Xiamen Presentation

Status Quo & Opportunities----from the perspective of Xiamen SEZ

Speaker: Arthur Zhang Director of Xiamen Investment Promotion AgencyEmail: [email protected] March 17, 2009

Outline

Xiamen FactsCore Competence-----excellent environment

Economy and FDI

Manufacturing Industry

Service Industry

Import & Export Trade

Opportunities for Xiamen SEZ

About XFIB & XIPA

Xiamen FactsCore Competence-----excellent environment

XiamenHong Kong

Beijing

Where is XiamenWhere is Xiamen

– In the South of Fujian Province– To the west of the Taiwan Straits– Sits between the Pearl River Delta and

Yangtze River Delta– Permanent Population: 2.43 million– Area: 1,573 km2

– Population of Xiamen, Zhangzhou and Quanzhou in total : 15 million

Taiwan40 million

People

15 million people

Great changes in the last 100 yearsGreat changes in the last 100 years

Xiamen (Amoy) Port in 1905

Present name of “gateway to China”

Xiamen International Cruise Port in 2008

Ancient name of “lower gate to the sea”

A Modern Port & Tourism City Important Central City on the West Coast of Taiwan Straits

Gold Medal City by

World Bank

International Nations in

Bloom

UN Habitat Award

XiamenXiamen

Best City for MNCs’Investment

Best City for Migrant Workers

One of Five Priority One of Five Priority among South Chinaamong South China’’s Regional Citiess Regional Cities

Recent research commissioned by UK Trade & Investment (UKTI) lists Xiamen as one of 5 key regional cities in South China for UK business opportunities, share rapid economic growth, large and developing consumer and industrial markets, and strong local government support, and offer greatest potential as business locations.

General Business Environment Grouping

Group A (Most attractive) Group B Group C Group D Group E Group F

Dongguan Dalian Foshan Changchun Changsha Baotou

Hangzhou Ningbo Nantong Chengdu Dongying Daqing

Qingdao Tianjin Nanjing Weifang Ordos Harbin

Shanghai Wuxi Shenyang Wuhan Jinan Hefei

Suzhou Xiamen Shaoxing Zhengzhou Shijiazhuang Wenzhou

Weihai Yantai Zhuhai Zibo Tangshan Xi’an

(Source: Opportunities for UK Businesses in China’s Regional Cities)

Torch Hi-tech

(Xiang’an) Industrial

Zone

Tong’anIndustrial

Concentrated Zone

Mechanic Industrial

Concentrated Zone

Export Processing Zone

Free Trade Zone

Software Park

Phase I

Wuyuan Bay CBD

Administrative & Industrial LayoutAdministrative & Industrial Layout

Free Port Zone

Aviation Industrial Park

Xiamen

Eastern Sea

Program Area

Guanyinshan CBD

Software Park Phase II

TokyoSeoul

Osaka

ChicagoHong Kong

Macao

Bangkok

KualaLumpur

Singapore Jakarta

Manila

LuxemburgL.A.

Amsterdam

Taipei

Fifth FreedomFifth Freedom Fifth Freedom

Fifth FreedomRe

gula

r Car

goFl

ight

• Major aviation hub in East China• 4th largest gateway airport in China• 150 domestic and international air routes,

which are served by 27 airlines at the airport.

Air Transportation

7th largest container port in China 137 container shipping routes

Throughput of Xiamen port in 2008 is 5.04 million TEUs & 97.0 million tons of cargo.The world’s top 20 shipping companies have all set up their businesses in Xiamen.4th port in China to handle the sixth-generation large container vessels.

The World’s 19th largest Container Port

XiamenTaipei

Beijing

1500km

Shanghai

1350km

Hong Kong

Shenzhen680km

Macau

Xiamen is one of the 47 land transport hubs granted by China’s Ministry of Communications. Extensive trucking services develops the city into the regional economic and logistics center.

Well-developed highways connect Xiamen to major cities in the Pearl River Delta such as Shenzhen and Guangzhou and the Yangtze River Delta such as Shanghai and Hangzhou.

Highway Transportation

Rail Transportation

More railways will connect Xiamen with the National Railway Network, making it a key rail hub in Southeast China.The biggest railway goods yard of southeast coast of China---Qian Chang Railway Goods Yard covers an area of 5,700 mu with 17 loading and unloading lines, started the construction in 2008.

