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SCMP Reporter

Zhengzhou, once the cradle of commerce in ancient China, is aiming to recapture its former glory.

  Today, the city is making a name for itself through fiercely competitive markets. In particular, battles between Zhengzhou's department stores have attracted the attention of the media throughout the mainland. They are calling it shangzhan - or 'the battle of commerce'.

   Its leading department store, Zhengzhou Asia Group, has jumped to the forefront of national attention with novel and ambitious marketing strategies.

  During a visit in June, President Jiang Zemin told municipal government leaders to develop Zhengzhou as a socialist and modernised commercial trading city. This delighted the city officials, as it represented a formal endorsement of their attempts to develop Zhengzhou as a commercial hub in central China.

  Mayor Zhu Tianbao said: 'This endorsement of the role of our city has opened up a lot of opportunities for us to promote and develop ourselves.'   It provided a strong case, he said, for the city to argue for its inclusion among the second batch of state-approved cities to be allowed to open its retail sector to foreigners on a trial basis.

  'Zhengzhou is a big market extending to an area of 200 million people,' he said.

  After Henan's provincial capital was moved from Kaifeng to Zhengzhou in 1954, the city has made great strides to become the province's economic centre.

  This has been made possible because Zhengzhou, with the biggest marshalling yard in Asia, is a transportation hub with good rail and road links.

  Its strategic position for the movement of passengers and cargo in the heart of China has led to the rise of specialised wholesale markets, department stores and commodities trade fairs.

  The concentration of several shopping arcades in the city centre speaks for itself. There are also at least 22 wholesale markets selling products ranging from grain to Chinese medicine, building materials and cars.

  All these activities have put a strain on the existing transport infrastructure.

  Zeng Xiangrui , secretary-general of the Zhengzhou Railway Bureau, said the new Jingjiu (Beijing-Kowloon) railway, which is expected to go into full operation next month, would alleviate the burden on the Beijing-Guangzhou line.

  But it would not be until next century before the Lianyungang-Lanzhou railway, running from east to west, would benefit from the construction of the Xian-Nanjing railway, he said.

  The improvement of road links and services is to be a priority in the next few years.

  For example, a Singaporean consortium is to take part in a US$10 million project to develop a highway port in the area.

  Despite all its advantages as a transportation hub, Zhengzhou has yet to attract the attention of many big multinational corporations.

  Coca-Cola and Nissan have invested in the city, which has a population close to Hong Kong's six million, while Hong Kong retailers Giordano and Bossini have also entered the consumer market.

  Mr Zhu said the development of the city's futures market, specialised wholesale markets and chain stores would be a priority.

  But Zhengzhou would not encourage development of further large department stores, as it would soon have eight, each with 100 million yuan (about HK$93 million) in annual sales, he said.

    Verbal approval has been obtained from the state to allow foreign banks to open representative offices in the city and, hopefully, this will take effect this year.

   Vehicles, machinery, textiles, pharmaceuticals, energy and food have been identified as pillar industries in the Ninth-Five Year Plan (1996-2000), according to the director of the Zhengzhou Economic and Trade Commission, Shi Jianjun .

  Industrial output is projected to reach more than 101 billion yuan by 2000 on average annual growth of 14-15 per cent, based on last year's total of 64 billion yuan.

  The economy is supported by industry leaders such as aluminium producer China Great Wall Aluminium, Henan Song Yue Textile Industrial Group, Zhengzhou Coal Industry Group, Zhengzhou Cable Works and abrasive materials maker White Dove (Group).

  These enterprises have been able to grow substantially, thanks to the rich natural resources in the area, such as cotton, tobacco, coal and aluminium.

  Zhengzhou's economic achievements are of course small when compared with those of coastal cities, but they compare favourably with other inland cities.

  However, there are concerns about Zhengzhou's economy, such as the problems facing one of its pillar industries, textiles, and sluggish sales at department stores resulting from a period of intense competition.

  Despite these setbacks Mr Zhu remains upbeat about the city's future - with its strong transport links, abundance of natural resources, and solid relations with the state.

  'No other cities can match the size of transport flow through Zhengzhou,' he said.

  At a time when Beijing is aiming at accelerating the economic development of inland regions, which often have richer resources, a good transportation system definitely gives Zhengzhou an edge.



Ready for a commercial comeback