From Site Selection magazine, September 2000 A S I A - P A C I F I C

China Set for Leading Role on The Global Economic Stage b y     M A R K     A R E N D The Chinese government is competing aggressively for foreign direct investment with the intention of being an economic powerhouse and high-tech haven. Foreign investment in China is poised to take off, particularly if the Asian mega-market is permitted to join the World Trade Organization (WTO). Every sector of the Chinese economy shows signs of growth, from investments in infrastructure to renovation of state-owned firms and industries to the emergence of a major service industry. Politics aside, China is a market-oriented economy; it welcomes foreign investment and is ready to compete for it. At an August 1999 seminar organized by the US-China Economic Development Assoc. (www.uceda.com), Han-Chang Qin, commercial consul of the Chinese Consulate in Los Angeles, made the argument that regardless of its WTO status China plans to open its financial, insurance, telecommunications, medical insurance and import/export markets, because doing so benefits China's economic interests. More recently, China has announced several new policies designed to attract foreign investment. They include: encouraging technological development and invention by foreign invested enterprises and exempting such enterprises from import tariffs and link taxes; exempting business income tax or refunding value-added tax for certain manufacturers, including those purchasing equipment domestically; reducing some taxes for foreign invested companies that increase their technology expenditures; relaxing restrictions on some loan guarantees and conditions; establishing Chinese investment foundations to help foreign investors increase their capital; letting domestic insurance organizations provide political risk insurance to overseas investors investing in the energy and transportation industries; and encouraging investment in central and western areas of China. ABOVE RIGHT: Coca Cola is one of several U.S. companies that have invested in Wuhan, capital of the Hubei Province in central China. Among the industries targeted by Wuhan's economic development officials are technology, metallurgy and textiles. Xerox, IBM and Continental Grain have joined Coca Cola in Wuhan. Internet Opportunities Abound Among the business developments to watch -- or help cultivate with facilities and other investments -- is the growth of Internet usage and the emergence of e-commerce. A 1999 report from the U.S. Dept. of Commerce Trade Compliance Center predicted the number of Chinese Internet users would grow by a factor of 10 from 2 million in 1998 to 20 million in 2000. The report, the China Country Commercial Guide, has this to say about the Internet in China: "Though China remains a developing country, the ambitious use of high technology has made inroads with the growth of governmental and business-to-business forms of e-commerce. Government at all levels seeks to use technology to inform the public about laws, deal with customs and simplify procedures, and businesses are beginning to conduct bidding, process sales and handle contacts online. In addition," it continues, "direct marketing and sales online have begun despite the lack of credit card usage and distribution difficulties. Despite the nascent stage of e-commerce, China offers a growing market for firms using or selling related information technology products." The entire report, which is must-read material for those investing in China, is available online at (www.mac.doc.gov/tcc). Click on Reports, then 2000, then China. RIGHT, TOP AND BOTTOM: Tianjin, located 120 kilometers from Beijing, boasts over 10,000 foreign company registrations. Numerous American companies have located facilities in Tianjin, including NCR and Motorola, which recently announced a $1.9 billion investment in its chip plant there.

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