China Market Guide

Tianjin
(Municipality)

(1) General Background

Tianjin has a total area of 11,919.7 square kilometers. Total population stood at 10.0 million based on China's 2000 population census.

Tianjin is one of the four centrally administrated municipalities along with Beijing, Shanghai and Chongqing, and is an integral part of the Pan Bohai Bay Economic Zone, which is one of the three biggest economic zones in China. Tianjin has undergone rapid development in recent years. GDP reached 12.5% in 2002, and per capita GDP amounted to RMB 22,380, the 3rd largest after Shanghai and Beijing.

Tianjin port, as the largest comprehensive and commercial port in North China, boasts China's biggest containerized cargo dock consisting of 108 berths including 55 which are able to serve 10-thousand-ton ships. It provides services to 300 ports in more than 160 countries and regions all over the world. It handled 129.06 million-ton cargos in 2002.

(2) Industries



Although output value of primary industry continues to grow in recent years, its share of GDP has decreased gradually. The agriculture sector is currently undergoing a strategic restructuring. Fish-breeding, poultry-raising and high quality planting have become the main agriculture industries of the Tianjin. In terms of gross agricultural output, the proportion of fish-breeding and poultry-raising was 51.7 percent, 3.7 percentage points higher than that in 2001.

Tianjin is an important industrial center in northern China. Gross industrial output of SOEs and enterprises above designated size reached RMB 332.31 billion in 2002, ranked 3rd among all provincial capitals and separate planning cities, after Shanghai and Shenzhen. Its pillar industries include electronics, automobiles, metallurgy and petrochemicals, of which the electronics and telecommunications are the most important and develop fast in recent years.



Tianjin's industrial development owes much to the rapid growth of hi-tech industries- electronics and information technology in particular. In 2002, the gross output value of the hi-tech industry was about RMB 109.74 billion, increased by 30.4% over the previous year; and its share in the gross industrial product was 33%, increased 7 percentage points from 25.9% in just three years. Meanwhile, a lot of hi-tech enterprises, such as GMCC, Jinyao Group, Nankai Guard Group and Tasly Group, have become very competitive.



Foreign enterprises (FIEs) have contributed greatly to Tianjin's industry growth, particularly in the hi- and new tech industry. During the period of 1998-2002, FIEs' gross output value grew by an average of 27.6% per annum. For the same period, FIEs' share of total gross output value increased from 31.3% to 41.1%, and its share in hi- and new tech industry was 83.1% in 2002. FIEs' output value rose by 29.8% to RMB 136.5 billion in 2002.

It is noticeable that private enterprises developed rapidly in recent years, and their share Tianjin's total industrial output increased from 2.7% to 4% in 2002. Meanwhile, the share of state-owned, collective-owned and joint ownership enterprises has declined.



As a result of government policies to expand domestic demand, heavy industry recorded a rapid development in Tianjin. In 2002, output value of heavy industry increased by 26% to 231.1 billion, accounting for 69.5% of total industrial output. Besides, the significance of large and medium-sized key enterprises in pushing development of industry forward was obvious in Tianjin.

Tianjin is becoming the biggest mobile phone manufacturing base in China thanks largely to investment from Motorola in the New Coastal Area, followed by Samsung and Sanyo. By end-2001, it was estimated that 4 out of 10 cell phones used in China are manufactured in Tianjin. Reportedly, US$2.5 billion will be invested during the 10th five-year plan to build Asia's largest manufacturing center in Tianjin. Tianjin's service sector develops quickly. Between 1985 and 2002, output of the service sector grew 18.9 times and its contribution to GDP also expanded from 27.6% to 47.1%. Meanwhile, industry's contribution to GDP decreased from 59.3% to 44.3%. Transportation and storage, trades and catering services, banking and insurance, and real estate are the four fastest growing service industries.

Tianjin is expected to be the region's largest financial center. Many banks can be found along the Jiefangbei Road which is the traditional financial center of Tianjin. More attention has been paid to finance since Dai Xianglong governed Tianjin and in this connection, the number of bank branches in Tianjin continues to grow. Branch of Industrial Bank Co., Ltd opened for business in May and branch of Citibank opened in December last year. Now Tianjin's government is making great efforts to establish Bohai Bank, as the starting point for the financial center of northern China.



