Chongqing became China’s fourth municipality in 1997, after Beijing, Shanghai and Tianjin. Yet this mountain city of more than 33 million remained relatively unknown until fallen ex-mayor Bo Xilai put Chongqing on the world map. In reality, the inland mega-city is really strategically poised for greatness since its wartime capital days during the Anti-Japanese Resistance. Geographically, Chongqing is well placed at the centre of the upper Yangtze economic belt – a gateway to the untapped potentials of the vast Western interior. A key transition point bridging the western regions with the developed east coast, Chongqing is the starting point in China’s Go West policy, and is positioned as a regional financial, logistics and manufacturing hub poised to be the engine for growth in the lesser-developed Western China.

Photo: britchamswchina.org

Doing Business in China? Why Chongqing? 

Newly conferred with municipality status, Chongqing’s positioning the gateway to the west was officially cemented and her fate as the next business destination inadvertently sealed. Unlike the other municipal counterparts, Chongqing differs substantially in size and structure, being vastly larger in size and rural in composition. Just slightly over half of Chongqing’s total population is urban, in contrast with Shanghai’s 89%; significant room for further business development.

Twelve times the size of Shanghai, land in Chongqing is abundant while costs have yet to catch up with coastal cities. Policies favor rural-urban migration, providing a low-cost labor base. Foreign companies previously set up in places like Shanghai have made Chongqing their China base, attracted by lower land and labor costs. The market within Chongqing also holds huge potential as development brings rising affluence.

Location, location, location

Strategically located at midpoint of the Yangtze, which spans much of China, Chongqing was an ancient inland trading hub. In modern times, rail, road and air transportation have developed by leaps and bounds. This is constantly being upgraded with another 1,000 km of highway to be built by 2015. A third airport terminal for Jiangbei Airport is in the works and a runway planned in Wushan County. Outside of China, a 6,200 mile rail cargo line right up to Belgium’s Antwerp allows freight to arrive in Europe in just 15 days, cutting through the Xinjiang Uygur Autonomous region, Kazakhstan, Russia and Poland.

Favored Industries

Chongqing is one of the oldest industrial bases of China, harking back to the wartime capital days churning out ammunition. It later became a significant player in the automobile, military and metallurgy industries. In fact, Chongqing is still a major player in the manufacture of motorcycles and its related parts. It was also a heavyweight in automobile manufacture, becoming Ford’s third manufacturing base on the mainland.

In recent years, the municipal government has been moving to reduce reliance on heavy industry, making significant inroads into the electronic sector. Today, one in four lapstops in the world is made in Chongqing, since HP set up a manufacturing base in 1999. Others like Acer and Asus have followed suit. Other technological heavyweights include the Foxconn Technology Group, Quanta Corporation and Inventec Corporation.

Within the Chongqing city proper, the Liangjiang New Area and the Chongqing New North Zone are purpose-built technology cradles, with the latter offering policies favoring investor. Up-and-coming business parks in surrounding counties like the Yongchuan’s Software Park and Xiyong’s technology park may be the next places to watch.

Other industries favored by the Chongqing government include automobile, electronics, energy and pharmaceuticals. Expect ripple effects to spread to supporting industries such as logistics and other B2B services. Slated as the financial hub of the upper reaches of the Yangtze, the financial sector is expected to receive substantial governmental support.

Procedure for set up in Chongqing

The procedure for setup in Chongqing may be considered comprehensive. But the number of steps involved foreshadow that delays can be expected every step of the way. To be fair, the Chongqing government has shown a certain amount of inventiveness in attracting investment into Chongqing through innovative policies even in finance and cloud computing sectors which are notoriously difficult to regulate.

Here’s a run-down of the steps for business set-up in Chongqing and the associated costs from www.doingbusiness.org.

Procedure	Associated Costs
Obtain notice of Pre-Approval of the Company Name	No cost
Open a preliminary bank account, deposit funds in the account and obtain the certificate of deposit	20.00 RMB
Obtain capital verification report from an auditing firm	500.00 RMB (0.2% of registered capital, no less than 500 RMB)
Obtain registration certification "Business License of Enterprise Legal Person" from local Administration of Industry and Commerce (AIC)	97.82 RMB (Registration fee: 0.08% of registered capital; copy of Business License: 10 RMB)
Obtain approval from the police department to make a company seal	No cost
Make a company seal	200.00 RMB
Obtain the Organization Code Certificate issued by the Quality and Technology Supervision Bureau	148.00 RMB
Register for national tax	20.00 RMB
Register for local tax	20.00 RMB
Open a bank account for the company and transfer registered capital to the account	No cost
Apply for the authorization to print or purchase financial invoices	No cost
Purchase invoices	40.00 RMB (0.7-1.1 RMB per set of invoices)
File for recruitment registration with local Career Service Center	No cost
Register with Social Welfare Insurance Center	No cost

Other measures implemented to make Chongqing more business-friendly to foreigners include setting up a one-stop centre for business set-up and a complaint centre. For locals, an app for small business set-up has been developed.

Cultural considerations and other potential pitfalls

At the confluence of the Yangtze and Jialing Rivers, Chongqing was an important port where traders and merchants congregated in ancient China. As such, the tendency for the locals towards brash and outspoken behavior was fomented, helped along by Chongqing’s extreme summer temperatures.

Foreigners relocating from more the more etiquette-conscious coastal areas may be taken aback at locals or business settings that appear less courteous. But over time, they may learn to appreciate the directness and fervor.

The flip side of rapid development and urbanization comes at a price and Chongqing is not spared. Like other fast-developing areas, pollution, congestion against a constant backdrop of construction is a reality here. 

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Keywords: Chongqing Business Doing Business in Chongqing