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Economic Profile of Dongguan Essay

Dongguan is an industrial city, located on the territory of Guang Dong province in China. Until September 1985 Dongguan was a county, then it became a city and now it has status of prefecture-level city, which administers 32 towns and a number of villager’s and neighborhood committees. The area of the city totals 2,465 square kilometers. Population of Dongguan reached to about 1. 5 million registered residents and almost 6 million unregistered migrants, including citizens of China, Hong Kong, Taiwan, Macao, etc.

The city is planted at the mouth of the Pearl River on the Southern seashore of the country. Climate of this region is pleasant and soft, with average temperature 23. 3 C. Small hills and alluvial plains feature the landscape of the area. The locality is reach with natural resources and fertile lands. Dongguan is known as an ancient city with 5,000 year history, the most glorious pages of which are the events of Incineration of Opium and fierce battles in times of Chinese War for Independence. Modern Dongguan has very advanced infrastructure and up-to-date public facilities.

There is a large international port in the city, which receives hundreds of overseas cargo and passenger ships. Its important function is collecting

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and distributing cargos all around the country. Any civil or cargo airlink to Dongguan can be made through a number of small airports, which are located outside of the city. There are perfectly developed railway and highway transportation networks throughout the province, which connect Dongguan with the main cities of China and Hong Kong. Dongguan has a dynamic flourishing economy, which quickly responds on global economic changes and modern technological innovations.

It is one of the world’s most known and developed center of industrial manufacturing, assembling and processing. Recently Dongguan’s economy is peaking out with GDP 8. 13 billion USD and its annual growth 18. 4%, which is more than 10% higher than the average growth of all Chinese cities. Average annual economic growth of Dongguan for the last 20 years is 23% (2002). In the first decade of the 21st century a lot of substantial economic transformations were initiated, which turned the city into important manufacturing and export base of the country.

These processes were connected, first of all, with rapid development of telecommunication and IT industry, which is now among the leading manufacturing fields in Dongguan. Besides, many changes took place with launching a new strategy of nationwide reformation. As the result of opening-out policy, many foreign investors got attracted by different opportunities and advantages of the region (favorable taxation and business environment, relatively cheap labor force, etc). Therefore a lot of new industrial enterprises and joint companies were established in the city. On the first stages, those were mostly textile and clothing manufacturing units.

Dongguan still remains the biggest country’s supplier of wooly products with manufacturing resources of about 100 million, and these high-quality goods are being exported to many countries of European Union, as well as to Russia, America, Japan. In recent years, huge volumes of financial and technological investments into electronic and IT branches turned them into the most flourishing and prosperous industries of the city’s economy. There are 2. 800 small and big companies in Dongguan, which operate at the market of computer and information technologies and produce more than 25% of total industrial output of the city.

Electronic products cover more than 60% of Dongguan’s export value, which is estimated as 11. 548 billion USD. Another step was gradual reformation and improvement of the structure of ownership in the city. The main policy of Dongguan’s administration was to keep controlling principal industries and manufacturing segments of the economy, along with facilitating growth and progress of other economic sectors. That is why many large plants, factories and enterprises remain public-owned on three levels: city, town and village property. Nevertheless, in 2002 contribution of private business and capital totaled 25.

3 billion yuan, and at the same time the funds and assets of public property exceeded 126 billion yuan. Successful governmental strategy, oriented on industrialization and internationalization, resulted in considerable growth of the number of manufacturing enterprises in Dongguan. More than 18,000 industrial corporations and companies include 8,496 trade enterprises, 1,012 joint ventures and 1,618 enterprises with foreign investments. In 2002, product value of the city’s industrial sector was 130. 895 billion, which is 116. 8 times increase in comparison with 1980.

Principal industries of the region are electronics and telecommunication, textile and clothing, paper and plastic products, food and beverages, services and others. Manufacturing brings 89 % of total contribution of industry into Dongguan’s economy. The main products, which have the most demand both on national and foreign markets, are micro electrical devices, motors and telephones, architectural materials, tricolor tubes, Polaroid lenses, paper products and copper clad laminate, foodstuff, clothing, etc. Dongguan has the world’s biggest net of enterprises, which produce hardware and periphery of PC.

A lot of promising opportunities got opened for Dongguan’s economy with China entering WTO. The city became global base of industry and manufacturing, especially in the fields of telecommunication and so called “3C products”: computer, communication and consume electronics, which remain foremost industries of the region and substantially contribute to gross output of the country. Therefore, increase of investments and introduction of contemporary foreign technologies brought to considerable upgrade of production capacities and improvment of product quality.

That is why the range of products and commodities is permanently growing, and city’s industries continue developing and expanding the market. If years ago the exports were directed mainly to neighboring Hong Kong and Southeast Asia, nowadays the majority of principal buyers of Dongguan’s products are American and European organizations. In 2001 values of city’s total exports reached the following amounts: 6. 318 billion US dollars to America, 2. 769 billion US dollars to European Union and 1. 412 billion US dollars to Japan.

In 2002 the volume of foreign trade reached 34. 455 billion USD. Industrial economy of Dongguan is heavily export-oriented and the majority of investments are directed on manufacturing for international markets and commerce. There is a great deal of international joint companies and cooperative enterprises in the city, which employ capital and financial resources of the investors from many European and Asian countries, like Germany, France, Netherlands, Finland, Japan, Taiwan, Singapore, South Korea, and from America and Australia as well.

