From China Liaoning Business Guide

Hunting Liaons?

You certainly know that Liaoning is a province of China. But do you know what "liaoning", present participle of "to liaon" means? Or what is a "liaon", plural "liaons", female form "liaoness"? Please take our quiz!

"Liaons" are, of course, not mammals in the Emirates, nor misspelled lions, but a friendly English term for the inhabitants of Liaoning Province in northeastern China. And it is true that local expats started to use "liaoning" as a verb for making good profits in one of the top global boom regions.

Global Number One Growth Province

China has been the global leader in economic growth for a number of years, and steered through the global financial crisis with aplomb. When you read this, China may already have surpassed Japan in total gross domestic product, but ranked third behind the United States and Japan in 2008. Within China, Liaoning was listed eighth in provincial GDP of 2008, and had a higher real growth rate than any of the provinces ahead.

Still, the province is widely unknown outside of Asia. In an international comparison of country subdivision by volume of GDP, based on 2005 data, and with a disputable method of comparing GDPs of various currencies, Liaoning was listed just above Berlin, Germany, and Iowa, USA, at rank 73.

According to a more current global analysis of the economically strongest regions below the national level, Liaoning ranks first in economic growth and was listed as the global top growth province. The analysts took the top eight countries in 2008 GDP according to revised 2010 World Bank data, the so-called G8 of GDP. Then they took the top eight administrative regions within those countries, the G8x8, according to regional GDP data of the national statistics administrations, and compared the real growth rates of those regions. Liaoning is the only region with a growth rate above 13 percent.

GDP 2008	Rank 1.	Rank 2.	Rank 3.	Rank 4.	Rank 5.	Rank 6.	Rank 7.	Rank 8.
USA	+ 0,4 % California	+ 1,6 % New York	+ 2,0 % Texas	- 1,6 % Florida	+ 0,3 % Illinois	+ 1,1 % Pennsylvania	+ 0,6 % New Jersey	- 0,7 % Ohio
Japan	+ 3,1 % Tokyo-to	+ 1,7 % Kanagawa-ken	+ 1,8 % Aichi-ken	+ 0,7 % Osaka-fu	+ 1,0 % Saitama-ken	+ 1,3 % Chiba-ken	+ 1,1 % Hyogo-ken	- 1,3 % Hokkaido
China	+ 10,1 % Guangdong	+ 12,1 % Shandong	+ 12,3 % Jiangsu	+ 10,1 % Zhejiang	+ 12,1 % Henan	+ 10,1 % Hebei	+ 9,7 % Shanghai	+ 13,1 % Liaoning
Germany	+ 1,6 % Nordrh.-Westf.	+ 1,2 % Bayern	+ 0,9 % Baden-Württ.	+ 1,3 % Hessen	+ 1,0 % Niedersachsen	+ 0,6 % Rheinland-Pfalz	+ 0,3 % Sachsen	+ 1,4 % Berlin
France	+ 0,5 % Île-de-France	+ 0,4 % Rhône-Alpes	+ 1,4 % Provence	+ 0,3 % Pas-de-Calais	+ 0,9 % Pays de la Loire	+ 0,9 % Aquitaine	+ 0,4 % Bretagne	+ 1,3 % Midi-Pyrénées
U. K.	+ 4,0 % London	+ 2,8 % South East	+ 3,5 % North West	+ 3,2 % East of England	+ 4,6 % Scotland	+ 3,5 % South West	+ 2,9 % West Midlands	+ 3,1 % Yorkshire & H
Italy	- 1,0 % Lombardia	- 0,4 % Lazio	- 0,7 % Veneto	- 0,4 % Emilia Romagna	- 1,1 % Piemonte	- 0,6 % Toscana	- 2,4 % Campania	- 0,9 % Sicilia
Russia	+ 7,7 % Moscow	+ 3,8 % Tyumen Region	+ 2,9 % Khanty-Mansysk	+ 8,2 % Moscow Region	+ 9,3 % St. Petersburg	+ 2,5 % Sverdlovsk	+ 7,7 % Tatarstan	+ 8,8 % Krasnodar

Preliminary economic data for 2009 confirms the strength of Liaoning in the global G8x8 matrix. Within China, Liaoning has surpassed Shanghai in terms of total GDP, and now ranks seventh among the provinces. Despite the global financial crisis, Liaoning maintained its high real GDP growth rate.

