Webinar: “Experiences of Investing in Weihai, Shandong Province” September 17, 2020”
September 23, 2020 Category Past events, Weekly
The EU-China Business Association and the Flanders-China Chamber of Commerce organized a webinar focused on “Experiences of investing in Weihai, Shandong province” on September 17, 2020.
Ms. Gwenn Sonck, Executive Director of the Flanders-China Chamber of Commerce and the EU-China Business Association and Honorary Citizen of Weihai City and Shandong Province, explained that in her job she met many delegations, but clearly remembered her first contact with Weihai 15 years ago. A delegation from Weihai visited Bekaert in Belgium, and during a luncheon introduced the city. Their openness and the advantages of their city made her want to learn more, and she was invited to visit the city. She was impressed by the natural beauty of the city, the friendliness of the people and the efficiency of the government. Delegations were exchanged and many friendships developed. A long-term cooperation was established between the Flanders-China Chamber of Commerce, the Weihai Foreign Commerce Bureau, other government departments and development zones. The city of Ghent also established a partnership with the city of Weihai. Many cities that are promoting themselves to attract foreign investment all say they are unique. The difference is that Weihai is really unique. Weihai only has 1,000 square kilometers of seaside and the city won many awards for its clean air, clean city, best habitat for living, business-friendly environment etc.
Mr. Chen Hui, Chief Representative of Weihai in Europe, introduced Weihai’s investment climate and the different strong sectors of Weihai. The city is located at the eastern-most tip of the Shandong peninsula and is the nearest city to South Korea in China. It takes 45 minutes to fly to Seoul and one hour to Beijing and Shanghai. The city has a land area of 5,800 sq km with a population of 2.84 million. The coastline is 986 km long. The city has a complete logistics infrastructure and convenient traffic conditions. The network of airlines, railways, sea routes and freeways connect Weihai with the whole of China and the world. There are four class-1 ports in Weihai with 27 sea routes to Japan, South Korea and domestic cities, including nine sea routes to South Korea. The passenger throughput of Weihai airport reached 3.09 million passengers in 2019 with direct flights to 24 cities. Weihai is a city of universities. Famous Chinese universities like the Harbin Institute of Technology and Shandong University set up campuses in Weihai. There are 11 institutes of higher learning where 20,000 students graduate every year.
Weihai has a sound industrial base and developed marine industry. There are 15 national and provincial-level industrial parks. There are 20,000 industrial enterprises, including 18 listed enterprises. Weihai is a famous and important production base for medical devices, fishing gear, tires, carpets, new materials and printers. Weihai has a developed marine industry and rich marine resources. There are more than 300 species of sea products. The output of aquatic products reached 2.7 million tons and the processing output reached 3.54 million tons. Weihai was one of the first open coastal cities in China and has 19 friendly sister-city relationships. The city has set up economic and trade cooperation with more than 200 countries and regions. In 2019 the import and export volume reached CNY140.2 billion, while the actual use of foreign capital amounted to USD1.22 billion. A total of 1,441 foreign-funded enterprises settled down in Weihai, including Hewlett-Packard from the U.S., Hyundai and Samsung from South Korea, Hitachi and Mitsubishi from Japan, Bekaert and Beaulieu from Belgium, Air Liquide from France and other Fortune 500 companies. Weihai is one of the first pilot cities for the innovative development of the service trade. Recognized technologically-advanced services companies will pay corporate income tax at a reduced rate of 15%. Weihai has become a hub city linking the east and the west for international logistics. Freight trains link Weihai to Hamburg and Duisburg in Germany.
There are seven industrial clusters with an output of more than CNY100 billion and the city is striving to cultivate one to three CNY10-billion-level enterprises in each industrial cluster within three years. One cluster is new generation information technology. Key enterprises have investments from all over the world. The electronic information and intelligent manufacturing industrial park has been built up. There are three development directions: printing devices and components, IC design, assembly and test, and mobile smart terminals, VR and AI.
A second cluster is new medicine and medical devices, including Wego Group and Disha Pharmaceutical Group. The Medical Devices and Biomedical Industrial Park has a planned area of 18 sq. km. and a construction area of 5 million sq. m. There are five development directions in this cluster: 1. core technology, industrialization and application of high-performance medical devices; 2. high-resolution acousto-optic electromagnetic medical imaging equipment; 3. rehabilitation equipment; 4. new targeted and multiple targeted drugs and anti-tumor drugs; and 5. therapeutic vaccine and gene therapy drug development. The revenue of this cluster could reach CNY130 billion by 2022.
The third cluster is advanced equipment and intelligent manufacturing. The development directions of this cluster are: 1. robots and key components; 2. intelligent manufacturing systems; 3. CNC machine tools and systems; 4. marine engineering equipment; and 5. vehicles and key parts. The goal is to achieve a revenue of CNY220 billion by 2022.
The fourth cluster is carbon fiber and other composites. The Carbon Fiber Industrial Park has a planned area of 2.5 sq. km. to introduce carbon fiber production and R&D institutions. The Graphene Industrial Park aims to create a graphene industrial cluster based on ultra-high purity graphite materials. The development directions are: 1. high-performance carbon fiber production, R&D and industrialization; 2. R&D of graphene material application technology; 3. R&D and production of metal-, ceramic-, and non-metal-based ceramic materials; and 4. production of high-performance polyurethane, engineering plastics, degradable polymers, silicon polymers, etc. The revenue to be achieved by 2020 is CNY110 billion.
