Though Jiujiang has a strong transportation network and industrial base, foreign investment has just started to take off in the city.Jiujiang, whose name means “nine rivers” in Chinese, is situated in northern Jiangxi in central China. To the south of this picturesque city lies the famous Lushan Mountain; to the east is Poyang Lake, China’s largest freshwater lake and a major tributary of the Yangzi River. As of 2010, Jiujiang had a population of 4.8 million, roughly 600,000 of whom lived in the city proper (see Jiujiang at a Glance).

As the only Yangzi port in Jiangxi, Jiujiang was an important military town for centuries. China’s Communist leaders gathered in Jiujiang to plot the Nanchang uprising against the ruling Nationalist party on August 1, 1927, which is regarded as the founding date of the People’s Liberation Army. Jiujiang was also an important commercial port and a center for tea and rice trading. Its cereals market remains an important national reference for rice prices.

Jiujiang stands out as one of the most attractive, ambitious, and vibrant port cities along the Yangzi. And with a strong local government presence, Jiujiang has the feel of a provincial capital, though Nanchang holds that position in Jiangxi.

Economy and investment

Jiujiang’s economy has taken off in recent years, in part because of increased foreign investment. Jiujiang’s gross domestic product for 2010 reached ¥103.2 billion ($15.7 billion), an increase of 14.3 percent year on year, surpassing the government’s annual target of ¥97 billion ($14.7 billion). According to the Statistical Bureau of Jiujiang, the average per capita disposable income for the first nine months of 2010 for urban dwellers hit ¥13,248 ($2,009), up 10.5 percent year on year, and the average per capita net income for rural dwellers reached ¥3,912 ($594), up 13.4 percent.

The city’s utilized foreign investment reached $665.4 million in 2010, roughly one-third greater than in the same period of 2009. Jiujiang’s exports nearly tripled to $843 million in the first nine months of 2010. Leading multinational corporations (MNCs) with a presence in the city include the United States’ Cabot Corp., Japan’s Itochu Corp., Suzuki Motor Corp., and Toshiba Corp., and France’s Total SA. Significant domestic businesses include Tsinghua Tongfang Co., Ltd., China Petroleum and Chemical Corp. (Sinopec), and China Minmetals Corp.

Despite Jiujiang’s extensive transport network and traditional industrial base, local investment officials say that few MNCs have invested in the city in recent years, partly because of its low international profile.

Diversified industrial base

Jiujiang has a diversified industrial base, with light industry, mining, petrochemicals, shipbuilding, and textiles as its major sectors. The surrounding area has significant antimony, copper, fluorite, gold, and tin reserves. China Minmetals, one of the largest state-owned enterprises in Jiujiang, has a white tungsten processing base. Tourism is also important. The famous Lushan Mountain Resort is just over an hour away by car.

Energy

Jiangxi is famous for its rich uranium resources, which account for one-third of China’s total uranium deposits. Senior officials from the Jiangxi Provincial Development and Reform Commission have confirmed that construction of the ¥105 billion ($15.9 billion) Jiujiang Pengze Nuclear Power Plant will start in the first half of 2011. Situated about 80 km from downtown Jiujiang, Pengze will be the first of six nuclear plants that the government plans to build across the province.

Jiujiang receives its natural gas through pipes from Xinjiang and Sichuan, and the city has three wind power farms near Poyang Lake. Coal-fired power plants are still the dominant source of electricity, however. In 2010 the city imported 50 million tons of coal from Henan, Shaanxi, Shanxi, and other provinces, and the figure is expected to rise to 80 million tons by the end of 2015. In anticipation of a rapid increase in industrial demand for energy and to better serve coal-fired power plants in the region, the local government approved a plan to build a coal-mixing center at the port with an annual handling capacity of 20 million tons, according to senior managers at Shanghai International Port Group Jiujiang Port Service Co., Ltd.

Chemicals

Most of Jiujiang’s recent investment has been in the chemical and petrochemical sectors. China Bluestar International Chemical Co., Ltd. acquired Xinghuo Organosilicon Plant in 1996. (Organosilicon compounds are used in certain types of paint, plastics, and electrical insulation.) In 2007, the new organosilicon plant went into full operation, doubling its annual capacity to 200,000 tons. Two years later, Bluestar started an ¥8 billion ($1.2 billion) upgrading and expansion project that will further increase its annual organosilicon capacity to 700,000 tons, making Xinghuo the world’s largest organo-silicon production base.

Bluestar also has a joint venture (JV) plant with Cabot, located in Xinghuo Industrial Park in Yongxiu County. The plant, which started operations in 2006, makes fumed silica, an advanced chemical product used in the auto and construction sectors. In January 2010, Bluestar and Cabot agreed to expand the JV’s production and triple annual capacity from 5,000 tons to 15,000 tons by 2011.

