Back in the year 2000, with all foreign roads leading to the glittering cities of Shanghai and Beijing, China’s Government decided to commence a “Go West” strategy, a deliberate long term policy to re-direct foreign investment, people, jobs, construction and wealth towards their inner and western cities, with the Province of Sichuan being the main target.
Like many of China’s long term policy initiatives, they began slowly; experimenting here, consulting there and watching to see how the market reacted. The massive earthquake in 2008, which killed almost 87,000 people in Sichuan province, and 4,000 in the area around Chengdu (80 kms away from the quake’s epicenter at Wenchuan) accelerated the process due to the urgent need to invest in new buildings and infrastructure, and to create jobs and incomes for the displaced families. By 2010, with the launch of China’s 12th Five Year Plan (2011 – 2016) the “Go West” policy was in full swing, and Chengdu (the capital of Sichuan province) and neighbouring Chongqing (a municipality of Beijing) are now regarded as two of China’s most important ‘second tier’ cities.
Chengdu is China’s fourth largest city with a population of over 14 million and a GDP of RMB 555.1billion (A$90 billion) the 13th largest in China. Chengdu has a reputation for being China’s ‘silicon valley’, with its 6 km long Science and Technology Street attracting China’s best IT talent and some of the world’s leading software brands, but its in Banking and Finance that Chengdu is gaining worldwide recognition.
Chengdu has the largest financial transaction volume and highest number of foreign banks in central and western China. Currently, the People’s Bank of China, China Securities Regulatory Commission, China Insurance Regulatory Commission and China Banking Regulatory Commission have all set up their regional headquarters in Chengdu and there are an increasing number of foreign banks establishing operations in the city, including OCBC, Bank of East Asia, HSBC, Citibank, Standard Chartered, ABN AMRO and UOB. Currently, Chengdu is planning to build itself into a back office banking services centre, and 12 of the world’s largest financial institutions have launched back office services projects in what is becoming their their new Financial City.
The insurance sector in Chengdu has also experienced rapid growth driven by local economic development and the soaring income of the city’s local population. Chengdu is already the largest insurance market in inland China, with the highest number of premiums and largest number of insurance institutions.
ANZ Bank, Australia’s most established bank in China, opened its Chinese language operations centre and back office capabilities in Chengdu in March 2011, employing almost 300 people and servicing ANZ China’s customers in its 6 retail branches (planned to increase to 20 in the next 5 to 10 years according to recent announcements). According to Mike Smith, ANZ’s CEO “Chengdu has a large, well-educated workforce and has already established a reputation as one of China’s leading business processing destinations.” ANZ has been operating in China since 1986 and was locally incorporated in Chengdu on 1 October 2010.
In 2011, Citibank opened a new smart-banking branch in Chengdu. Citi China’s CEO, Andrew Au, commented, “Citi is committed to continued investment in China, and Chengdu is an important part of our plans. We have had a branch in Chengdu since 2005, and I am pleased we are extending our business in one of the key commercial centers of Western China through this new consumer outlet.”
The Chinese State Council has approved Chengdu as the “technological, commercial, financial, transport and telecommunications centre of south-west China”. The current development plans for the 5 km² “Financial City” is in three phases:
Chengdu’s new “Financial City” will be “a modern metropolis that has complex and efficient transportation, infrastructure, information systems and energy systems” and will undoubtedly lead to a shift in China’s financial services sector from Shanghai into the inner western regions of the PRC. International Banks, insurance and financial services companies are beating a path to Chengdu’s door to tap into their lower cost, highly educated workforce and to leverage their world class modern infrastructure.
(This article first appeared in AB+F magazine, 20th June 2012)