A number of factors make Liaoning a global hotspot of economic opportunities: First, a relatively well-trained industrial labor force with wages below national average, which in turn is significantly below global average. Liaoning has some of the best vocational schools in China, and many families have been working in industrial enterprises for generations, with a tradition of handing master-level technical knowledge from the father to the son. Still, the 2010 minimum wage of Liaoning is between 500 and 700 RMB per month (about 73 to 102 USD), depending on the prefecture or county, and the second lowest of all coastal provinces. 2008 actual average earnings of urban employees per year were 27,729 RMB (3,989 USD), half of Beijing and Shanghai, and much lower than competitor provinces Zhejiang, Guangdong and Jiangsu. Cost of living is equally below the national average.

Secondly, a good infrastructure with, for example, the already densest railway network of all provinces in China. New and faster than ever high-speed railways between Dalian and Harbin and from Shenyang to Beijing are under construction and are slated to start operating in 2011 and 2012. The time to go by train from the city center of Shenyang to the center of Beijing will be reduced to a bit more than two hours from currently more than three hours by airplane (including the taxi time needed from the airports to the city centers). Liaoning has six international and domestic airports and with Dalian one of China’s largest seaports, connected by regular shipping lines with 140 countries.

Third, strong support from the national government for accelerated economic development in Northeast China, which is led by Liaoning province. The State Council has recently reconfirmed this policy in several documents, which will guide the preparation of the next five-year plan for 2012 to 2016. Preferential policies are already in place, major additional budget allocations are to be expected.

Particularly, two regional economic development schemes, one strengthening the synergy of coastal area of Liaoning along the Bohai Gulf (Liaoning Belt) and the other promoting inland Shenyang Economic Area (Shenyang Metro), were promulgated in Liaoning in November 2009 and April 2010 as part of National Strategies to support robust development in Liaoning. No province has ever before been beneficiary of two national development strategies at the same time.

Fourth, Liaoning is the backbone of China’s industrial strength, which has a large and varied industrial base. Traditional industries like mineral extraction and processing, heavy engineering, steel production, textiles and petrochemicals continue to thrive alongside newer technologies. The key industrial sectors include equipment manufacturing, automotive production, ship building, biotechnology and pharmaceutical as well as electronics and software development. Industry has concentrated around key cities in the province, supported by comprehensive supply chains and research and development institutes. These industrial clusters ensure that investors benefit from and embed quickly into the business infrastructure.

Liaoning Yesterday >> Tomorrow

The Qing Emperors of the last Dynasty of China originated in Liaoning. When the Central Plains were re-united in the mid 17^th century, the capital was moved from Mukden (Manchu word for Shenyang, today capital of Liaoning) to Beijing. Liaoning holds the key offshore position from the north into the mainland. Partly due to its strategic importance, it suffered from the Japan-Russia War in the early 20^th century and later from the War against Japan during the Second World War.

After 1949, Liaoning Province became the cradle for the development of modern industry in China and has paved the way for many of China’s industrial achievements. It is home to the first Chinese jet aeroplane, the first locomotive, the first bulk cargo ship of 10,000 tons, the first transistor, and the first underwater robot. In more recent years, it produced key components of space rockets, essential for placing China into the exclusive group of countries who have put a man into space.

In 1984, Dalian of Liaoning was opened as one of China’s 14 pioneer coastal cities for foreign investment. Other coastal cities such as Yingkou, Jinzhou and Huludao also followed later in the 1990s. During the same period, Liaoning went through the process of industrial restructuring to develop a market-oriented economy and had to overcome the "rust-belt" effect of steel and coal dependence. To date, this has been basically completed. Liaoning is now thriving, and also home both for traditional industries and some of the most innovative and cutting edge industrial sectors particularly in the fields of biotechnology, pharmaceuticals, electronics, software development and robotics.

