Processing trade: Chongqing Logic behind 80 million laptops

No matter which province or city can use three or five years of time, Chaoshan has created a trillion yuan industrial system, which is worthy of respect and worth learning. Chongqing has done such a thing, and "A notebook has not yet been produced. Every year, billions of dollars of tax revenue begin to be paid."

How did Chongqing do it? On November 1, the mayor of Chongqing Huang Qifan made an interpretation at the China International Gold Summit of the Beijing International Trade Hotel. This is the main content of this article.

There has been new progress in this matter.

November 3, Reuters from macro? According to the news, this second-ranked personal computer maker will set up the second domestic operational headquarters in Chongqing and plan Chongqing as another global manufacturing center. The news from relevant parties in Chongqing, Acer? The current laptop production capacity in Chongqing was 40 million units. Coupled with the 40 million notebook computers of Hewlett-Packard, the global leader in the personal computer industry, 80 million laptops have already been bagged.

Three days later, on November 6th, at the annual meeting held by the China-EU Business School at its Beijing campus, Huang Qifan introduced several cases of Chongqing's reform and opening up. When it comes to macros? At the time, he said: “When we talked to HP, we could say that it was singled out because there were no competitors at the time. Due to the financial crisis, people did not notice this. But this was done later this year. Many siblings compete."

On May 11, 2008, Huang Qifan and his entourage set out on a trip to the United States to open a historic negotiation for Chongqing. In the case of negotiations, there are records in the text behind.

With HP's promise, Huang Qifan flew to Taiwan again to find Foxconn Chairman Guo Tingming. “Why did you only make parts and components, why didn’t you do the whole machine? He said no one gave me the whole machine. I thought five years ago and always took it. I can say that I don't have orders, I say that I have 40 million units and 20 million units for you, but there are preconditions that your entire parts system must follow me to Chongqing, he immediately called him eight or nine department directors, four The vice president summoned and a dozen of us discussed together for four hours. We signed with us last year."

Huang Qifan did not mention it—but logically we can infer that he came to Beijing from the back in Taiwan. He also needs a bonded area, otherwise the processing trade cannot do it. This will make him more expensive: out of nothing, there is a trillion-dollar industry, which is equivalent to the Phoenix first planting a plane tree, Beijing resolutely supports. Chongqing has got two bonded zones!

In this process, Huang and his men quickly ran to Beijing, Shenzhen, and Europe, and blew up the “five trains” to Shenzhen and the “Southern Eurasian Land Bridge” to Chongqing.

More and more big names, HP's settlement center has also been placed in Chongqing, and then branding, Cisco ahead of macro? Landing for half a year. On behalf of industry and commerce, HP has Foxconn, Quanta, and Inventec, and Macro? There will also be several companies, and Cisco will also have its own industry chain. At present, there are more than 100 parts and components suppliers, and there are also 70 or 80 companies in the negotiations. Based on 80 million notebook computers, it covers the rapid development of the processing and processing trade bases for electronic products such as servers and communication products, printers, digital cameras, and 3G mobile phones.

The game is alive. One of my friends referred to the Chongqing Electric Power Base as "Huang Qifan's investment madness." He said, "I didn't think he really did it."

Many people did not expect it, but Huang Qifan was thinking of it. In the two years before the historic handshake between Chongqing and HP in mid-May 2008, Huang Qifan looked forward to the future of Chongqing's electronic information industry. At the time, the automobile and motorcycle giants were very upset: Huang Juran said that the electronic information industry is going to surpass Chongqing's automobile and motorcycle industry - the position of the rivers and lakes of Chongqing's autos and motorcycles. The Chinese know a lot, "How many years have we been," said a motorcycle. The boss said.

In fact, once again pushing time one or two years ago, Huang Qifan is enthusiastically promoting the expansion of Chongqing Airport. He is particularly concerned about the ability to take off and landing large cargo flights. During the five-year period, Chongqing Airport expanded several times. The third-phase project under construction will upgrade Chongqing’s airport status to one of the top airports in the country.

