Equipment industry base

In order to promote development of the Shanghai equipment manufacture industry and explore geographical advantages of the Lingang New Town from neighboring the international airport and international deep-sea harbor, Shanghai has planned and constructed the Lingang New Town into a Lingang industry zone characterized with equipment manufacture industry.

Development and construction of the Lingang New Town is a significant strategic decision concerning Shanghai development trend in the 21st century, made by the Shanghai Committee of the Communist Party and the Government. The Lingang New Town relies on the Yangshan International Deep-Water harbor and is close to the Pudong International Airport. The New Town with developed industries and perfect functional service is a comprehensive seaside city integrating harbor, zone and town, and is also a new ideal space of city development in Shanghai in the 21st century.

The Lingang New Town is divided into the New Harbor City and Lingang Industry Area, two functional zones. The New Harbor City is located between southeast estuary of Yangtze River and Hangzhou Gulf, 50 km away from the downtown of Shanghai, with planned area 293 square km. The comprehensive living service zone with the Dishuihu as a center is planned for about 100 km2, where area of concentrated urban constructive land is about 50 km2 and resident population is 500,000 ~ 600,000.

The Lingang Industry Area is a functional zone majoring in industry development, with planned area of about 200 square km2, among which urban constructive land is 120 square km2 and the resident population is near 500,000. The Lingang Industry Zone takes modern internationally first-class equipment industry as the main target, and finally shapes a comprehensive industry zone with obvious industrial features and competitive advantages, by means of developing high value added manufacture, hi-tech industries, modern logistics, R&D service, education and training, processing for export, trading home and overseas etc.

The Lingang Industry Zone is composed of three main functional zones, namely, the industry zone, modern logistics park zone, ancillary zone to industry zone. The industry zone concentrates on industries of auto, equipment, and logistics, including the magnitude equipment division, medium-sized equipment division and high-tech industry division. The modern industrial logistics zone, conducting as the backbone of the industry zone and the complementary of the Yangshan Deep-water Harbor, is an important part of the Lingang Industry Zone. The ancillary industry zone takes living facilities as its main function, and also includes comprehensive zones for technological R&D, residence and tourism.

The first stage of development is divided into three parts, respectively magnitude equipment industry division, high-tech industry division and logistics park division, connected by expressways of two harbors. The industry area is oriented positively at the setup of the magnitude equipment division and construction of its corresponding basic facilities to critically develop auto equipment, shipbuilding mating equipment and large electrical and mechanical equipment etc. The high-tech industry zone will mainly develop urban-type industry and technological R&D industry, while the logistics park zone, which aims at the first stage is to provide logistic services for the Industry Zone and the Yangshan Deep-Water Harbor.

It is predicted that total production value of the Shanghai equipment industry in 2007 will reach 1,000 billion yuan, which is about 50% of total industrial production value in Shanghai, and that total production value of the Shanghai equipment industry in 2010 will reach 1,500 billion yuan, which is about 54% of total industrial production value in Shanghai. The key is to realize upgrade and breakthrough in power station and transmission equipment, rail traffic, micro electronic equipment, fine processing equipment, key exclusive equipment, energy source equipment, new environmental protection equipment, smart measurement and automatic control equipment etc. eight categories

Refine steel base

The Shanghai Refined Steel Base relies on the Baoshan Steel Co., Ltd, and is a refined steel base in China with the most modernization, biggest capacity and most complete kinds and specifications. Its core zone is located the Baoshan District, east to the exit of the Huangpu River and north to the Yangtze River. During the tenth Five-Year plan period, the Shanghai Refined Steel Base main constructs the Baosteel ordinary carbon steel manufacture base, Yigang stainless steel manufacture base, Wugang special steel manufacture base, Luojing steel deep processing base etc. four integrated refined steel bases to critically develop steel for automobiles, petroleum pipes and shipbuilding plates, stainless steel, electric steel and highefficient constructive steel.

