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Province Introduction of China: Jiangsu

Published: 01 Apr 2009 18:34:46 PST

Key Information 
 


















































Introduction
Jiangsu province lies at the center of China’s east coast. It borders Shandong to the north, Anhui to the west, and Zhejiang and Shanghai to the south. Its geographic make-up is comprised mainly of plains, abundant rivers and numerous lakes. The third and fourth largest freshwater lakes in China, Lake Taihu and Lake Hongze, can be found here, while Yangtze River, the longest river in China, cuts through the province in the south before flowing into the East China Sea.
 
The name “Jiangsu” comes from Jiang, short for the city of Jiangning (now called Nanjing), and Su, for the city of Suzhou. There are 13 cities in this province, with Nanjing being the provincial capital.   
 
Economic Overview
In 2006, Jiangsu’s GDP was RMB 2154.8 billion (US$274.5 billion), making it the third largest (in terms of GDP) amongst all the provinces in China. Guangdong and Shandong are the first and second largest respectively.   
 


 
Jiangsu is known for its “Su Nan (or Southern Jiangsu) Model” which developed many booming collective and township enterprises in the 1980s and 1990s. Township enterprises are government-funded enterprises that were set up by rural farmers and the remaining workforce after the government made appeals to them to do so. They started to prosper as a result of reforms carried out by the government.   
 



Until the mid-1990s, township enterprises were a fast-growing sector and were the main contributors to Jiangsu’s economy. Today, however, township enterprises are slowly losing their importance in Jiangsu’s economy as industrial parks in the province bring in the big bucks from foreign investors.  
 
Fixed asset investment, which rose 20.3% to RMB 1006.4 billion, maintained a stable growth in 2006. Among the urban fixed asset investments, investments in the agriculture industry and service sectors amounted to RMB 1.6 billion, RMB 343.9 billion, and RMB 401.9 billion respectively. The five industries that have the highest amount of fixed asset investment are real estate, environmental and public utilities, transportation and storage, communication, computer and other electronic manufacturing, and electrical, heat and water production and supply.  





















  

 
Jiangsu is the third largest consumer market in 2006, with retail sales of consumer goods amounting to RMB 662.3 billion and accounting for 8.7% of China’s total. Major retail giants such as Wal-Mart from the U.S., Metro and OBI from Germany, Carrefour and Auchan from France, B&Q from the UK, and China Resources Vanguard from Hong Kong have established their presence in Jiangsu. Meanwhile, local enterprises have also grown quickly. Examples of these are Suguo, Suning, and Wenfeng Big World.  
 
As evidenced, food makes up more than one third of per capita expenditure. Spending on other items such as recreation, cultural activities and education, residence, clothing, transportation and communication, services, etc, trail behind.   
 
Although there is no official definition of boundaries, Jiangsu is divided into Su Nan (or Southern Jiangsu) and Su Bei (or Northern Jiangsu). The Yangtze River lies along the line that roughly divides the two regions. The cities of Nanjing, Zhenjiang, Suzhou, Wuxi, Changzhou, Yangzhou, Taizhou and Nantong (the province’s economic hub) lie within the Su Nan region and the cities of Xuzhou, Lianyungang, Huaiyin, Xiancheng and Shuqian lie within Su Bei.  
 
The economy of Northern Jiangsu lags behind Southern Jiangsu’s. This is apparent from the relative GDPs of both regions. The total GDP of Southern Jiangsu amounted to RMB 1,734.3 billion in 2006, accounting for 80.5% of the province’s total despite the land area accounting for only 47% of Jiangsu’s total land area. The three main reasons for this are Northern Jiangsu’s underdeveloped transportation system, its immature industries and the immense distance to Shanghai compared to Southern Jiangsu. Also, in the past, Northern Jiangsu was frequently affected by heavy floods from the Hai River. The uneven development of economies on either side of the Yangtze River poses an issue for the continued sustainability of the Jiangsu province as a whole. 
  
Industry
Historically, Jiangsu had a much stronger light industry, such as its textile and food industries. However, after 1993, growth of the heavy industry sector, including chemicals and construction materials, accelerated and overtook that of the light industry. In 2006, the share of heavy industry increased to 69.7% from 57% in 2000.
 
The pillar industries in Jiangsu are electronics, chemicals, textiles, metallurgy, electrical equipment manufacturing, and general purpose equipment manufacturing. The six pillar industries’ share of the value-added industrial output came up to 52.9% of the province’s total in 2006.  












  

 
Electronics is the leading pillar industry, with a total industrial output of RMB 631.7 billion. Trailing behind are the five other pillar industries, with industrial outputs approximately totaling half of the electronics industry’s.  









