Facilities, incentives and international companies prove a compelling mix for the Zhangjiagang free trade Zone

The Zhangjiagang Free Trade Zone is making every effort to build itself into a modern world-class free trade zone based on its favorable geographic location and booming industrial development.

"Our goal is to develop the zone into an international leading free trade area in China," says Wang Huizhong, deputy director of the zone's administrative committee.

As one of China's first inland port free trade zones, the Zhangjiagang Bonded Zone has evolved into an important inland cargo transport hub in East China following its establishment in 1992.

Last year, the zone handled $33.4 billion (25.8 billion euros) worth of cargo, a year-on-year increase of 28.3 percent. Its fiscal revenue went up to 6.6 billion yuan ($1.05 billion; 810 million euros), nearly double that of 2008. The total revenue of the companies in the zone stood at 460 billion yuan, 2.5 times the figure recorded in 2008.

The free trade zone offers many incentives for foreign investment. For instance, companies in the zone can enjoy more relaxed foreign exchange controls, and goods circulated within the zone will be exempt from value-added taxes and consumption duties.

Attracted by these favorable policies, as well as the fast development of marketplaces and the local economy, the free trade zone recorded foreign investment amounting to $600 million last year, nearly double that of 2008.

The zone has thus far attracted total foreign investment worth $7.9 billion, a figure that is expected to reach $9.8 billion by the end of 2015.

The zone is now home to more than 946 foreign companies, including global majors such as the Netherlands-based Royal Vopak, the world's largest independent tank storage provider, which specializes in the storage and handling of liquid chemicals, gasses and oil products.

Cai Yuhao, deputy general manager of Dow Corning Zhangjiagang's site, says that besides the favorable policies, another main draw for foreign companies is the presence of an established industry chain.

"Based on the city's strong chemical industry development, the zone enjoys a complete chemical industry chain, which is of great appeal to us," Cai says.

"The presence of global companies such as Royal Vopak has provided a strong foundation for us to develop business in China."

Another major appeal of the logistics hub is that it allows cargo to be transported seamlessly and effortlessly across the nation without any major procedural or red-tape delays, says Wang.

He adds that the proximity of the free trade zone to Zhangjiagang Port enables it to offer better logistics services, including one-stop customs clearance, to solve the bottleneck affecting some other bond zones.

With the one-stop system, goods can be transported efficiently by establishing effective coordination among all international trade-related agencies on customs, quarantine, transport, warehousing, financial services and insurance procedures.

"By offering one-stop customs clearance, the zone improves customs clearance efficiency and helps companies reduce the costs of international trade. The city's international trade has also been boosted," says Wang.

Covering an area of 150 square kilometers, the zone is home to more than 4,100 traders, aiding the burgeoning market in industries related to trading. In 2011, the trade volume of the chemical and industrial market hit 36 billion yuan. Textile raw-material transactions hit 22 billion yuan last year.

The zone is also developing an e-commerce platform to help small and medium-sized enterprises conduct international business. Jiangsu 1-Touch Business Service Ltd, the first imports and exports outsourcing services platform for SMEs nationwide, was established in the zone in 2010.

"The e-commerce platform means a lot to the SMEs in the international trading business, which also improves logistics operation in the zone," says Li Jia, deputy general manager of Jiangsu 1-Touch Business Service Ltd.

She says that through the company's online services, customs clearance will be sped up and delays in goods delivery will be almost eradicated.

"These measures will save costs for companies located in the zone, giving them larger profit potential," says Li.

Since its establishment in 2010, the company has provided services to 200 clients, with a transaction volume of up to $20 million. That figure is expected to hit $100 million this year, according to statistics provided by the local government.

But the development of the bonded zone also faces many challenges.

"There has been turbulence in the international trade market in recent years. Our logistics business has also been adversely affected, since the development of the logistics industry is closely related to the trade industry," says Wang.

He says that to further develop international trade for the companies located in the zone, the zone is also investing efforts to develop other kinds of trade markets, such as a consumer goods trade market, in addition to those that already exist.

Xu Hanyang, deputy director of the zone's logistics and trade development bureau, is responsible for the development of the zone's consumer goods market. He says that as China is gradually transforming its export-oriented economy into a consumption-driven economy, it is the right time to develop such a market.

"An increasing number of individual customers will provide us with more opportunities to develop a booming consumer goods market," says Xu.

"The zone has played a very significant role in improving East China's port cargo transport. It is no exaggeration to say that it has helped Zhangjiagang become one of the best inland port cargo transportation centers across Asia," says Wang.

huhaiyan@chinadaily.com.cn

The Yongjia pier of the Zhangjiagang Free Trade Zone. Provided to China Daily

(China Daily 10/19/2012 page16)