Situated in the eastern suburbs of the city, Sinopec Jiujiang Co. is the only large-scale petrochemicals enterprise in Jiangxi. It includes a refinery, fertilizer and chemical plants, and new coking and hydrofining installations. The fertilizer plants are among the most technologically advanced in China. The company processed 6.5 million tons of crude oil in 2009. In December 2009, the Jiangxi provincial government and Sinopec agreed to upgrade and expand the plant’s oil processing capacity from 5 million tons to 8-10 million tons in three to five years.

Autos

Suzuki and Chinese minibus maker Jiangxi Changhe Automobile LLC moved their JV’s headquarters from Jingdezhen, Jiangxi, to Jiujiang in January 2009. Changhe has a controlling stake, while Suzuki holds 49 percent of the $312 million JV. Jiangxi Changhe Suzuki Automobile Co., Ltd. had already been operating an engine plant in Jiujiang since 2005. The plant makes fuel-efficient 1.4-liter engines, developed by Suzuki, for the “Wagon R Wide” car for the China market. According to company officials, production during the first phase of the expanded venture is 75,000 units a year, and the JV expects capacity to reach 300,000 units by 2012. In December 2008, as part of its efforts to improve efficiency, the JV also moved production of its Freedom-brand mini trucks from Hefei, Anhui, to Jiujiang. Preparation work is also underway to assemble a new Suzuki model called “Splash.”

Consumer electronics

Though Jiujiang has attracted few MNCs in general, last year it saw a boost in foreign investment. Canon Inc.’s Taiwan operation, the world’s largest digital camera original equipment manufacturer, invested $150 million in a major production facility in the Jiujiang Export Processing Zone. The facility manufactures cameras for Casio Computer Co., Ltd., Olympus Corp., and Sony Corp.

Leading investment zones

Jiujiang has 13 industrial parks and zones, which are headed by the Jiujiang Economic and Technological Development Zone (ETDZ), the largest of Jiujiang’s development zones, and Xinghuo Industrial Park.

Jiujiang ETDZ, founded in 1992 and upgraded to national-level status in March 2010, is located in the southwest suburbs of the city, about 9 km from the downtown area, on the south bank of the Yangzi and close to the port. The 150 km2 ETDZ has four pillar industries: auto and auto spare parts, led by Changhe Suzuki; new materials, led by Jushi Group Co., Ltd., Asia’s top fiberglass producer; new energy, represented by Jiangxi Sornid Hi-Tech Co., Ltd., one of China’s major multi-crystalline silicon producers; and electronics, led by Canon.

The national Jiujiang Export Processing Zone, the only one of its kind in Jiangxi, is located in the ETDZ. As of November 2010, the zone was home to 61 enterprises, including China’s leading juice producer, China Huiyuan Juice Group, Ltd.

Established in 2000, Xinghuo Industrial Park mainly engages in the manufacture and research and development of organosilicon products. Currently, 2 km2 of the park are being used out of a planned total of 10 km2. The park, which aims to become a world-class manufacturing base for silicon products, hosts the Xinghuo Organosilicon Plant.

The Jiangxi provincial government aims to establish a national production center for mobile phones in Gongqingcheng (Youth City), a suburb of Jiujiang on the banks of Poyang Lake. According to media reports, a recent industrial conference hosted by the provincial government attracted 10 domestic projects worth a total contractual value of ¥2.8 billion ($425 million). More than 50 mobile phone manufacturers from Shenzhen, Guangdong, immediately set out on a fact-finding mission and several new mobile phone projects are being negotiated as a result of the conference.

Transport network

Jiujiang is to the Beijing-Kowloon Railway what Wuhan, Hubei, is to the Beijing-Guangzhou Railway: the half-way point on one of China’s most important north-south trunklines. An intercity express rail link between Jiujiang and Nanchang opened in September 2010, with trains on the 135 km line running at a top speed of 180 km per hour. Jiujiang’s rail network also extends to Ma’anshan, Anhui.

Linking Guangdong to Gansu, the Beijing-Zhuhai and Fuzhou-Lanzhou national highways pass through Jiujiang, and the city is connected by expressway to Jingdezhen and Nanchang. The Daqing-Guangzhou (linking Heilongjiang to Guangdong) and Hangzhou-Ruili (linking Zhejiang to Yunnan) expressways, both of which are under construction, will also pass through the city.

Construction began in October 2009 on a new Yangzi River bridge. The six-lane bridge, which will be completed in three years, will connect Jiujiang with Huangmei County in Hubei.

Jiujiang airport is only 10 km from the popular tourist attraction of Lushan Mountain. Though the airport was closed for about half of its first 10 years after opening because of low traffic levels, it reopened in 2006 and offers daily flights to Beijing and Shanghai. The nearest alternative airport is two hours away in Nanchang, which serves many more cities, including Hong Kong.