  

 
Electronics  
In 2006, the three regions of Jiangsu (the second largest electronic product manufacturing base in China), Guangdong (the largest production base) and Shanghai (the third largest) accounted for more than 70% of the total electronic industry revenue in China. Additionally, within the same year, the electronics industry contributed 6.5% to the province’s total GDP.  
 
More than 80% of the electronics industry’s industrial output was generated by the province’s eight industrial parks which are located at Nanjing, Suzhou, Wuxi and Changzhou.  
 
Most of the electronic enterprises in Jiangsu are jointly set up by China firms and foreign companies. Among the 1,499 above designated scales electronics enterprises, 890 are foreign invested, 428 are private enterprises and only 42 are state-owned companies. Major investors include Philips Semiconductor, Hejian Technology (Suzhou), Infineon, Samsung, Hitachi Display, Sumitomo Bakelite, and Seagate.
 
Chemicals  
The chemical industry is another important industry in Jiangsu. In 2006, the total value-added industrial output was RMB 92.7 billion. Major producers include Nanjing Jinling Chemical Plant, Lianyungang Taisheng Chemical, Yancheng City Longgang Perfume Chemical Factory, and Yangzhou Aokang Chemical. It should be noted that Nanjing Jinling Chemical is one of the largest PVC plastic stabilizer producers in China.  
 
In 2000, BASF, the largest chemical producer in the world, and Sinopec (its Chinese partner) jointly set up an integrated petrochemical site in Nanjing called BASF-YPC Co. Ltd. (BYC). The total investment in the project amounted to US$2.9 billion, with each company holding a 50% stake in the joint venture. The plant began operation in mid-2005 and its core business is the supply of steam crackers to nine world-scale downstream plants, and the production of chemicals and polymers for the domestic market.
 
Textiles

Jiangsu is a leading textile and garment production base in China. According to the China National Textile and Apparel Council, Jiangsu is the third largest textile and garment producer after Guangdong and Zhejiang. The sales revenue of textiles and garments in Jiangsu amounted to RMB 362.9 billion, while the net profit reached RMB 10.5 billion in 2006. Jiangsu is also a major export market. In the first eight months of 2007, the export value of textiles and garments in the Jiangsu province amounted to US$9.58 billion, up 17.4% year-on-year. It ranked third among all the provinces of China.   
 
In recent years, the rapid growth of the Yangtze River Delta (in which Jiangsu is located) has gradually threatened Guangdong’s leading position in the industry. In the first quarter of 2007, the growth of textile and garment production in Jiangsu was double that of Guangdong. This growth is partially due to the fact that the Yangtze River Delta has more available land and more labor supply from less developed neighboring provinces such as Anhui and Jiangxi.
 
Also, Jiangsu has a well-established industry cluster which has set up various types of production models such as export-oriented (Jintan), market-oriented (Changshu) and brand-oriented (Ganjiang). Moreover, Jiangsu has developed quite a number of famous domestic brands like Bosideng Corp, Jiangsu AB Group, Hongdou Group, and Jiangsu Sunshine Group.
 
Services

In 2006, the value-add of Jiangsu’s service sector amounted to RMB 781.7 billion, up 15.5% from 2005. It accounted for 36.3% of the province’s total GDP. The service sector has maintained a stable growth, with the weightage increasing from 35.9% in 2000 to the current 36.3%.
 
Retail  
Jiangsu is one of largest retail markets in China. In 2006, the value add of the retail and wholesale sector amounted to RMB 202.9 billion, accounting for 26% of the service sector and contributing 9.4% to Jiangsu’s GDP. Also in the same year, there were 486 commercial exchange markets with a transaction value above RMB 100 million. Among them, 12 markets had a transaction value above RMB 10 billion. New types of stores and modern chain stores have developed rapidly.  
 
Logistics
Logistics is the second largest service industry in Jiangsu. In 2006, the value-add of the logistic sector amounted to RMB 92.8 billion, accounting for 11.9% of the total service sector’s GDP and 4.3% of the province’s GDP.  
 
With the speedy growth of the manufacturing sector in Jiangsu, demand for logistic services has risen as well. In 2006, the logistics transaction value reached RMB 6.23 trillion, up 23.6% from 2005, accounting for 10.5% of China’s total. By the end of 2006, Jiangsu had 22 major logistic parks and 54 large logistic companies providing freight forwarding, sorting and logistics services in China. 
 
