Voluntary Report - Public distribution

**Date:** 10/5/2007

**GAIN Report Number:** CH7417

CH7417

**China, Peoples Republic of**

**Market Development Reports**

**Tianjin ECM: Gateway to the North**

**2007**

**Approved by:**

![](media/image1.wmf)LaVerne E. Brabant

U.S. Embassy, Beijing

**Prepared by:**

Angie Han

**Report Highlights:** The largest port city in Northern China, and
ranked as the world's sixth largest port, Tianjin has evolved from an
imperial capital into a major industrial hub. Easy to reach by land,
air, and sea, it is an important distribution center for goods being
transported to Northern and Western China. Given its proximity to
Beijing, Tianjin has become a popular destination for Beijingers' lavish
weddings and banquets during festivals. Tianjin\'s status as co-host of
the 2008 Olympic football games, its improving infrastructure, rising
quality of life, continuing economic growth, and large population of
foreign students and expatriates have all combined to create excellent
market potential for food and agricultural product imports.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Beijing ATO \[CH4\]

\[CH\]

**Tianjin: An Emerging City Market**

With a population of 10 million, Tianjin is one of the key emerging city
markets in China. The city is the largest port city in northern China
and the port of Tianjin ranked as the world's sixth largest port in
2006, making it an important distribution center for northern China.

![](media/image2.wmf)Just 120 kilometers southeast of Beijing, Tianjin
is the largest port city in China and third largest city in China behind
Shanghai and Beijing. Tianjin, one of four special municipalities
including Beijing, Shanghai, and Chongqing, and is a major trading hub
and Beijing's link to the Sea of Bohai. Given its special status,
Tianjin is directly administered by the Central Government while
enjoying provincial-level status.

**History**

The ideal location of Tianjin at the confluence of the Hai River and
Grand Canal, connect it to the Yangtze River. It has been a major
trade/transportation center since the time of the Yuan Dynasty in the
13^th^ century.

![](media/image3.jpeg){width="2.625in" height="1.6298611111111112in"}The
name *Tianjin* means "the place where the emperor crossed the river."
Strategically located on the overland route to Manchuria, Tianjin has
been a frequent military objective of foreign invaders since the late
18^th^ century. Agreements exacted from China by the British and French
during the Second Opium War (1856-60) made Tianjin a treaty port, one of
the 11 Chinese ports opened to foreign trade. With the complete
abolition of the remaining foreign concessions in 1946 Tianjin was
completely restored to Chinese sovereignty. Some describe Tianjin as a
more 'Chinese' city compared to other large Chinese cities such as
Beijing or Shanghai. Due to its past history as a treaty port history,
Tianjin's architecture has a distinctly European influence. Some of the
most interesting examples of this influence can be found in the 'Five
Avenues' district where the British and French concessions were once
located.

**Booming Economy**

Modern-day Tianjin is an industrial and commercial port on the Bohai Sea
rim with a 152.8 km coastline, and is easy to reach by air, land, and
sea. Tianjin has reserves of about 1 billion tons of petroleum, with its
Dagang District containing important oilfields. Salt production is also
an important industry, with Changlu Yanqu being one of China's most
notable salt production areas. Geothermal energy is another resource
endemic to Tianjin, and the deposits of manganese and boron under
Tianjin were the first to be found in China.

Major industries in Tianjin include petrochemicals, textiles, car
manufacturing, mechanical and metalworking. Famous for its manufacturing
industries, the first wristwatch, bicycle, and television made in China
all came from Tianjin. One of China's earliest domestic car
manufacturers, Xiali, is located in Tianjin. In March 2005, China's
first private airline, Okay Airways (based in Tianjin), launched its
first flight. The European aircraft maker, Airbus, plans to manufacture
300 A320 aircraft on its assembly line located in Tianjin by 2016.

**Key Economic Indicators at a Glance 2001-2005**

![](media/image4.jpeg){width="3.3645833333333335in"
height="2.5208333333333335in"}

GDP (avg. annual growth) 14.0%

CPI 1.7%

Population 10.43 million

Car ownership 1:100 households

(Source: Global Insight)

Tianjin has a fairly large foreign student and expatriate population.
The city has 37 higher education institutions, 159 scientific research
institutes, and 10 state-level engineering technology research centers.
More than 200 major international corporations, including more than 80
of the world's top 500 companies, in over 60 industries, have settled in
Tianjin.

