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Short story: it can end up as a long read. So boil up the billy, make a pot of nice green tea, unwrap a bar of Lithuania’s Tai Tau dark chocolate and settle down for a slightly longer read from our Tea ‘nd Chocolate Bar collection.
If the view of most non Chinese is taken into account, there are probably only a handful of cities in China – with Wuhan suddenly leaping to the foremost of everyone’s mind thanks to the US media, fake news and the conspiracy theorists.
In so far as good places in China for business, the list narrows considerably; Beijing, Shanghai, Guangzhou / Guangdong (many can’t distinguish province from city) and Shenzhen – which oft gets lumped in with Guangzhou, seem to be the only 4 worthy of consideration. How true is that today?
Well, that depends on who you listen to. And where you are when making your analysis. If you are out of China surfing the net, talking to fellow business people or, in some cases, your Gvt trade development office, the above four will rank favourably.
If however you are in China, had the foresight (and intelligence) to travel outside the main centres, you may not agree. Furthermore, if you were to chat to some of the local, well established marketing firms – as in those based here in China, not overseas with China sub contractors – you will find many recommend 2nd, or even third tier cities.
In fact around this time last year (June 2020) we ran this article:
Chengdu is the capital of Sichuan, situated in South western China often overshadowed by, in terms of popularity and population, it’s bigger neighbours Xi’an and Chongqing. The latter is enjoying growing importance as China’s gateway to the west courtesy of its situation on the Yangtze River.
Sichuan – the Province – and Chengdu conjure up an image of peace and tranquillity, full of history. An easy, laid back lifestyle punctuated by tea shops, spicy food, friendly people and a dialect that even well educated native Chinese struggle to understand.
Not to mention those cute – not so- cuddly little black and white animals. Almost like stepping back into Dynasty China, after a long, arduous overnight, and then some train ride from Beijing. That was back circa 2005.
The passage of time and advances in technology, especially Hi speed train lines, has seen Chengdu transform itself. Today the Beijing to Chengdu trip has been cut from 20 to 8 hours.
Of course, the romantics among you can still make the older, slower 34 hour expedition. According to Bloomberg, Chengdu overtook Shenzhen in the Milken Institute’s 2019 index of China’s best-performing cities.
At this time, it’s probably prudent to reflect, that whilst the tier system is a good idea of how cities are improving and moving up or down the rankings, it is not always the best indicator for business.
That being said, when you compare, say a tier one city with a tier 5 then it is fair to say that economically speaking, the tier one is endowed with more gvt support, better facilities and amenities. And of course, very likely more expats, if that is relative or important to you.
At the far end of the scale, while the difference may be strikingly obvious, as we note below, it may not be critical to you. However when we start talking about “livability, quality of lifestyle etc” we are starting to move into vague, fuzzy and subjective narratives. One mans meat – as the expression goes.
So tiers may, or may not be important to your business. Probably if you were focused on finance or investment it might. Manufacturing or technology, maybe not.
You would need to also look at things such as average salary, costs and proximity to supply sources, local gvt policies- incentives, tax breaks, population education / skills, logistics, consumer habits your production capacity.
Some smaller cities have a higher rate of disposable income than bigger ones. Unsurprisingly. Many of these things go to weighing up a tier level, but you need to focus on what is relative and important to you. Not to the entire globe generally. It is up to you to decide.
Chinese Tier Levels.
Once apon a time, differentiation and distinction was easy. There were rich, highly developed cities, Beijing, – tier one – those slightly less developed tier 2 down to the disadvantage and poverty stricken regions tiered appropriately lower.
And before we develop further, bear in mind that whilst the tier level is a China category, many firms use different algorithms and rationale in deciding their idea of a city rating. Some firms are located here, others do so from afar, basing their judgement solely on data.
However, as the slang expression goes, that was then. This is now. As 2020 drew to a close, Beijing announced the successful completion its ten year task to completely rid poverty from China.
Now, what that means depends on how you play with the numbers. But at the end of the day, it is arguable that even the poor, remote regions of China are better off now than they were a decade back.
As mentioned above, Chengdu of course is not the only city to have benefited from the rapid rise of technology and fortunes in China. The end result is the lines between tiers became blurred. Especially at the top level.
New First Tier Cities in China
At first blush the above title is misleading as it tends to suggest that more cites have been added to the first tier category. This is not true. What in fact has happened is an extra category has been created, between tier 1 and tier 2.
This fine distinction is in line with the philosophy that China is not just one huge market and thus helps industries and brands make better informed decisions.
An indepth discussion of China’s tier cities would be useful but outside the scope of this article. However, if you would like to pursue this topic further we recommend this easy to digest publication:
The Biggest Cities in China: Tier 1 Cities in China – Definition and Rankings
Where does this leave Chengdu?