Real Estate
Despite a series of tightening measures, Jiangsu’s real estate industry has maintained strong growth in 2006. Added value of the real estate sector amounted to RMB 91.5 billion, an increase of 14.9% from 2005. It contributed 11.7% to the service sector’s GDP and 4.2% to Jiangsu’s GDP.  
 
Since 2005, the real estate investment in Jiangsu has achieved top ranking in China. In 2006, investment in the real estate sector reached RMB 203.1 billion, up 23% from the previous year. By the end of 2006, the number of real estate developers had increased to 4137, an increment of 327 from 2005. The first tier and second tier developers rose from 435 to 619 in 2005.  
 
Electronics
In 2006, the three regions of Jiangsu (the second largest electronic product manufacturing base in China), Guangdong (the largest production base) and Shanghai (the third largest) accounted for more than 70% of the total electronic industry revenue in China. Additionally, within the same year, the electronics industry contributed 6.5% to the province’s total GDP.  
 
More than 80% of the electronics industry’s industrial output was generated by the province’s eight industrial parks which are located at Nanjing, Suzhou, Wuxi and Changzhou.  
 
Most of the electronic enterprises in Jiangsu are jointly set up by China firms and foreign companies. Among the 1,499 above designated scales electronics enterprises, 890 are foreign invested, 428 are private enterprises and only 42 are state-owned companies. Major investors include Philips Semiconductor, Hejian Technology (Suzhou), Infineon, Samsung, Hitachi Display, Sumitomo Bakelite, and Seagate.
 
Chemicals
The chemical industry is another important industry in Jiangsu. In 2006, the total value-added industrial output was RMB 92.7 billion. Major producers include Nanjing Jinling Chemical Plant, Lianyungang Taisheng Chemical, Yancheng City Longgang Perfume Chemical Factory, and Yangzhou Aokang Chemical. It should be noted that Nanjing Jinling Chemical is one of the largest PVC plastic stabilizer producers in China.  
 
In 2000, BASF, the largest chemical producer in the world, and Sinopec (its Chinese partner) jointly set up an integrated petrochemical site in Nanjing called BASF-YPC Co. Ltd. (BYC). The total investment in the project amounted to US$2.9 billion, with each company holding a 50% stake in the joint venture. The plant began operation in mid-2005 and its core business is the supply of steam crackers to nine world-scale downstream plants, and the production of chemicals and polymers for the domestic market.
 
Textitles
Jiangsu is a leading textile and garment production base in China. According to the China National Textile and Apparel Council, Jiangsu is the third largest textile and garment producer after Guangdong and Zhejiang. The sales revenue of textiles and garments in Jiangsu amounted to RMB 362.9 billion, while the net profit reached RMB 10.5 billion in 2006. Jiangsu is also a major export market. In the first eight months of 2007, the export value of textiles and garments in the Jiangsu province amounted to US$9.58 billion, up 17.4% year-on-year. It ranked third among all the provinces of China. 
 
In recent years, the rapid growth of the Yangtze River Delta (in which Jiangsu is located) has gradually threatened Guangdong’s leading position in the industry. In the first quarter of 2007, the growth of textile and garment production in Jiangsu was double that of Guangdong. This growth is partially due to the fact that the Yangtze River Delta has more available land and more labor supply from less developed neighboring provinces such as Anhui and Jiangxi.
 
Also, Jiangsu has a well-established industry cluster which has set up various types of production models such as export-oriented (Jintan), market-oriented (Changshu) and brand-oriented (Ganjiang). Moreover, Jiangsu has developed quite a number of famous domestic brands like Bosideng Corp, Jiangsu AB Group, Hongdou Group, and Jiangsu Sunshine Group. 
   
Foreign Trade and Foreign Investment
Jiangsu has strong trade ties with more than 200 countries and regions. In 2006, foreign trade surged to US$284 billion, 24.6% higher than in 2005, ranking second in China after Guangdong province. Export value totaled US$160.4 billion, up 30.5%. Also, export products, machinery and electronic products accounted for 69.4% of the total export, of which the export of PC and telecommunications products contributed 51% and had a value of US$ 56.9 billion in 2006.  
 
Foreign-invested enterprises are the main contributors to Jiangsu’s exports, accounting for 77.1% of the total. Private enterprises saw a fast growth in 2006, with an export value of US$16.5 billion, up 63.2% year-on-year. The major export destinations include the EU, U.S., and Japan, while the import regions are Taiwan, Japan, and Korea.   
 









 
To a great extent, the rapid growth of Jiangsu’s economy is the result of surging foreign investment in the province. In 2003, Jiangsu displaced Guangdong as the largest FDI recipient for the first time in the past 10 years. Since then, Jiangsu has remained at the top position. In 2006, the utilized FDI in Jiangsu reached US$17.4 billion, up 32.3% and almost US$300 million higher than Guangdong. The service sector is a fast growing industry - a total of 1304 projects were approved in 2006 with a utilized FDI of US$2.9 billion, up 71.4% year-on-year. 
 
