Model Cities

Changsha

Background:

Geographic Background:

Changsha City (east longitude111°53'~114°15', north latitude 27°51'~28°41'), is the capital city of Hunan Province. It is the political, economic, scientific, educational, cultural and business center of the province. It is located in the western margin of the Chang-Liu Basin and downstream of the Xiangjiang River.

To the east, Changsha's neighbors are Yichun City and Pingxiang City of Jiangxi Province. To its south sit Zhuzhou City and Xiangtan City, with Loudi City and Yiyang City in the west and Yueyang City and Yiyang City in the north. The length of the city from east to west is about 230 km, and the width from south to north is about 88 km. It covers an area of 11,819.5 square kilometers, of which the urban area occupies 948.23 square kilometers. The downtown area comprises 242.78 square kilometers.


Economic Background:

Changsha has a good industrial and economic base, rather reasonable industrial structure, and is one of the areas with the most industrial and economic development potential in Central-South China. As for its agriculture, Changsha City has good agricultural ecologic environment, and was the first of "4-largest rice markets" in China in its history, and now is an important commodity food production and research base. As for its tertiary industry, for a long history, Changsha City has been an important business town in the south of Changjiang River. Changsha has deep trade tradition, first-class facility, prosperous market, and is the most important business city in Central-South China and one of the first excellent tourism cities in China.

Changsha's economy is growing rapidly

The gross domestic product (GDP) of Changsha has grown at an average of 15.4 percent per year from 2003-2007, compared with the national average of 11 percent; GDP per capita in Changsha amounted to over USD 4,748 in 2007

The economy comprises agriculture (6.3 percent), construction and manufacturing (45.0 percent) and services (48.7 percent).

According to Changsha's Social and Economic Development Plan (2006-2010), GDP is expected to grow at an annual rate of 13 percent through 2010.

Changsha is well known as its industries of radio and TV media, agriculture, cartoon and software Changsha has a large consumer market and further expansion is expected

Changsha residents have seen increasing income levels; urban residents had an average per capita disposable income of over USD 2,275 in 2007, 17 percent higher than the national average

According to Changsha's Social and Economic Development Plan (2006-2010), the average per capita disposable income will increase at an annual rate of 9 percent through 2010

Retail sales reached USD 14.6 billion in 2007, representing a CAGR of 23 percent over the 2003-2007 period Changsha is one of China's more competitive cities

According to the "Annual Report on Urban Competitiveness (No. 5)" (1), in all related indicators, Changsha was ranked above average and as the 20th in China for its efficiency •Changsha was ranked as the 14th most competitive city in China by the National Bureau of Statistics of China in 2007

A number of other cities within an hour's drive from Changsha form its "Economic Circle"

Seven cities are within a one-hour drive from Changsha: Zhuzhou, Xiangtan, Yueyang, Yiyang, Changde, Loudi and Hengyang

These cities have growing economies in their own right. With strong economic and transport links to Changsha, they form an "economic circle" around Changsha. Together with Changsha, these cities have a total population of 40.8 million and represent GDP of USD 97.6 billion, comprising 76 percent of Hunan province's total GDP, and total retail sales of USD 34.6 billion equivalent to 73% of Hunan province's 2007 total.

Within a two-hour drive of Changsha, the "economic circle" includes two additional cities: Shaoyang and Pingxiang. The nine cities have a combined population of 50.13 million, GDP of USD 108.9 billion and retail sales of USD 38.1 billion

In 2009, under the correct leadership of the Municipal Party Committee and the municipal government, commercial competent authorities of all levels have acted promptly and actively in an endeavor to effectively relieve the impact of the financial crisis on our city's import and export, and have successfully reached the goal of stable trade development under unfavorable conditions of economy.


International Trading Background:

I. Introduction to General Situation of Foreign Trade in 2009

In 2009, the total volume of imports and exports reached 4.12 billion US dollars, declining 20.3% compared with the same period of last year and maintaining the same level as the drop of the rest of the province. Among them, exports covered 2.45 billion U.S dollars, dropped by 29.7% compared with the same period of last year and 5 percentage points lower than that of the provincial average. Exports took up 44.6% of the total provincial volume, and increased by 3.2 percentage points over the previous year, while the volume of imports totaled 1.67 billion US dollars, recording a year-on-year decrease of 0.9%.

Our total volume of imports and exports ranked the 4th, the overall decreasing amplitude ranked the 2nd among 6 provincial capital cities in the central region. The total volume of exports ranked the 3rd, one rank higher over last year.

II. Trend and Features of the Foreign Trade Operation in 2009

1. The import and export experienced volatile increase overall, but the force driving recovery of export was inadequate

In 2009, the recovery of our export is slow and difficult. The value of export per month compared with the same period of last year has been negative, however, the export remained the same trend as that of the import on the whole, and the trend of recovery is bound to come.

2. Sharp drop in export to many markets, while some market demands remained stable

In 2009, the decline of export of a majority of trade markets exceeded 10%.

In the context of severe contraction of overseas market demand and rampant trade protectionism, the export to Vietnam, Pakistan, Tanzania, Israel, Venezuela, Kazakhstan, Peru and other 60 countries and regions has achieved positive growth with a total volume of 281 million US dollars.

In addition, export begins to be transported to 16 countries and regions, such as Nepal, Lesotho, and Burundi and so on, thus adding 8 exporting partners to a total of 185.

3. The export of mechanical and electrical products decreased by half, and tea and other products have an important role to play in stabilizing export

In 2009, the net export value of mechanical and electrical products reduced by 780 million US dollars compared with the same period of last year, a year-on-year decline of 46.2%.

