The city of Jiangmen is administratively divided into three districts, namely Pengjiang, Jianghai and Xinhui, and four county-level cities, namely Taishan, Kaiping, Enping and Heshan. Jiangmen boasts a well-developed transport network, with the total length of highways ranking top among all prefectural cities in Guangdong province. Plans are afoot to build a so-called "90-minute economic circle" incorporating Hong Kong, Macau and Jiangmen. The city is developing itself into a leading energy base in Guangdong. Construction of the 9 million-kwh Taishan Power Plant -- the largest of its kind in Asia -- is gathering momentum, with the first two generator units of 1.2 million-kwh each being operational. Its excellent ecosystem and living environment have won the city several awards in recent years, including "China's Top Tourist Cities", "National Garden Cities", "National Hygienic Cities" and "Cities with Excellent Living Environment in China". This year, Jiangmen strives to achieve the status of "National Environmental Protection Model Cities". The municipal government is also introducing the ISO quality management system to help raise administrative efficiency and provide quality service to investors in the city.

Advantages for Development Highly Recognised

Jiangmen is a pilot city for both the informatisation initiative in China and the Regional Infrastructure for Sustainable Economies (RISE) plan of the Pacific Economic Cooperation Council (PECC). In the investment climate survey report compiled by the World Bank in 2003, Jiangmen was ranked fourth among 23 mainland cities after Shanghai, Hangzhou and Dalian. Jiangmen's ratings are the most outstanding in seven areas, namely infrastructure facilities, labour supply, ratio of joint venture enterprises, government informal charges, taxation, productivity and investment rate. Jiangmen is also the only city in Guangdong that has been rated as one of China's top 50 zones with favourable investment climate.

Sound Manufacturing Base

The economic development of Jiangmen had topped the provincial league during the early days of reform and opening up, with a sound manufacturing foundation being laid in the city. However, due to the lack of convenient transport links, relatively low degree of informatisation of the traditional industries, limited clustering effect, and inadequate innovative capability, the pace of development of Jiangmen has gradually lagged behind that of cities on the east bank of the Pearl River such as Dongguan and Shenzhen. At present, the economy of Jiangmen ranks fourth among all cities in Guangdong. In 2003, the city's GDP reached Rmb73.1 billion, with per capita GDP reaching Rmb19,200. Industrial output value stood at Rmb153.9 billion.

A comprehensive, outward-oriented industrial sector spanning from traditional processing activities to new- and high-tech industries has taken shape in Jiangmen. The city boasts the capability to design and manufacture more than 5,000 types of industrial products. Among these, Jiangmen is the largest producer of 20 types in terms of production scale in Guangdong or across China. Today, the city has grown into one of China's leading production bases for textiles and garment, chemical fibres, leather goods, food and paper products. Of these, Jiangmen's motorcycle output accounts for 10% of the national total and commands over 6% of market shares. Its outputs of chemical fibres and washing machines make up 80% and 43% of the Guangdong market respectively.

The pillar industries of Jiangmen are: electronic information products, electrical machinery and equipment with home appliances as the core products, textiles, chemical fibres and garment, food processing and production, and transport equipment such as motorcycles and parts and components thereof.

At present, several industry clusters have emerged in Jiangmen, including motorcycles and related parts and components in the city itself; glass, jewellery and hardware and sanitaryware in Pengjiang district; stainless steel products, containers and ship breaking in Xinhui; food, textiles and chemical fibres, and water heating and sanitaryware in Kaiping; microphone and audio equipment in Enping; and footwear and printing in Heshan.

Continuous Improvement in Infrastructure

The natural barrier of the Pearl River estuary and inefficient transport links have for a long time put the city of Jiangmen in a disadvantaged position as a destination for relocating manufacturing activities from overseas. In view of its lag behind cities on the east bank in terms of development, Jiangmen attaches great importance to the construction of transport and infrastructure facilities.

Over the past few years, Jiangmen has spent an average Rmb2 billion a year to improve its infrastructure with emphasis on highways. A modern road network comprising highways, first-, second- and third-class roads has been established in the city. Highways that are now fully operational include the Foshan-Kaiping, Jiangmen-Heshan, Kaiping-Yangjiang, coastal western Guangdong, and Taishan south-north highways. Highways that are under construction include Jiangmen-Zhuhai and Jiangmen-Zhongshan. Upon completion, the total length of highways in Jiangmen will increase to 310 km, the longest among all prefectural cities in the province.

Jiangmen is served by six wharves totalling 360 berths with a combined annual throughput of 20.32 million tonnes. In 2001, the State Council approved the port of Xinhui to operate freight forwarding service and open to foreign-registered vessels. The 65 sqm Yingzhou Lake area, a national first-grade open port, enjoys the status of an open zone. During the Tenth Five-year Plan period, the 5,000-tonne class waterway access to international waters at Yamen and the ones at Laolonghu and Tanjiang have begun dredging work. Meanwhile, the 3,000-tonne class waterway section between Xinhui and Zhaoqing is being dredged, and the port of Yutang in Taishan is being upgraded to an international freight distribution centre comparable to the ones in western PRD and in western Guangdong.

