A principal player

Guangzhou is the provincial capital of Guangdong. The city has long been known as the southern gate of the nation and is the location of the important biannual Canton Trade Fair. Guangzhou is one of the 14 coastal cities opened to foreign trade in 1984. To the east of the city, at the confluence of the Pearl and Doug Rivers, is Huangpu, Guangzhou's principal. port (and the sixth largest in China) and the Economic and Technological Development Zone of Guangzhou (GETDZ).

Since 1985, when the GETDZ was set up, some 131 foreign investment ventures (mostly wholly owned. joint ventures) have been established (including familiar American household names such as Wrigley, Procter & Gamble and Pepsi Cola) and a total of 380 contracts signed. Most of the investment is from Hong Kong but as much as 30 per cent is American and the number of companies in the GETDZ is growing; 24 projects with an investment value of US$30m have been set up in the last two years.

Although the GETDZ is 20 miles from the centre of Guangzhou it is by Huangpu port and the Guangzhou-Shenzhen railway and the new proposed super-highway will pass close by. It is well served with water, power, telecommunications and schools and hospitals for the 20,000 workers who live there permanently (another 20,000 commute). The bonded area in the GETDZ will soon be completed making it the fifth bonded area in China (after shanghai, Tianjin, Shenzhen and Dalian).

There are many private companies in Guangdong (over 100,000 in Guangzhou alone). which provide employment for the once surplus labour. In.1959 Guangzhou's exports were US$1.05bn with more than 60 per cent of the city's products and semi-finished products going to Hong Kong. In 1991 Guangzhou's gross industrial output value was 49.12bn RMB.

There is an urgent need to improve Guangzhou's public transport system to meet the needs of the 3m daily commuters. There are plans to construct a metro extending over 27km with 23 stations by the year 2000.

A ring road is under construction with the first section between Yantai and 1Hangsha joining. up with the new four lane Guangzhou-Foshan motorway 27km long), which recently opened to traffic.

The Guangzhou – Shenzhen – Zhuhai super- highway is being built by Hong Kong's Hopewell Holdings, at a cost of US$720m. The 120km section between Guangzhou and Shenzhen will be a dual three-lane toll way built to international standards. There is 38km of elevated structure, 15 interchanges and 27km of river and delta crossings. The scheduled opening date is June 30th 1994, but the project-has had several difficulties. The subsequent phases, including the 110km western section which runs from Guangzhou south to Zhulzai is due to start early next year.

Guangzhou has an airport, but the recent development of an airport at Shenzhen has been at its expense. With a forecast of 7 million passengers passing through this year, Guangzhou has little room for expansion.

The telecommunications system is the most advanced in the nation, with 2.01 million telephone lines installed in the province; long distance telephone services, as well as mobile telephone and pager systems, are all available. *

Sources for this article include the UK's Department of Trade acid Industry.

Guangzhou Peugeot's story

Guangzhou Peugeot Automobile has been based in Guangzhou since its joint venture contract was signed in 1985. The project was one of three the government project in 1979, and French company, Peugeot Automobile, won the 22 per cent stake in the venture, with Guangzhou municipal government's 100 per cent owned company Guangzhou Automobile Corporation holding the majority stake of 46 per cent. (This is shortly to be lowered, when 10 per cent of shares are to be offered to private shareholders.)

The company's plant has been able to assemble and produce cars from completely knocked down (CKD) parts since 1988. The models — the Peugeot 504, 505 saloon and 505 pickup – initially were for sale purely on the domestic market, but this year 1200 vehicles will be exported. "That isn't too had, for a young company," says general manager, Claude Pierre Cusey.

The original contract, says Cusey, specified that the cars should contain 95-99 per cent locally sourced parts within five years. But Guangzhou was far from ideal as a base at the outset. "In Guangzhou and the south, there is no industry – just rice fields. There is a lot of business of course, but industry and products all come from the north."

The ambitious local content has now been scaled down, after the company visited more than 600 suppliers, few of whom knew how to produce to specification.

Since 1991, when the municipal government decided to invest in the industry, Guangzhou Peugeot has now found more and more suppliers in the city. "It is obviously easier to have suppliers near our plant. It is easier to discuss, to adjust the quality, and to transport."

Transportation still causes difficulties. Huangpu port is quite adequate for the company's export needs, but the roads give Cusey headaches.

"The infrastructure is a problem for us. It is a real problem," he says. Since all the parts are transported by truck, delays, which are frequent, are clearly an inconvenience. He is waiting for the Guangzhou-Shenzhen super-highway to pass by the front of the plant, but the completion date has recently been put back again. "Benin has the best equipment. In Guangzhou, there are not enough roads for the cars and trucks, and the streets are very small. There is a lot of work, but it is not enough."

Since France fell out of favour with the Chinese government, the French consulate in Guangzhou has been closed. "It is not a good thing for us because we send a lot of people to France for training," says Cusey. "It is not a big problem, but we still suffer some inconvenience." *