Foreigners pump in mere US$9b to west

PUBLISHED : Monday, 17 April, 2000, 12:00am
UPDATED : Monday, 17 April, 2000, 12:00am


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The 10 western cities, provinces and regions encompassing more than half the mainland's land area account for less than 3 per cent of foreign investment, and overseas firms have good reason to stay away.

According to the Ministry of Foreign Trade and Economic Co-operation, the 10 had, by the end of last year, attracted US$9.9 billion in actual investment, out of a national total of more than US$300 billion.

The 10 are Sichuan, Shaanxi, Chongqing, Yunnan, Guizhou, Xinjiang, Gansu, Ningxia, Qinghai and Tibet.

Developing this western region is the priority of the five-year plan, which begins next year, with the aim of reducing the widening gap between it and the richer coastal regions.

But a Beijing Morning Post survey of foreign companies showed the many reasons for not investing in the west.

One was a lack of understanding, with most Chinese never having been there - let alone foreigners.

Another was poor transport facilities.

A German firm invested in a factory in Lanzhou, capital of Gansu province, and needed to import parts and components via Tianjin. Trains were full, so it had to rely on road transport, which was more expensive and took more than two weeks.

To arrange a bank loan, the German firm needed eight chops and at least a month. When it applied for a business licence, it took a year to get the right to use land. Such licences can be obtained in three to five months in Shanghai.

A Japanese trading firm manager said in the east, middle-ranking officials could make decisions, but in the west high-level official approval was needed.

Chen Weirong, president of Kanka, one of the mainland's biggest television-makers, said in two years in Shenzhen, he had never set foot in a government office but, in the west, he had to seek the approval of leaders all the time.

Another problem was the difficulty of finding high-quality managers and skilled workers.

Japanese firms complained of excessive and illegal fees, more serious in the west than in Guangdong.

A German consultant, who surveyed 100 German companies, found a high level of disregard of signed contracts by the mainland signatory. They complained local companies changed the contracts at will and paid no attention to what they signed.

Another complaint is that incentives offered by the west are less than those given in Shenzhen and other special zones, while there is uncertainty over laws and policies, which are subject to sudden change.

Bottom two of the investment table were Qinghai, which attracted just US$15 million by the end of last year, and Tibet, with less than US$1 million.