Last year the value of the city's logistics industry output was 9.3 billion yuan, 29 percent higher than the previous year.

The area's favorable logistics have attracted a number of foreign investment projects, and several well-known companies, including Dow Corning and Dupont from the United States, now have operations here.

Dow Corning, which makes silicone-based products and is the world's largest supplier of silicone, is a joint venture between Dow Chemical Co and Corning Inc. Since 2006, with its manufacturing partner, it has set up four plants making silicone materials in Zhangjiagang.

The project, with a total investment of $1.8 billion, is one of the largest programs globally for Dow Corning.

"With a pyrogenic silica plant, a siloxane plant and two downstream finishing plants, this is an integrated silicone manufacturing site," says Cai Yuhao, deputy general manager of Dow Corning Zhangjiagang's site.

Given the size of the investment, Dow Corning invested a lot of time and effort in choosing the location before coming to Zhangjiagang, Cai says.

"For Dow Corning, an international expansion like this would be regarded as an aggressive move. It was crucial that we found a safe, professional entry point. Zhangjiagang met those requirements."

The main reasons for Dow Corning choosing Zhangjiagang was the convenient transport and the local government's efficiency, he says.

"The majority of our products have been sold in the domestic market. Most of our business is for China, which is how we've always grown. The Zhangjiagang base, by virtue of the good transport, particularly with the ports, offers big savings with logistics."

Cai graduated from Tsinghua University, majoring in the chemical engineering in 1995, then studied at Michigan Technological University, obtaining a master's degree in 1997.

After working for Dow Corning in the US for about 10 years, he returned to Zhangjiagang in 2007, helping with the construction of the plants.

Cai, 40, a native of Beijing, says he is impressed by the efficiency and entrepreneurial spirit of Zhangjiagang's government in attracting businesses.

"Even on Saturdays government officials work and meet investors, something you would be hard pressed to see elsewhere in the world," he says.

With several big chemical-manufacturing companies moving to the area, the Yangtze River Chemical Industry Park was set up, giving another fillip to the chemical industry's growth.

The steel industry is another local economic pillar, and it too owes its growth to the rapid development of the logistics industry, says Shen Wenrong, chairman of Jiangsu Shagang Group, China's largest private steelmaker.

"The good transport here helps us control our logistics costs, which has been a key reason for us in developing our business," Shen says.

The group brought in revenue of 207.5 billion yuan last year, an increase of 16 percent on the previous year, and it is ranked 346th in the Fortune Global 500 for 2012.

Gong Li, an analyst with Industrial Securities, based in Fujian province, says booming local industries are also serving as powerful engines for Zhangjiagang's logistics industry.

"The logistics industry cannot be separated from trade. Several industries, including metallurgy, petrochemicals, food and oil, construction materials and energy sectors, have a strong foothold in the city, which will give a further boost to the logistics industry," Gong says.

The presence of Dow Corning and Dow Chemicals in Zhangjiagang has drawn world-class logistics services providers to the city, including Royal Vopak of the Netherlands, the world's largest independent tank storage provider.

Since 2007, it has already put in $64 million yuan of the planned $140 million to set up its Zhangjiagang branch in the Yangtze River Chemical Industry Park of Zhangjiagang Free Trade Zone. The branch is the first wholly owned subsidiary of Royal Vopak in China.

Global Logistics Properties, Singapore's major logistics service provider, also plans to establish its presence here. It will build a logistics zone covering 80,000 square meters by the end of next year.

"It will be one of the largest in our global network," says a local senior manager of the company's Zhangjiagang branch.

As the epicenter for East China, one of the major trade centers and a key port on the Yangtze River, Zhangjiagang is ideal for logistics, she says.

"That, combined with our expertise in logistics, will give local and multinational companies in the country better options," says the manager who has more than 10 years' experience in logistics.

However, the development of logistics in Zhangjiagang also faces many challenges.

The demand for logistics has shrunk as some export-oriented businesses have reduced production and cut spending in response to weaker markets, says Liu Zheng, an analyst with Citic Securities of Beijing.

Shu of Dow Chemical points out that Zhangjiagang port is inland, and some chemical raw materials cannot be transported on the river because of safety concerns.

"But challenges come together with opportunities. The constraint forces us to further expand our product lines and capacity and move up the value chain to produce more energy-efficient products," he says.

"As we aim to produce high value-added products, we are looking for better logistics services. Zhangjiagang meets these requirements with its comprehensive logistics network."

The company operates its own wharfs in the Zhangjiagang Port, which can handle 45,000-ton freighters, he says.

Shu, a Beijinger graduated from Tsinghua University in 1998 and in his current position since 2010, says Zhangjiagang allows him to make the most of his potential.

"As a student majoring in chemical engineering, if you work in first-tier cities such as Beijing you rarely get the chance to head a team building and operating large-scale plants like this base in Zhangjiagang," he says.

"At a class reunion 10 years later, it is no exaggeration to say that my career was one of the most colorful and fulfilling. Zhangjiagang is a paradise where aspiring people can realize their dreams."

huhaiyan@chinadaily.com.cn

(China Daily 10/19/2012 page16)