The export of high-new technology products picked up, with that of computer and telecommunication technology increasing 111.3% compared with the same period of last year.

Some traditional labor-intensive products such as fireworks, tea, prepared intestine experienced rise in both quantity and price even in the tough time of financial crisis.

Moreover, significant growth was reached in price and quantity of such products as drugs (antibiotics), travel accessories, bags and luggage, electric fans, flue-cured tobacco, furniture and its components, presswork, Aluminium oxide, non-forged alumina, and alumina products, etc. (though the export of flue-cured tobacco was slightly declined.)

4. Enterprises engaged in foreign trade continued to expand, and the contribution rate of the export of brand enterprises was high

In 2009, the number of newly registered and recorded enterprises reached 289, and the team of enterprises engaged in foreign trade continued to expand.

Dohia and Eastcom were added to the list of 26 "Internationally Renowned Brand in Hunan Province", which covered 3% of the total exporting companies.

5. The decline of export of private enterprises ranks the first, but they still play an essential role in supporting the trade development

From January to December last year, the accumulative export volume of our private enterprises totaled 1,534 billion U.S. Dollars, dropped by 33.7% compared with the same period of last year, which ranks the first among enterprises.

Nevertheless, the private sector still has a major role to play in foreign trade of Changsha, with its share of export reaching as high as 62.7% and its import volume covering about 57%.

6. General trade constitutes the main part of trading methods, and processing trade rose by a small margin

General trade in Changsha city experienced plunge, with cumulative imports and exports decreasing by 21.2% compared with the same period of last year,. However, the high share of 83.4% and 83% of its import and export in the whole city speaks volume for its leading role in various trading means.

The export of the goods of overseas contracted projects proceeded with continuous growth. Despite the year-on-year drop of 14.9 percentage points of the absolute value of processing trade, its share of import and export in the city rose compared with the same period last year.

7.The decrease of cumulative imports was gradually alleviated, with the total volume remaining the same level as that of last year.

Ⅲ. Promotion measures for foreign trade in 2009

1. Enhancing the policy guidance and increasing the confidence of enterprises

In order to restore and increase the confidence of foreign trade enterprises, and to continuously expand the foreign trade market, the Municipal Party Committee and municipal government launched "Policy Suggestions on Expanding Reform and Opening-up with the Grasp of Opportunities". Meanwhile, policies on encouraging foreign trade of all levels were earnestly implemented, and extensive awareness campaign was staged in forms of press conferences, policy-expounding meetings, training workshop of enterprises etc. Thanks to all these measures mentioned above, the confidence of exporting companies was significantly beefed up.

2.Strengthening the service function and optimizing development environment

First, vigorous efforts were made to establish various platforms. We have facilitated the smooth operation of two foreign trade platforms, namely, Jinxia Bonded and Logistic Center and Liuyang Fireworks Custom Control Site.

With the assistance of the Provincial Office, the first international e-commerce platform-"Hunan foreign trade net" was established in Hunan.

Second, great emphasis was placed on coordination of various departments. With the assistance of the Provincial Office, the coordination mechanism of tariff, inspection and quarantine, foreign exchange, credit in foreign trade has be promoted for its implementation and improvement, and the coordination mechanism with such departments as Customs, Inspection and Quarantine, foreign trade, etc. has been initially established.

Third, a flexible approach to the priorities of service sector was adopted, and the flex-job system among key enterprises of foreign trade was established. With key enterprises as the core, the scheduling and service of projects was conducted and a host of new foreign trade enterprises such as Foton Automobile etc. was explored.

3. Giving full play to the advantages of exhibitions and helping enterprises go out

In this year, efforts were intensified in organizing fairs and exhibitions. In addition to organizing enterprises to participate in Canton Fair and AESAN Expo, Czech Fashion Exhibition and Czech Pharmaceutical Exhibition were organized.

This year, enterprises in Changsha have applied for a total of 725 fund-developing projects for media and small-sized enterprises. Sany Heavy Machinery, Sunward Intelligent, Foton Automobile and other large-scale enterprises have made a killing in international market.


Changsha Services Outsourcing Industry Development

Purpose:

Taking advantage of its current basis and favorable conditions, Changsha is to build itself into a modern service center that can serve the whole province, radiate out to the central west, and impact on the whole country, with efforts focused on building Changsha into a regional logistics hub, financial center and outsourcing base. By 2010, the added value of the Changsha service industry will have reached RMB 155 billion, with 40% of the total employment serving in this industry. For the service outsourcing industry, Changsha will target high-end outsourcing business and big offshore markets of Europe, US, Japan, South Korea and Hong Kong. At the same time, Changsha will also take domestic outsourcing business from the Yangtze River Delta and Pearl River Delta.

The targets of Changsha's service outsourcing in 2010 are as follows:

1. The output value of outsourcing businesses will reach RMB 30 billion, with US$ 100 million exports.

2. Twenty medium and large-sized outsourcing companies will have passed international qualification certification.

3. Ten international prestigious companies will shift their outsourcing business to Changsha.

4. The number of people specializd in service outsourcing will reach 100 thousand.


Political Support:

To encourage the development of service outsourcing, the Changsha Government has set up an ad hoc outsourcing leading group and formulated preferential policies, such as financial policies or tax incentives to promote the development small and medium-sized high-tech companies, cartoon animation industry, new materials industry, and university industrial park.

Devott Publications
May 16, 2011, final list of the third “TOP 10 Service Outsourcing Parks in China, 2010 ” by Chinasourcing publishes officially, together with “White Paper of TOP 10 Service Outsourcing Parks in China, 2010”