West China – Incredible Chongqing
By Hans Halskov, consul and trade commissioner, Consulate / Trade Commission of Denmark, Chongqing

Back to the contents

It may be provocative to claim that Chongqing today outperforms Shanghai’s rapid development in the 90’s. What is evident, however, is that Chongqing has enough local government influence and funding capacity to press ahead and become one of the most liveable megacities in China by 2020.

Today it is, arguably, China’s best kept secret, but this will not last for long. Out of nowhere it has already become China’s third best-selling market for luxury cars (priced above CNY 1 million), and the city is on track to become China’s largest production base for laptop computers. Time is of essence if Danish companies want to capitalise before the city becomes another Red Ocean like we know it from other cities in China?

In March 2010, two Danish journalists visited Chongqing. The subsequent headlines in their newspaper read: “The Undiscovered Power Centre,” “Chongqing is China’s Manhattan,” and “Denmark Missing Market Worth Billions.” While these headlines may be meant to sell newspapers, they are, in fact supported by some underlying facts:

Chongqing’s Political Face-Lift
In 1997, Chongqing was separated from Sichuan Province and formed China's biggest city government (“municipality”) directly under China's central government. The other three municipal governments are Beijing, Shanghai and Tianjin. Hu Jin Tao put it this way, “The Chongqing Municipality is to be the first city in West China to realize the target of building a well-off society in an all-round way.”

“Go West” Strategy and Preferential Policies
In 2000, China introduced its "Go West" strategy aimed to enhance the development of China's vast western regions. The initiative has resulted in a higher than average growth in the region - a development which has been particularly pronounced in recent years. Preferential policies (taxes, subsidies) for companies that are based here, combined with lower wages and a sufficient and talented employee pool, are important attractions.

GDP Growth at 14.9 Percent in 2009
Growth in foreign investment will reach USD 6 billion this year, which equals 5-10 percent of China’s total. This compares to USD 4 billion in 2009 and USD 2.7 billion in 2008, and an aggregated USD 2.7 billion for the period 2004-2007. GDP growth reached 19.3 percent in the first quarter of 2010 and 14.9 percent in 2009 - the third highest in the world!

Global Fortune 500 Companies Increase to 152
The number of Global Fortune 500 companies in Chongqing has increased from 52 in 2006 to 154 by the end of 2009. Chongqing, with its 32 million inhabitants spread over 82,000 km2, had an urbanisation rate of 32 percent in 1997. In 2008 it increased to 50 percent, and the expectation is 70 percent before 2020. 12 million people will have been urbanised. McKinsey dubs it one of China’s rising megacities.

West China’s Economic Hub with Chengdu
Along with Chengdu, Chongqing unconditionally represents West China’s growth engine. The 300 km distance between the two metropolises is travelled by bullet trains in just one hour (from 2011); at present the trip takes less than two hours. A company can establish a sales office in either place and conveniently conduct sales calls in both cities on the same day.

Denmark as First-Mover
Denmark established a consulate in Chongqing in 2005 in order to open up the Western China corridor for Danish enterprises. The consulate is one of the three  European consulates in Chongqing , therefore enjoying a unique status in the city. Consequently, it is in a unique position to effectively access stakeholders. The consulate has literally thousands of personal contacts in Chengdu and Chongqing waiting to be re-activated by Danish companies with an interest in the region.

Danish companies will need to position themselves differently to make gains in this Blue Ocean. Time is of utmost importance if companies wish to take advantage of the favourable conditions here. Ten years of development in Denmark can take an equivalent of two years in Chongqing. The speed of Chongqing’s rise to modernity is mind-boggling, even for the most hardcore China scholars (this inspired the name of this article).

Opportunities are abundant in almost every sector. Decision making is fast, and prompt follow-up is a critical ingredient needed to satisfy the demands from Chongqing customers. The Power of Introductions is as important as ever, so using personal networks is vital to obtaining real access to the opportunities.

Hans Halskov has worked for Danish and foreign multinationals from locations in Taipei, Shanghai and Beijing through the 90’s, and in Copenhagen until 2007 before joining the Danish Foreign Ministry in Chongqing as consul and trade commissioner. He speaks Chinese, is married to a Taiwanese and has three trilingual daughters.