Business in Hong Kong & China

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Comment by Johnson Choi on September 25, 2010 at 5:00am

Hong Kong received record HIGH 3.46 million visitors in August, a 21.9% jump from a year ago http://www.hkchcc.org/hongkong-china.htm

Comment by Johnson Choi on September 24, 2010 at 5:56am

Wanted: 1,000 professors for Hong Kong universities at US$156,000 annual salary - If you factor in United States foreign earned income exclusion and selecting a State with no State income tax as your tax home - you need to earn more than US$250,000 in the United States to match the Hong Kong professor's salary. Not to mention you can get a live in maid to do all your cooking and house cleaning for US$500/month. See 9-26-2010 story at http://www.hkchcc.org/hongkong-china.htm or http://www.facebook.com/notes/johnson-choi/wanted-1000-professors-f...

Comment by Johnson Choi on September 23, 2010 at 6:29am

China will invest up to 24 trillion yuan (US$3.6 trillion) in urban infrastructure by 2020 with no tax increase http://www.hkchcc.org/hongkong-china.htm

Comment by Johnson Choi on September 22, 2010 at 12:52pm

Sept 22 2010 - Mr. Roger Garcia from San Francisco will be taking over as the Executive Director of the Hong Kong International Film Festival effective Oct 1 2010.

Mr. Bob Meyers has been supplying wine to Major film festivals in North America and Europe for more than 20 years is interested to sponsor events for Hawaii International Film Festival and Hong Kong International Film Festival.

We have a nice discussion in San Francisco over lunch today.

http://www.hkchcc.org/photo-album1.htm

Comment by Johnson Choi on September 22, 2010 at 2:18am

Hong Kong will spend US$3.87 billion on new venues to bid for 2023 Asian Game, expect to take a US$2 billion loss.

http://www.facebook.com/notes/johnson-choi/hong-kong-bid-for-asian-...

Comment by Johnson Choi on September 20, 2010 at 7:23am

What United States Commercial Service said about "Chengdu"?

Our office's mission is to assist American businesses enter and succeed in the Southwest China market (the provinces Yunnan, Guizhou and Tibet, as well as the Chongqing and Chengdu municipalities).

Our jurisdiction covers an area of 2,337,400 square kilometers (1,200,000 square kilometers of which is Tibet).
200 million people live in this region.
Chengdu, the capital of Sichuan Province, is the most important commercial center in Western China. This metropolis of 10.44 million lies 1,500 miles from China’s eastern seaboard. The city has a market reach of 200 million consumers and it is the distribution center for southwest China encompassing Sichuan, Yunnan and Guizhou Provinces, the Tibet Autonomous Region, and the Municipality of Chongqing. Sichuan Province boasts one of the most diversified industrial bases in the country and Chengdu is a key manufacturing center for the electronics, machinery, pharmaceuticals, chemicals, metallurgy and food processing industries. The IT industry has been designated as a key sector for growth in Sichuan Province. Sichuan is also the national headquarters for feed grain companies. In 2007, the city of Chengdu had a GDP of RMB 390.00 billion ($56.5 billion), a 12.1% increase over 2007.

In the aftermath of the devastating May 12, 2008 Wenchuan earthquake, , the Sichuan government has projected an investment of RMB 1.7 Trillion ( $248 Billion) for reconstruction for the next 2-5 years. The reconstruction will focus on sectors such as infrastructure, education, public health, energy and technology. Overall, the Wenchuan earthquake did not have a major impact on Chengdu’s business environment. Local and MNC businesses continue to operate normally, however some sectors such as tourism and commercial/residential real estate have been impacted. The government has placed a stronger emphasis on building the economic base in Chengdu and outlying areas, with an increased push for foreign investment into the region. As a result, several MNCs are considering additional expansion into Sichuan realizing already strong business fundamentals. Reconstruction will create additional opportunities for U.S. firms across a variety of best prospects.