(3) Foreign Trade

Total imports and exports amounted to US$ 22.8 billion in 2002. Tianjin has a highly externally oriented economy, the ratio of foreign trade to GDP reached 92%.

Manufactured goods accounted for 89.6% of Tianjin's total exports in 2002, 3.1% more than that in 2001, of which machine and electronic products (such as mobiles, displays, and compact disc players) are the most important, accounting for 63.8% of total exports. The export of hi-tech products had a rapid growth in recent years. In 2002, it accounted for 39.3 percent of the city's total exports by growing 61.1%, of which computer related products and electronic equipments increased especially rapidly.

Tianjin is an export processing base for a wide range of products. In 2002, export processing trade grew by 29.6%, accounting for 67.2% of the total exports. Besides machine and electronic products, major export items included textile material and products, mineral products and metallurgy industrial products.

Foreign, HK, Macao and Taiwan funded enterprises continued to be the largest player of the city's foreign trade. Foreign trade of these enterprises in 2002 accounted for 80.3% of the total. In addition, exports of private enterprises increased rapidly, totaled US$ 0.052 billion in 2002 after growing by 1.8 times.

Major export markets were Japan, the US, South Korea, HK, Netherlands and Germany. While exports to developing countries continue to grow, exports to the previously important markets decline. Since 2000, exports to Germany, HK, and UK all have decreased continuously. So did exports to Japan and Netherland in 2002. Meanwhile, Latin and North America, Africa have begun to import more goods from Tianjin.

Imports grew by an average of 37.7% per annum for the period 1990 to 2002. In 2002, Tianjin imported US$ 11.77 billion (+25.2%). Major import sources were Japan, the US, South Korea, HK and Germany. Over the past five years, imports from these countries all recorded a rapid growth. In particular, imports from Korea, Taiwan, Germany and France had the fastest growth.

(4) Foreign Investment

Actual Foreign investment increased 18.2% to US$ 3.8 billion in 2002, of which many were investment expansion by existing foreign companies reportedly. Foreign investments in Tianjin are mainly engaged in manufacturing (including textiles and garment, chemical products, machinery and equipments, electronic and telecommunication), trade and catering, and real estate. Trade and services were the hottest targets of investment in 2002.

95 of the world's Top 500 enterprises have invested in Tianjin, such as Motorola, Samsung, BridgeStone, LG, GE, TOYOTA, Honda, Sanyo, 3M and Kyocera. Foreign-invested enterprises (FIEs) are playing an important role in Tianjin's economy. FIEs now account for about 20% of Tianjin's GDP and 80.3% of foreign trade.

Hong Kong is traditionally the biggest investor in Tianjin. By end-2002, Hong Kong signed a total of 5,138 agreements with contractual capital amount of US$15.7 billion. Actually utilized investment amounted to US$8.5 billion. In 2002 alone, Hong Kong signed 122 agreements with contractual amount of US$2.6 billion, and actually utilized amount of investment was US$1.7 billion. US and Japan investment in Tianjin increased rapidly in recent years. Other major sources of foreign investment came from Korea, Germany and Taiwan.

(5) Consumer Market

Tianjin is the fourth biggest retail center of China. Retail sales of consumer goods grew by 13.1% to RMB 94.14 billion in 2002. Per capital consumer expenditure amounted to RMB 9,162.7, ranked the 2nd among all provinces and municipalities, after Shanghai.

In recent years, more than 10 large business establishments including Gulou Trade Street have been reconstructed. Currently there are more than 50 shopping centers with an area of more than ten thousand square meters in Tianjin. Modern sales channels and new trade forms have developed quickly. The city had 1,800 chain stores and their sales value totaled RMB 14.2 billion in 2002 as a result of 40% growth.

Some international famous supermarket companies have established chain stores in Tianjin, these includes Metro, Makro, Walmart, Osun and Trust-mart. Shanghai Lianhua, Jiangsu Suning, Beijing Gome and other domestic famous trade enterprises also set up supermarkets in Tianjin. Tianjin's indigenous retailer -- Family World is also very competitive.