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It's about more than just hotpot

Updated: 2014-08-15

By Hu Haiyan, Tan Yingzi and Ji Jin, China Daily Europe

It's about more than just hotpot

Lianglu Cuntan Bonded Port Zone covers more than 8 square kilometers. Hundreds of cars made in Europe are waiting to be offloaded in the port. Yuan Zhiqiang / for China Daily

It's about more than just hotpot

Goods made in Europe have been taken to Chongqing directly through the Chongqing-Xinjiang-Europe Rail, which greatly reduces costs and time. Provided to China Daily

It's about more than just hotpot

Chongqing is looking to cash in on its links with Europe to burnish its credentials as an economic center

At a railway station in Chongqing, dozens of workers are busy loading goods such as laptops onto a train that will take them from China across 11,000 kilometers and six time zones. Within days of completing their 16-day journey to Duisburg, Germany, which will take in Kazakhstan, Russia, Belarus and Poland, many of these goods will be sitting in the shops of Europe.

About 60 kilometers away from that railway station in Chongqing, at Lianglu Cuntan Bonded Port Zone, which covers more than 8 square kilometers, dozens of cars made in Europe are waiting to be offloaded.

These two logistics operations are telling examples of the international ambitions that Chongqing nurses. The city, one of four municipalities under the central government's direct control and lying at the confluence of the Yangtze and Jialing rivers (the others are Beijing, Shanghai and Tianjin), is keen to establish itself as an international trading post, with one of its chief assets being its strong ties with Europe.

The improvement in logistics represented by the Chongqing-Xinjiang-Europe Rail and the free bonded port, and the city's well performing manufacturing industries are being marshaled to bring the city and Europe closer together economically, making Chongqing one of the continent's most important trading partners in inland China.

The European Union is also becoming more important in Chongqing's economic growth. In fact, the Chongqing Foreign Trade and Economic Relations Commission says the EU has become Chongqing's largest trade partner.

Last year imports and exports between the two were worth $14 billion ($10.5 billion euros), 17 percent higher than the year before. Exports to the EU were worth $11.6 billion, 17.8 percent higher than in 2012, and imports were worth $2.4 billion, 11.7 percent higher than in 2012.

"Trade between Europe and Chongqing is very important for both sides," a spokesman for the commission says. "In the past few years trade has grown greatly in quantity and quality. As transport between the city and Europe improves and Chongqing's manufacturing industries continue to grow rapidly, there is huge potential for both sides."

Last year Chongqing introduced advanced technologies from Europe, and 20 local companies benefited from it. For example, Changan Ford imported car parts from European car companies to enhance its innovation capability.

Chongqing Changan Automobile Co Ltd, one of the largest domestic car makers, is setting up more research and development centers worldwide, including in Europe.

Since establishing its first global R&D center in Turin in 2003, the company has set up five more: in Chongqing, Britain, Japan, the US and a second one in Italy.

More than 90 percent of the employees at the overseas R&D centers are foreigners, most of them engineers.

"We have benefited greatly from the R&D centers overseas," says Zhu Huarong, vice-president of Changan, who is in charge of the company's overseas business. The overseas centers are mainly responsible for the R&D of Changan cars to be sold in China.

"One of the Italian centers provides about 80 percent of the design work," Zhu says.

Yin Mingshan, president of Chongqing Lifan Group, one of the largest domestic car and motorcycle makers, says its sales in the US and Europe are expected to increase to 20 percent by the end of next year.

"The international market, especially Europe and the US, is hugely significant for us," Yin says. "However, it is more difficult for us to sell our cars in developed regions such as Europe than in Africa. Still, we will work very hard to boost our sales there to gain more brand recognition globally."

The company exported 52,000 vehicles last year, 20 percent more than the previous year. It had revenue of $410 million, 33 percent higher than the year before.

The company says it expects its exports to rise by 50 percent this year, bringing in export revenue of $600 million.

Wang Sanhuan, deputy director-general of administration of economic operation of Chongqing Liangjiang New Area, says Chongqing municipality has made a huge effort to make European goods more accessible to customers in Chongqing.

For example, in the past, to reach Chongqing, vehicles made in Europe had to be taken to coastal cities such as Guangzhou and then shipped to Chongqing, usually taking about six weeks.

Last month the State Council gave Chongqing approval to directly import vehicles from overseas, enabling those made in Europe to be taken to Chongqing directly such as on the Chongqing-Xinjiang-Europe Rail, greatly reducing costs and time.

