A boom town. (Photo by Maria Trombly)

August 22, 2007 -- Chengdu, the capital city of Sichuan, has in recent years become one of the most important business cities in southwest China. According to this year's Public Appraisal for Best Chinese Cities for Investment, Chengdu was chosen as one of the top ten cities to invest in, out of a total of 280 urban centers.

"For those who are interested in international business, Chengdu is a good place to start," Min Li, a senior consultant at Drozak Consulting GmbH, told Emerging China.

Li says that lower labor costs and start up expenses are the main factors driving the foreign investment boom in Chengdu. Big names like Motorola, IBM, Intel, France Hennessy and TNT Post Group have set up centers there, he said.

"The local government has been more efficient in recent years. A scientific and democratic public decision-making mechanism has been established, and the new administrative model is optimizing the working flow of Chengdu government. This also makes great sense to outside investors," Yingcong Zhang, a researcher at Chengdu's Economic Information Center, told Emerging China.

According to Zhang, the main industries in Chengdu - which include food, medicine, machinery and the information technology - are supported by numerous large-scale enterprises, such as Chengdu Sugar and Wine Co.. Ltd., Chengdu Food Group, Sichuan Medicine Co. Ltd., Chengdu Automobile Co. Ltd. etc.

Many high-tech enterprises from outside Chengdu are also beginning to settle down there.

"Chengdu features the IT outsourcing services, based on its large talent pool, government support, and high quality of life," Kai Yang, the vice general manager of research at CCID Consulting, told Emerging China.

Recently, HiSoft Technology International Ltd., a global IT service provider, opened a Global Development Center in Chengdu. The company said that it will establish a strong presence in southwest China, and develop a more comprehensive IT outsourcing service platform.

"Chengdu plans to attract oversea and domestic companies for service outsourcing and become a well-known service outsourcing base in China and worldwide. Chengdu enjoys advantages in the exporting of outsourced services in the software sector because of its large talent pool, government support, and high quality of life," the company said in a statement.

The State Development and Reform Commission has formally approved Chengdu's proposed establishment of a national bio-industry base there. China's aviation industries have begun construction of a high-tech industrial park in the city that will feature space and aviation technology.

"All these factors will improve the investment environment, promoting the development of related industries in Chengdu," said Zhang. "Alteration of the old town zone and construction of the new district have ameliorated the appearance of the city," Zhang said. "Public facilities, such as water, power and gas supplies, have improved in the city and surrounding areas."

"Chengdu is a hub of transportation and communication in southwest China. It is also the center of technology, business and finance in Sichuan province," said Zhang.

Chengdu was quick to become a major base for communication infrastructure, with one of China's nine top level postal centers and one of six national telecom exchanges.

Chengdu's transportation network is well developed, and it is the start of many national highways, with major routes going from Sichuan-Shanxi, Sichuan-Tibet, and Sichuan-Yunnan.

The city is also turning into an important hub for air travel in China. China Southern Airlines, says it is planning to add a Beijing-Chengdu route, while Chengdu Municipal Committee of Communication has announced that 3E Airlines will launch an international cargo air route, from Chengdu to Europe and America in August. Shuangliu International Airport in Chengdu is one of the major national airports in China.

The Chengdu Statistics Bureau reports that total investment in permanent assets in 2006 was 189.95 billion yuan (US$25.13 billion). Domestic investment was 72.84 billion yuan (US$9.65 billion), an increase of 71.1 percent from 2005. The total amount of direct foreign investment touched 5.74 billion yuan (US$0.76 billion), an increase of 36.6 percent from the previous year. The total amount of revenue in the first half of 2007 stands at 13.15 billion yuan (US$1.74 billion), of which 32 percent came from state-owned enterprises and 25.5 percent came from foreign investment enterprises. Both increased by almost 80 percent, compared to the previous year.