Chongqing, the most recently established municipality directly under the Central Government since 1997, is the largest administrative municipality in China with a population of 32.4 million. Chongqing is strategically located in the upper reaches of the Yangzi River. According to current patterns of Chinese economic development, there are three economic regions: the eastern, western, and central belts. Chongqing has been identified as the connecting point between the eastern and western belts. Chongqing has received a great deal of financial and policy support from the Central Government, enabling its economy to grow rapidly and increasingly compete with Chengdu. Chongqing is famous for the scenic Three Gorges and the Three Gorges Reservoir. Once the construction of the Three Gorges Dam is competed, river navigation between Chongqing and Shanghai will become more reliable. Pillar industries in Chongqing are machine building, metallurgy, chemicals and pharmaceuticals. Since the early 1980’s, many companies in the national defense industry have shifted to manufacturing civilian products, playing an important role in the automobile and motorcycle industries in the city. With its strong heavy industry foundation, Chongqing is expected to become the automotive capital of western China. In 2007, Chongqing had a GDP of RMB 411.8 billion ($59.7 billion), a 15.6% increase over 2006. Southwest China’s economy has enjoyed relatively sustained growth in recent years and will continue to grow at 9 to 10% over the next few years.

Encouraged sectors for foreign investment include: infrastructure, agricultural projects, R&D, and modern services such as banking, insurance, securities, logistics and tourism.

U.S. Commercial Service - Chengdu
4 Lingshiguan Lu, Renmin Nanlu Section 4
Chengdu, Sichuan 610041, China
Tel: (86-28) 8558-3992/9642
Fax: (86-28) 8558-9221/3520
Email: Chengdu.Office.Box@trade.gov

Comment by Daniel Leuck on September 19, 2010 at 10:59pm

Wow - Those are pretty extreme expectations. Not many companies go from 0 to 200 in two years! That also disappointing news regarding the preferential tax rate, but I'm sure you will figure out how to make it work. With a density of smart people and a good idea (Ascribe), I'm sure you can find a winning formula.

BTW - I meant to write Xi'an (西安) rather than Chian in my original response.

Comment by Truman Leung on September 19, 2010 at 10:06pm

Thanks, Dan, for your encouraging comment! Everything on the blog post was collected "third hand" via the web. When I met people on the ground in Chengdu I was able to get a bit of "second hand" feedback from people who have lived there.

Here are some gotchas:

Preferential reduced taxes typically can only be actually awarded if you are a large multinational technology company, like Intel, which has large unit in Chengdu. Forget about it if you are a tiny startup. My friend said that he knew companies that fully qualified with all criteria, applied for the preferential tax rate but never got it.

One guy who lived in Chengdu for about 10 years commented sarcastically about the New Tianfu City (a new planned city next to the software park), saying that officials tout big new projects like that but it may never happen.

Also, someone said that software conferences are all fluff and very little actual knowledge transfer or quality networking occurs.

Regarding the incubation center ... the Chengdu High Tech Zone Innovation Service Center incubates about 600 companies, mostly software related. In 2006, they brought in 45 European software startups and have since been disappointed when those companies didn't grow as fast as they wanted and weren't interacting with local companies very much. They expect that a company starting with 5 employees should have 50 by the end of the first year and 200 by the end of the second. My friends met up with the incubator officials about perhaps getting office space in their incubation center. But after hearing the incubator's expectation, they felt it wasn't a fit for their startup. Probably not a good fit for mine either.

Nevertheless, I still think Chengdu is a good choice for doing a software business. The University of Electronic Science and Technology of China should be a good source of software talent. A graduate from there went on to start 168.com and is super successful.

Comment by Daniel Leuck on September 19, 2010 at 2:38pm

That is a fantastic post Truman. I've not seen that kind of density of easily digestible information about doing a tech startup in China on any other site.

re: the Chengdu incubator - Why not just go for it? If you haven't grown that much in two years then just move out and find a small regular commercial space. With a 15% preferential tax rate, you should be able to kick butt. In terms of connectivity, if your app lives on EC2, does super fast connectivity at your office really matter? I've run offshore operations in Russia and Argentina that didn't have super fast connectivity, and it worked out fine. The apps were hosted in the US or Japan, so all we required was reliable connectivity. It didn't have to be lightning fast.

re: Talent

I have two friends who are doing software development in neighboring Chian, and they are having a very easy time finding high quality programmers due to the high density of universities with good CS programs.

Comment by Zhien Wang on September 19, 2010 at 12:32pm

This sounds very interesting. My eyes and ears are wide open. :)

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