Supply Chain Overview in Chengdu

Supply Chain Overview in Chengdu

Chengdu, the fourth largest logistics hub behind Shanghai, Guangzhou and Beijing is offering a preferential corporate income tax rate of 15% until 2013.

I recently attended a supply chain road show in Chengdu and was taken aback by the city's dynamism and energy. Its increasing standard of living is achieved through a 20% year on year retail sales growth and a GDP per capita that has doubled within the last five years. The last program on our itinerary took place in Chengdu's Lan Kwai Fong, a major F&B development by the renowned Hong Kong businessmen, Allen Zeman, who turned a rat alley in Hong Kong into a world class F&B district showcasing Hong Kong as a World City. Here, you might feel a sense of dj-vu if you had witnessed the similar transformation that had taken place before at the Bund in Shanghai.

It is no secret that Western China is fast developing. It represents 70% of China's total land area, 27% of its total population, 20% of the country's GDP and it is equipped with such abundant resources as coal, natural gas and oil. Chongqing, Xi'an and Chengdu are leading cities, with Chengdu experiencing strong FDI growth over the past two years, rising nearly 57% year on year in the January to November period of 2010.

Chengdu, with a population of 15 million, is the fourth largest logistics hub behind Shanghai, Guangzhou and Beijing. It has built four industrial parks to facilitate high tech, automotive, railway and aerospace sector growth and it also plans to build eight railway lines linked to the rest of China.

To date, it has received forty-three foreign logistics companies with a flagship of Maersk building its largest back office in the world. Dell is due to make a major investment bidding to replace Intel as the chief foreign player in the city. Of the recently completed warehouse projects, Global Logistics Properties set up an 81,000 square meter facility with another 65,000 square meter currently underway.

Other current infrastructure development projects in Chengdu include the followings:

  • Leshan Port -- Due completion in later 2011, it will be the biggest inland port in the upper reach of the Yangtze river
  • Jintang Airport -- Due completion in 2015, the send airport in Chengdu will increase annual passenger throughput to 80M passengers
  • Financial Headquarters business zone -- A CBD project due completion in later 2011

Unlike Chongqing, the government in Chengdu is aggressively promoting and marketing to foreign investors and their work is bearing fruit. Equipped with clearer local government transparency, foreign companies are favoring Chengdu. To lure in FDI, the government is offering a preferential corporate income tax rate of 15% until 2013, most likely to be renewed until 2018, for qualified companies. They have also lowered the registered capital of qualified enterprise from USD $7 million to $4 million.

Attracting leadership talent is a key challenge and employers have to rely on the first-tier cities for their talent source. They are partnering with executive search firms who can effectively market their clients' best interest with a clear approach strategy and can identify mobile leaders who aspire to be part of this development in the West.

Michael Lee is a director of Asianet Consultants . Based in Hong Kong, Leem specializes in strategic talent acquisition and consulting for the manufacturing and supply chain industry.

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