Fortune Global forum goes to Chengdu

A bird's eye view of Chengdu. Photos provided to China Daily

Sichuan capital becomes the first western Chinese city to host the famous business meeting

In 2008, when Chen Xiaoming was picking up a head of a Fortune Global 500 company from the airport, he was surprised at the contents of the man's suitcase - instant noodles, bottled water and candles.

Chen, who at the time was the deputy head of the auto industry investment service administration of the Chengdu Economic and Technological Development Zone, recalls that the executive, a first-time visitor, had heard rumors that the city suffered frequent shortages of water and electricity.

The anecdote shows how little Chengdu was known around the world at the time. But five years later, now that the city is a rising economic star with an international profile, any business leader worth his salt would be embarrassed to make the same mistake.

The city's growing economic clout is why Fortune Magazine selected Chengdu to be the host city of the 12th Fortune Global Forum, which is to be held from June 6 to 8. It marks the first time that the prestigious business meeting has been held in China's historically underdeveloped western region.

The decision also shows the increasing importance of Chengdu, which Fortune has selected as one of the world's best new cities for global business in the world economy.

Chengdu's GDP last year totaled 813.89 billion yuan ($130.7 billion), making the inland city the third-largest economy among China's all 15 deputy provincial level cities.

It was just 390.1 billion yuan in 2008, the year when the world slipped into financial crisis. But Chengdu managed to achieve rapid economic expansion annually over the past five years amid global economic turmoil and slower growth nationwide.

The city's total trade volume with foreign countries reached $47.54 billion in 2012, up 25.5 percent compared to the year before.

Per capita disposable income rose 13.6 percent to 27,194 yuan, greatly outpacing inflation, which was 3 percent last year, according to official figures.

The gap between rural and urban incomes has also narrowed gradually in the last decade. Rural incomes were at 37.6 percent the level of urban incomes in 2002, and by last year, that figure had risen to 41.5 percent. Roughly 35 percent of Chengdu's 14 million residents are rural, and their average net income per capita grew by 14.1 percent to 11,301 yuan in 2012.

Deng Ling, a professor on regional economy at Sichuan University, points out that developing a comprehensive model of economic growth rather than depending on any single sector is the key to Chengdu's success amid the global economic turmoil.

"Like Shanghai, Chengdu managed to transform from the old industrial base it was (before the opening-up and reform) into a comprehensive economy. It's not just a center for modern manufacturing but also one for finance, business and trade, logistics, culture and tourism," she said.

Deng said Chengdu cannot rely on overseas trade like coastal cities do, which is why domestic demand is the key contributor to Chengdu's rise.

She also added that Chengdu, compared to many other Chinese cities, has been more open and international, making it more attractive to foreign firms.

With 234 of the Fortune Global 500 companies represented, Chengdu is indeed the most popular investment destination in western China. Its actually utilized foreign capital in 2012 totaled $8.59 billion, ranking highest among cities in western China.

It is currently the only inland Chinese city that appears in the 2011 and 2012 "Annual Top 10 Best Foreign Investment Strategy Cities in Asia and the Pacific Region" published by UK newspaper the Financial Times.

Andy Serwer, Fortune magazine's managing editor, has called Chengdu "a dynamic magnet for multinational companies".

"Chengdu is the ideal location and a perfect city for the event thanks to a number of attributes: its ability to attract multinationals, its 15 percent GDP growth as well as its advantages in transportation, education and resources," he said.

Chengdu has attracted famous companies from all over the world, including shipping and oil conglomerate AP Moller-Maersk Group, consultancy firm Accenture, delivery service provider DHL Express, e-commerce giant Amazon and cement company Lafarge.

Housing a total of 60 banks and 69 insurance companies, the city has the highest concentration of financial services in central and western China. It has 14 foreign banks and 15 foreign-funded insurance companies, which is also more than any of its peers in the region.

Go west, go Chengdu

The path to achieving these milestones began when the country launched the Great Western Development Strategy in 2000.

