Foreign investors have been pouring money into Chinese port projects during the 1990s. One of the results has been a considerable duplication of container and general cargo wharves along the coast, all competing for business badly hit by the Asian crisis. Throughput levels have often been disappointing.
Inland ports have also suffered, including the Singapore-Changshu Port City, although this US$220m project does claim healthy growth in cargo handling levels. The port is located in the Changshu Economic Development Zone, one of the city's two province-level development zones.
Local government support
Singapore groups headed by Pan United are the main backers of the project, which is situated to the north of two other well-known Singapore-managed investments in Jiangsu province – the industrial parks of Suzhou and Wuxi. Indeed, the Singapore-Suzhou Township Development is a minority investor in the port city and one of the original hopes of the port has been to serve the shipping needs of multinational corporations set up in these two parks.
Changshu city has a population of just over one million, making it one of the smaller cities in the region. However, it is well situated on the south bank of the Yangtze, about 87km upstream from the mouth of the river. It also has good road links, including a six-lane highway connecting the port with downtown Changshu, located 20km to the south-west.
Hiring and retaining quality staff in a place situated far from the city centre presents a challenge but the investors say their experience in this area has been very positive. "After training, the staff are comparable to workers in Singapore," says Mr. Charles Chong of Pan United.
The aim is to create an around-the-clock working environment, providing an integrated logistics/industrial hub complete with modern port facilities. Singaporean professionals manage the development which includes a dedicated international port, factories, offices and apartments.
The local government is supportive of the project, seeing it as a means to attract more foreign investors. "It is easier to form a better and closer working relationship with smaller ports," comments one foreign investor.
The port city is being developed in four phases, the first being an US$80m development of a 2.3 sq km site completed in 1997. Phase one contains three berths and modem cargo handling and storage facilities. Phase two should be ready later this year and the entire project is due to be completed by 2006 when it is designed to handle annual cargo throughput of 15m tonnes.
Cargo-handling levels are growing at a "very promising" rate, according to Chong. Last year's volume of 6,000 teu had already been achieved in the first five months of 1999 and non-containerised cargo up to May 1999 stood at 460,000 tons.
The major disappointment has been the dearth of investors in the 110-hectare industrial park which is also managed by the Singapore consortium. "With the regional economic crisis and the perception that the yuan will be devalued, foreign investors' interests in China have ground to a halt," says Chong. "Our industrial park and the city of Changshu were not spared."
Companies which are highly dependent on port facilities are being targeted, such as those involved in paper, machinery and food manufacture. The port hopes to attract investment from the chemicals sector, a controversial ambition according one commentator. "China has little experience in the transportation and handling of chemicals and there is therefore an environmental concern in what is a densely populated region," he says.
Chong counters this claim by saying that chemical companies need to process and blend chemicals near to their customers. "As I we are targeting multinational companies, we expect them to introduce measures and safety regulations of international standard," he comments.
The main investor to date is the Belgium-based company Westerlund. It has invested US$20m in a forestry products handling company in partnership with Changshu Xinghua Changjiang. By the end of this year it will have built two 11,000 sq metre warehouses. The company supplies several local mills in the area with imported wood pulp and paper board. In future it hopes to export finished paper products.
Mr. Carl Sanders, general manager of Westerlund in China, says the company has had a "pretty good experience" since the Changshu operation started two years ago. "The port has been well set up by the people from Pan United," he comments. "Cooperation with the local authorities has also been very satisfactory."