur 158b
Population: 44 mGDP : Eur 287b
Manufacturing – new trends in this sector
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- Focus on development High tech- Up the value chain - Environmental issues start to play a stronger
role- Strong increase labor costs
- Growing automation in manufacturing processes - More focus on the domestic market
- More international collaborations- Collaboration/ownership European R&D
- ‘Branding’ is becoming more important (slowly)
China PMI 2012-2014
Source: Economist Intelligent Unit Source: Markit Economics