Dongguan’s local legislation allows overseas investors to establish joint and cooperative enterprises with foreign investments in different forms (except direct foreign investments), as well as launching export-oriented processing and assembling, compensation trade and international leasing. Usual investment procedures include examination and approval of the establishment of a company and its affiliated offices, receiving permission to conduct export-oriented, processing and assembling operations, and, finally, procedures for approval of the application for conducting compensation trade.

The majority of joint enterprises of Dongguan are established in the following patterns of ownership: (1) Sino-Foreign Equinity Joint Ventures, which unite Chinese and foreign capitals and have limited liability, at that the contribution of overseas investor has to exceed 25%; (2) Sino-Foreign Cooperative Joint Ventures, which can be established on cooperative contract basis; (3) Foreign Enterprises, which have 100% of overseas capital investments; (4) Share Holdings with Foreign Investments, which can be established by Chinese and overseas shareholders (over 25% of the registered capital has to belong to foreign shareholders).

Besides, overseas investors enjoy favorable business environment of the country and establish joint enterprises for the following activity. Export-oriented processing and assembling means providing Chinese companies with raw materials, components and basic technologies for processing and assembling, and then receiving ready products back for sale. Another form is compensation trade, which means providing Chinese part with credit in the form of capital, financial resources, materials or parts, technologies and know-how, with further obligation to buy some stipulated amount of the product.

Therefore, by the end of 2002, the amount of foreign capital investments into economy of Dongguan exceeded 14 billion USD. It is also important, that a lot of powerful overseas corporations and companies with world’s reputation, like Dupont, Nokia, Sony, Panasonic, Samsung Electronics, Sumitomo Metal, Vtech and many others, which possess developed up-to-date technologies and have significant market opportunities, continue their investments into manufacturing powers and enterprises of Dongguan.

It increases economic prosperity of the city, as well as welfare and living standards of its residents. Both national and foreign investors and manufacturers receive governmental support and a number of privileges. In order to provide commercial and production organizations of any forms of ownership with necessary information base and services, there is a network of governmental establishments, which include administrative and legal bureaus, consulting and accounting companies, etc.

Besides, special Foreign Trade and Economy Offices were opened in every town for working with overseas businessmen and promoting the advantages and business opportunities of the city for prospective foreign investors. The main governmental organization, which is dealing with all principal matters connected with overseas investments and doing business in the city, is Dongguan Municipal Bureau of Foreign Trade and Economic Cooperation (DMBOFTEC). Its prerogative is to examine and to approve foundation of joint enterprises with foreign capitals, as well as to go through with other formalities.

Another governmental body is Dongguan Foreign Investment Promotion Center (FIPC), which is mostly engaged in rendering consulting services to overseas investors and attracting new foreign players to industrial market of the city. Certainly, governmental support of business in Dongguan is not limited by only fulfillment of official procedures and promoting. Municipal government sponsors and implements a number of development engineering projects on improvement and enlargement of city’s business facilities.

These projects include building some new industrial parks and office centers, expansion of communication network and transporting connections between industrial districts of the city and other measures. In particular, city’s downtown is recently under huge reconstruction and development in order to be turned into up-to-date administrative and business center. Capable and qualified labor power of the city is among its main attractions for the investors. Over 6 million potential employees of different levels, starting from construction workers and ending with high level managers, are available at human resource market of Dongguan.

The majority of such specialists are experienced, well-skilled and familiar with the specific work or types of manufacturing and modern technologies. Numerous manufacturing and commercial enterprises are located in central parts of the city and create unique business atmosphere in Dongguan. There are more than 180 specialized industrial zones and technology districts on the territory of the city (including more than 30 large and very advanced ones), which are integrated into a number of interrelated industrial sectors.

Provided with up-to-date facilities, advanced infrastructure system and high quality services, they form perfect manufacturing base for doing successful and profitable business. For example, Dongguan Songshan Lake Sci. and Tech. Industry Park covers the biggest territory of 7. 200 hectares, which is used for researches and technological development. A number of large manufacturing companies, including the enterprises of copper, rubber, textile and plastic industry, located their facilities on the areas of Dongguan (Chang Ping) Technology Park.

Shilong National Star Class Technology-intensive District was the first trial informationized town of the country, which recently enjoys numerous benefits of governmental support in developing hi-tech industry. It attracts huge amounts of foreign investments into joint ventures, especially from Japanese and Taiwanese companies, like Kyocera camera, Kyocera Mita printer, Minolta, Taiwan EMC display, and some national organizations. Along with industrial and business sectors, Dongguan’s public and commercial services are developing and increasing the quality of work.

There is advanced efficient network of different financial institutions in the city, including 12 banks, which render full range of services on money transfers, crediting and depositing. In 2002 total balance of deposits in banking establishments exceeded 145 billion yuan, which is 18. 7% more than in previous year. In the same period total balance of loan came to 75 billion yuan. Bibliography: • Dongguan. (n. d. ). Electronic informational pages of Dongguan municipal government. Retrieved March 24, 2006, from the World Wide Web: <http://english. dg. gov. cn >.

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