High hopes for port of Dalian

PUBLISHED : Wednesday, 26 October, 1994, 12:00am
UPDATED : Wednesday, 26 October, 1994, 12:00am

BILLED as a rising economic star and the 'Hong Kong of the north', the port city of Dalian has high hopes of becoming one of the major business centres of China.

Located at the southern tip of the Liaodong peninsula, Dalian, with a population of just over five million, is a major industrial city and the second largest port after Shanghai.

The city already has an established role as the region's transportation hub.

Dalian acts as a gateway to the country's hinterland provinces of Heilongjiang, Liaoning and Jilin in the northeast.

About 80 per cent of the exports of these three provinces leave by Dalian, which handled more than 59 million tonnes of cargo last year.

The port also has special facilities to handle crude oil, grain and steel products.

Another deepwater port is being constructed at Dayao Bay which, when completed, will have an annual cargo-handling capacity of 80 million tonnes.

In June 1993, the first four of 20 berths had been completed and were handling 2.6 million tonnes.

The city's fortunes were given a major boost when, in 1988, the central government declared the whole of the Liaodong peninsula an open economic zone. Since then, industries, including machinery, petrochemicals, textiles and building materials, have become well established.

In October 1992, the city government announced an ambitious plan to emulate the success of Hong Kong and to build a 'northern Hong Kong' in 20 years' time.

The development plan called for the transformation of Dalian into an entrepot as well as centre for transport, finance, commerce, tourism and information.

To date, the city has been quite successful in accomplishing these goals. For instance, it has improved in its role as a retail centre of the region.

During the first four months of this year, retail sales grew by 25.9 per cent over last year's figures to 5.23 billion yen (about HK$4.73 billion).

In 1993, Dalian's exports totalled US$2.2 billion, up four per cent from 1992, while imports soared by 29 per cent to $2.5 billion. In the first quarter of this year, exports totalled $731 million which was an increase of 19.1 per cent compared to the same period last year.

Major export markets include Japan, Hong Kong, Macau, the US and Thailand.

Due to this growing profile, Dalian has become increasingly popular with foreign investors. By December 1993, the city had approved 1,772 foreign-funded joint ventures worth about $1 billion.

The projects were mainly in manufacturing, property development, hotels, tourism and other services.

Hong Kong investors account for more than 40 per cent of the total investment in Dalian. Their investments include property, infrastructure, urban renewal, insurance, retail business and the retooling of state enterprises.

By the end of last year, there were more than 600 foreign companies which had set up offices in the city, including 20 foreign banks from Hong Kong, the US and Japan.

Local banks include Hongkong Bank, Standard Chartered, the Bank of East Asia, Nanyang Commercial Bank and a number of Japanese banks.

Dalian is now one of 11 cities approved by the central government to set up Sino-joint venture department stores and with import-export rights.

In keeping with its open city policy, Dalian has established a number of development zones which are the focus of overseas investment.

The Dalian Economic Technological Development Zone (DETZ) is located 27 kilometres from the city centre. It was set up in 1984 to accommodate foreign investment, especially that involving a high technological content or an emphasis on export.

By December last year, Dalian had approved more than 403 foreign-funded enterprises.

The majority of the enterprises involve manufacturing, with Japan, Hong Kong and the US being the main sources of foreign capital. Foreign companies making large investment in the area include Canon, Sanyo, PPG and Toshiba.

To date about 24 square kilometres of the DETZ has been developed, complete with basic infrastructural services such as water treatment plants, LPG gas and road links.

In addition, there is the Dalian Bonded Zone which is located to the northeast of the DETZ. This is a 1.25 sq km area which is a free trade zone where entrepot trade, export processing activities, bonded warehousing, financial and other services are being encouraged.

The zone, which was approved by the State Council, will adopt preferential policies, including the exemption of import and export duties and refunds on the value added tax if products are sold outside of China.

By the end of May 1993, 126 domestic and foreign-funded projects had been set up in the zone, involving a total of $600 million.

Other investment zones include the Dalian High and New Technology Park, the Jinshitan Tourist Development Zone, one of 11 national-class tourist development zones in China, and various small industrial zones to be developed along the Shenyang Dalian Highway located near Yangshufang, Jinzhou and Lushunkou.