Covering 11,900 sq km, Tianjin serves as an important grain and
vegetable production base for the Tianjin-Beijing area, and farmland
accounts for about 40 percent of Tianjin's total area. Wheat, rice, and
corn are the most important crops. However, production bases have also
been established to produce meat, eggs, and poultry. Tianjin has
excellent coastal conditions for marine life providing an ideal breeding
ground for migratory and indigenous fish, shrimp, lobsters, and
shellfish, making it an important location for the fishing industry. The
natural conditions found in the vast inland waterways make Tianjin ideal
for freshwater fish cultivation as well.

![](media/image5.jpeg){width="2.25in" height="2.125in"}

The Tianjin municipal government has announced plans to invest 110
billion Yuan by 2010 to improve the city's transportation
infrastructure. An estimated 36.7 billion Yuan is to be spent on
expanding facilities and the overall throughput capacity of Tianjin
Port, with the remaining funds to be concentrated on the development of
the city's Binhai International Airport and rail cargo handling
facilities.

As a participant in the US Sister City Program, Tianjin established ties
during the 1980s with Philadelphia, Pennsylvania through a variety of
special economic and cultural partnerships and exchanges. Comparable
programs have also allowed Tianjin to establish similar relationships
with other global cities such as Kobe in Japan, Melbourne in Australia,
and Nord-pas-de-Calais in France.

**Binhai New Area**

The Binhai New Area, also called the New Coastal District of Tianjin
(NCD) is located at the juncture of the Beijing-Tianjin City Belt and
the Circum-Bohai City Belt. At the center of Northeast Asia, Tianjin is
gateway to North, Northeast, and Northwest China, and the nearest
departure point for the Eurasian Continental Bridge. The NCD consists of
Tianjin Port, the Tianjin Port Free Trade Zone, and Tanggu, Hangu, and
Dagang development zones.

![](media/image6.jpeg){width="1.5729166666666667in"
height="1.0833333333333333in"}

Created 20 years ago, the Tianjin Economic-Technological Development
Area (TEDA) is one of the first coastal development areas opened to the
outside world. The United Nations Industrial Development Organization
(UNIDO) listed TEDA as one of the most dynamic areas of China along with
Shenzhen, Suzhou, Wenzhou, Shanghai Pudong, and Xi'an High-tech Park.
Major multinational companies like Motorola, Nestlé, Toyota, Novozymes,
Con-Agra, and Samsung are located in the TEDA due to its highly
attractive business environment, making TEDA the premier state-sponsored
development area in North China.

![](media/image7.jpeg){width="2.627083333333333in"
height="3.5in"}Tianjin Port is second only to Shanghai in terms of
capacity and is the largest cargo terminal in northern China. Port
facilities provide direct access to Tianjin International Airport and
Beijing. Tianjin Port handles cargo for North and West China, which
accounts for more than 60% of its handling capacity. In 2006, Tianjin's
cargo throughput reached 258 million metric tons, making it the world's
sixth-largest port by volume, mainly handling fruit, nuts, grains, dairy
products, poultry and meat products, cotton, soybeans, wood and wood
products. The Tianjin Free Trade Zone located inside the port is the
only Free Trade Zone in China having special railway lines, making the
movement of goods highly effective and cost efficient. International
trade, bonded warehouses, and export processing are all major industries
in the zone.

Tianjin has established long-term navigation and business relations with
more than 300 ports in more than 170 countries and regions around the
world. The port is expected to expand handling capacity to 300 million
tons by 2010. Tianjin's municipal government hopes to increase Tianjin
Port's throughput to 300 million tons and 12 million TEUs (twenty-foot
container equiv. units), raise the volume of road freight to 300 million
tons per year by expanding highways in the region to 12,500 km, and by
boosting annual volumes at Binhai Airport to 10 million passengers and
500,000 tons of cargo.

Including its airport, Tianjin has 6 ports and Customs centers. The
newest and largest Customs House Center is a unique one-stop-shopping
customs office. The newly built five-story building resembles a
five-star hotel more than a Customs House and combines AQSIQ, Chinese
Customs, banking services, form processing, and other customs house
broker services all under one roof. Traders claim it to be one of the
most convenient and efficient Customs offices in China and are pleased
with the ease the status of their documents can be tracked during
processing, which now takes an average of 2-3 days from the time the
goods arrive to the time they leave the port area. Also, the new Chinese
Customs arrangement makes it possible to clear customs year round
including holidays. On weekends Customs usually only processes exports,
with import processing limited to weekdays. During major Chinese
holidays like the Spring Festival and National holidays, customs
clearance is still possible although the AQSIQ does not process
documents during these periods. It is interesting to note that during
the period leading up to the Spring Festival, goods clear customs
quickly and often can be released even if taxes and fees have not been
paid. Fee collecting agencies in China often use a quota based system,
so near the end of the Lunar Calendar Year individual ports often try to
slow revenues to prevent large increases, so the next year's quota,
based on the previous year's quota, is smaller rather than larger.

