Chinese cities performed well in the new ranking of the Asia-Pacific Cities of the Future 2011-12 published by FDI Intelligence magazine, a bi-monthly news and foreign direct investment (FDI) publication owned by The Financial Times based in London.
The FDI future cities survey is carried out across 141 Asia-Pacific cities every two years. The ranking is made according to six criteria: economic potential, human resources, cost-effectiveness, quality of life, infrastructure and business friendliness.
Contributing to its showing as second overall on the list, the magazine reported that from January 2003 to July 2011, Shanghai attracted more Greenfield FDI — investment in an area where previously no facilities existed — than any other cities in the Asia-Pacific region. Additionally, Shanghai claimed more than half a million university students, ensuring businesses in Shanghai easy access to human capital.
Beside Shanghai, Shenzhen and Beijing also entered the top ten taking fourth and seventh place, respectively.
FDI Intelligence sees potential for Chinese cities in other areas as well. The top ten list of cities with the most economic potential saw seven entries from China: Shanghai (first), Beijing, Hong Kong, Shenzhen, Macao, Guangzhou, Kunshan and Suzhou (in order from third to ninth). The Yangtze River and Pearl River Deltas, considered the epicenters of industry in China, seem poised to maintain their position as the largest contributors to GDP in the country.
Shanghai also topped the human resources category, which might be expected in a city with over 20 million people. In this criterion, Beijing came in third after Tokyo, which was followed by Zhengzhou, the capital city of Henan province in Central China. Zhongshan in Guangdong province and Shijiazhuang in Hebei Province also scored top ten entries at eighth and tenth.
In the Business Friendliness category, four Chinese cities made it into the top ten. Dongguan was ranked first followed by Shenzhen. Hong Kong, Ningbo and Shanghai took fourth, fifth and seventh place respectively.
While scoring well according to other metrics, Chinese Cities faired poorly in cost effectiveness. The Cost Effectiveness Category saw not a single entry from China in the top ten. Cities in Southeast Asia fared best, including Cambodia’s Phnom Penh, Vietnam’s Hai Phong, Da Nang, and Hanoi, Malaysia’s Johor Bahru, Malaysia’s Alor Setar, Thailand’s Rayong and Nepal’s capital city Kathmandu and Pakistan’s Multan making strong showings. Cambodia attracts investors with its relatively low profit tax at 22.5 percent, while Vietnam and Thailand have low industrial rents and labor costs, FDI Intelligence explained in its report.
The Quality of Living category is comprised mainly of Australian cities, which posted six in the top ten.
In terms of Infrastructure, Hong Kong is the only Chinese city that was listed in the top ten. Guangzhou and Chengdu took ninth and tenth in the ranking of FDI strategy locations. With an unexpectedly high showing Chengdu – the capital of inland Sichuan Province – may be benefiting from a move of FDI inland from the coasts, which receives the majority of FDI to China.