For recent years the Baosteel Group representing the Shanghai Refined Steel Base, has been experiencing the great adjustment of industry layout, concentrating the large scale manufacture including smelting, heated rolling and stretching processing into Baoshan area, shaping three specialized manufacture centers and formulating a northern refined steel base. The first is carbon steel plate and pipe refined product manufacture center with the Baosteel zone as a foundation; the second is stainless steel refined product manufacture center with the Yigang and peripheral zones a foundation; the third is special steel refined product manufacture center with the Wugang current zones as a foundation. The Baoshan Luojing will be built into an extensive processing base.

In July 2004, Baosteel Group has been evaluated as the 372nd place of the world top 500 enterprises by the "Fortune" magazine, as one of the first lot of enterprises that enter the world top 500 enterprises in the Chinese competitive industries and manufacture industries.

To insist on refined product development strategy is critically to control the total quantity and optimize structure and integrate production. Comprehensive competition of the main business of steel will be the first three places in the same industry and become world-level refined steel base.

Petrochemical industry base

The petrochemical industry base is composed of the Shanghai Chemical Industry Park, Sinopec Shanghai Petrochemical Co., Ltd, Sinopec Shanghai Gaoqiao Petrochemical Co., Ltd and Wujing Chemical Zone, and is basically located in the south of Shanghai. Its concept of construction and development is to optimize resource arrangement, to adjust layout structure, to emphasize biologic environment, and to raise core competition of the Shanghai petrochemical and special chemical industries as a key, to speed up development and construction of the Shanghai Chemical Industry Park and renovation of the old chemical bases, so as to strive to establish green chemical industry bases with internationally advanced processes, the biggest economic scope, world first-class management mode and production and biologic coordinative development.

The Shanghai Chemical Industry Park is a core zone of the petrochemical and special chemical industry base, and is at the north bank of Hangzhou Gulf, 60 kilometers away from the downtown, with planned area of 29.4 square kilometers. It is one of the biggest investment projects in China. Total investment of the first-phase projects is 150 billion yuan to critically develop petroleum and natural gas projects, synthetic new materials and special chemicals etc. petroleum deep processing products. After the chemical industry park is completed, its industrial production value will reach 150 billion yuan. According to the prospective planning, the Shanghai Chemical Industry Park will break the current planned boundaries to connect westwards to the Shanghai petrochemical to form a chemical industry belt with area of 60 km2 or so.

The Sinopec Shanghai Petrochemical Co., Ltd. processes oil of 8.61 million t and achieves total industrial production value of 26.59 billion yuan and sales income of 26.56 billion yuan, which is listed at the 3rd place in the Chinese top 100 chemical enterprises. The Sinopec Gaoqiao Petrochemical Co., Ltd. processes oil of 8.42 million t and achieves total industrial production value of 23.33 billion yuan and sales income of 23.77 billion yuan. The Shanghai Huayi Group Co. completes total industrial production value of 19.37 billion yuan and sales income of 19.4 billion yuan.

The key is zone development, project construction, improvement and mating, formation of capacity, optimization of layout and understanding the strategy. The key of structure adjustment and optimizing layout is to develop Caojing, improve Wujing and adjust Gaoqiao. The key of development strategy is to extend industrial chains and make all efforts to develop special chemical industry. It is predicted that in the coming three years the petrochemical projects under construction and to be built are about 27% of total industrial investment. It is also predicted that total production value of the petrochemical industry is 180 billion yuan in 2007 and capacity of oil processing in 2010 will reach 35-40 million t/a, and ethylene output 4 million t/a, and total production value 280 billion yuan, it will become a first-class in the world and the first in Asia modernized chemical base.

Automobile industry base

The Shanghai auto industry focuses on three strategic targets (namely the sales of locally produced auto up to 1 million sets per year, holding a position in World Top 500, newly increasing 50,000 independent brand cars in 2007), to accelerate arrangement adjustment and base construction, to maintain excellent development trend in vigorous market competition, so as to gradually formulate a complete industry chain and powerful aggregative effect, and strongly promote construction of the Shanghai International Auto City and the Pudong Jinqiao Base.

