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untroubled by trump

Amid increased uncertainty over the future of US-China trade, Guangzhou is continuing to pull in investment from major North American companies. The city's vice-mayor, Cai Chaolin, tells Karen E Thuermer why he attributes this to a focus on cultivating sophisticated and hi-tech industries.

US trade with China is currently under much scrutiny at the highest political levels. But Guangzhou's vice-mayor, Cai Chaolin, stresses that the city has been open for business continuously for 2000 years, serving as a trading hub and gateway to China and the rest of Asia. 

“This is our history and legacy, and we will continue to play this role,” he says. “Many multinationals entered the Chinese market through Guangzhou, and we continue to facilitate trade.” 

To keep the momentum going, in 2016 the city announced a five-year plan to shift Guangzhou’s economic focus to advanced manufacturing and service industries. “We are further strengthening commerce and logistics where Guangzhou is already a leader,” says Mr Cai. “We are accelerating the development of finance, technology and tourism industries.”

An intelligent design

Guangzhou is making significant progress, says Mr Cai, in developing artificial intelligence and robotics, new generation IT, energy-saving and new energy vehicles, biopharmaceuticals and healthcare, energy and green equipment, rail transit, high-end ship and ocean engineering, aviation and satellite applications. “US companies are responsive to this,” he adds. 

In recent years, two-way investment between Guangzhou and the US has been expanding. Today, the US is one of the city’s top investors. As of January 2017, US companies had invested in 922 projects in Guangzhou, totalling $1.55bn. 

“In the past five years, US investment in Guangzhou in the areas of scientific research, technical services and geological prospecting, pharmaceutical manufacturing, information transmission, computer services and the software industry accounted for a higher proportion,” says Mr Cai.

Rising labour costs in China remains a concern to investors, but the vice-mayor says that with his city’s emphasis on higher value industry and innovation, increased labour costs are justified, given that Guangzhou is attracting scientists, technologists, entrepreneurs, engineers and highly skilled technicians. “The ideal investments Guangzhou is seeking are pioneering projects or growing projects that are in modern service industries, advanced manufacturing or innovation, which matches our highly skilled labour force,” says Mr Cai.

For example, in 2016 Cisco set up its largest Internet of Things R&D facility outside the US in Guangzhou Development Zone, for a total investment of Rmb20bn ($2.9bn). “General Electric also established a bio-industrial park project, which we are confident will advance Guangzhou’s biomedical industry,” adds Mr Cai.

IP reassurance

Another major concern for investors in China is intellectual property rights. On this matter, Mr Cai says Guangzhou provides investors with “a world-class government service, and a more transparent, fair and just market environment, backed by high government efficiency, transparency and capability”.

He describes Guangzhou as “the most open and market-oriented city in China”, and adds: “We are devoted to building legal frameworks that meet global standards and facilitate a market economy.”

Despite US president Donald Trump’s tough talk on trade with China, accusations of illegal currency manipulation and threats of punitive tariffs, Mr Cai also points to co-investment that exists between Guangzhou and the US. 

“In 2016 alone, Guangzhou companies invested in 48 enterprises and institutions in the US,” he says. “That brings the total of Guangzhou investments in the US to 166. These cover R&D, production, telecommunications and information transmission services, research and testing, wholesale, real estate and many others.”

This article is sourced from fDi Magazine
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