Tianjin Tanggu Ocean New-Technology Development Zone located near
Tianjin New Port is 38 km from Tianjin International Airport and 143 km
from Beijing. Transportation and complete infrastructure facilities are
available in the zone. The zone was officially converted to a National
Development Zone in 1995.

Tianjin Xiqing Economic Development Zone near Tianjin city has
convenient transportation conditions and complete infrastructure
facilities. This industrial park is home to electronics, chemistry,
machinery, and food-processing industries.

![](media/image8.jpeg){width="4.0in"
height="2.9895833333333335in"}**Restaurant and Institutional Sector on
the Rise: A Wedding Destination**

Due to its proximity to Beijing, easy access by car, and relatively
lower cost of living, hotels and restaurants in Tianjin receive a lot of
business by providing wedding banquets for newlyweds from Beijing. It is
roughly 40 percent less expensive to hold a wedding banquet in Tianjin
versus Beijing, with a larger range of food, especially high value
seafood, available. The JinZhongHe exit along the Beijing-Tianjin
expressway is a particularly popular exit for many Beijingers due to its
closeness to Beijing and diversity of restaurants there. The busiest
periods are during the Spring Festival, May Day and National Day
Holidays.

Hotel facilities are highly developed in Tianjin and international hotel
chains are all there including the Hyatt Regency, Sheraton, Holiday Inn,
Renaissance, Ibis and Nikko. As Tianjin will co-host some of the
football games for the 2008 Olympic Games, new hotels are also being
built. The newest five-star hotel, the Nikko Tianjin, opened in 2007
with 400 rooms and suites. The Tianjin Westin is scheduled to open soon
in anticipation of an influx of tourists due to the 2008 Olympic Games
and the continued economic growth in Tianjin. Serviced
residences/apartments are also on the rise. Ascott, one of the leading
serviced residence providers in China, plans to add another property in
Tianjin in 2008 in addition to its current property, the Somerset
Olympic Tower.

![](media/image9.jpeg){width="1.7708333333333333in" height="2.625in"}As
indicated by the Hyatt Regency Tianjin, sourcing for imported food
supplies in the HRI sector is usually from local or Beijing sources,
with a wide product range including individual ingredients, meat,
seafood, fruit, and beverages. However, limited volumes are required in
most cases, making it difficult for outside suppliers to provide market
appropriate supplies.

Tianjin is famous for its local snacks. To many, Tianjin is more
'Chinese' than other cities such as Beijing or Shanghai. However, as
more Western style restaurants emerge, the younger generation's taste
desire for trendy Western foods and drinks is evolving. Broadway Cafe,
Alibaba, as well as a variety of local bars and restaurants on the bar
street are often visited by local white-collar workers, as well as
expatriates. Dramatic changes in consumer consumption patterns and
lifestyles have created a favorable market environment for imported
goods and products, as well as Western style restaurants and retail
outlets.

**Retail**

Like any other city in China, people in Tianjin consider the wet market
to be their first choice for buying fresh produce, believing produce
found there is fresher and cheaper than in supermarkets. Several
international retailers are in the market along with local retailers.
Imported products are not widespread in domestic supermarkets and even
less common in smaller retail outlets, limited in part by lower income
levels compared to those found in other major cities. The port area,
including Tanggu and TEDA, has proven to be a better market for imported
goods due to the large number of expatriates living there. As indicated
in report CH7403 Emerging City Markets released in March 2007, Tianjin
realized a 24 percent increase in its imports of U.S. foods over the
past two years (2004-2006).

![](media/image10.jpeg){width="4.166666666666667in" height="3.125in"}The
first Carrefour store in Tianjin, the NanKai outlet, and the HaiGuanSi
outlet are the only two Carrefours to carry a significant amount of
imported goods. Korean and Japanese foods are dominant among these
imports, especially in snacks, beverages, noodles, and various
ingredients. The store manager explained that as the Korean student
community is strong here (there are nearly a dozen universities are
institutions in greater Tianjin), there is high demand for such
products.

