The World Bank released a report last month entitled "Governance, Investment Climate, and Harmonious Society: Competitiveness Enhancements for 120 Cities in China." The report has loads of information, and with a specific city-emphasis, it much more applicable to those seeking to invest in China than any country wide report would have been.
The section on Southwest China reveals much useful information to help compare the major cities in the region in areas such as taxes and fees, days to clear imports and exports, government involvement in business, average annual salaries, and more.
The report, which can be obtained at the World Bank China website, states:
"For a foreign investor interested in access to a lagging region's markets or resources, city-level differences in investment climate could have a decisive effect on city selection. Domestic private investment is likely to play a much greater role, however, in the development of China's lagging regions. Thus, the investment climate for domestic business start-up and development is vitally important for China's lagging regions" (p9).
That is the primary theme behind a city-specific report. China business law and regulation are similar enough country wide, that the primary factors which should be considered before investing are the factors which make one city better than another for the specific investment intended.
Infrastructure loses, which the report states came mostly from power outages (due to the incredible rate of expansion and construction), are already an issue in Guangdong Province, but in Southwest China (Guangxi, Guizhou, Yunnan, Sichuan, and Hainan) are even greater. Besides the extremely large and influencial cities in the Southwest, Liuzhou ranks with or above most of the other cities in terms of infrastructure loss, and is ahead of all other cities in Guangxi which were surveyed.
I was also impressed at Liuzhou's rankings for the percentage of taxes and fees paid to the government. Liuzhou pays 5.2%, while the average of all fifteen Southwest cities surveyed is 6.4% in a range from 4.7 to 8.7%. That makes Liuzhou's tax rates close to the bottom of all Southwest China, and the cheapest in Guangxi, far ahead of Nanning at 7.3% and Guilin at 6.9%
Liuzhou did have a stain when it came to the number of days to clear export and import. Most of the Southwest cities required something between ten to twelve days, but Liuzhou had a very high number of 22.8 days to clear.
The main point is that investors in China should not approach "China" as one big entity and make decisions based on China's figures, but rather investigate the differences in its cities. Any one of these factors could make or break a particular industry, and with such variation, specific choice of entry or exit city makes a big difference, especially in China's less developed areas.