The Shanghai International Auto City, with a planned zone of 68 square kilometers, enters all-round construction phase, among which the industry zone, trading zone, international car racing field, R&D zone, parts and components zone, Tongji Auto Institute and the new town zone have all gained substantial achievements.

Shanghai Volkswagen, located in industry area of the Shanghai International Auto City, enters a new-round development tide. A batch of projects, such as the newly increased productivity of 100,000 cars and manufacturing 300,000 engines for economical cars of the No. 1 Factory of the Shanghai Volkswagen has entered constructive phase. The car-testing field with international advanced level, built by the Shanghai Volkswagen with years of efforts, has been put into use in 2003. The basic facilities of the parts and components zone with planned area of 8 square kilometers have achieved "Seven available, one leveled". By the end of 2003, the total number of introduced Chinese and foreign enterprises has been more than 200, with contracted investment capital of 25 billion yuan. The racing field has been completed and the F1 China Rally is successfully held in September 2004.

The Jinqiao Base of the Shanghai GM covers 550,000 square meters. The maximum productivity has been promoted to 180,000 cars per year. Around the three strategic targets of SAIC, the Shanghai GM establishes differential development strategy and ascertains an objective of annual production of 450,000 complete cars in 2007.

In the coming several years, Anting, Jinqiao and Lingang, three auto manufacture bases will be built. It is predicted that the projects of the auto industry under construction and to be built in the coming 3 years will be 15% of total industrial investment; in 2007 total production value of the Shanghai auto industry will reach 280 billion yuan; in 2010 in China the capacity of 20 million sets will be formed, among which Shanghai has capacity of 15 million sets per year with total production value above 400 billion yuan.

Micro electronic industry base

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The microelectronics industry of Shanghai is accelerating to gather in three areas of Pudong, Caohejing and Puxi (Songjiang and Qingpu), and at present has had shapes the microelectronics industry base basically characterized by "one belt two zones" across Shanghai from east to west. Shanghai has already become the most surging place of integrated circuit industry development and one of the most appealing investment cities.

The Shanghai IC industry has witnessed a historical breakthrough in the integrated circuit industry for last two years; an IC industrial chain, covering design, assembly and test etc. upstream and downstream related industries and with reasonable structure and clear work separation, has shown up. With the implementing projects of Huahong NEC, SMIC, GraceSMC, AdvancedSMC, TaiwanSMC, Hanson Co., Xuqing Semicon as marks, the production line of 8 inches integrated circuits will have 11, and 4-6 inches production lines will have six; in addition, there are Huahong Design, VIA Technologies, SJTU-Han Chip, Fudan Micro-electronics etc, a lot of design enterprises; a number of professional assembly and test enterprises such as Intel, Amkor Technology, ASE Kaohsiung, ChipPAC, GAP tech have already registered in Shanghai.

The Shanghai Pudong microelectronics industry belt, with Zhangjiang Information City as a core and Shengjiang road as an axis, extends to the Jinqiao Export Processing Zone and Waigaoqiao Free Trade Zone and radiates toward the surrounding industry parks. The base core area from north to south is constituted with total planned area of 20.5 square km. According to the statistics, the increase of sales income of the integrated circuit in the microelectronics industry belt is over 100%. 5 production lines of 8 inches integrated circuits have been put into operation with annual output of 8" chip of 600,000 pieces and its production value is up to 7 billion Yuan.

The Caohejing Hi-tech Park has become an ideal base for the IC industry. At present, the Caohejing Hi-tech Park accommodates more than 80 IC business enterprises, with 8,000 employees and is currently one of the biggest domestic bases of IC chips in R&D and manufacturing.

The Songjiang Industry Zone lays emphasis in its new western region on enterprises, whose business is assembly of the integrated circuit, with planned area 18 square kilometers. Taiwan SMC, the world leader in chip manufacture, has signed an investment agreement with the Songjiang Government and located in the new western region.

The Taiwan business industry park under construction in the Qingpu District is a core area of its microelectronics industry, with planned area of 9.9 square kilometers. A number of businesses has been digging here such as Hongmao microelectronics with total investment 3.6 billion USD, Hanson technology with 3 billion USD and Xuqing semiconductors 5 billion USD etc. have registered; meanwhile, Datang Mobilecom and ChenSE as micro-electronics business enterprises have already landed here.