Do not forget what Huang Qifan said when he answered a reporter’s question in March this year. Partnering with Bo Xilai is “like a duck”.

To draw lessons from the development mode of Chongqing's processing trade industry, it should be based on the macroeconomic background of China's macroeconomic response to the financial crisis and strategic transformation. It should also focus on the urbanization, industrialization, and integration of urban and rural areas in Chongqing in recent years. The reform and opening-up measures in a package are linked to reflect: For example, the household registration reform, say, the construction of 40 million square meters of public rental housing, such as the land exchanges, for example, the rapidly advancing open highlands, financial highlands, and educational highland construction, such as the two-wing farmers' ten thousand yuan. If the revenue-increasing project is on a higher perspective, it also includes the construction of five Chongqings represented by “forest and Chongqing” and so on. Together, these measures form a system of mutual dependence and harmonious progress. They provide an insight into the dilemmas of the "chicken or egg" dilemma in the less-developed areas such as going out of economic development and livelihood building, urbanization and rural development.

The non-Chinese trillion-dollar electronic information industry base in Chongqing was formed by breaking through the proposition that "chicken or eggs first".

What is particularly worth mentioning is education. A few years ago, Chongqing decided to ensure that education accounted for 4% of GDP as an iron law. Huang Qifan, deputy mayor at the time of managing finances while also managing education, was equivalent to fiscal revenue at 4% of GDP. 20% established the proportion of financial education in the cut, and insisted on maintaining this ratio in the dynamic. Several years of hard work have brought Chongqing’s education ranking from the countdown to the lead in the west. In 2003, Chongqing University City, which was later widely acknowledged, was opened to the controversy. According to the person in charge of the Xiyong Microelectronics Industrial Park, the companies that have just started to enter are actually undeveloped wastelands. They think of Silicon Valley and believe in the future of this microelectronics industry park.

This article is based on Huang Qifan's speech at the China Gold Forum held on October 1st. He joined Huang Qifan's speech on November 6 at the China Europe European Union Business School annual meeting and September 23 at Chongqing University. Headings and subheadings are for the editors. Without my review.

The theme of the conference is a topic related to industry and finance. This topic can be carried out in many aspects. I would like to initiate a case study and discuss the opening up, industrial development and finance that are important to China for the next five to ten years. Business development, etc. provide some references. The main point is how to use the scientific development concept to transform the development mode of processing trade.

The Turning Point of China's Processing Trade After 20 years, China's processing trade has “two out of the world, big in and large out” and has grown to an annual volume of 1.1 trillion US dollars. This 1.1 trillion US dollars is almost all distributed along the coast, and there are basically no inland regions. .

In the past three to five years, many economic experts have called for the transfer of processing trade to the inland gradient. “Otherwise they all went to Southeast Asia.” Before and after the financial crisis, labor shortages and costs increased, coupled with the deployment of various resources for oil, electricity, and coal transportation. The bottleneck, the coastal processing trade does have a gradient transfer requirements. However, if the pattern does not change, or if it is “outside”, then this fear may become a reality — because Southeast Asia is a coastal concept.

Chongqing has found a breakthrough. For this reason, we conducted a special study. In 2008, Chongqing found a breakthrough—that is, changing “two out” to “one out”, and 80% of the raw materials and parts manufacturing industry in processing trade went to Chongqing. , To form an integrated upstream, downstream and downstream industrial chain, complete machine parts and vertically integrated integrated processing bases. At this time, local spare parts supply local machines to minimize logistics costs, and the products formed are also sold worldwide. .

Gradient transfer of processing trade to solve the three major logistics issues Logistics is one of the biggest obstacles to the gradient transfer of processing trade, including three aspects: the first is the input logistics, the supply chain between parts and components, and the second, the production of Products have to be sold to the world, and there is a logistics project. Third, processing trade needs to rely on the bonded area. It is bonded processing, so there is a bonded logistics.

Inland areas must truly develop the processing trade and resolve these three logistics issues. Otherwise, as far as Chongqing is concerned, a distance of 2,000 kilometers is sufficient to offset all advantages of labor, oil, electricity, coal, and land.

