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FEATURE STORY: Big In Belgium
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Tianjin firm’s EU-China trade park sparks imitators


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Bagging Chinese investment for Europe has become a priority across the EU. Just how keen European member states are can be seen in a spate of stories about Chinese trade parks set to be established in Western Europe, as conduits for Chinese trade and investment into the continent. 


Two such parks generating headlines are a Euro China trade park in Athlone (a large town in the centre of Ireland) and another, smaller project focused in Birkenhead, a dockland area  of Liverpool. A Tianjin company meanwhile, with a similar project already functioning in Belgium questions the viability of locating such projects in the UK or Ireland, away from the centre of the EU market and outside the Schengen single-visa zone. 


altMr Ma Jian is general manager of Tianjin Liho Import & Export Co, part of a state-owned conglomerate, which built an EU-China trade centre in Antwerp. He looked at numerous European countries for Liho’s trade park, but Ma says his trade park has to be in the heart of continental Europe where most Chinese export sales are centred. 


The Antwerp project makes sense given Liho’s own vast portfolio of export-oriented brands. Officially known as Tianjin Liho Import and Export Group Co Ltd, the government-run firm ranks among the top 500 import and export enterprises nationally and the top 50 export enterprises in Tianjin. Brands in the Tianjin Liho Group portfolio include the Peacock Enamelware brand, Stainless Steel Tableware brand, Triangle and leather and fur products produced by Liho under the Snow Club logo. 

“The goods are produced at around 150 manufacturing bases controlled by Liho,” explains Ma. As he shows Business Tianjin around a spacious showroom at the firm’s offices, it’s obvious the scope of the Liho’s output and influence. From fur coats to elaborate jade carvings, from cookware to porcelain and modern furniture, Liho makes it all. 


Located on Uilenbaan Street in the city’s port district, the China-Europe Trade Centre is operated by the locally-registered firm, Tianjin International Corp. NV (SA). Without being over-sized, the Antwerp project offers logistics distribution and warehouse services but will also arrange transportation for Chinese firms. The exhibition spaces are used for exchanges between corporate as well as state entities. The 16,550 square meter facility includes a 700 sq metre exhibition Hall, a 500 sqm showroom and eight offices. Other facilities include a 60 sqm café and a warehouse sized 5,000 sqm. 


The Centre wants to be a bridge, through which companies in China as well as in Tianjin may conduct business with their counterparts in Europe. Importantly, says Ma, careful groundwork ensures Chinese businesses will get easy access to local markets for sales or investments. Close relations with the Chinese Embassy in Belgium as well as ties to Belgian politicians and trade bodies - including Flanders Bureau of Economy and Trade – ensure visiting Chinese traders get their visas on time while membership of local business groups like the Flanders Chamber of Commerce delivers business ties and leads for Chinese traders. Likewise, employing local accountants and lawyers has also ensured Chinese companies “a short-cut for the development of their business in the EU market.” 


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Ma says: “Even though Belgium is a small country, it is the centre and the heart of Europe. Antwerp Port is the second biggest port in Europe. Our trade centre is 15 kilometres from the port and 45 kilometres from Brussels. Belgium has great advantages in Europe. Around Belgium are the developed countries of Europe like France, Germany, Holland and Luxembourg. The geographical location is very good. The location, the workforce and the local and Chinese political support are the reasons why our trade centre has worked so well.” 


Hardly a shot in the dark, the Liho-run China Europe Trade Centre project is actually a state-approved project, one of three major Overseas Projects of the Tianjin Municipality and co-sponsored by Tianjin Liho Group and Tianjin Changxing International Trade Co. Termed “bridgehead of Tianjin Binhai New Area in Europe” and green-lighted by the Tianjin Municipal Party Committee and the Tianjin Municipal Government as well as the local office of the State-owned Assets Supervision and Administration Commission.

 

Competition 


altOther planned EU-China trade parks appear speculative compared to the state-backed park established by Liho. The British developer Peel for instance, is seeking to build a EUR150 million International Trade Centre (ITC) at West Float as part of its £4.5bn Wirral Waters real estate scheme in Birkenhead near Liverpool. Promising 3,000 jobs to an economically deprived part of Britain, the project will, according to Peel, “enable Chinese companies to exhibit, sell, assemble and distribute their goods into the UK, Irish and European markets”. The development, to be built over ten years, will encompass 2.5m square feet of floor space - the size of 25 football fields). Peel’s Director Lindsey Ashworth said, “Local retailers will have access on their doorstep to high quality products manufactured overseas, and local people will have the opportunity to apply for the new jobs that will be created.” 


Jobs have also been promised at the Euro Chinese Trading Hub being planned for a 138-hectare site near Athlone, a university town in the centre of Ireland. Promising a new rail hub to cater for up to 35,000 visitors per week, the developers are promising a facility nearly as big as Hannover Messe, Germany’s – and the world’s biggest trade fair. 


