Dark horse picks up pace in race to economic strength

PUBLISHED : Thursday, 02 June, 1994, 12:00am
UPDATED : Thursday, 02 June, 1994, 12:00am

AMID the galloping charge of key mainland cities towards an economic bonanza, less-fancied Yantai is being tipped by some as the economic dark horse of northern China.

The city in Shandong province, one of the first batch of 14 open coastal cities designated by the State Council in 1984, is backing itself to become a modern, international port city.

Putting a premium on its proximity to the Korean peninsula and Japan, the seemingly low-key Yantai is becoming a hit with investors from the two countries. Hong Kong, however, still leads the field.

Among the bigger overseas players are China Strategic Investment and China Travel of Hong Kong, and Daewoo of South Korea.

Businessmen say one of the city's key attraction is its efficient and supportive government.

While somewhat overshadowed by neighbours such as Qingdao, its aggression in competition for foreign funds has impressed investors.

''The Yantai government was quick to approve my project. I have also proposed a few projects in another coastal city, but the approvals were taking an awfully long time in coming. Maybe there are so many foreign investors that they don't care as much,'' said a Hong Kong businessman.

A Taiwanese garment-maker said: ''I chose Yantai because its air is fresh and there are no traffic jams. Business has been good. People have got richer in the past few years.'' Yantai, in the east of Shandong Peninsula, has been a key maritime centre for 1,300 years.

The municipal government also administers two districts, four counties and five other cities, of which 10 exercise open economic policy.

Vice-mayor Wang Dehe said one advantage of the city was its prolific agricultural output, particularly its massive fruit production.

''In agriculture, Shandong is important to China, and Yantai is important to Shandong,'' said Planning Commission of Yantai vice-director Qu Yanbin.

With a vast rural hinterland and access to rich ocean areas, it is especially attractive to food-processing ventures.

Analysts say its appeal is to small, labour-intensive, export-processing joint ventures looking for a responsive local government.

The city is also opening infrastructure projects for foreign investors such as power stations.

Among the city's best assets is its roads, said to be the best in Shandong, which itself has a reputation for having the most extensive and high-quality network of highways in China.

The city authorities have a reputation for careful financial allocation, with officials working in buildings dating back to the '50s and '60s rather than building new ones, saving funds for building the city.

In the past decade, it has spent more than five billion yuan (about HK$4.55 billion) on infrastructure.

However, critics say Yantai still suffers from weaknesses for which officials have great plans but few funds.

Officials disagree. ''The country has been very supportive in our infrastructure development. These past few years, it has approved many infrastructure projects,'' said Mr Qu.

The expansion of the airport, for example, had enough funds to go ahead in the absence of foreign investment and would be completed by the end of next year, he said.

Officials have tried in vain to lure foreign funds for the airport, which was upgraded in 1992 to handle Boeing 737s for international freight.

Yantai is not yet an international passenger airport - although it hopes to become one.

Officials also hope to see charter flights operating to South Korea, Taiwan and Hong Kong, similar to one service to Japan.

Shandong is also fighting for approval to build the biggest civil airport in northern China, according to Yantai officials.

Analysts say newcomers may now find difficulties recruiting technical staff because demand has outgrown supply.

Mr Wang said the city was launching training programmes to cater for manpower demand.

No foreign banks or representative offices have set up in the city because they are not yet admitted.

Bank of China Yantai branch vice-manager Wang Zujun said the city had applied to Beijing for permission for one to two foreign banks to set up offices in the city.

The city's Economic and Technological Development Zone, which offers special benefits to investors, is also seeking Beijing's approval for a free-trade zone.

Since 1992, the city has focused on tertiary industry.

''These past few years, tertiary industry has been growing fast . . . our tertiary industry is at an earlier development stage compared with other cities on the mainland,'' said Mr Qu.

''But the government has made much investment and effort in trade, transport and tourism. We are now catching up.''.

The most rapidly developing tertiary sectors were telecommunications, tourism and commerce, he said.

By the end of last year, there were 230 real estate development companies, of which 27 per cent were joint ventures and 13 per cent solely foreign-invested enterprises - including businesses from Hong Kong, Singapore and Taiwan.

The manufacturing industry is the most important economic contributor, accounting for 60 per cent of gross domestic product (GDP).

It is followed by tertiary industry which contributes 30 per cent to GDP. Agricultural output accounted for the remaining 10 per cent.

The city aims at revising the pattern by 2000, when tertiary industry is expected to be the most important, followed by industry and then agriculture.

Its main operations are light industry, food, textile, machinery, electronics, metallurgy, coal and building materials.

In recent years, it has developed raw material and hi-tech industries.

Its manufacturing sector makes about 2,000 products, of which 450 are exported. Last year, exports amounted to US$1 billion, with joint ventures accounting for US$510 million.

CONTACTS Vice-mayor: Wang Dehe, tel: (0535) 24-2548, 16 Yuhuangding Xilu, Yantai Bank of China Yantai branch vice-manager: Wang Zujun, tel: (0535) 21-4302, 15 Shuntai Street, Yantai Yantai Economic and Technological Development Zone Labour Union Committee Propaganda Department director: Hou Jiansen, tel: (0535) 37-2883 Yantai Economic and Technical Development Zone, Port of Yantai Authority director's assistant: Yang Yusheng tel: (0535) 24-6421, 24 2039 155 Bei Ma Road, Yantai. Real Estate Development Office Of Leading Body Department chief: Lu Zhenhai, tel: (0535) 24-3238, 17-1 Yuhuangding West Road, Yantai.

STATISTICS Population: 6.3 million (including urban population of 800,000). Area: 13,500 square kilometres. Total foreign joint ventures approved by the city in 1993: 1,266, up 80 per cent on 1992. Investment agreed by foreign joint ventures approved in 1993: US$2.52billion, up 64 per cent on 1992. Investment agreed by foreign partners of joint ventures approved in 1993: $1.31 billion, up 54 per cent on 1992.