The idea of ​​solving the logistics problems has brought about the vertical integration of the whole logistics and the components of the European trade logistics and solved the logistics problems.

The logistics should be analyzed according to different modes of transportation. aircraft. Air transportation of goods to the United States, Europe, and inland and coastal costs are almost the same. Therefore, if a product is transported by air, there is no difference between Shanghai and Chongqing in terms of logistics costs.

Steamship. When transporting goods from Chongqing to Shanghai and then to Europe and the United States, it takes more than 2,000 kilometers to complete the logistics cost; however, if you sail from Shenzhen to Europe, the situation will be different. With the support of the Ministry of Railways, the containers from Chongqing to Shenzhen Yantian Port will be designated. "Five scheduled trains" for alignment, scheduled vehicles, timing, and pricing were opened, and transportation time was cut by half. It was two days faster to arrive in Europe than to start from the "Yangtze River Delta," and the freight was quite the same.

train. This approach is mainly applicable to customers in Europe. From inland to Europe, it was actually transported by train from the coast to Manzhouli to Siberia, 10,000 kilometers across Russia and Europe, and the distance was relatively low and the cost was low. Now if Guangdong and Shanghai pass trains to Manchuria to Europe for roughly 20 days, but Chongqing trains to Rotterdam or Duisburg, Germany, these important logistics centers are 12 days.

Therefore, the logistics direction from the southeast coast to Europe can be from Chongqing to Xinjiang, and then through Xinjiang to Alashankou, and then go to Europe.

Smoothly linking the Eurasian Continental Bridge to the South Line Well, why do we all know that through the Siberian line of the Eurasian Continental Bridge on the Northern Line, we do not know much about the South Line - that is, from Chongqing to Xinjiang to Europe? The reason is very simple, that is, the South Line Eurasian Continental Bridge is more than 4,000 kilometers in China, more than 4,000 kilometers in Kazakhstan, and 1,000 kilometers in Russia - Russia is not happy. This account is actually very easy to calculate. The difference between a 10,000-kilometer and a 1,000-kilometer “passage fee” is too great.

We recently coordinated this matter. With the support of the Ministry of Railways and the General Administration of Customs, China Railway Container Company and Russia and Kazakhstan's railway companies are operating together to share the benefits of South-line freight and help coordinate the return shipments. At present, the Three Kingdoms Customs has signed an agreement to facilitate the exchange of goods. Without this coordination of interests, Russia can give you regular inspections on his 1,000-kilometer railway and turn it over. It doesn't matter if you are using silly material. If it is strategic goods, computers, or advanced electronic products, it will be very troublesome.

Now, as long as 12 days from Chongqing to Europe, this logistics has also opened up.

Without the reform breakthroughs of customs supervision, there will be no development of bonded logistics in Chongqing's processing trade. Bonded logistics has a basic theory. The Bonded Zone covers the customs territory. Any material from abroad to the bonded area is subject to customs declaration. Any goods going out of the bonded area to the border is also a declaration. If we set up a bonded zone 2,000 kilometers away from the coast, for example, in Chongqing, we now have things to go from overseas to the Chongqing Free Trade Zone. Do not check, 2000 km, it seems a bit worried; if checked, the bonded area will have to check again, the second inspection, who would also come? Similarly, from the Chongqing Free Trade Zone, it is also facing the problem of "two customs clearance." Therefore, in the past 20 years, the inland areas have never approved the bonded area, and there is no processing trade in the bonded area, and the bonded area is required for inland processing trade.

We conducted another study on this matter. Why is the modern Internet of things? Why GPS Global Positioning? With these two new things, China Customs has innovated the supervision model for inland bonded areas and realized “one declaration, one application, and one inspection release.” The inland bonded port area and the coastal station reached the same starting line.

This is a major increase in the world-class level of China's customs management capabilities, which is reflected in Chongqing.

Many people do not want to understand the mechanism inside, thinking that it is to imitate the coast. It is not imitation. It is a major improvement in the management level of China's customs and major reforms! The reform of the original management method has reached a world-class realm, making Chongqing a truly open upland. Without a reform breakthrough in customs supervision, there will be no major development in processing trade in Chongqing.

