Uncut diamond set to sparkle

PUBLISHED : Tuesday, 27 April, 2004, 12:00am
UPDATED : Tuesday, 27 April, 2004, 12:00am

Each road in Zhanjiang is lined with a different species of palm or other tropical tree and shrub.

A 3km coastal promenade has just opened and the city boasts its first five-star hotel, the Crowne Plaza Holiday Inn. The last stretch of highway linking Zhanjiang to Guangzhou will be completed by the end of the year, cutting travel time to four hours, while the highway to Chongqing will be opened by the end of next year.

The improvements are just some of the results of ambitious plans by former mayor Zhou Zhenhong and his successor, Xu Shaohua , who took over in 2002, to make the Guangdong city more attractive for foreign investors.

'Mr Zhou is daring. He went ahead and relocated residents so roads could be widened, unlike his predecessors who kept delaying their plans so they didn't have to deal with a difficult problem,' said Che Jinhua , a supervisor at Singapore-invested Zhanjiang OEM Electric Equipment.

'Under Mr Xu, we saw the greening of the city and the completion of road projects,' Ms Che said.

OEM's Billy Chiang started his business producing small household appliances like rice cookers in rented factories 12 years ago and has turned a profit in his first year of operation.

'Zhanjiang is an uncut diamond that needs polishing,' Mr Chiang said. 'There has been a big improvement in the past two years. In the next two years, this will become a hotspot for investors.'

Restaurants have sprung up in Zhanjiang, along with karaoke lounges and a 200 million yuan theatre complex, complete with four-tier balconies and Broadway-style shows. Werner Schoeb, the vice-president of Hilti (China), said the local government had supported his business, without demanding any bribes or kickbacks.

'Everything is above the table,' said Mr Schoeb. 'They helped us get land for our expansion. I needed to expand immediately and the land we wanted had already been sold, but they got it back for us.'

Land in Zhanjiang is three to four times cheaper than in Guangzhou. The local development zone assigns an officer to follow each project from negotiation to start-up and offers to iron out procedural problems once a business is operational.

The zone also has an incentive scheme to encourage exporters to improve their performance.

Kwong Hing won 70,000 yuan for exceptional export performance last year - its exports rose 25 per cent to US$20 million - while its manager, Tom Leung, received a 20,000 yuan award for his efforts.

The development zone's vice-director, Liao Dong, said rewards were increased to 200 million yuan this year from 110 million last year. A further 33 million yuan will pay export tax rebates.

'We get our refunds very fast. We have already been paid up to June last year. In other places, people have to wait two years. Here, it takes only six months,' said Mr Leung.

Investors who have supported Zhanjiang's infrastructure construction, like Holiday Inn owner Shum Hong-sang, also get help when they have cash-flow problems.

Mr Shum has invested 8 million yuan in the 28-storey property but has only opened 200 of its 600 rooms because there are not enough guests yet to fill the hotel.

The combination of pro-investment policies, government attitude and Zhanjiang's geographical and environmental advantages has attracted 300 foreign companies to the 9.2 sq km development zone, leaving only 13 hectares of land to fill.

Mr Liao said while the new site would not be ready soon, registered investors could build factories off-location and still enjoy preferential treatment if their offices were in the zone. Local labour is cheap and plentiful and employers do not have to grapple with the seasonal fluctuation of migrant workers common in the Pearl River Delta.

Of course, some companies have failed in Zhanjiang. One Hong Kong pearl trader over-expanded and has left the shell of a grandiose building in the development zone, while one Thai company performed very well in Guizhou but was unable to get production going. 'But that is because they went to the countryside. Land is cheaper but they could not get power and water supply. What do you expect?' said Mr Chiang.

The factors that previously worked against Zhanjiang are now helping to make it an attractive investment destination. Mr Chiang said Zhanjiang could learn from the mistakes of Pearl River Delta cities, where haphazard and overlapping development and environmental degradation rule.