Week of August 18, 2003
  Snapshot from the Field
rendering: Hangzhou Bay Bridge
At 22.5 miles (36 kilometers) in length, Hangzhou Bay Bridge (pictured in rendering) will rank as the world's longest sea-crossing span.
Construction Kicks Off for World-Record $1.42B Chinese Bridge

by JACK LYNE, Site Selection Executive Editor
of Interactive Publishing

CIXI and ZHAPU, China — A record-setting US$1.42-billion bridge over turbulent waters in East China is at last taking shape after almost a decade's preparation, kicking off a project likely to reshape the region's economic development.
        Stretching 22.5 miles (36 kilometers) in length, the S-shaped bridge over Hangzhou Bay will rank as the world's longest sea-crossing span. Project construction got underway in June to connect the cable-stayed bridge's two opposite ends in Cixi and Zhapu, both cities in Zhejiang province. The record-busting surface link is scheduled for completion five years down the road, in 2008.
        The six-lane Hangzhou Bay Bridge marks the first sea-spanning structure ever constructed in China. The thousands of government-built bridges thus far have been limited to river crossings.
        More significantly, the Hangzhou Bay Bridge will provide a huge infrastructure-fueled boost for the entire Yangtze River Delta.
        "The bridge will help form a more convenient and efficient traffic network in the Yangtze River Delta, enabling each part to develop much closer relations with one another," said Lv Zushan, governor of Zhejiang, China's fourth-largest provincial economy. "We believe the bridge will open many more opportunities for the region's overall development and greatly enhance its economic strength and competitive power."

Bridge Cuts Two Hours Out of
Shanghai-to-Ningbo Travel Time
The Yangtze River Delta, however, already ranks as one of China's most developed regions. While the area contains some 10 percent of the nation's total population, it accounts for 22 percent of China's gross domestic product.
        The region's economy, though, will likely become even more robust with the new bridge. The Hangzhou Bay span will significantly strengthen development-boosting linkages between the delta's cluster of fast-growing, economically robust cities, including Shanghai, the nation's business center.
        The link, for example, will shorten the distance between Shanghai and Ningbo by 75 miles (120 kilometers). That, according to government officials, will slash what's now a four-hour drive to a two-hour trip. (For more on logistics in China, see accompanying "Moved in China" sidebar.)
        "It is the greatest construction project the Chinese government has ever undertaken," said Liu Ting, deputy director of the Hangzhou Bay Bridge project, "not only because of the technical aspects but also because it is so important to the economic development of the whole province."
Hangzhou Bay's legendary tides
Hangzhou Bay's legendary tides (pictured) are both a bridge construction obstacle and a major project-related tourism draw.

        Construction began only after nine years of planning. Sometimes treacherous waters made careful preparation a necessity, according to Wang Yong, chief commander of the Hangzhou Bay Bridge project. A gulf in the East China Sea, Hangzhou Bay is widely known for its Qiantang River Tide, considered one of China's natural wonders. Qiantang tides can create huge, deafening waves, reaching as high as 25 feet (7.5 meters) and moving at speeds of 15 to 18 miles (24 to 29 kilometers) an hour.
        "The project will be a very arduous task," Wang said, "for the bridge will be built in an extremely complicated marine environment, and we must deal with a great number of technical difficulties. That is why the project was under preparation for almost a decade before construction could start. During this period, over 600 experts from all over the world carried out more than 100 technical studies on the bridge planning.
rendering: service island
Pit stop: Hangzhou Bay Bridge travelers can stop mid-way across the span at a "service island" (pictured in rendering) that will offer food, rest and other services.

        "But no matter how difficult a task it will be," Wang added, "we are confident that the bridge will be a world-class structure."

Bridge Marks First Government-Approved
Infrastructure Project with Private-Sector Participation
The Hangzhou Bay Bridge sets yet another precedent: It partially rewrites China's development rule book. The bridge marks the first large mainland infrastructure project approved by China's powerful State Council (www.china.org.cn/e-gongbao/gazette) that has private-sector investment.
        Fifty percent of the project's $497.6 million in base capital has been invested by 17 private-sector enterprises from Zhejiang province. Bank loans and bond issues will make up the lion's share of the rest of bridge funding, with China's central government providing only a small investment.
        The arrangement isn't so unusual, though, in Zhejiang, which is "the province with China's most dynamic non-governmental economy," noted Xi Jinping, secretary of the Zhejiang provincial party committee.
        "Private funds have already infiltrated all walks of life here," Xi added. "But the decision to use non-governmental capital in such a grand construction project as the Hangzhou Bay Bridge signals that the private economy has entered a new era in Zhejiang - one in which the private sector is likely to participate in more infrastructure projects and other programs that used to be monopolized by the state."
Louisiana's Lake Pontchartrain Causeway
Still the champ: Hangzhou Bay Bridge may be the world's longest sea-crossing structure, but it's not the world's longest bridge. That distinction remains with Louisiana's 23.83-mile (38-kilometer) Lake Pontchartrain Causeway.

        The Zhejiang government's most requested document this year, in fact, is a guidebook in promoting private-sector investment, according to provincial officials.

