Guangzhou Baiyun Development Forum: Promotion of

UNCLAS SECTION 01 OF 02 GUANGZHOU 000088

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ECON TBIO KTDB EAIR EIND EINV CH
SUBJECT: Guangzhou Baiyun Development Forum: Promotion of
Bio-tech, Real Estate, and Logistics Sectors


1. SUMMARY: Guangzhou's Baiyun District is stepping up
efforts to develop its bio-technology, real estate, and
logistics sectors. Officials will focus on developing the
industrial zone surrounding the new Baiyun International
Airport, strengthening the bio-medical and bio-engineering
sectors, and promoting Baiyun's relatively clean
environment to attract residential real estate development
projects. While Baiyun enjoys a relative advantage over
other areas in the biotechnology and real estate sectors,
competition from Huadu and Panyu Districts in the logistics
sector will still be fierce. Opportunities for U.S.
businesses should remain strong despite Chinese efforts to
cool down the economy by restricting investment. END
SUMMARY.

Bio-tech Industry Development
--------------


2. Baiyun District plans to build a "Golden Triangle of
Biological Science" with biomedicine, biological
agriculture, and biological services as the respective
points of the triangle. The Liuxi Bay Baiyun Biological
Port will focus on bio-medicine, biological agriculture,
and biological research. Manufacturing and marketing will
also be done at Liuxi. Beijing Bioway Biotech Group Co.
Ltd. is the first company to set up operatons there.
Guangzhou Baiyun Biological Medical Health Industrial Base
will focus on bio-medical manufacturing. Guangzhou
Pharmaceutical Co. Ltd, Baiyunshan Corporation, and over 30
other enterprises will set up operations there, making it
the single largest medicine manufacturing center in China
in terms of output. Helong Biological Service Area will be
the conference site of the World Biological Economy Forum,
holding exhibitions and fairs on bio-tech products.


3. In addition to the Golden Triangle, Baiyun will set up
the Guangzhou 863 Industrialization Promotion Center,
integrating a high-tech enterprise incubator, an industrial
service platform, and a popular science media center. It
will be one of only five such centers in China. Currently,
57 enterprises with a registered capital of RMB 480 million
(USD 61.5 million) have been established under this plan.
(Note: the State Hi-tech Research Development Plan, or "863
Plan," for the 11th Five-Year period has spawned projects
dealing with biology, aerospace, information technology,
lasers, automation, energy resources, and new materials
across China. End Note).


4. Guangzhou Sinobioway Co. Ltd., the largest bio-
engineering group in China, plans to set up a bio-
engineering incubator in Baiyun. According to its
president, the firm's BIOINTEL system (an integrated
software system developed by Beijing Bioway Biotech Group
Co. Ltd., combining language and logic processors, a search
engine, and databases) offers a comprehensive service on
par with software from Intel, IBM, Microsoft, Oracle, and
Google.

Real Estate Development
--------------


5. Along with Baiyun Mountain and Maofeng Mountain, Baiyun
District is called "the lung and oxygen bar of Guangzhou."
Baiyun authorities are promoting its relatively clean
environment to attract residential real estate development
projects. The biggest man-made lake in Guangzhou (to be
named Baiyun Lake) will be built as a tourist site.
Despite Ministry of Land Resources' directives in 2003 and
2006 to cut back on the development of high-end residential
projects, Baiyun District plans to focus on building garden
villas and apartments to attract wealthy residents.


6. In December 2006, the average price for residential
housing in Baiyun District was RMB 6,965 (USD 893) per
square meter. The average price in Guangzhou city was RMB
7,435 (USD 953) per square meter. While cheaper to
purchase, some expats complain that Baiyun is too far of a
commute from the heart of Guangzhou.

Logistics Development
--------------


7. Baiyun District has introduced a "two circles and three
belts" plan. "Two circles" refers to developing airport
industrial logistics and comprehensive logistics services;
"three belts" refers to developing rail, road, and air
transportation logistics services.


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8. A representative from the Baiyun Airport Management
Group said that in anticipation of continued passenger and
cargo business growth, the Group plans to improve
infrastructure in the nearby industrial zone. It will also
accelerate cooperation with customs and other inspection
agencies to improve efficiency. He added that China
Eastern Airlines will establish an operations center at the
airport and increase the number of its flights through
Guangzhou, while China Southern Airlines will increase the
number of its cargo flights early this year.

Logistics Development in Guangzhou
--------------


9. Baiyun's logistics development dovetails with the
Guangzhou Municipal Government's plans for the next 5 years.
Guangzhou plans to invest RMB 50 billion (USD 6.4 billion)
to build an expressway network consisting of four ring
roads and 16 highways leading to surrounding cities. Over
RMB 18 billion (USD 2.3 billion) will be used for Phase II
of Baiyun International Airport's development, to include a
third runway, a second terminal, and facilities for FedEx's
Asian-Pacific Transport Hub. Another RMB 26 billion (USD
3.3 billion) will be spent on the construction of channels
in Guangzhou Harbor and of Nansha Harbor Phase III.


10. Guangzhou authorities are touting their "3+5" plan to
build international and regional logistics zones. The
three international logistics zones will be centered on
Baiyun International Airport, Nansha Harbor, and Huangpu's
port and rail facilities. The following five regional
logistics zones will be developed:

--Baiyun Logistics Zone to focus on cargo, purchasing, and
delivery.
--Huadu Logistics Zone to focus on road and rail
transportation.
--Fangcun Logistics Zone to focus on wholesale companies.
--Panyu Logistics Zone to focus on road transportation.
--Zengcheng Logistics Zone to serve customers in Dongguan
and East Guangdong.

Growth and Investment in Baiyun District
--------------


11. Baiyun District's GDP reached RMB 50 billion (USD 6.4
billion) in 2005, the fourth highest in Guangzhou. In 2006,
GDP is expected to reach RMB 57.5 billion (USD 7.37
billion),up 14%. In the first 10 months of 2006, Baiyun
District attracted USD 157 million in contracted foreign
investment. Multinational companies such as British home
improvement chain B&Q and UPS have established a presence
there.

Comment
--------------


12. Baiyun's biomedical and real estate sectors should see
robust growth in the near-term. However, Baiyun faces
intense competition from the neighboring districts of Huadu
and Panyu, currently the two main logistics centers in
Guangzhou. Huadu and Panyu have better infrastructure and
also benefit from their proximity to the international
airport, rail lines, and ports. Baiyun's development is a
key element in Guangzhou's plans to expand growth in its
surrounding districts. However, the competition for a
piece of Guangzhou's development pie among the subordinate
district governments is representative of the situation
among cities in a province and among provinces in China.

GOLDBERG