The fifth cluster is marine biology and health food. The Marine High-tech Industrial Park has been set up with a planning area of 37 sq. km. It is the only marine biotechnology park in Shandong province. The development directions are 1. marine biology and genetic drugs, etc.; 2. deep processing of marine products; and 3. deep processing of agricultural products such as ginseng and peanuts. The revenue of this cluster is expected to reach CNY220 billion by 2020.
The sixth cluster is leisure and sports products. The development directions are: 1. R&D and design of high-end textiles, clothing, carpets and sports products; 2. design and production of high-end fashion brands; and 3. introducing world-renowned fashion events. The target revenue is CNY110 billion by 2022.
The seventh and last cluster is health and wellness tourism. Weihai is one of the most attractive tourist destinations in China and a famous hot spring town with nine high-quality hot springs. The development directions are: 1. medical colleges, research institutions and hospitals; 2. rehabilitation physiotherapy and elderly care; 3. high-end hotels and theme parks; and 4. sports, film and TV bases. The revenue target is CNY130 billion by 2022.
The European office of Weihai is located in Munich, tel. +49-17632860311, email: chenhuich2003@aliyun.com
Mr. Jun Liao, Divisional CEO Specialty Business, member of the Bekaert Group Executive, Bekaert, gave a short description of the activities of Bekaert in China and why it went to Weihai. Bekaert entered the China market in 1992. The first venture was established in Jiangyin, close to Shanghai, to make tire cord and stay close to international customers who had moved their business into China. Later the company saw the great potential of the China market and expanded its business to other cities. The company set up a business in Weihai in 2003. Invested capital has grown from USD30 million to over USD100 million. Total investment has grown from USD30 million to USD310 million. Bekaert’s growth in Weihai is linked to the open investment environment. During the Covid-19 outbreak the company received tax and financial benefits. During the Covid-19 epidemic we very quickly resumed our production with the support of the city government. The government was very supportive. Weihai also has advantages in human resources with its top class universities and technology schools. When you face difficulties, you can go to the city government, which is very open and supportive. A tip to do business in China is to conduct due diligence before you make a big investment decision.
Mr. Berthold Arends, General Manager, Marquardt Switches Weihai, gave a description of the activities of Marquardt in Weihai and why it choose the city to invest. The German family-owned company is headquartered in Baden-Würtemberg and started its China business in 1996 in Shanghai’s Pudong. At that time it was in the middle of nowhere, but Pudong developed very fast. The core business was switches for power tools, drilling machines, etc. Several years later the company expanded its business in automotive switches, anything you can press in the car and also hidden systems, including steering locks. Since 2014 there has been a further development in battery management systems. Due to the huge development, especially in automotive, the company was looking to expand in Asia. The location in Shanghai was fully occupied and new projects required manufacturing space. The company was looking not only to China but finally the decision was made to stay in China because the core business would be in electrical vehicles. China is very much supporting development in EVs, and the core know-how is located in China. Weihai had certain advantages. Logistics-wise it is close to customers in Changchun, Beijing and Qingdao, but also in Korea and Japan. Transportation by sea, rail, road and air is very well developed, which is a big advantage. There is a very strong willingness to develop Weihai into a high-tech area. There are famous and well-equipped universities willing to cooperate with companies. People are very open to new challenges and very stable. Compared to other regions in China, people in Weihai are much more committed to a choice they made. Weihai does not have much automotive industry, so Marquardt is pioneering. It started an apprenticeship program for students from vocational colleges to start a training program. In two years time they will become new employees. Support from the local government is very important. As a certified high-tech company it can receive tax benefits. When you are a new investor in China you would need a consultant or partner to understand how to start. There are a lot of local regulations which are challenging to get to know all by yourself. You also need to have the right contacts and support from the local authorities.
How did Weihai cope with Covid-19? Mr. Arends went to Germany for a winter vacation on January 19 and hadn’t heard anything about the disease, but after landing in Germany, everybody was talking about corona. It was a big challenge to go back to China as flights were canceled, but he succeeded in the beginning of March. The company recovered four days after Chinese Spring Festival, losing only a few days of work, and restarted 100% with measures such as wearing masks and performing disinfections. The company never faced any issues. Weihai had only around 40 cases. The key success factor for keeping the number of Covid-19 cases so low is that the Chinese authorities don’t allow anybody to come into the country without 14 days of quarantine in a specified hotel. It is impressive how strict and fast the measures were implemented. Also impressive was how people followed the measures.
Mr. Luis S. Galán, CEO and Founder of 2Open China Ecommerce, discussed the importance of e-commerce and also shared his experiences in Weihai. His company also started in Pudong. Mr. Galan came to China with a scholarship to study for his MBA in the China-Europe Business School in Shanghai. He now has a team of 30 people in Weihai. It has a competitive advantage in human resources. His company – 2Open – is a service provider for e-commerce solutions. Weihai is a great place to live and develop a business. Weihai is like the Mediterranean with seaside, palm trees and blue skies. People in Weihai have a great attitude and willingness to help. Mr. Galan first tip to do successful business in China is to have an appreciation for China and the right mindset. Don’t go to China with a negative mindset. Doing business is serving and helping each other. By doing business we are helping our clients, consumers and employees. Secondly, try to have a stable and motivated team. Treat them as family. Thirdly, be realistic as everybody wants to go to China. Thinking that you are going to make easy money is totally wrong. To compete in China you need strong resources and a strong mindset.
Companies interested to know more about Weihai’s investment environment, can send an e-mail to: gwenn.sonck@flanders-china.be
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