Jiangxi’s vast network of inland waterways includes 56 ports of various sizes, among which Jiujiang stands out as the most important. Situated at the point where the Beijing-Jiujiang Railway meets the Yangzi, Jiujiang is one of five national hub ports along the river and one of China’s 13 main ports for coal transhipment. Shipping lines—including AP Moller-Maersk A/S; China Cosco Holdings Co. Ltd.; China Shipping (Group) Co.; MSC Mediterranean Shipping Co. SA; Sinokor Merchant Marine (China) Co., Ltd.; and Sinotrans, Ltd.—offer regular container services from Jiujiang port to destinations such as Hong Kong, Japan, and countries in Southeast Asia. In recent years, an increasing number of domestic and foreign shipping lines have set up offices in Jiujiang, which hosts 20 freight forwarders and shipping agents in the city. The port operates more than 20 international routes.

Jiujiang’s rapid growth attracted the attention of Shanghai International Port (Group) Co., Ltd. (SIPG), by far the largest investor in Yangzi ports. SIPG injected ¥550 million ($83 million) in 2008 for a 92 percent equity stake in the Jiujiang port, with the remaining shares held by the Jiujiang State-Owned Assets Supervision and Administration Commission. Today, SIPG Jiujiang Port Group handles about one-third of the city’s entire cargo volume; the remainder is handled by small operators and privately owned terminals.

Human resources

Jiujiang has a general shortage of workers in the city, but the local government says it helps investors address this problem by recruiting workers in and outside the city. Jiujiang University, the city’s main university, has an enrollment of more than 30,000 full-time students, according to the university. Though Jiujiang is not known for its educational institutions, Nanchang, which is less than an hour away by train, has several universities and colleges.

Jiujiang’s future

Jiujiang is trying to attract companies from the auto and auto parts, electronics, new-energy, and new-materials sectors. In addition, the city offers opportunities to invest in the tourism sector. For example, the city has no international five-star hotels.

Foreign-invested enterprises praise the city’s strong local government support for foreign companies, relatively low levels of pollution, and pleasant surroundings of Jiujiang. The city still lacks a critical mass of foreign-invested enterprises, so expatriate family life is limited, however. Furthermore, local government officials admit that the city lacks a clear strategy on how to balance attracting industry and protecting the environment. Each of Jiujiang’s districts, for example, pursues its own industrial plans, which may not be aligned with the municipal government’s desire to preserve the city’s natural beauty and historical heritage.

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Case Study: Sateri’s Jiujiang Fiber Mill

Sateri International (Singapore) Pte. Ltd.’s fiber mill in Jiujiang, Jiangxi, is striving to improve the reliability of its supply chains in this third-tier city. Sateri, a subsidiary of Singapore’s Royal Golden Pte. Ltd., operates a wholly foreign-owned viscose fiber mill in Jiujiang. With a production capacity of more than 130,000 tons a year, the mill supplies customers in the textile and non-woven hygiene products industries. Viscose fibers are used in home and hospital products, such as baby wipes and surgical facial masks.

Sateri decided to locate its China viscose fiber mill operations in Jiujiang because of the city’s strong transportation links. The plant is close to the Yangzi River and about 20 km from the city’s downtown.

The fiber mill imports dissolving pulp from Brazil via Shanghai. Sateri sources other raw materials, including chemicals such as sulfuric acid, in China. For example, the mill sources sodium hydroxide from Yichang, Hubei. Sateri sells its finished products domestically in Guangdong, Hubei, Jiangsu, Shandong, and Zhejiang; its major export markets are Europe and Southeast Asia.

Sateri has a private terminal on Poyang Lake, the largest freshwater lake in China and a major Yangzi tributary. The company plans to expand the terminal’s capacity to handle dangerous goods, which will allow Sateri to expand and export more goods from Jiujiang.

The fiber mill imports roughly 110,000 tons of coal annually to use in the production process. Most of the coal comes from Sichuan but, according to local ship operators, the river journey can take up to 14 days because of fluctuating water levels downstream from the Three Gorges Dam. The company aims to find new sources of quality coal that can be delivered more reliably. Sateri purchases coal from Shanxi from traders in the port city of Qinhuangdao, Hebei, and has it delivered to the plant via the sea and then the Yangzi.

Though Sateri remains happy with its original decision to locate in Jiujiang because of its good transport links, the company devotes considerable resources to developing its logistical infrastructure and improving its supply chains.

—David Lammie
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[author] David Lammie ([email protected]) is a director of Yangtze Business Services, Ltd. Jiujiang is one of 24 major port cities featured in its publication Yangtze Transport: Accessing China’s Interior. [/author]

Posted by Christina Nelson