At 1 million sq m, the facility will be Ireland’s biggest single development, with a four-storey reception building, three large exhibition halls, nine smaller halls and basement parking for 1,370 cars. A floor area of 100,000 sq m will eventually encompass two five-star hotels, a Chinese palace, 445,000 sq m of exhibition halls, a commercial zone of 264,000 sq m and some 186,000 sq m of serviced apartments. 

 

Ma finds it very hard to imagine Chinese businesses going there. As he explains, “The Athlone project doesn’t make any sense because the location of Ireland doesn’t make sense from a Chinese perspective. Ireland is too far away from the key markets like France and Germany. Also, because Ireland in not in the Schengen visa zone, Chinese business people cannot visit other EU countries, besides the UK, on an Irish visa. It is easy for us to go to other European countries such as France and Germany from Antwerp in Belgium, but it’s much more difficult to go to other parts of the EU from Ireland because of the visa situation.” 


It’s worth bearing in mind that most of the exporters in China are small sized companies with tight margins and they’ll be very reluctant to invest in exhibition spaces in a trade centre in Athlone, unless there’s a very good chance of a quick return on that investment. Ma however, believes there’s a chance the Athlone or Birkenhead projects could work if they function as annual or bi-annual trade fairs, in the way the Canton Fair is organised in Guangzhou twice a year. That of course begs the question of how such large facilities will be used outside of the trade fair dates.


Numerous Irish business people with a long track record in China that I’ve talked to also don’t see Athlone as a realistic project. One of them, Frank Mullins, a lawyer from Dublin, has lived for 10 years in China and now advises Irish firms on market entry to China. He says, “serious business people have to visit China to see products and Chinese export businesses are currently cash-strapped and wary about renting spaces in an unproven project like Athlone.” 


Future plans 


altMa has plans to roll out e-commerce functions and draw retail stores to the location. “We’re more about convenience, more about value-orientated operations from a scale-orientated one, so as to gradually set us retailer's stores, on-line consignment, chain stores operation and many other modes of operation, such as business with member card.” 


Ma has no plans to assemble or manufacture goods at the Antwerp facility. Chinese exporters have tapped Russia and Eastern Europe by exporting semi-finished products from Chinese zones across the border and finishing the processing in Russia, avoiding local tariffs. One of China's first overseas industrial parks, the Yssurisk Trade and Economic Cooperation Park, is home to companies making clothing, shoes and furniture. 


Incredibly, Heilongjiang province has also built 10 trade parks in Russia. Provincial officials have stated that getting more trade from Russia, which accounts for half of Heilongjiang’s exports, will mean building more logistics parks and wholesale markets in towns on both sides of the border. The Harbin-Mudanjiang-Suifenhe-Dongning Commercial Processing Zone for Russian trade has 1,700 enterprises in five import and export industrial clusters for food processing, machinery, agricultural products, building materials and light industry. 


In October last year Mr. Bai Wenbin, Chairman of Tianjin Liho Imp. & Exp. Group Co.,Ltd, and General Manager of Tianjin Changxing International Trading Co., was handed Belgium royalty’s highest honour, ‘La decoration de ‘Commandeur de L’Ordre de Leopold’ by visiting Crown Prince Phillippe of Belgium. However, while the Liho park is clearly successful and inter-linked with the Belgian economy and officialdom, not all EU citizens are so sure of the long-term benefit of such parks. A note of caution was raised by a Liverpool local on SkyscraperCity, a popular UK-based urban planning forum: “In the long term, the very last thing Britain, and indeed Europe needs is to stuff its homes and landfills to capacity with manufactured goods so cheap and so far from where they’re built that they are uneconomic to repair the first time they fail…while the indigenous manufacturing industry wastes away.” The development is “not good for the UK or the EU in the long term” wrote the commentator, a native of Birkenhead, site of the planned Euro-China trade park. 


Trade Park Tradition 


Going into the EU is relatively new, but Chinese business, with state backing, has been building trade centres in developing countries for decades. From the late 1990s Chinese policymakers have green-lighted around a dozen Chinese centres for trade, investment, and development in Africa. Usually built as public–private partnerships: for instance in Benin, China’s aid budget provided 60 percent of the construction cost as a loan with a Zhejiang-based company (operating the centre) contributing 40 percent. Largely, Chinese firms rent the space, warehousing and sell to Benin and neighbouring countries. 


altMore ambitiously, in 2004, China Middle East Investment and Trade Promotion Centre and Jebel Ali Free Trade Zone, constructed a dragon-shaped $300 million trade centre, known as Dragon Mart, to host 4,000 Chinese companies in Dubai. Appliance maker Haier meanwhile built industrial parks in South Carolina (USA) and Lahore, Pakistan while Fujian Huaqiao Co has attempted to build a trade zone in Cuba. 


In 2006, the Chinese Ministry of Commerce decided to give official support to the establishment of zones in other countries (State Council 2008). Initially, a minimum of 10 zones would be established abroad with $2 billion of Chinese government money, with the hope that 500 Chinese companies would use them as a beachhead to overseas markets. Chinese president, Hu Jintao, pledged to establish three to five economic trade and cooperation zones in Africa as part of eight major commitments made during the 2006 China Africa Forum in Beijing. 



By Mark Gao

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