With improvements in the pipeline and growing economic integration of the areas along the Xijiang River, Xinhui is poised to become a leading port in western PRD while Yingzhou Lake will become an economic zone specially targeted at both domestic and foreign investors. In 2003, the container throughput of Jiangmen port ranked tenth in the country and fourth in Guangdong.

As for railways, the Jiangmen section of the Guangzhou-Zhuhai railway and the Jiangmen line of the Guangzhou-Zhuhai Inter-city Express Light Rail are both in the preparation stage. Upon completion, these lines will significantly boost the city's infrastructure.

All these are paving the way for Jiangmen to develop into a logistics hub in western PRD.

Changes under CEPA

In the 1990s, Jiangmen had lagged behind cities in the east bank of the Pearl River because of its less advantageous geographic location. This explains why Jiangmen has been so pro-active in leveraging the new opportunities under CEPA to propel its development to a new level. Since the signing of CEPA, the city has hosted a series of promotions including a seminar on Guangdong-Hong Kong-Macau economic cooperation and the development of Jiangmen, and a seminar on SMEs going global in conjunction with a presentation introducing the services of the Hong Kong Trade Development Council. These events explored the benefits of CEPA to Jiangmen's economy and explained the investment climate and related policies of Jiangmen to prospective Hong Kong investors.

The Jiangmen municipal bureau of foreign trade and economic cooperation has established a dedicated unit to provide advisory service to foreign investors on issues concerning investment environment, laws, regulations and policies, and administration and registration procedures. Special counters known as "green channel" have also been opened at the city's industry and commerce administration offices to serve investors from Hong Kong and Macau.

In August 2003, the 6th Hong Kong/Guangdong Cooperation Joint Conference decided to set up a coordination committee for the preparation of the Hong Kong-Zhuhai-Macau bridge and the project formally entered the implementation stage. When the bridge is completed, the role of Jiangmen in linking western Guangdong with the transport hub in the PRD will become more important. Hong Kong's logistics services are expected to penetrate the whole western PRD market with the completion of the bridge. The increases in sea and air freight volume for Hong Kong are projected at 30% and 35% respectively.

In April 2004, the foundation laying ceremony for the Xinhua Guanhui Car City in Heshan, a Hong Kong-invested project with a total investment of Rmb200 million, was held. Occupying an area of 700 mu, the car city will feature 100 exhibition halls offering cars of different famous brands both from overseas and within China. A full range of support and logistics services will also be available. It is the largest Hong Kong investment project in the city after the signing of CEPA.

Opportunities for Hong Kong

The greatest opportunities for Hong Kong companies in Jiangmen under CEPA lie in services. Jiangmen has a sound economic foundation and comprehensive manufacturing sector but a relatively backward services sector. It urgently needs to raise the efficiency of its services sector to facilitate the further development of its industries. There is enormous development potential in services such as management consultancy, convention and exhibition, construction, logistics, franchising, advertising and tourism. These are promising sectors for Hong Kong service providers.

Due to limited land resources and the environmental constraint in the east bank of Pearl River, the core region driving economic growth in Guangdong may shift from the east bank to the west in future. Growing industrialisation has taken its toll on rising operating cost and saturation in eastern PRD both in terms of land, industry type and talent. Industries are seen to be gradually shifting to the west.

By comparison, wages and other operating costs are lower in western PRD. Besides, as mentioned above, the western part has its share of advantages including a strong manufacturing base. Home electrical appliances, motorcycles, lighting and furniture produced in Jiangmen are very well received. What the city lacks is experience in product design, sales and overseas marketing. Hong Kong can play an important role in these areas by providing a full range of top quality producer services and professional services to help mainland enterprises increase competitiveness and speed up the convergence of western PRD with international practice in terms of production.

As a gateway for Hong Kong to enter the western PRD market, Jiangmen has a unique advantage over neighbouring Zhuhai, Zhongshan, Foshan and Zhaoqing, thanks to its abundant land resources (10 times the area of Hong Kong). Besides, upon completion of the Hong Kong-Zhuhai-Macau bridge, Jiangmen will become closer to Hong Kong.

Jiangmen has always been an investment hot spot for Hong Kong companies among other western PRD cities. Hong Kong is currently the largest source of foreign investment in the city, accounting for 70% of the total. There are over 2,100 Hong Kong-invested enterprises operating in Jiangmen, making up more than half of the total number of foreign-invested enterprises, with total investment close to US$7 billion. Among these, more than 1,700 are engaged in manufacturing, with total investment exceeding US$4.4 billion. Investments in the services sector are concentrated in real estate, hospitality, restaurants, construction and other public services. Among these, investment in real estate alone amounts to nearly US$900 million, or one-third of the total in the services sector.

At present, due to state policy restrictions in areas such as wholesale and retail, warehousing and business services, less than 100 foreign-invested enterprises have been established in the services sector in Jiangmen. None has been established in the management consultancy and finance sectors. With the lowering of market entry threshold and decentralisation of approval right under CEPA, Hong Kong companies will find more opportunities to invest in the above-mentioned sectors.