20091150Longyan/XiamenLong-Xia

April 20054290.1Ganzhou/longyanGan-Long

20103500Xiamen/ShenzhenXia-Shen

20091.78276Fuzhou/XIamenFu-Xia20092298.4Wenzhou/FuzhouWen-Fu

Open TimeHoursLength（km）

Origin/terminusRoutes

Xiang-PuNanchang / Fuzhou, Putian 603.6 20113.5

Xiang-Purailway

Xiamen’s Core Competence--excellent environment

Xiamen’s Core Competence-----excellent environment

Xiamen Facts---Economy and FDI

Unit: USD million

Burgeoning Economy in Xiamen

05000

100001500020000250003000035000400004500050000

GDP Total Industrial OutputValue

Import & Export Value ofForeign Trade

1990 1995 2000 2005 2008

22941

44740 45389

Xiamen BrandsFamous Brands Famous Local Companies

FDI in XiamenBy the end of 2008，there are 8,284 FDI projects approved in Xiamen, with a contracted value of US$ 30.62 billion and paid-up value of US$ 18.94 billion.

Total FDI flows continue to increase by 40% for the past 3 years.

43 “Global Fortune 500” invested 76 projects in Xiamen, with a total foreign investment of US$ 2.83 billion.

0.670.671.301.301.061.06

2.312.31

surpass 1 surpass 1 billion USDbillion USD

20032003 20042004 20052005 20062006 2007 20082007 2008

3.273.271.901.90

Unit: billion USDTotal Total

contracted contracted valuevalue

U.K. Investments

Microgard Limited is in full control of the garment development, design, testing and manufacturing process. From its Headquarters in Hull, UK, Microgard develops and specifies base materials using state of the art technologies to provide the highest levels of protection and comfort .

• 40 UK invested projects, total contractual value of US$ 130 million

• Industries: glass fiber, aerospace components, electronics, consultancy, trading,

software development

Meggitt PLC is an international aerospace, defense and electronics group with a consistent record of strong financial performance.

Premium Aircraft Interiors Group Limited is a group of leading aircraft interior supplier, an international group headquartered in the UK, with manufacturing operations in the USA, UK and Germany .

TESCO invested its first project via Hongkong in January 2009 with registered capital of USD 98 million.

“3 4 5 6 7 8”

FDI enterprises’ contributions to Xiamen’s economy :

30% of fixed assets investment;

40% of tax revenues;

50% of job opportunities created;

60% of imports & exports;

70% of economic growth;

80% of GDP

Xiamen Facts--- Manufacturing Industry

Electronics & Information IndustryMachinery IndustryFine Chemical Industry

3 Pillar Industries

Electronics & InformationElectronics & Information32.5%32.5%

MachineryMachinery25.2%25.2%Fine ChemicalFine Chemical

14.7%14.7%

OthersOthers27.6%27.6%

Electronics and Information Industry- Xiamen is the home to famous domestic and international brands as Xoceco, Amoi, Dell, Matsushita, TDK and FDK. The production and sales of digital TV, faxing machines, auto audio, displayers, telephones, compact discs, transformers, capacitors, IC fix frames, relays and photo-electric equipments list Xiamen among the top in China.

Machinery Industry- Xiamen has about 180 machinery and metallurgy companies, and it is superiorly established in various sectors including engineering machinery, power distribution equipment, large and medium-sized buses, tungsten products and aviation maintenance.

Fine Chemical Industry- A world-class manufacturing base of color film/paper has been established in Xiamen. Its rubber tire industry manufactures quite a complete set of products and holds a big share at the domestic and Southeast Asian market. Here is also the world’s biggest PTA production line of single series and the manufacturing and R&D base of polyester.

3 Pillar Industries

Key Enterprises—Components & ICT & Optronics

Dell Computer – the world’s top PC manufacturer;

Lenovo Mobile Phone – 1st in Chinese domestic brand market;

Amoi Mobile Phone – 2nd in Chinese domestic brand market;

Faratronic – China’s No.1 thin film capacitors manufacturer;

Panasonic – Digital cameras, car-borne GPS devices;AUO – the world’s top TFT-LCD manufacturer;Xoceco – China’s NO.1 LCD TV exporter, with 4% of global market share;Genius Optical – the world’s No.1 mobile phone camera lens; Motic – China’s No. 1 exporter of digital microscopes and top 5 in the world;Epistar – the world’s top high power LED chips manufacturerSan’an Optoelectronics – China’s No. 1LED wafer and chip manufacturer;Hualian Electronics – one of China’s largest LED products

Xiamen Facts-----Service Industry

Silk Road on the Sea— 1,000 years of trading history

Consumption Market & Business Forms of Commerce

Status of Social Consumption Retail Sales in Xiamen (2002-2007)

Unit: RMB 0.1billion

The consuming market of Xiamen grows steadily. From 2002 to 2007，the

yearly average growth rate is 15.1%. The social consumption retail sales in

2007 was RMB36.205 billion（about US$5.232 billion）. Various business forms of retailing are in operation, such as shopping malls, supermarkets, convenience stores, boutiques and vending machines.Big retailers like Wal-mart, Carrefour, Tesco, Metro, Trust-mart have already invested in Xiamen, and their sales performances ranks among the top in China.Many other famous companies also have investment in Xiamen including New World Department Store from HK and B&Q from Europe, etc..

