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People's Daily Online>>China Business

Chengdu seeks to boost consumption

By Cong Mu (Global Times)

08:11, April 20, 2012

Global investors and financial professionals gathered yesterday in Chengdu, capital of Sichuan Province, to discuss local consumption-driven opportunities, despite difficulties posed by less developed infrastructure.

"We like the Chinese companies that focus on China's domestic demand, so that we can introduce advanced overseas expertise into such companies and turn them into ones that have internationalized management and operations," Mao Mao, senior vice president at Lunar Capital Management, told the Global Times on the sidelines of Chengdu Global Investment Summit yesterday.

"This is what China really needs now for economic transition. We will build our own (Chinese) quality companies," Mao said.

The Shanghai-based firm, a private equity firm focused on mid-western China, paid $30 million last month for a 60 percent stake in walnut powder maker Sichuan Zhiqiang Food Co, Mao said.

As well as a lack of high-caliber managers, forum participants said that the western region, and Chengdu in particular, needs to overcome multiple development hurdles, such as accounting and legal practices that are not in line with international standards, a lack of regulation transparency and corporate governance issues.

Meanwhile, "there are still many constraints on consumption, such as inadequate pensions, the biggest problem in China, as well as the problems of paying for healthcare and education. They are a great concern for every family in the country," Lei Wei, Chengdu-based senior investment officer at International Finance Corp, a private investment arm of the World Bank Group, told the forum.

Consumption makes up a major part of Chengdu's GDP. Total consumer goods retail sales in Chengdu reached 286 billion yuan ($45.4 billion) in 2011, or 42 percent of the local GDP.

The year-on-year consumption growth rate in Chengdu was 18.4 percent last year, whereas in Beijing it was 10.8 percent, according to the local statistics bureau.

Social security issues need to be solved by the local governments before they can boost consumption, Lei said. He further noted that "unfair income distribution" also makes it harder to increase people's buying power, citing the wealth-gap lessons from Latin America.

Chengdu will create more well-paid jobs by attracting more advanced manufacturing companies to the city, Chen Fu, vice director at Chengdu Investment Promotion Commission under the city government, told the Global Times.

The city produced goods worth 104 billion yuan for export in 2011, up 122 percent year-on-year, many of which were made for companies like Hon Hai Precision Industry Co, Taiwan-based manufacturer of iPads and iPhones, Chen said.

"Two-thirds of the iPads are made in Chengdu," Chen told the investors at the forum.


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