Before that time, Chengdu was not seen as an international city, and it had little global profile, according to Chinese media report.

That year, 30 of the Fortune Global 500 set up operations in Sichuan, and McDonald's opened its first restaurant in western China in Chengdu.

The national strategy brought Chengdu new momentum. A key element of the blueprint was introducing and supporting the development of the IT industry in Sichuan.

Intel, the world's largest semiconductor maker, announced in early 2003 that it would set up a factory in Chengdu to test semiconductor chip packages. The plant began operating in 2005. Now, one out of every two of the laptop microchips made in the world is produced in the city.

In an interview with Sichuan Daily, Ge Jun, executive director of Intel China, called Chengdu a "legend" and a "typical example of western China's openness and integration into the global economy".

He says his company, which has invested a total of $600 million in Chengdu since 2003, would release a report at the upcoming Fortune Forum to sum up its decade-long history of investment in Chengdu and forecast the future.

Many other IT giants are following Intel's lead, including Dell, Lenovo, Foxconn, Compal Electronics and Wistron.

Local leaders say that foreign investors are drawn to Chengdu because of its talent pool and global traffic network.

In 2011, Kelly Services, a leading global human resources company, and three Chinese professional agencies released the Kelly Services Global Employee Index Research Report, which ranked Chengdu, Beijing and Shanghai as the top three cities in China in terms of talent retention.

Chengdu is the fourth-biggest air hub in China behind Beijing, Shanghai and Guangzhou. The Shuangliu airport had a total of more than 30 million passengers in 2012.

A direct flight between Chengdu and Melbourne, Australia, was opened on Feb 28, bringing the airport's total number of direct international routes up to 28 and linking major cities like Amsterdam, Bangalore and Singapore.

Flights to Paris and London are planned. The airport aims to have more than 30 international direct lines by the end of 2013.

Chengdu also owns the biggest railway container hub in Asia. In 2012, it opened two direct rail freight services that connect to Europe - one to Duisburg, Germany and another to Lodz, Poland.

Five Strategies

Improvements to transportation and logistics networks are an important part of the Five Metropolitan Prosperity Strategies that the Chengdu government has adopted in an effort to develop the city into the nucleus of western China's economic growth.

In addition to having more international air and rail connections, Chengdu will prioritize the development of public transportation, accelerate the construction of subway lines and build a diversified, high-volume and seamless multi-layered mass transit system.

It will strengthen its urban high-speed passenger rail as well as the inter-city highway network connecting the city center with Tianfu New Zone, two local economic growth hubs. The new urban traffic system will traverse the six major regions of the city, and it is expected to lower travel time across the city to half an hour.

Chengdu will also speed up the construction of a high-speed rail line linking Leshan and Mianyang, two other major cities in Sichuan province.

It will launch major projects such as the city's second airport and Chengdu-Lanzhou Railway as soon as possible too.

Chengdu will also quicken its step in the construction of four-hour and eight-hour high-speed railway rings.

Additionally, the strategies also aim to increase the size and value of industries size while optimizing the infrastructure of newly-built economic and technological zones and integrating development of the three rings of Chengdu.

Augmenting the size and value of various industries will underpin Chengdu's objective of becoming the heart of western China's economic development.

Chengdu's rise relies on the integrated fostering of the primary, secondary and tertiary industries, and it is powered by the advanced manufacturing sector, which is highly concentrated, correlated and efficient.

'Frontrunner'

When trying to explain the secret behind Chengdu's fast growth in recent years, Deng, the regional economics ex-pert at Sichuan University, stressed the city's role as a frontrunner in China's economic reform.

"Reform has brought Chengdu dynamics," she says.

Deng said urbanization, based on coordinated development, will be "a major engine" for China's economic development in the coming two to three decades.

"Chengdu has accumulated much experience in urbanization through its explorations, but it still has a lot to do in the future. The city will still be a frontrunner in the reform in the future," she said.

Contact the writers at zhanghaizhou@chinadaily.com.cn, liyu@chinadaily.com.cn and haonan@chinadaily.com.cn