Haicang Free Port ZoneOn June 6, 2008, Haicang Free Port Zone was approved by the State Council and became one of 7 Free Port Zones in China. It is also one of 2 free port zones in South China with Qingzhou of Guangxi Region.

Major policies：Policies of the bonded zone, export processing zone and bonded logistics park will all be implemented in the free port zone. Goods in the zone can be freely stored, repacked, processed and manufactured. (The top two ports in the world, Singapore Port and Hong Kong Port , are both implementing free port policy.）

Planned size ：9.5092 k㎡

Four parts: Haicang Port Area, Songyu Port Area, Export Processing Zone and Haicang Logistics Park

Time for operation：Phase I will be put into use in May 2009.

Convention and Exhibition Industry

Brand Fairs : China International Fair for Investment and Trade (CIFIT)

China Xiamen Machinery & Electronics Exhibition (CXMEE)

National Fairs: West-Taiwan Strait Auto Expo, International Food Procurement Fair, Xiamen Gift & Home Decoration Show, International Stone Fair, China Sporting & Leisure Goods Fair

International Meetings：、World Choir Games, International Dragon Award (IDA)、ISE Meeting、International Machinery Conference in China (IMCC), ICCA, etc.

Enterprises’ Annual Meetings: ABB, Kodak, Dell, Schneider ,Pepsi, Fujitsu、Exxon

Mobil 、Toyota、Teco……

Sponsor: Ministry of Commerce, P.R.ChinaCo-sponsors: UNCTAD, UNIDO, OECD, IFC, WAIPA, CCIIP Venue: Xiamen, ChinaTime: September 8~11 annually

An event of Class----UFI-approved Event：→Strong support from China’s Central government: CIFIT is the only national

investment promotion event sponsored by the MOFCOM, approved by the State Council;

→ Unique World-wide investment promotion event ever approved by UFI (The Global Association of Exhibition Industry.

CHINA INTERNATIONAL FAIR FOR INVESTMENT & TRADE

http://www.chinafair.org.cn

Banking Industry

branches of 4 big commercial banks

branches of 6 small and media commercial banks

1 regional commercial bank

1 post saving office

1 rural credit cooperative

15 branch and representative offices of

foreign banks

1 other financing company

Xiamen Facts-----Import & Export Trade

Import & Export Trade Development of Xiamen1998-2008

0

50

100

150

200

250

300

350

400

450

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Total Foreign Trade Value Import Value Export Value

Unit: USD 100Million

In ten years time from 1998 to 2008, Xiamen’s foreign trade value grew 6 times higher from USD 7.62 billion to USD 45.39 billion at an average annual rate of 20%. The export value grew 6.8 times higher from USD 4.3 billion to USD 29.39 billion at an average annual rate of 21.9% while the import value grew 4.8 times higher from USD 3.32 billion to USD 15.99 billion at an average rate of 17.6%.

Import & Export Trade with U.K. (2008)

Export to U.K.

US$ 864.66 million, up by 58.26%

Main Products:

Watercrafts: 191.15Garments: 83.94

Taps & Valves: 78.52Shoes: 63.01Efficient light bulbs: 44.31

Import from U.K.

US$ 333.56 million, up by 41.58%

Main Products:

Photosensitive materials: 77.60 Spare parts of Aircraft: 44.80Waste paper: 31.47Lift equipments & accessories:

15.05Waste copper: 10.83

(Unit: Million USD)

Opportunities for Xiamen

Encouraged Industrial Fields

Manufacture Industry:High-level manufacturing industry:

TFT-LCD, LED, PV and auto electronic devices, etc.