Major Development Zones
By the end of 2006, Jiangsu had 12 state-level industrial parks including five economic and technology development zones, four high-tech parks, two state-level tourism zones, and one free trade zone.  
 
In that year, the total GDP of Jiangsu’s industrial parks, including 12 state-level and 113 provincial-level industrial parks, reached RMB 547.5 billion, up 40% year-on-year and contributing 25.4% to the province’s total. The state-level industrial parks alone amounted to RMB 222 billion, up 19% from the previous year. The total utilized FDI of the 125 industrial parks amounted to US$13.8 billion, accounting for 80% of the province’s total.   
 

 










Suzhou Industrial Park (SIP)
SIP is a high-profile bilateral cooperative project between the government of China and Singapore. Established in 1994, the park is 80 km away from Shanghai Hongqiao Airport, and 120 km from Shanghai Pudong Airport. The Shanghai Port is an important transportation hub for SIP, as 70% of goods produced in SIP are imported or exported via this port.   
 
In 2007, the total GDP of SIP reached RMB 83.6 billion, contributing 15% to Suzhou’s total GDP, while the land area accounted for only 3.5% of the city’s land area. The total foreign trade amounted to US$56.7 billion, up 13% from the previous year, while the total utilized FDI amounted to US$1.8 billion, accounting for 30% of Suzhou’s total and 10% of Jiangsu province’s total.
 
SIP has adapted Singapore’s experience in urban planning, trade promotion, human resource management and other fields. Today, SIP is not only attractive to foreign investors, it is also gaining the confidence of Chinese entrepreneurs. The concept of SIP has become the model of other industrial parks in China.  
 
Semiconductor, optic-electronic technologies and mechanical-electronic technologies have formed a relatively complete production chain, and have become the cornerstone of SIP. The industrial output of the IT sector in SIP accounts for 3% of China’s total, and the industrial output of the IC industry accounts for 16% of the total.  
 
Kunshan Economic and Technological Development Zone (KSETDZ)
Established in 1985, KSETDZ is situated to the east of Kunshan City, 50 km to the west of Shanghai and 37 km east of Suzhou. It is 45 km away from Shanghai Hongqiao Airport and 100 km from Shanghai Pudong Airport.
 
Fuelled by foreign investment, the zone has been enjoying robust growth for the past 10 years. Taiwanese companies have invested in about 65% of enterprises in Kunshan.  
 
There are many reasons for the zone’s success. The most obvious one is its geographic location - specifically, its proximity to Shanghai. Moreover, the zone’s main competitive advantage lies in its pro-business environment and the encouraging attitude of the local authorities.  
 
The electronic and information industries are the largest contributors to the zone’s growth. More than 300 IT enterprises have set up business in the zone with a total investment of US$6 billion.  
 
In 2006, the electronic and information industries had a total industrial output of RMB 164 billion, up 23% year-on-year, accounting for 64% of the zone’s total. Meanwhile, the zone has started to develop new economic growth engines, shifting from a labor-intensive to a technology-intensive industry. Precision machinery and biotechnology have also been developed rapidly in recent years. 
 
Education
Jiangsu has the highest number of higher education institutions and students in China. At the end of 2006, there were 119 regular higher education institutions (including universities and advanced vocational schools), and more than 1.3 million students studying in these institutions. Two of the more prominent universities are Nanjing University and Soochow University.
 
Nanjing University has almost 100 years of history, making it one of the oldest tertiary institutions in China. The school is a comprehensive, research-oriented and internationalized university.
 
Soochow University is located in Suzhou city. The university takes an active participation in international academic exchange and it has established cooperative and exchange relationships with over 80 universities and institutions. 
   
Major Cities in Jiangsu
There are 13 administrative areas in Jiangsu altogether. As shown in the table, Suzhou, Wuxi and Nanjing have the highest GDP among all the cities in Jiangsu despite the fact that they are not the cities with the largest land areas or population. 
 

 
















The following subsections present a brief overview of two Jiangsu cities that are of economic interest to businesses – Nanjing and Suzhou. 
 
Nanjing



















 
Introduction
Nanjing, the capital city of Jiangsu, is located in the downstream Yangtze River drainage basin and Yangtze River Delta economic zone. The city has served as a national hub for education, research, transportation and tourism throughout history. With an urban population of over five million, it is also the second largest commercial center in the East China region, trailing behind only Shanghai.  
 