Biggest Shareholder Keen on Tourism
Privately held Songcheng Group (www.songcn.com/song) is the Hangzhou Bay Bridge's largest single stockholder. Based in Hangzhou, Zhejiang's provincial capital, Songcheng Group has invested $86 million, 17.3 per cent of the basic capital.
        "The Hangzhou Bay Bridge project is a very highly sought-after investment program," said Songcheng Group President Huang Qiaoling. "Many businesses, both domestic and overseas, badly wanted to participate."
        Songcheng Group's investment rationale, however, differs from some other bridge participants. The company is China's largest private-sector player in the tourism industry.
        Songcheng Group began building Chinese theme parks in 1995. The company has completed four attractions in and around Hangzhou: American City, Hangzhou Amusement Park, Mountaineers', and the Town of Song Dynasty. Together, the four parks currently attract 4 million visitors a year. And Songcheng has other Chinese theme parks in various stages of development.
        "One of the most important reasons for Songcheng Group's investment in the Hangzhou Bay Bridge is the project's tourism promotion," said Huang.
        The Qiantang tides are already a major tourist draw. Last year, 786,500 Chinese and international visitors attended the five-day 2002 China International Qiantang River Tide-Watching Festival. Some 6.7 million people have visited the festival since it began in 1994.
        Songcheng Group, Huang explained, was particularly drawn to one part of the bridge design, a tourism-friendly 111,111-sq.-ft. (10,000-sq.-m.) platform in Cixi. In addition to providing a prime vantage point for the tides, that platform will include hotels, restaurants, gas stations and a viewing tower.
        Those attractions will provide investor return, as will the bridge's toll fees. Investors will realize an 8.03 to 10.1 percent rate of return over a 14.2-year period, project officials anticipate. The bridge is expected to carry 52,000 vehicles a day when it opens for traffic in 2009. By 2015, daily traffic will rise to 80,000 vehicles, officials are projecting.
        Hangzhou Bay Bridge, however, won't be the world's longest bridge. That distinction will remain with Louisiana's 23.83-mile (38-kilometer) Lake Pontchartrain Causeway.

Editor's note: For more coverage of major world infrastructure projects,
see the upcoming September Site Selection cover story.

Moved in China

Liaoning City
The traditionally heavy industrial province of Liaoning is northeastern China's logistics gateway. (Pictured: Liaoning City, the provincial capital.)
by ADAM BRUNS, Site Selection Managing Editor

To get a handle on the mushrooming of logistics in China, consider this: In 1990, the total number of 20-ft. equivalent units (TEUs) put through China ports was just over 1.4 million. By 2001, according to Drewry Shipping Consultants, that number had reached 22.8 million.
        Just as in manufacturing, barriers to foreign involvement in Chinese industry are gradually eroding. As a result of WTO accession, foreign distribution companies are allowed to set up joint ventures in five special economic zones, as well as in the cities of Beijing, Shanghai, Tianjin, Guangzhou, Dalian, Qingdao, Zhengzhou and Wuhan. Meanwhile, the Chinese government has committed to developing fully integrated distribution hubs at the Yangtze River port cities of Chongqing, Wuhan, Nanjing, Zhanjiagang and Nantong. The only common name to those two lists is Wuhan - which explains why the city of 6 million people is often referred to as "the Chicago of China."
        At the same time though, barriers to efficient logistics are not eroding as quickly as many might hope.
        Another snapshot: The total spending on logistics services in the U.S. equals about 9 percent of the country's GDP. In contrast, the proportionate spending in China in 2001 equaled about 20 percent of the nation's GDP, or US$280 billion.
        But a flurry of third-party logistics providers is out to change that, led by firms like Maersk, APL Logistics, PG Logistics (a division of Procter & Gamble) and OOCL. Joining them is industrial conglomerate China International Trust and Investment Corp. (CITIC), which is unfolding a network of seven logistics and distribution operations by the end of 2005.

Tolls Can Be 20 Percent of Hauling Costs
But the roadblocks quite literally persist. For one thing, tolls can amount to about 20 percent of an operator's hauling costs, compared to 2 to 3 percent in Europe, for example. A national less-than-truckload service network does not exist. And cross-border movements between provinces are hindered by separate licensing systems. The tax revenue generated by such a fragmented system is not likely to give way anytime soon to calls for a more fluid network.
        Dr. Mark Goh, director of business development solutions for APL Logistics Asia/Middle East, says the top five markets for facility growth in his territory are, in order: China, India, Vietnam, Thailand and Indonesia. While China hogs the headlines, "Thailand and Vietnam are increasingly seen as logistics hubs for South-East Asia and Indo-China, respectively," he notes. He also says that the traditionally heavy industrial province of Liaoning is the logistics gateway for northeastern China, and therefore a prime target for third-party logistics provider growth, which has been projected to increase by as much as 25 percent in the country by 2007.
        As for the well-documented problems, Goh says, "I believe it is the country's regulatory framework that requires more urgent attention. There is no single pan-China logistics permit, for example. Foreign companies need separate licenses to operate in different provinces and separate licenses to provide different logistics services. This makes it difficult to operate effectively. There is a desire to change, but progress is slow. So the challenge for us is to continue to provide a seamless service to our customers despite these difficulties." Return to Snapshot article.

sf0818bsf0818b ©2003 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.