China South City to turn Shenzhen into procurement hub
China South City Holdings, owner of the largest industrial materials procurement complex in southern China, is betting its facilities, which cost more than 6 billion yuan (HK$6.81 billion), will transform Shenzhen into the Pearl River Delta's procurement hub, even though a growing number of factories are closing in the area.
China South City's phase two has a total floor area of 740,000 square metres, 10 times the size of Wan Chai's Convention and Exhibition Centre. It is scheduled to open in May next year.
Phase two is made up of two five-storey mega blocks, with each floor covering the same area as the Hong Kong Convention and Exhibition Centre. They are designated to showcase leather and textile products.
'Although more and more manufacturing plants are leaving Shenzhen and moving inland to Jiangxi or Hunan province, they still need to purchase raw materials for production,' said Ricky Cheng, a co-chairman of China South City, at a media conference in Shenzhen yesterday. 'The Shenzhen government is very supportive of the project as it stands to help make the city a trade centre and secure tax revenues.'
Open since 2004, phase one has nearly 3,000 units supplying raw materials to five industries, namely, textiles and clothing, leather products, electronics, metal and plastic materials and printing and packaging. Suppliers of raw materials for various industries are grouped together to encourage one-stop shopping.
'As someone engaged in jewellery trading, I am tired of travelling abroad 20 times a year to trade shows,' Mr Cheng said. 'I find the idea of a 'permanent trade show' for a given industry valid.'
Some 85 per cent of units in phase one have been sold or leased. Phase two will provide 15,000 units for raw materials and finished products in the textiles and leather industries.
By 2011, the number of shops will double to about 30,000 units when the expansion for the metal, electronics and printing industries is completed. China South City will then occupy a 1 million sq metre site with a built-up floor area of 2.2 million sq metres.
Market sources said the firm had appointed Merrill Lynch as sponsor of an initial public offering in the third quarter in Hong Kong to raise US$300 million to US$500 million.
In addition to Shenzhen, the company has signed framework agreements with Nanchang in Jiangxi province and Nanning in Guangxi province to clone the idea of permanent trade supply centres and on a larger scale.
