CHONGQING, China — American businesses are increasingly looking to China’s Western hinterlands as the future source of growth and profits, with Ford, Wal-Mart and other companies planning major investment and expansions in cities like this sprawling mega-metropolis of 32 million people.
With prosperous east coast cities such as Shanghai becoming too saturated and too expensive, and growing concerns about a property “bubble,” many firms see boundless potential in so-called second- and third-tier cities like this one on the Yangtze River. Rising incomes are creating a new consumer class, but the region still lags far behind in the number of cars, appliances, luxury brands and Western fast food meals sold.
“The growth is in the tier-two and tier-three cities, which are inland,” said Joseph R. Hinrichs, chairman and chief executive of Ford China. “The fundamentals of demand and economic growth are there.” Pointing to places such as Wuhan, Chengdu and Chongqing, he added, “There are many cities that people don’t even know.”
Ed Chan, president and chief executive of Wal-Mart China, told a recent conference here in Chongqing that his company has plans “to build out our retail footprint in this part of China.”
Official, centralized statistics on U.S. and foreign firms venturing west are not available, and some moves are still in the planning stages. In Sichuan province, for example, there are 1,171 registered American companies, although there is no accounting for their size or whether they are joint ventures with Chinese firms.
When the American Chamber of Commerce China issued its annual “white paper” on business in China this year, it included for the first time separate sections on the business environment in Chongqing and Chengdu — opportunities as well as challenges.
Read more at The Washington Post.