Why Do Business in Weifang?

A few points in favor of setting up business in smaller cities in China:
-It is easier to get to know top government leaders in small cities. For example, in Weifang I met and chatted with the Mayor and Vice Mayor on more than one occassion, and I’m just a foreign teacher. I think this is a major benefit. How likely would it be for me or a person running a small to medium sized business to meet and chat with the city leadership in Beijing?

-Smaller cities have cheaper real estate prices. I don’t know about business properties, but for residential you’d pay about 2k RMB/sq meter in Weifang out towards the edge of the city (only about 10 minutes from downtown by car) and nearly 10k RMB/sq meter in Haidian in Beijing if you were looking to buy.

-Smaller cities have lower wages. Teachers at Weifang University made between 1k and 4k RMB a month. No one made over 4k (officially anyway), not even the president of the university. I know this because I’ve seen the payroll. I’m not sure how much teachers at Beihang make, but there sure are a lot of nice new cars on this campus, so I’m pretty sure that the answer is more than in Weifang, where the few teachers who had cars were the ones married to businessmen.

-Smaller cities typically have less pollution and less traffic and thus are easier to get around in.

As for Weifang specifically:
-It is a third tier city.

-Grade A office space for cheap prices. (This is according to some American businessmen I talked to. Having no personal experience in this area, I wouldn’t be able to judge this myself.)

-Infrastructure is just as good as in larger cities – reliable electricity, internet, telephone, cellular, roads, rail, even an airport (small but nice, not some scary relic from the cold war) with daily flights to Beijing and Shanghai.

-Located smack in the middle of the Shandong peninsula making it a major hub between the larger cities of Qingdao, Jinan and Yantai. Because of its location it is a good place to set up headquarters if a company has branches or often does business in each of those cities.

-Good hotels and conference space. Weifang has one five star hotel and at least seven four star hotels. Also, because most of the year these hotels are underused good prices can be had.

-Just under two hours from Qingdao International Airport, which has flights to Seoul, Busan, Tokyo, Osaka, Fukuoka, Nagoya and Hong Kong in addition to around thirty domestic locations.

-International Kite Festival – According to Jiaoyitong.com News, the 2005 Kite Festival resulted in the signing of 227 contracts worth a total of 16,510,000,000 RMB of which 1/3 was foreign capital. This annual event is basically what puts Weifang on the map.

Possible Weifang Business opportunities:
- Outsourcing manufacturing for diesel – Weichai is a large SOE that manufactures diesel engines for China Rail.

- Outsourcing manufacturing for toilets – Milim is a large company that manufactures toilets for Gerber.

- Outsourcing manufacturing for pharmaceuticals – Yaxing Chemical is a large company that manufactures pharmaceuticals for Bayer.

- Trade in textiles – according to an African-Australian friend of mine in this business in Weifang there are lots of textiles factories in and around the city. These factories do sell product direct to overseas retailers, but a middleman can negotiate lower prices with the factories and turn around and sell the same product even cheaper than the factories themselves to retailers.

- I have met American and South African entrepreneurs of medium-sized businesses who were outsourcing the manufacture of children’s furniture in Weifang and looking to outsource the manufacture of pipes used for plumbing and were strongly considering setting up a JV in Weifang with a local company there.

Tags Weifang, Business, Small Chinese Cities, Third Tier Chinese Cities

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