11.2007

SHANDONG PROVINCE

Major Economic Indicators

Shandong lies in the Bohai Bay economic region. It spans a total area of 156,700 sq. km. Total population stood at 93.1 million in 2006. Jinan is the provincial capital of Shandong.

Major cities include Jinan, Qingdao, Yantai, Zibo, Weihai, Weifang, Dongying, Rizhao which are collectively known as the cities cluster in the Shandong peninsula. The cities cluster represented 66% of Shandong's GDP in 2006. Qingdao and Yantai are two of the largest ports in China. The 2008 Beijing Olympic water sport projects will be held in Qingdao.

Shandong's private sector has developed very quickly. The total number of private enterprises reached 363 thousand in 2006, compared to 175 thousand in 2002.

Industries

Shandong is endowed with agricultural and marine resources. As a base of agricultural and marine production, Shandong has developed strong food manufacturing and food processing industries. Yantai is an especially important export base of agricultural products, focusing on apples, peanuts and vegetables. The long coastline of Shandong has also endowed it with strong potential in developing industries such as offshore petroleum, seaside tourism and seawater utilization.

Composition of GDP (%)

Source: Shandong Statistical Yearbook, 2007

Due to the rich natural resources, particularly oil (it has the second largest oil field in China--Shengli Oil Field) and coal, Shandong's excavating and energy industry is very strong. Industries are mainly located in Qingdao, Yantai, Weifang, Jinan and Weihai.

Output Share of Leading Industry Groups (2006)

Notes:All state-owned enterprises and other forms with annual sales over RMB 5 million
Source: Shandong Statistical Yearbook 2007

Shandong's industrial output has been dominated by heavy industry. Nonetheless, Shandong is also a cradle for many national giants in light industry. Shandong has successfully promoted many famous brands such as Haier Electronics, Hisense Electronics, Tsingdao Beer, China Qingqi Motorcycles, Kongfujia Liquor and Weifang Kite etc. Now 93 Shandong products have been awarded "Chinese Famous Brand Names", after only Zhejiang and Guangdong.

Share of Total Industry Output Value (%)

Source: Shandong Statistical Yearbook 2007

As a result of government policy, hi-tech industries grew rapidly by 32.5% in terms of value-added to RMB261 billion in 2006, accounting for 22.7% of the province's total value-added industrial output. Shandong government will continue to give priority to the development of computers, telecommunications, and software applicable to information networking and network telecommunications.

The added value of the services sector was RMB718.7 billion in 2006, an increase of 14.5% from 2005. In this sector, wholesale trade and retail trade was the biggest sector, which had an output value of 161.2 billion (+13.7%). The education sector enjoyed the fastest growth of 21.7% to RMB42.5 billion.

Tourism

Shandong is a popular tourist spot, going for the charming and romantic beachscape or the beautiful buildings with typical European style. In 2006, Shandong attracted 168 million (+19%) domestic with a revenue of RMB121 billion (+24.6%). Overseas tourists reached 1.9 million (+24.5%) generating a revenue of US$1,014 million (+30%). Tourists from Hong Kong and Macao grew by 26.3% to 203 thousand.

Foreign trade

Japan and Korea were Shandong's major trading partners owing to geographical proximity, followed by the US. Major exports included machinery, electronics, chemicals, textiles, garments, fish & other aquatic products, articles of leather, etc.

South Korea was the largest import source, followed by the US and Japan. Major imports included steel, machinery, plastics, raw hides and skins, man-made fibres, chemicals, other raw materials, computers, complete sets of equipment and technology.

Hong Kong was Shandong's 4th biggest trading partner after Korea, Japan and the US. In 2006, Shandong exported US$2,582 million (+16.8%) worth of goods to Hong Kong, and imports from Hong Kong amounted to US$536 million (+5.1%).

Foreign Investment

FDI in Shandong are mainly in the manufacturing sector like textiles, raw chemical materials and chemical products, medical and pharmaceutical products, electrical equipment and machinery, ordinary machinery and equipment for special purposes. Real estate is also important, accounting for 51.1% of the utilized FDI in the services sector in 2006.

FDI in Shandong

Source: Shandong Statistical Yearbook, 2007

Utilized FDI by Sector (2006)

Source: Shandong Statistical Yearbook, 2006

Hong Kong is the second largest source of FDI after South Korea. Qingdao, Yantai and Weihai are the primary destinations of overseas investments. Other major foreign investors come from Japan, the US, Taiwan.

FDI from Hong Kong in Shandong

Source: Shandong Statistical Yearbook 2006, 2007

Among the world's largest 500 enterprises, 116 have already established presence in Shandong by the end of 2006. Multinational companies such as the German Metro, Siemens, the French Carrefour, Daewoo, LG and Samsung of South Korea, Toyota of Japan, Lucent, Kodak and Pepsi Cola of the US have already set up their subsidiaries in Shandong.

There are five export processing zones in Shangdon -- Qingdao, Jinan, Weihai, Yantai and Weifang. Export processing zones are designated areas administered by the Customs. Goods moving in and out of the zones are regarded as imports and exports. Enterprises involving in export processing, storage and transportation are allowed in the zones.

Consumer Market

Shandong is one of the largest consumer markets among all mainland provinces and municipalities. Retail sales of consumer goods increased by 16.3% to RMB712.3 billion in 2006, accounting for 9.3% of the national total. Major commercial centres are located in Jinan, Qingdao, Yantai, and Weifang. In 2006, annual per capita disposal income of urban households grew by 13.5% to RMB12,192.

The landscape of retail distribution in Shandong is changing rapidly in recent years. While the importance of traditional department stores has declined, various forms of modern operation such as supermarkets, ware-house type markets, chain stores, and convenience stores are prolific.

Composition of Per Capita Expenditure of Urban Household (%)

Source: Shandong Statistical Yearbook, 2007

Major department stores and shopping centers in Shandong include Shandong Yinzuo Shopping Center, Zibo Department Store Building, Qingdao Liqun Group Co. Ltd., Jinan Hualian, Weihai Department Store and Yantai Zhenhua Department Store, etc.

In recent years, many foreign investors have set up joint venture retail outlets in Shandong's major cities such as Jinan, Qingdao, Weihai and Yantai. Foreign department stores/supermarkets in Shandong include Jusco, Carrefour and Price Smart.

Economic Indicators of Major Cities (2006)