As we mentioned above, there are many different methods of evaluating city tier levels in China. Once you begin to research you may find such categories as a 2.5 tier. Or other rating systems. Horses for courses. Your needs are going to be different from others.
However, for a nice clean, clear view, we like Yicai’s categorisation. It is what we base this article on. Yicai also just happens to be one of the most trusted, respected, influential and popular financial magazines in China. They also have an English language Global version.
Today the top level or tier cities in China are: Beijing, Shanghai, Guangzhou and Shenzhen respectively. As an aside, it is interesting to see how Shenzhen has improved at a faster clip than Guangzhou and may soon eclipse it for third spot. Beijing and Shanghai seem in little danger of losing their pole positions. For the meantime!
*** Update: July 2022: post Shanghai’s disastrous Covid 19 response and the negativity that went with it, it will be interesting to see how that city fares in future rankings.***
Yica include 15 cities in their New First Tier Cities in China. From then on we move to the traditional 2nd tiers and so forth down. There is also movement between tiers as cities either improve or decline in fortunes.
As an example, the north east port city of Dalian located in Liaoning province is famed, not just for its picturesque scenery and beaches but as a well established business centre. A few years ago it was listed in the New First Tier Cities in China. Today however, as the region struggles, Dalian is now ranked as Tier 2.
(are you still with us here? It’s like one of those tricky IQ tests~)
In fact Chengdu sits at #1 in the list of Yica’s 15 up and coming challengers for the tier one crown. It is a crude measurement, but to put this into some perspective we can perhaps relate to, lets refresh that the bottom rung in Tier one, is occupied by Shenzhen.
With a point score of 116, Shenzhen trails Guangzhou by only 3 points. Chengdu trails Shenzhen by 16. Perhaps now you can see why Chengdu is creating waves, garnering attention and a serious, positive consideration?
The Globalisation and World Cities Research Network (GaWC) is based in Loughborough University in Leicestershire, UK. They create a bi-annual categorisation of world cities into “Alpha”, “Beta” and “Gamma” tiers, based upon their international connectivity.
In 2020 they ranked Chengdu 9th as the world’s second-tier strong city. That’s a 7 place rise in 2 years, becoming the only Chinese city to be included in the Beta+ list.
In other words, according to the Brits, Chengdu out classed both Beijing and Shanghai. Will be interesting to see the 2022 rank.
To round of its list of achievements, as of last Sunday, June 27th, Chengdu can now boast to being only the 3rd Chinese city – after Beijing and Shanghai – to operate two major airports.
You can read the story here: High Hopes for Newly Opened Chengdu Airport (Their pun, not ours~) a Caixin Premium article. (means needs a paid up subscription)
Chengdu – conclusion
This then, has been a very, very brief look at Chengdu and it rise to importance in the Chinese city level stakes. Are we saying you should develop your new Chinese business venture in Chengdu? No. Of course not.
That ‘s for you to evaluate and decide. What we are saying, and have said for almost 2 decades is; think outside the top 4 tiers, and Chengdu is certainly well worth considering. Even visiting.
To learn and understand more about Chengdu any major search engine will provide the usual, data, facts and stats. However for a more interesting and up to date look we recommend this site: 10 Interesting Facts About Chengdu – from who we borrowed the head images.
If you have reached the point of seriously considering a China entry for your product and want more factual, hard data on Chengdu, well, as we stated before, a quick trip through any search engine will soon deliver many options.
Alternatively our sister brand Uengager can offer the same service, but with a personalised, bespoke boots on the ground perspective. If this is more to your style and needs, you can chat about it with Everlyne, below.
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Introducing Everlyne YU
In 2003 Everlyne Yu co-founded WPBeijing Marketing Studio with Englishman Peter Bic, now known as Bic Brands.
She began Uengager, as a SaaS MarTech company focused on customer engagement in 2017.
Hello, Nihao, I’m Everlyne
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Everlyne is also a key note speaker, lecturer and KOL on MarTech in China. She is CEO of Uengager, business development officer for Bicyu.
Everlyne hs been privileged to work with a variety of international organisations, from VW, Cushman Wakefield, Sodexo, Bristol Myers Squibb to local Chinese firms such as Midea, and OK Order.
If you’re looking for guidance, tips, advice on any aspect of starting or growing a business in China or training, coaching your existing China marketing team for excellence, be sure to check out Uengager. Home page and base for Everlyne Yu. Read her short bio – opposite left – or contact her direct – below – for a free, heart to heart chat.
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To take it a step further, there are, as we have said, numerous stats and analysis firms on line who you can commission to research for you. Or alternatively, Uengager also offers boots on the ground, personalised business proposal evaluations and investigations. You can reach out directly to Everlyne below.
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