The critical is to enhance R&D, to broaden categories, to speed up upgrade and to raise profit. To promote interaction and development of IC design and whole-set, to promote combination of IT and other manufacture industries, to encourage electronic IT extension towards automobile electronics, digital TV, key elements and media content industries. To construct complete industrial chains with ability to research and develop, design, production, assembly, test and software etc. to make it become a state-level micro electronic industry base with international level.

Minhang District Economic & Technological Development Zone

Established in 1986, the Shanghai Minhang Economic & Technological Development Zone was one of the first fourteen state-level development zones in China, approved by the State Council. Located in the southwest of Shanghai, the development zone covers 3.5 km2 as a whole, 2.13 km2 of which?is its first phase and 1.37 km2 is?the second. After 17-year efforts, the zone has been built into a modern industrial park featuring in mechanics & electronics, bio-pharmaceutics and light industry products.

Minhang Development Zone belongs to a mini zone, but the ratio of the infrastructure input to created economic benefit (real tax) is 1:20. The annual sales income is over 8 billion yuan per square km of the industrial land-use in the zone and ranks the top in various development zones in China.

The zone lays emphasis on the international philosophy of simultaneous development of ecology, investment environment and regional development. So far, the integral road network, various underground pipeline network system, including sewage pipes, water supply pipes, as well as power supply and transmission systems have been formed.

Caohejing Hi-Tech Development Zone

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The Caohejing New Technology Development Zone was one of the first state-level economic and technology development zones and new technology development zones, approved by the State Council, to attract overseas capital and introduce advanced technology, and to develop new technology. The development zone locates in the southwest of Shanghai, with 6 square km planned area.

Excellent location, humanity and investment environment promote the Hi-Tech industrial projects to gather together continuously and form Hi-Tech industry group and an industrial chain with certain scale, where micro-electronics, optoelectronics, computer & software, neo-materials are four chief industries, including air & space aviation and biomedicine etc. An industrial chain has been formed to some degree. Meanwhile, the industrial gathering effect of the development zone begins to extend to zone function development to gradually constitute four functional centers, such as R&D center, technology innovation center, network center and financial data center. Now, the Caohejing development zone has gathered near 1000 local and foreign hi-tech companies, among which more than 400 businesses are foreign invested. Over 30 of the top 500 trans-national companies have established more than 40 hi-tech businesses here. There are 190 hi-tech enterprises have bee approbated by the Shanghai Government, which account for 16% of the total number of hi-tech companies enterprises in Shanghai.

The zone dedicates to building three topic parks: a dual excellence park both in quality and environment, a digital park and an international park, to effectively improve investment environment of the zone and to build a more superior development space for hi-tech industry and to promote vigorous development of foreign investment. The principal is R&D or R&D integration enterprises and some trade companies as well as intermediate service agencies in the fields of computer, microelectronics, optoelectronics, neomaterial and biomedicine etc.

In order to further explore the development space, the Caohejing New Technology Development Zone is preparing to build the Pujiang Hi-Tech Park with area of 10.7 km2, which real construction stage has begun now. In March 2003, the State Council agreed the approval of the General Customs Administration to add the Caohejing Export Processing Zone in the Pujiang Hi-Tech Park, with 3 km2 planned area, and in the first phase about 0.9 km2 will be developed, which has passed examination of related ministries and commissions of the General Customs Administration.

Waigaoqiao Free Trade Zone

Approved by the State Council in 1990,the Shanghai Waigaoqiao Free Trade Zone was one of the earliest and largest free trade zones in China. The free trade zone integrates multiple economic functions, such as international trade, export processing, logistics, cargo forwarding and duty-suspended commodity exhibition etc. It locates at the northeast corner of the Shanghai Pudong New Area and next to the mouth of the Yangtze River. It lies at the intersection of China’s eastern coastline and the golden waterway. The planned area of the zone is around 10 square kilometers and an area of 8.5 square kilometers is ready. Constructive area of 2.76 million m2 of factory buildings and 2.57 million m2 with basically complete facilities have been finished in the zone. 5,712 enterprises from 72 countries and regions of the world have already entered the free trade zone, including 85 multi-national corporations of the Fortune Top 500.