At this time, why can't Chongqing engage in processing and trade bases?

The issue of bonded logistics was solved, the logistics problems were solved, and the incoming logistics was solved through the vertical integration and integration approach. Inland can engage in processing trade. However, this package solution is only suitable for some products. For example, laptops: can be shipped by air, and 50% of sales are in Europe. If production takes place in Chongqing, half of the products are transported by plane to other places and half by train to Europe. The logistics was solved; the problem of bonded logistics was solved; 70% and 80% of parts were localized. At this time, why can't Chongqing engage in processing and trade bases? Why can't we engage in notebook computer manufacturing bases?

Persuading Hewlett-Packard to form a “1+3+100” cluster of brand owners, foundries, and component suppliers has made a clear study of these issues. In the second half of 2008, we discussed with HP, the world's leading laptop computer. At that time, due to the financial crisis, the production and sales of electronic products in the world had largely shrunk, but the sales of notebook computers had grown in a contrarian direction and there were forecasts that it would double in about four years. This prediction is becoming a reality from now on: In 2008, global sales of laptops were 160 million units. By 2009, it will have reached 200 million units. This year it will reach 2.5 units. According to this trend, it is no suspense to double the number of people in the next year. ——We will discuss the new 160 million units. Your HP will always compete for this market. You have 25% of the existing market structure with 40 million units. In the newly added 160 million units, are you also? Should there be 40 million units? If you have to, go to Chongqing - I can't go to Hewlett-Packard to say that you moved 40 million units from Shanghai to Jiangsu to Chongqing, which is a corner of the province of Digging Brothers.

How does he discuss logistics with us? We explained the model, he believes.

The CEOs of large influential companies in the world are usually strategists and thinkers of the distribution of the global situation. He clarified this idea and went to Chongqing to order 40 million units. When he placed a single order, I can certainly find Foxconn, Quanta, Inventec to process 40 million units, and then there will be hundreds of parts factories to come to me to make parts - if I only get 5 million units However, it is now 40 million units, and one component can produce 40 million annually. The vast majority of supporting component manufacturers will follow. Therefore, over one year, more than 100 component manufacturers have settled in Chongqing, forming a vertically integrated system of “1+3+100” branded, commercial and industrial, and component manufacturers. We originally had a goal of achieving 80% localization of parts and components in 3 years. Now in only one year, we have achieved 60% of this standard, and it should be possible to achieve 80% localization one year in advance.

This progress is far faster than our original expectations and commitments to HP. It also illustrates the shift in the development mode of processing trade, turning the “two out” into a model of “outside and inside (parts processed)”. It works.

The transformation has led to net foreign exchange earnings, driving employment and investment, and even brought R&D. This has changed the smile curve of processing trade. This change has also brought about net increase in foreign exchange, employment, and domestic demand. Coastal processing trade has two ends. If there are 100 billion U.S. dollars in exports, net foreign exchange earning may be only 20 billion yuan - because roughly 80 billion U.S. dollars spare parts are "incoming materials" for "processing materials," and only a limited processing fee and logistics are earned. cost. Because of this pattern, in recent years, we have suffered a lot of losses in trade frictions. People have always said that we have a good balance, and we have to argue with people very complicatedly that I have not exported as much—to discuss these crooked thing. Western politicians have decided how many surpluses they will export. Our model, if we have 100 billion U.S. dollars in exports, we can have 70 to 80 billion U.S. dollars worth of local manufacturing, which will significantly increase our net foreign exchange earnings. Even if trade frictions hit one, it will drive 80 billion fights and drive 200 Billion hit one, which is more cost-effective?

The second is the labor force. Apart from the assembly plant, so many parts and components have been integrated. Does the hundreds of thousands of workers in the parts factories not use local employment? Originally, we have driven the employment of small businesses and labor forces in neighboring countries, and now it has become more migrant workers who have truly driven their own localities.