Less land coverage with high added value

Service industry:logistics, tourism, financing, fair & exhibition, software & IT services, trading, culture, Intermediary agency and real estate

Key Manufacturing Industrial Chains with Targeted Output Value of RMB 10 Billion

Industrial Chain Covered Industries Key manufacturers

LCD industrial chain Backlight module, LCD displays, LCD TVs

Automobile, auto parts & components, tires of vehicles & engineering machinery

Power distribution & control equipment, electrical appliances & components, specialized electrical devices

Software development, IC design、embedded software、software services

Machinery for construction engineering, heavyweight handling equipment

Aircraft maintenance & aerospace components manufacturing

LED substrates & materials, LED wafer & chip, solar cell, organic compounds cell, LED chip test & assembly, lighting Application Products

AU Optronics Corp(AUO)

Automobile industrial chain

KINGLONG Bus 、Golden Dragon Bus Co.Ltd

Electrical appliance & power distribution industrial chain

ABB Low Voltage、ABB Switchgear

Software & IT industrial chain

Longtop Inc.

Engineering machinery industrial chain

Xiamen XGMA Machinery Co.,Ltd、Linde Forklift Truck

Corp. Ltd

Aircraft maintenance industrial chain

Taikoo Aircraft Engineering Co.Ltd

LED & PV industrial chain

San'an Optoelectronics、Hualian Electronics Co Ltd

Key Service Industrial Chains with targeted contribution to 10% of GDP

Industrial Chain Covered businesses Key service providersFinancial industry Deposits & loans business, financial

intermediaries, property insurance, life insurance, securities brokerage business, investment banking

Modern Logistics Park, HaicangFree Port Zone, Qian Chang Railway Goods Yard

Hotels, travel agencies, retailing, leisure industry, catering, transport, tourism

Development & sales of housing & commercial property

Cultural services, cartoons, creative industry

ICBC, ABC, Bank of China, CBC, Bank of Communications, Xiamen City Commercial Bank, PICC, China Life Insurance, Ping An Insurance, Xiamen Securities, Xiamen ITG Futures

Logistics operation industry

Kenfair Logistics, Port Development, Superchain Logistics, HongxinEntrepreneurship, China Logistics, ITG TIDAK Logistics, Jinlian Logistics

Tourism & exhibition industry

Kenfair Travel Group, Seashine Tourism Group, Xiamen Tourism Group

Real estate industry China Resources Land, SEZ Property, Haicang Investment, Seashine Real Estate

Cultural industry Xiamen VA Group, Xiamen Daily Newspaper, Youbide, Huihe Stone Carving Art, WorldCom Warner, Blue Bird Cartoon, G-Bits

Opportunities for XiamenUnique Adjacency to Taiwan:

less than 1 hour’s flight from Taipei to XiamenXiamen is only 136 sea miles to Taichung, 165 sea miles to Kaohsiung, 222 sea miles to Geelong Port.Big chances for Taiwan hi-tech industries’ vertical integration: TFT-LCD, LED and IC design

Taichung

Xiamen Taipei

Improvement of Cross Straits Relations Improvement of Cross Straits Relations

More Opportunities for More Opportunities for XiamenXiamen

50%52%61%20%Cost Saving

QingdaoShanghaiXiamen / FuzhouShenzhen

Seaport Cost Saving Under Direct Sea Freight

(Source: )

transportation costs largely reduced by direct flights

Taiwan

Xiamen 1h30m 45m

Shanghai 5h 1h30m

Beijing 7h 3h(Direct Flight)

Xiamen

Tax Preference

For high and new technology enterprises:

-Corporate income tax: 15%

-5-year tax holiday for newly established ones: 2 years

exemption, 3 years half reduction (only applies to SEZs

and Pudong new development area of Shanghai)

XiamenXiamen Foreign Investment Bureau Foreign Investment Bureau (XFIB)(XFIB)

• XFIB is a functional department operating under XiamenMunicipal Government, mainly responsible for the City’s

foreign investment related affairs.

• Its main functions include investment promotion, examination & approval of foreign-invested projects, management & services for foreign-funded enterprises, consultation on foreign investment policies, and handling complaints lodgedby foreign-funded enterprises.

More details on: http://www.xiameninvest.com http://www.fdi-xiamen-cn.com

About XIPAXiamen Investment Promotion Agency (XIPA) is a professional investment promotion organization established by Xiamen Municipal Government. XIPA operates up to international practices and provide “one-stop" service to investors for free-a simpler and faster investment channel to serve investors’ interest better.

What XIPA can do for you:Provide information regarding Xiamen’s investment environment, opportunities and the facts needed for decision-makingCarry out field survey and market studies during the early stages of investmentRecommend the most suitable location and best mode for investmentArrange investment site toursSupport, backup and problem solution in the investment process…

Visit us at: http://www.xipa.com.cn

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