The Shanghai Waigaoqiao Free Trade Zone positively promoted system innovation in 2003, insisting on "going first and trying first", expanding strength in inviting and attracting investment, strengthening comprehensive competitive power in the bonded area, optimizing comprehensive investment environment, reducing enterprise’s operation costs, deepening functional development, as well as making new progress in the development of the three major functions of international trade, export processing and logistics service, which make the comprehensive economy of the bonded area keep fast , healthy , lasting growth, and make the average annual increasing degree of the main economic indexes above 20%. The bonded area has already become an important part to promote the development of a new round of economy of the whole city and the Pudong New District.

Summary

With consumption level improving steadily and urban development progressing greatly since the 1990s, Shanghai’s commerce, after its reform and opening up, has gained substantial development, basically forming a multi-tier modern commerce pattern with the core of "four streets and four towns", i.e., the Nanjing East Road, Nanjing West Road, Huihai Road, Sichuan North Road, Yuyuan, Xujiahui, Ever Bright Town and the New Shanghai Commerce Town in Pudong, supported by local commercial centers, featured commercial streets and community commerce. As a result, a diversified modern commerce structure consisting of department stores, franchises, supermarkets, hypermarkets, convenient stores, shopping centers and catering service networks. The fast development of modern chain commercial operation, typically chain stores, has promoted the strategic transition from traditional commerce to modern commerce.

Chain retail sector

More than 11,000 chain stores in Shanghai contribute annual sales of over 180 billion yuan, 150 billion yuan of which came from sales.

--Supermarkets: After more than 10 years of development since early 1990s, supermarket operators have set up 6,000 shops and plus. Currently, the supermarket sector in Shanghai is at its mature stage, with market concentration getting more and more prominent.

--Convenient stores: Retail sales of convenient stores only accounted for a small fraction of that of the municipality. In addition, with identical commodities structures and locations, the business mode is still away from mature, which calls for further regulation and innovation.

--Hypermarkets: Today, hypermarkets in Shanghai are already playing a more and more important role in retail sales of food sand commodities. In the fields of household electronics, clothing, communications equipments and other endurable goods, hypermarkets are also expanding their market shares. Some hypermarkets are also taking the path toward neighboring shopping centers.

--Franchises: Currently, in sectors such as household electronics, construction material, medicine and food franchises are showing the momentum of pushing forward. Both the number of franchise shops and their total retail sales are increasing in these sectors. Particularly in the fields of electronics and construction material with the trend toward professional, scale and networked development, franchise chain stores have become the leading business modes, playing a dominant role in the retail market.

Other retail sectors

Shanghai is the most famous shopping hub in China. There are department stores, shopping centers, and hundred-year-old shops, shops for special commodities and super-markets row upon row. The famous, special and superb commodities from home and abroad are a feast for eyes with everything that one could wish for. Generally shops in Shanghai open at 10:00 in the morning and close at 10:00 in the evening.

--Department stores: Actively realigning their operational structures to meet multi-tier and multi-dimension demands of the consumers, Shanghai’s department store sector has achieved higher concentration rate through the transformation of business mode and the promotion of chain operation. In addition, with more and more citizens moving into suburbs, emerging community department stores are developing fast to drive the development of local commerce.

Catering

During the last decade, Shanghai’s catering market has maintained double digit annual growth. The sector has formed a pattern of subdivision and diversification and operators from outside Shanghai held a market share as high as 60%.

As an international city, Shanghai offers all kinds of cuisines from around the world. Of course, the majority of restaurants offer Chinese food at reasonable prices. Chinese food is famous for its Eight Major Cuisines: Sichuan, Zhejiang, Hunan, Jiangsu, Shandong, Fujian, Cantonese and Anhui. Not surprisingly, Shanghai Cuisine, also known as Ben Bang, is not one of the Eight Major Cuisines.