Good Company

In history, international economic relations concentrated on nearby Korea, Russia, and Japan. In most cities of Liaoning, you will still rarely see any Caucasians on the street. But the number of foreign visitors grew from 5 million in 2000 to 21 million in 2008. So far, about 13,000 foreigners obtained a work permit and took permanent residence in the province. This number is likely to increase, as the presence of international companies is growing quickly.

Investment in Liaoning started to become popular among global Fortune 500 enterprises just in recent years. Intel selected the second largest city of Liaoning, Dalian, to invest 2.5 billion USD in Asia’s first 300 millimeter wafer fabrication facility. Construction is almost complete and production to start in October, 2010.

Auto maker BMW set up a joint venture and built a first production line in Shenyang in 2004. BMW Brilliance Automotive became so successful that German headquarters decided to invest 750 million USD in a second factory for their 3 and 5 "long" series. Following is a list of top twenty Global Fortune 500 enterprises with recent investment in Liaoning, sorted by the total project volume.

	Country	Global	Liaoning	Location
	USA	Intel	Dalian Intel	Dalian
	South Korea	Daewoo	Daewoo Co., Ltd.	Dalian
	Germany	BMW	BMW Brilliance Automotive Ltd.	Shenyang
	USA	General Motors	Shenyang Jinbei Vehicle Manufacturing Co., Ltd.	Shenyang
	Japan	Toshiba	Toshiba TV Co., Ltd.	Dalian
	Finland	Nokia	Nokia Communication Technology Co., Ltd.	Dalian
	USA	Gillette	Shenyang Cutting Tip Co., Ltd.	Shenyang
	France	Carrefour	Carrefour Hypermarket	Shenyang
	USA	Coca-Cola	Coca-Cola Co., Ltd.	Shenyang
	Canada	Nortel	Nortel Networks	Dalian
	South Korea	LG Electronics	LG Electronics Co., Ltd.	Shenyang
	Germany	BASF	BASF Vitamin Co., Ltd.	Shenyang
	Japan	Toshiba	Toshiba Elevator Co., Ltd.	Shenyang
	Switzerland	Sulzer	Bingshan Group	Dalian
	Japan	Panasonic	Panasonic Storage Battery (Shenyang) Co., Ltd.	Shenyang
	USA	Ingersoll Rand	Ingersoll Rand Machine Tool Co., Ltd.	Dalian
	USA	Wal-Mart	Wal-Mart Co., Ltd.	Shenyang
	Germany	Linde	BOC Gases North Co, Ltd.	Fushun
	USA	Johnson Controls	Jinbei Johnson Controls Automot. Interior Co., Ltd.	Shenyang
	Germany	Metro	Metro Storage Management Co., Ltd.	Dalian

An impressive number of small and medium-sized European, American and Australian enterprises have also discovered Liaoning as a good location for their China operations. In 2008, about 40 percent of the 125 billion USD total foreign investment in 22,000 Liaoning enterprises was from countries outside of Asia. But the average volume of investment in Liaoning is higher than the China average: Liaoning ranked 8th among Chinese provinces in the number of foreign invested enterprises, but 5th in the volume of investment. Also, foreign invested enterprises accounted for nearly half of all exports of Liaoning in 2008.

Meet the Liaons

The people of Liaoning are young. With a median age of 34, they are three years younger than Americans and ten years younger than Germans or Japanese. Like the Scandinavians in Europe, they are taller than average, and good in basketball and fashion modeling.

Comparing with other people of China, Liaons are said to be more straightforward, open and even adventurous. Their nature can be traced back in history: many people from other provinces immigrated to Liaoning in the 19th Century. They were seeking a new future, just like many Europeans moved to a new world after the discovery of America.

When it comes to doing business, Liaons are often considered honest, reliable and down-to-earth. Rather than just maximizing profits, they accept transactions beneficial as a whole without harming either party.

A growing number of young Liaons speak English quite well, and most of them are happy to converse with foreigners. You will also find many members of the older generation who can speak Russian or Japanese. French, German, Spanish and Italian classes are becoming more popular at universities but are rare at secondary schools. The number of speakers is still very limited.