"The rail link will bring down transport costs, reducing the prices of European cars for Chinese customers, especially here in Chongqing and in Southwest China as a whole," Wang says.

"This will further contribute to growing trade between Chongqing and Europe."

The Liangjiang New Area, the third national development and opening-up zone in China (after Pudong New Area in Shanghai and Binhai New Area in Tianjin) and the first such area in inland China, has also been working to establish more logistics centers in Chongqing and Europe, including Duisburg and the Belgian port of Antwerp to help bring back more cargo from European countries to reduce rail running costs.

Liangjiang New Area says Chongqing imported 10,000 motor vehicles from Europe last year, and it expects the figure to grow by as much as 40 percent a year over the next five years.

Huang Qu, of Chonqing Bonded Ports Zone Co Ltd, which administers the development of Chongqing Lianglu Cuntan Bonded Ports Zone, says the municipality's strengths in manufacturing, such as of laptops, provides a strong pillar for the relationship between Chongqing and the EU.

The bonded ports zone, the only inland port to boast water and air links, is adding further impetus to Chongqing in its drive to realize its ambitions.

By October, an exhibition center covering 47,000 square meters and exhibiting goods mostly from European countries will be built in the zone, Huang says.

The bonded zone is home to more than 400 companies, including 13 on the Fortune 500 list. Last year it had output of 70 billion yuan ($11.4 billion; 8.5 billion euros). Companies there produced 21.6 million laptops (including more than 1 million tablet computers), double that of 2012.

"On average, about 60,000 laptops were made a day, and 2,500 an hour, with an industrial output of 58.3 billion yuan," Huang says.

"Trade between Chongqing and Europe in laptops is likely to be worth between $20 billion and $30 billion next year, 100 million computers being produced, making Chongqing one of the world's largest laptop producers."

Li Feng, deputy general manager of Chongqing Feiliks Supply Chain Management Co Ltd, says his company's growth illustrates how far trade between Chongqing and Europe has come.

Li, born in Jiangsu province in East China, came to Chongqing in 2010 to help establish the Feiliks Chongqing branch.

"Before I came here, I thought transport might be quite backward compared with that of East China, but I was amazed to find that Chongqing boasts good transport that takes in water, rail and air.

"As a logistics company that provides mainly services for big computer makers such as Acer, we have gained a lot from developing our business in Chongqing because of its cheaper labor compared with that of East China and the city's complete computer manufacturing industries."

Feiliks has helped about 200 small to medium-sized companies in Europe transport fast moving goods from Europe to Shanghai by air at a low cost.

"The Chongqing-Europe rail link presents a big opportunity to cut costs while maintaining efficiency," Li says.

Last year the company's Chongqing branch had revenue of 160 million yuan, 20 percent higher than the year before. Its profit was 4 million yuan, making Feiliks' Chongqing branch the second-largest operation center in China, Li says.

Guido Tielman, consul-general of the Netherlands in Chongqing, says his country attaches great importance to developing trade between the city and the Netherlands and to economic collaboration.

It's about more than just hotpot

"Chongqing enjoys advantages in developing trade with many European countries. The city has abundant human resources, can make things more cheaply and has strong research and development. Chongqing and the Netherlands are compatible in many ways, including in economics and culture."

Tielman, who came to Chongqing in July last year, says he was excited to have a role in the rapid growth of trade between Chongqing and Europe.

"There is plenty of scope for Dutch companies to grow here. Those already here include Shell and Inalfa, although Chongqing is still not as well-known among Dutch companies as Beijing and Shanghai, and a lot of work needs to be done, including publicizing the city more in the Netherlands."

In May the Netherlands consulate-general presented opportunities in Chongqing to 150 Dutch companies during seminars in the Netherlands, 50 of which have expressed interest in the city, Tielman says.

"China is the second investment partner in the Netherlands in terms of projects numbers, providing about 9,000 jobs there. The country holds many opportunities for us, and Chongqing, as an important inland city, gives us the chance to tap into western China."

Just as many companies based in Beijing and Shanghai have invested in the Netherlands, there is potential for Western cities such as Chongqing to do the same, he says, citing Chongqing Lifan as an example of a company setting up its European headquarters in the Netherlands.

There are many areas in which the two regions can work together, including agriculture, the automotive industry and healthcare, he says.

"The city is as exciting as the flavor of the famous local food, hot pot. I expect more and more achievements to be made in terms of Chongqing-Europe trade as the city gains more global recognition."

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