Life service

Life service sector in Shanghai has achieved substantial growth.

--Beauty and hairdressing: Emphasizing on brands and chain operation, a number of chain brands with unique taste of fashion are holding an increasingly larger market share. In the meantime, many enterprises armed with standard volatilizing products and powerful capacities have set up communities in the mode of chain operation, forming a life service network.

--Bathing: Currently, there are more than 300 composite or sauna bathing operators and about 2,000 public bathing places in Shanghai. Contributing annual sales of over 2 billion yuan, it is becoming an increasingly important sector in life service. Main changes in the sector are reflected through functional extension into leisure, health care and recreation. Traditional service of bathing, back massage and foot care contribute less than 50% in the sales revenue.

--Laundry: Covering key target groups such as hotels and community residents; the sector is developing very fast. In some emerging communities, laundry has become one of the basic service items. Currently, there are about 7,000 branches across the city, forming a market size above 900 million yuan. The sector is expected to accelerate its development in the coming years.

--Repair & maintenance: The sector has sales revenue of 3 billion yuan. Notably, autorepair and its extended services, such as car decoration and maintenance are taking an increasingly larger market share in the sector.

--Life service-lease: With sales revenue of 2 billion yuan, the sector is showing promising space of development. It covers lease services of automobiles, audio/video products, printed products and goods for children and computers.

--Photography and related service: With sales revenue of approximately 2 billion yuan, the sector provides services for professional photographer, wedding photographing and wedding ceremony as well as film developing/printing, coping and typewriting. Currently, the sector is improving its expertise, upgrading its products and extending into basic community services.

--Life service-intermediate service: Mainly consisting of intermediate service for housekeeping, babysitters’house rental, the sector features scattered small-scale operation.

Staple and subsidiary food market

In 2008, the city consumed more than 3 million tons of food, over 386,000 tons of edible oil, about 586,700 tons of pork, approximately 195,000 tons of poultry meat, nearly 563,000 tons of aquatic products, almost 2.1 million tons of vegetable, roughly 170,000 tons of bean products and more than 1,000,000 tons of wines.

Jinqiao Export Processing Zone

The Shanghai Jinqiao Export Processing Zone is the first state level economic and technical development zone approved by the State Council in 1990, and is the first one named as "export processing zone", with 27 km2 planned area, where the science and technology industry centralized 6 km2 zone was named as the "Jinqiao Modern Science & Technology Park", approved by the State Ministry of Science& Technology. The 3-km2 area in the south zone was a closed custom administration area, agreed by the State Council and approved by eight ministries and commissions, such as and General Customs Agency etc. In this zone, the five leading industries, such as electronic information, automobile and its components, modern household appliance, new material, foodstuff and pharmacy, are critically developed. Common development of industrial chains and export and procurement of foreign exchange are promoted through the interrelating effect of the leading industries.

Among the 500 biggest trans-national companies, 37 companies have entered the Jinqiao, which invested 54 businesses in all. The companies with investment over 100 million USD are the Shanghai GM, Alcatel Shanghai Bell, Sony and SVA, Hitachi, UAES, Siemens Mobile, Shanghai Huahong-NEC, Kodak China, Shanghai Kyocera Electronics and Shanghai Sharp etc. The projects with sales income over 1 billion yuan are Shanghai HP, Shanghai Huahong, Shanghai LG, Shanghai Sharp, Kodak Electronics, Leveno, AJ Corporation, etc. Those with taxes above 100 million yuan are the Toshiba computer, Johnson Cosmetics, Kyocera Electronics, Leveno Electronics, Omron automatics, Intel Dairy, Seng Ling Electric, Shanghai Sine Pharmaceutical Corp, etc.

With 18 years’development and construction, the Jinqiao Export Processing Zone has become a Hi-Tech industry zone with electronic information, automobile and its components, modern household appliance, new material, foodstuff and pharmacy as major industries, and become the first national model area passing ISO14000 international environment management system in Shanghai, accepted and approved by the State Environment Protection Administration.