Shenyang, capital of Northeast China's Liaoning Province, has emerged into a popular destination for overseas investors.

After the Central Government's decision to revitalize the traditional industrial bases in Northeast China, more overseas investment capital flowed into Shenyang, the hub of the region, offering it greater growth potential.

Statistics show that actual foreign investment in the city hit a record US$2.12 billion in 2005, increasing 106 per cent compared with the same period of the previous year and accounting for more than 60 per cent of the total of the province.

The robust growth has continued. In the first quarter of this year, actual foreign investment in the city reached US$472 million.

And the investment figures in the first three months respectively increased by 79.9, 125.2 and 162.9 per cent year-on-year.

At present, 26 large foreign ventures with an investment of more than US$5 million each run businesses in Shenyang.

Chen Zhenggao, secretary of the Shenyang Municipal Committee of the Communist Party of China, gestures at a press conference in Shenyang, Northeast China's Liaoning Province, April 30, 2006. He said the exposition will be a highly profitable one for the city, as it will bring enormous business opportunities to the city's relevant sectors, such as restaurants, hotels, taxis and department stores. [chinadaily.com.cn]

Experts say that the investment boom, pushing ahead the growth of local economy, is mainly attributed to well-established industrial basis and favourable investment environment of the city.

Industrial strength

As a traditional industrial city, Shenyang has long enjoyed the reputation of "Oriental Ruhr" and is regarded an ideal destination for industrial operations.

In recent years, a great number of renowned multinational manufacturers, such as US-based General Electric and Germany-based Bayerische Motoren Werhe AG, have set up ventures in the city.

Last year, investment from foreign-funded industrial projects in the city amounted to US$1.1 billion, accounting for half the total actual foreign investment.

Encouraged by great potential of the strong performing Chinese market, many foreign investors, including Bridgestone, Michelin and Mitsubishi, began to expand operations there early this year.

In the first quarter of this year, industrial projects invested by foreign companies stood at US$303 million, taking up 64.1 per cent of the total actual foreign investment.

A series of favourable investment policies released by the municipal government, including investment subsidies and factory rent relief, have turned out to be the main attraction for investors.

Local authorities will grant subsidies of 500,000 yuan (US$62,500) to an overseas multinational company with its regional head office in Shenyang, and 1 million yuan (US$125,000) in case of the establishment of head office for the entire Chinese market.

A large foreign company will receive 100,000 yuan (US$12,500) as operation subsidies from the government when setting up representative offices or branches in the city.

Construction of standard factory buildings with a total area of not less than 1 million square metres is also on the agenda of the government.

And investors will be exempted from factory rent for the first year and enjoy a half-reduction rent favour for the second year.

Due to its impressively favourable environment and consistency of investment policies, Shenyang has built up its brand as one of the best Chinese cities for investment, said Yang Zhifang, professor of economics with Liaoning University.

He added that with the city's further opening to the world, more foreign capital will flow in.

Efficient promotion

Benefiting from the friendly environment, many foreign investors have begun to introduce friends and clients to the city.

Gongyu Zhenye, senior partner of a Japanese law firm, the first legal service provider from Japan in Shenyang, said he will introduce his clients to Shenyang as an investment option.

So far 500 intermediary organizations from home and abroad involved in attracting investment have reached co-operative intention with the authorities.

Of them, sixty-one have entered co-operative agreements with authorities of the city's districts, counties and development zones.

Consultancy offered by these organizations backed by professional expertise and reputable credits carries more weight with their clients.

This can make the city an even more promising investment destination.

To facilitate investment promotion at efficient costs, the Foreign Economic and Trade Bureau of the city plan to invest in building a centre for exchange and trade of project information.

Investment projects will be presented in the centre, and investors from both home and abroad will be invited to release regular information.

The centre is expected to provide a platform to promote investment not only in the city but also in the region of Northeast China.

"We will pay special attention to key projects and provide efficient services to advance them," said Zhang Ning, chief of the Foreign Economic and Trade Bureau.

Investment abroad

While overseas investors flock to Shenyang, local companies are seeking to explore opportunities abroad.

Approved by the Ministry of Commerce early this year, four projects from the city will take off abroad.

Local companies have begun to venture into the United States, Britain and Germany, while continuing to pay close attention to Russia and other neighbouring countries, their traditional investment market.

Private companies are the main force of the move abroad, accounting for 70 per cent of the city's total.

Engineering construction is an advantageous sector in the city. A number of construction companies there have the capability to bid for overseas projects independently.

Contract value of construction projects in 2005 increased three times compared with the previous year.

During the first quarter of this year, contract value of overseas engineering construction and labour services amounted to US$4.04 million.

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