**Tianjin Major Retail Ou**tlets at a Glance

+----------------+------------+---------------+----------------+------+
| Store          | Chinese    | Ownership     | Type           | Out  |
|                | Name       |               |                | lets |
+----------------+------------+---------------+----------------+------+
| Carrefour      | Jia Le Fu  | French        | Hypermarket    | 5    |
+----------------+------------+---------------+----------------+------+
| Tesco (Hymall) | Le Gou     | Brit          | Hypermarket    | 4    |
|                |            | ish/Taiwanese |                |      |
+----------------+------------+---------------+----------------+------+
| RT-Mart        | Da Run Fa  | Taiwanese     | Supermarket    | 1    |
+----------------+------------+---------------+----------------+------+
| Wal-Mart       | Wo Er Ma   | U.S.          | Hypermarket    | 2    |
+----------------+------------+---------------+----------------+------+
| Metro          | Mai De     | German        | Cash-Carry     | 1    |
|                | Long       |               |                |      |
+----------------+------------+---------------+----------------+------+
| Home World     | Jia Shi    | Hong Kong     | Hypermarket    | 17   |
| (VanGuard)     | Jie        |               |                |      |
+----------------+------------+---------------+----------------+------+
| Lotus          | Yi Chu     | Taiwanese     | Hypermarket    | 4    |
|                | Lian Hua   |               |                |      |
+----------------+------------+---------------+----------------+------+
| WuMart         | Wu Mei     | Mainland      | Hypermarket    | 2    |
|                |            |               |                |      |
|                |            |               | Supermarket    | 9    |
|                |            |               |                |      |
|                |            |               | Minimart       | 34   |
+----------------+------------+---------------+----------------+------+

**Processing**

Tianjin is a major food & beverage processing, and packaging center. In
addition to the growth of its port infrastructure and export processing
trade, many food companies have established plants in Tianjin,
especially in the trade zones. Hunt's Chalkis, a newly established
tomato processing plant in Tianjin is an example of one company that has
benefited from Tianjin's excellent port location as well as its trade
friendly environment. A year after the plant was established it
experienced strong sales as a successful supplier to the domestic
Chinese market as well as export markets in Asia and the Middle East.
Reduced processing costs, including labor, are perceived to be a benefit
by most international companies, according to the general manager of
Hunt's Chalkis.

Bunge Limited, a leading U.S. agriculture and food company also
established a joint venture in early 2007 to operate a soybean
processing plant in Tianjin in order to produce feed for the region.
Cargill, another leading U.S. agriculture and food company established a
fertilizer-blending plant in Tianjin to produce high quality fertilizer.

![](media/image11.jpeg){width="3.5833333333333335in"
height="2.3409722222222222in"}**Towards the 2008 Olympics**

Tianjin will host 12 of the Beijing 2008 Olympic football preliminaries;
other cities co-hosting soccer events during 2008 Olympics (in addition
to Beijing) are Shanghai and Shenyang. The construction of the Tianjin
football stadium began in August 2003 and was completed in August 2007.
Covering 78,000 sq meters, the Tianjin Olympic Center Stadium can
accommodate 60,000 spectators.

The city is also building a new metro and magnetic levitation rail to
connect Tianjin and Beijing, with the goal of reducing travel time to
within 30 minutes. Tianjin's third subway line is expected to be
completed by 2009. At a total of 29.7 kilometers, the line will run from
the southwest to the northeast of the city, connecting two overland rail
stations with 23 stations between. The city's government plans to build
nine subway lines over the next 30 years, totaling 234.7 kilometers.

The municipal government in Tianjin is using the 2008 Olympics as an
opportunity to spend some US\$22 billion on further improving the city's
infrastructure and tourism-related projects, including converting the
pungent Huaihai riverfront into an attractive tourist complex, and
constructing new bridges, roadways, sewage-processing facilities and
office buildings.

