China Business

Chongqing as Next Big Thing

Chongqing lawyers

Got an email the other day on Chongqing that went as follows:

I’m a Long-time reader of your blog from Chongqing. Hope all has been well with you.

First, I’m not sure how this could work into a post, or whether it is simply of interest, but there has been fascinating political and cultural developments here in Chongqing over the last year, mostly due to the entrance of new(ish) general secretary Bo Xilai. He has made headway into cleaning up the city’s notorious controlling mafia (possibly an un-spoken reason MNCs had historically chosen Chengdu over Chongqing for their base in western China???), pushed to clean up mafia-related and property-related corruption within the city government (the deputy director of the city’s PSB was just arrested), and has made a cultural impact through his push for “5 Chongqings” (Forested Chongqing, Healthy Chongqing, Smooth Transportation Chongqing, Safe Chongqing, and Liveable Chongqing) – an attempt at establishing an underlying philosophy for future policies and decisions, and the encouragement of sending Maoist slogan text messages and singing Communist revolutionary songs. While some have compared this last policy as a new “cultural revolution”, it has seemingly been well received by the public at large. A friend summarized Bo Xilai’s current M.O. as “cleaning the local government of the filth, while still trying to maintain the average people’s faith in that same government”.

With that said, these sorts of changes should affect the business environment of Chongqing, possibly to a great degree. And what have I seen on the ground? There are more foreigners in town than before, more MNCs, more companies establishing businesses, and more entrepreneurial small-medium sized businesses getting started. Granted, most of these businesses are in established industries (mostly auto supply and manufacturing, industrial manufacturing, and logistics), but there is growth you can feel.

Whether foreign companies were affected by the Chongqing mafia in the past or present is not something of which I have any knowledge. I understood the minimum capital requirements for a WFOE were recently lowered as well. Whatever the cause, it feels like there is growth here.

In hindsight, our China lawyers have been seeing the same thing in that over the last six months or so we have seen a pickup in business involving Chongqing, though I have to admit we were starting at a pretty small base. Much of our work has been related to the transportation/logistics sector.

What are you seeing out there? Is Chongqing really going to be the next big thing?

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