TM in Chengdu: Building an industry hub from scratch

Posted on 20 Nov 2012

While China has a reputation for cheap and plentiful labour, relaxed employment laws and a well-established supply chain network, one fascinating city in the western province of Sichuan - Chengdu - is trying to move beyond that image. And on first impression, it is succeeding.

A Starbucks in Kuan and Zhai Xiangzi (Wide and Narrow Alleys). The buildings housed the Imperial officials and soldiers from the Qing Dynasty

On arrival in Chengdu, the first thing that hits you if you’re not a frequent visitor to China is how many high rise buildings there are. They are everywhere, and around half of them are still under construction or empty. The sheer scale of construction work going on is mind-boggling to a newcomer like myself.

Our first visit is to the Chengdu Planning Exhibition Hall, another huge building that is largely empty of people and is reminiscent of an airport departure lounge. We watch a 3D film about the history of Chengdu and the link it provided between Chinese cities in the East and the Middle East and eventually Europe – one of the most ancient and important examples of a supply chain, albeit it relatively primitive.

The model of Chengdu and exactly what the municipal government intends to do is not only incredibly ambitious, but from the sheer amount of construction work going on around the city, it’s obvious what is being proposed is not merely talk. Unlike in the West, the Chinese have the capital and plan in a holistic way, sticking to targets and taking decisions collectively.

The basketball-sized model of Chengdu is, to be frank, quite incredible. It maps out the different industry zones that are currently under development, the metro lines that are currently under construction and those that are in operation, and the different train and

Lights showing already constructed metro lines (blue), and ones planned or under construction in the city.

airport terminals that the city boasts. Chengdu is fast becoming a fantastic place to to do business – not just because of the rapidly developing infrastructure but, according to Caroline Cul, Deputy General Manager at Damco (part of the A.P. Moller-Maersk Group), also because of the local and central government’s attitude towards their plans.

“The government [in Chengdu] understands our needs – and they also understand the needs of foreign companies that want to invest here,” she said.

The Bureau of Strategic Designing of Chengdu Hi-Tech Zone (CDHT) places emphasis on the need to create an environment where multiple different enterprises from all different industry sub sectors can flourish, with the help of foreign investment.

Getting ready for the masses: residential and office buildings under construction in Tianfu New City

Giving a broad outline of what the plans are for Chengdu and the various industrial initiatives in the works, the guide at the exhibition centre told us that apart from the central business district or the “downtown” urban centre, there are plans to surround this with the development of four middle-sized cities each with a population of 200,000 – 500,000 people.

As well as this, there are plans to develop 30 prioritised towns, 100 “normal towns”, and more than 1,000 small towns, each falling into one of 21 different industrial development zones: all with different sectoral focuses and features.

“We want to build this new zone as a hi-tech industry base. We want to focus on the ICT sector, the energy equipment manufacturing sector like solar panels and wind turbine technology, new materials like composites and nanotechnology-materials, the civil aerospace sector and the biopharmaceutical sector,” explained a planning official from the exhibition hall.

“We also want to provide a strong financial centre here – along with various R&D centres, logistics centres and exhibition centres. We also want to boost tourism here,” she added.

The vision portrayed was astounding – not just because of the scale but because of the way in which clusters of manufacturing and engineering expertise have an extremely fertile ground in which to grow.

Bringing production to Chengdu might only be the first part of your company’s journey to China – the ultimate plan is to turn Chengdu into a place where you want to come and conduct R&D and innovation projects.

This became even more apparent when we took a trip to the Tianfu Software Park – part of the southern part of the Chengdu Hi-Tech Zone. See my blog post tomorrow about Tianfu New City and The Tianfu Software Park, and the various incentives the local and central governments are offering foreign companies that invest here.