Foreign investment grows in Chengdu

The megacities of Beijing, Shanghai and Guangzhou have always attracted the bulk of investments in China. But increasingly, foreign investors are looking towards second- and third-tier cities - with the number of Singapore firms in Chengdu growing by 28 per cent from 2013 to 2014.

CHENGDU: The megacities of Beijing, Shanghai and Guangzhou have always attracted the bulk of investments in China. But increasingly, foreign investors are looking towards second- and third-tier cities.

The number of Singapore firms in Chengdu, for instance, grew from 299 in early 2013, to 384 by end-2014 - a 28 per cent increase.

SINGAPORE-LINKED COMPANIES DRAWN TO SICHUAN

Mr Darrel Chua has had over 20 years of experience in inflight entertainment. About five years ago, he ventured to China to develop mobile and in-flight entertainment content. But rather than start his business in the mega-cities of Beijing, Shanghai or Guangzhou, he opted for the western Chinese city of Chengdu.

Said Mr Chua, President of Enveesoft: "Chengdu probably helps us save about 50 per cent of labour costs compared to Beijing and Shanghai, and the fact that there's actually less foreigners coming here means it's less crowded and more opportunities for foreigners like us to come and explore the market."

Mr Chua's firm is among a rising number of Singapore-linked companies drawn to Sichuan province, where Chengdu is located in.

In June 2012, Singapore had a total of 454 projects in Sichuan, but this rose to 482 by end-2013 - a six percent increase. As of 2014, total Singapore investments in Chengdu reached US$650 million.

One of the most high-profile Singapore investments is the 1,000 hectare Singapore-Sichuan Hi-tech Innovation Park. It is the first large-scale Hi-Tech park, jointly developed by Singapore and Sichuan.

Said Mr Cui Wei, CEO, Singapore-Sichuan Hi-tech Innovation Park: "For the first 30 years, China's reform and opening up was mostly in the coastal regions, but for the next 30 years, probably the western region will play a more important role."

HOTEL INDUSTRY SEEING MORE FOREIGN INVESTMENT

The hotel industry, too, is seeing more foreign investments. Five years ago, there were about six five-star international hotels in Chengdu. Now, there are 10.

But some say further growth is hindered by a lack of connectivity.

Said Mr Francis Kan, General Manager at Millennium Hotel: "In my opinion, it is important that the government is willing to open up the international market. For example, if you don't have more international direct flights coming into Chengdu, then it will hinder the progress of the city."

"You can open up many other hotels, but the pie is only that small. If you open up more international flights, the pie gets bigger, so everyone gets a better share," he added.

But plans are afoot to bring in more passengers. Earlier this year, authorities approved a new 11.2 billion US dollar airport for the city. When ready in 2025, Chengdu will become the third major Chinese city - after Beijing and Shanghai - to boast a second airport. By then, Chengdu could already be home to more Singapore investments.

Chengdu is one of three locations in Western China being considered for a third government-to-government project between Singapore and China, the other two cities being Xi'an and Chongqing. While not much has been revealed publicly about the project, it is known that it will revolve around the theme of connectivity and modern services.

The feasibility study for the project is expected to be completed by the end of 2015.

Source: Channel NewsAsia