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Viewing report
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Kunshan Export Processing Zone
China Knowledge Press, June 2011, Pages: 25
Kunshan Export Processing Zone (Kunshan EPZ) was rated “AA” by China Knowledge. Established in 2000, has an area of 10 sq km and was the first state-level export processing zone to start operations in China. Industrial parks rated AA are highly attractive and are highly recommended. However, in comparison with industrial parks given the AAA rating, these industrial parks still lag behind in some areas. The most typical disadvantage is the smaller economic size as reflected in the GDP or FDI, high investment costs and limited land resources. Together with AAA-rated industrial parks, these industrial parks are considered first-tier industrial parks. There are 24 with “AA” rating among 254 national or municipal level industrial parks rated by China Knowledge since 2003.
From 2007, Kunshan Export Processing Zone has been developing into Kunshan Free Trade Zone (Kunshan FTZ). In 2010, the foreign trade value of Kunshan FTZ exceeded US$53.4 billion and accounted for 65% of Kunshan’s total. Its export value hit US$37.1 billion, accounting for 69.5% of Kunshan’s total. The major industries are electronic information, optical semiconductors, office machinery and auto parts manufacturing. In 2008, enterprises in the zone produced 37.9 million laptops and 14.2 million digital cameras, contributing over one-fourth and one tenth of the world’s total output, respectively. Meanwhile, the zone’s combined output of mobile phones and global positioning systems surpassed 10 million. The Shanghai-Nanjing Highway, which connects Kunshan and Shanghai, is called the “Information Technology Highway” in China.
There are 113 foreign-funded firms in the zone. Total foreign investment in the zone reached US$1.95 billion by the end of 2008. Several Taiwan-based information technology manufacturers including Mitac, CLEVO, Compal, Altek Corp, Optoma and Makita have set up production lines in the zone. Altek, one of the four major digital camera makers in Taiwan, has invested US$36 million in Kunshan for a cell phone production line and 12 SMT assembly lines. Compal, the world’s second-largest laptop OEM firm, has invested a total of US$88.5 million in Kunshan to produce PDAs, laptops, DMCs and mobile phones. To facilitate exports, the zone launched a pilot program for bonded logistics with the approval of the State Council. By the end of 2010, it had attracted 18 logistics enterprises, including U.S.-based AMB, the second-largest logistics property developer in the world. It plans to build a 20,000 sq m warehouse in Kunshan FTZ.
Last year, Kunshan’s GDP amounted to RMB 210 billion, up 14.2% year-on-year. The GDP per capita reached RMB 144,,500 in 2010. The industrial output in Kunshan has surpassed RMB 700 billion, a stable increase of 20.6% year-on-year. The foreign-funded enterprises play an important role in the city’s economy, which generated RMB 623.7 billion industrial output in 2010, accounting for 89.1% of the city’s total. After years of development, Kunshan has established itself as one of the world’s most important IT industrial bases. In 2010, the enterprises there produced 70.96 million laptops and 16.5 million digital cameras, up 17% and 5.6% respectively. The industrial output from its high-tech enterprises amounted to RMB 248.7 billion, accounting for over 30.7% of the city’s total.
Situated within half an hour of Shanghai Economic circle, the city benefits from its proximity to Shanghai. Kunshan is often called the tenth district of Shanghai as the fast development of the city is largely dependent on Shanghai. Kunshan is an export-orientated economy where non-state-owned and controlled businesses account for 97% of the city’s economy.
Due to its small population of 1.7 million and increasing labor and operational costs above national average, the zone is seeing a shift of interests and existing manufacturers to less costly cities in the Central and Western regions.
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