**Tianjin's Development Projects at a Glance:**

1\. No.1 Subway Line Project (6.9 billion Yuan)

2\. Light-track Communication Tianjin Urban District/New Coastal Area
(5.9 billion Yuan)

3\. Tianjin-Ji County Expressway Project (5.5 billion Yuan)

4\. Tianjin Part of Tianjin-Shanxi Expressway (3.5 billion Yuan)

5\. Tangshan-Tianjin Expressway (south section in Tianjin) (3.0 billion
Yuan)

6\. Expanding construction of local railways (597 million Yuan)

7\. Construction of Five Container-berths in the North Pond of Tianjin
Port (3.1 billion Yuan)

8\. Nanjiang Coal Dock in Tianjin Port (2.2 billion Yuan)

9\. Reconstruction of Old Dock in the North Port area of Tianjin Port
(2.0 billion Yuan)

10\. Tianjin Port North Dongtudi Container Dock Reconstruction-Expansion
(1.7 billion Yuan)

11\. First-Stage Construction Tianjin Port Nanjiang Bulk Logistics
Center (2.4 billion Yuan)

12\. Second-Stage Construction of 100,000-ton Waterway in Tianjin Port
(198 million Yuan)

13\. First-Stage Construction of Beida Breakwater in Tianjin Port (180.5
million Yuan)

14\. Ship Lock of Haihe River (283 million Yuan)

15\. Expanding Construction of Tianjin Airport (492.8 million Yuan)

16\. Long-distance Bus Passenger Transport Central Station (196 million
Yuan)

17\. Water Plant on Cuijia Dock (1.1 billion Yuan)

18\. Sewage Treatment in Haihe River Basin (2.3 billion Yuan)

19\. Beicang Sewage Treatment Project (371 million Yuan)

20\. Sewage Treatment Plant Project in WuQing District (126.2 million
Yuan)

21\. Gas Station for Automobiles (520 million Yuan)

22\. Trunk Pipeline for Natural Gas Distribution in the Coastal Areas
(253.0 million Yuan)

23\. Renovation of Combustion Equipments (150 million Yuan)

24\. Trunk Natural Gas Pipeline in North Semi-ring of Outer Ring (120
million Yuan)

25\. Reconstruction of Old Gas Pipe Network (50 million Yuan)

**Market Entry Tips**

The imported food market in Tianjin has yet to be fully developed, but
continues to evolve. Some industry players offer the following tips for
entering the market:

1.  Consumer Awareness: Many products fail because distributors and
    consumers are unfamiliar with the products, and are not sure how to
    handle or use them.

2.  Product Knowledge: In-store product demos and marketing promotions
    in Chinese can be very successful advertising methods. Promotions
    that focus on adapting US food ingredients to Chinese cuisine are
    suggested.

3.  Price and Food Safety: Tianjin is still a price-sensitive market and
    imported items must compete with low-priced domestic products.
    Establishing a brand or item as "premium quality" is a must for
    selling in a highly competitive environment, and American products
    are often appreciated for meeting stringent safety standards.

4.  Research: Take time to investigate the market and find a good
    distributor. Successful ventures require experienced distributors
    who know the local market.

5.  Test the Waters: Proceed with caution before attempting large-scale
    supply to the market. Be prepared to offer limited quantities and
    build your network slowly. If a product is new to the China market,
    it may be better to introduce it to already established markets
    where unfamiliar foods are easily adopted, like Beijing or Shanghai.

6.  Holidays: Demand for imported goods is increasing, particularly
    during holiday periods, when such goods are often given as presents,
    and are associated with upward mobility.

7.  Follow the Leader: Build relationships with successful exporters to
    China, and learn from their examples.

# 

# Contact Information and Useful Websites:

**Agricultural Trade Office, Beijing**

# Embassy of the United States of America

Tel: (86-10) 8529-6418

Fax: (86-10) 8529-6692

Email: <ATOBeijing@fas.usda.gov>

Web: [www.USDAChina.org](http://www.USDAChina.org/)

**Office of Agricultural Affairs, Beijing**

**Embassy of the United States of America**

Tel: (86-10) 6532-1953

Fax: (86-10) 6532-2962

Email: <AgBeijing@fas.usda.gov>

**Animal and Plant Health Inspection Service**

**Embassy of the United States of America**

Tel: (86-10) 6532-3212

Fax: (86-10) 6532-5813

**Agricultural Trade Office, Guangzhou**

Tel: (86-20) 8667-7553

Fax: (86-20) 8666-0703

Email: <ATOGuangzhou@fas.usda.gov>

Web: [www.USDAChina.org](http://www.USDAChina.org/)

**Agricultural Trade Office, Shanghai**

Tel: (86-21) 6279-8622

Fax: (86-21) 6279-8336

Email: ATOShanghai@fas.usda.gov

Web: [www.USDAChina.org](http://www.USDAChina.org/)

**Official Tianjin Government Site**

[www.tj.gov.cn](http://www.tj.gov.cn/)

**Tianjin Customs Site**

<http://tianjin.customs.gov.cn/>