Investment Climate
The city has maintained the same industrial structure since the 1960s, with electronics, petrochemicals, iron and steel, and automobiles as the four pillar industries. These four industries had a combined industrial output of RMB 323 billion in 2006, up 12% year-on-year, contributing 68.8% of the total industrial output of the city. Some examples of big state-owned firms are Panda Electronics, Jincheng Motors and Nanjing Steel.  
 
The city government is making an effort to boost economic development by building large industrial parks. There are currently two main ones under operation: Nanjing Economic and Technological Development Zone and Nanjing High-tech Park.
 
Today, Nanjing’s economy still falls behind neighboring cities such as Suzhou and Wuxi, which have an edge in attracting foreign investment. This is a likely result of Nanjing’s many state-owned enterprises that carry the burden of their long history. In recent years, these state-owned enterprises have found themselves incapable of competing with efficient multinational firms and some are mired in heavy debt. As a result, a large number of these enterprises have merged with competitors, become privatized or have been forced into bankruptcy.  
 
In December 2007, state-owned Nanjing Automobile Group was acquired by Shanghai Automotive Industry Corporation (SAIC), the largest automaker in China. Nanjing Auto was a medium-sized automaker that ran a joint venture with Fiat and purchased the MG brand in 2006.  
 
After completion of the merger, the SAIC-Nanjing Auto complex will be the nation’s biggest auto group in terms of assets, number of products and business scope.  
 
Currently, Nanjing ranks 3rd in Jiangsu province (in terms of GDP). However, if it exploits its strategic location and rich human resources further, the city’s economic development will see a greater boom in the future.
 
Foreign Investment
In 2006, the total foreign trade of Nanjing amounted to US$31.5 billion, up 16.4% from 2005. Export value was US$17.4 billion, an increase of 21.9%. Foreign-invested enterprises export reached US$7.73 billion, accounting for 44.5% of the city’s total.  
 
During 2006, 604 investment projects were approved with a total investment of US$3.08 billion, up 20.5%. The utilized FDI amounted to US$1.7 billion, of which US$1.05 billion or 62% were invested in the 11 state-level and provincial-level industrial parks.
 
Important Travel Information
Time taken to travel from Lukou International Airport to:

- Beijing 1 hour 45 mins
- Guangzhou 2 hours
- Dalian 1 hour 30 mins
- Xi’an 2 hours
- Hong Kong 2 hours 25mins
- Seoul 3 hours

Suzhou



















 
Introduction
Suzhou is located in the southern part of Jiangsu province, to the East of Lake Tai. The city is famous for its beautiful stone bridges, pagodas and meticulously designed gardens which have become great tourist attractions.
 
Suzhou has strong economic fundamentals and is one of the main industrial centers in China. In 2006, the GDP per capita was RMB 78,374 (US$9,984), earning it a no. 5 ranking in China.
 
Investment Climate
In 2006, the total industrial output of Suzhou reached RMB1254.4 billion, up 26.3% year-on-year. Heavy industry accounts for 67% of the total. Foreign invested enterprises were the largest contributor, with an industrial output value of RMB 831.9 billion in 2006 - accounting for 66% of the total.  
 
Within the same year, the city’s pillar industry - electronics - contributed 37.1% to the total industrial output, an increase of 1.8 percentage point from the previous year. Together with the other four pillar industries - ferrous-metal melting, textiles, electronic machinery and chemicals - the five pillar industries contributed more than 60% to the city’s industrial output. 
 
Currently, Suzhou’s economic development is mainly dependent on foreign investment. Suzhou Industrial Park (SIP), a joint venture between a Chinese consortium and a Singaporean consortium, combines advanced management style by the partner from Singapore and China’s competitiveness.  
 
It is the only project in China that involves comprehensive software transfer - ranging from master planning and investment promotion, to public administrative policy - for the creation of a pro-business environment.  
 
Foreign Investment
In 2006, the total foreign trade of Suzhou reached US$174.3 billion, up 24% from 2005. The export value amounted to US$94.7 billion, up 30%. Foreign invested enterprises exported US$85.3 billion, accounting for 90% of total export.  
 
Also in the same year, export trading of private enterprises saw a fast growth, exporting US$4.5 billion worth of products and services (up 68.5% year-on-year).
 
EU, the US and Japan were the largest three export markets, with export values of US$24.7 billion, US$24.4 billion and US$9.8 billion respectively.  
 
Together, they account for 62.2% of the total export. Machinery and electronics were the main export products, amounting to US$77.3 billion and accounting for 81.4% of the city’s total export.
 

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