The third is investment. The final assembly plant is a labor-intensive "porter". The parts are assembled and transferred to be traders. The $100 billion assembly plant, which actually invests $5 billion, is enough — it's mainly liquidity. It takes 10 turns a year and turns 20 turns. Parts are different, say 48-layer printed circuit boards, where the line is complicated? All are high technology. And it is capital-intensive, making 100 billion US dollars worth of spare parts and investing at least 60 billion U.S. dollars. Therefore, the same investment, attracting investment in the assembly plant is not much, attracted a huge amount of capital of the parts factory.

As a result of changes in the processing trade model, the concept of net foreign exchange creation and employment has changed. Parts of “one end” has also brought out R&D, and a large amount of capital has been invested. The entire smile curve has changed.

The settlement of the 100 billion U.S. dollar processing trade settlement to Chongqing's processing trade also has a high end. Sales of processing trade are overseas, and settlement is done after sales have been completed. This type of settlement is a net-like, global settlement and offshore finance.

In the past 20 years, due to the insufficiency of the foreign exchange management system, China's trillion-dollar processing trade settlements have been conducted overseas. For example, in the past, there was a provision that in the territory of the People's Republic of China, no natural person or legal person could open an offshore financial account, and the processing trade settlement account must be offshore finance. Since you did not let me open, I would go to another place. For another example, in the past, foreign exchange management required filling in 16 statements for each foreign exchange, and large-scale tens of millions of dollars in physical trade could be accommodated, but it was not suitable for processing trade needs: one day can be tens of single, several hundred single, and zero. Fragmentation, but request to pick up at any time, ready to process, ready to ship. To fill in so many orders.

Moreover, our establishment of diplomatic relations between workers and peasants is already a world-class big bank, but there is no business function of offshore finance. Without this business function, he cannot do this. I will give you a hundred billion US dollars in offshore finance. Business, you can't get it.

Therefore, the annual settlement of 1.1 trillion US dollars of processing trade is overseas.

A lot of wealth has been lost.

In this sense, we must see it unreasonable. Last year, we discussed with HP. We asked how this 40 million units will be settled after almost 50 billion U.S. dollars. Hewlett-Packard said that it settled in Singapore. Why did I say that? He said that coastal areas, where China and Asia as a whole are settled, of course, where you settle. I can't say no. All Asia is here. I'm a strategic partner with you. We're married. You're just a tenant in Singapore. With the current communication conditions, the settlement is the same everywhere you go.

We discussed it for three months. We must know that the multinational corporation’s 100 billion U.S. dollar accounting flow has moved greatly. This has led to a shake-up of the earth. It is generally impossible to discuss this matter. You have no significance in talking to the Chinese headquarters and the Asia Pacific headquarters below. This is The top leaders talk about top operations and have to convince him.

This matter is inseparable from the strong support of the State Administration of Foreign Exchange. This matter cannot be separated from the strong support of the State Administration of Foreign Exchange. SAFE agreed that Chongqing pilot offshore finance this year, open an account, and provide banking services. At the same time, it can implement black box management—replace the structural white box management of the past, and do not need to fill in 16 reports for each business. .

This event was completed. The contract was signed in September last year and it began trial operation in November. This year it officially began operation.

This 100 billion U.S. dollar settlement will bring in more than 10 billion GDP and benefits, including three pieces. One is to “tax”; the other is to “pay”, which bank will help you with the settlement, collect and pay, 1000 Billions of U.S. dollars, 700 billion yuan in and out of the country - there are always billions of service fees in one year. Third, "salaries", thousands of white-collar accountants, all are high-income people, and there will also be two to three billion salary income. The three parts add more than 10 billion. The benefits of more than one trillion yuan of processing trade in China's overseas settlements equals more than 100 billion yuan.

This year, Chongqing can already collect billions of tax revenues. I started collecting taxes when a notebook was not available. This is a settlement of HP’s US$100 billion in the Asia Pacific region. In the future, Chongqing will have roughly 670 billion US dollars worth of processing trade exports. Counting that the settlement center brings tax revenue can reach nearly 10 billion, equivalent to an annual output of 2 million automobile factory tax.

Some things did not work this way ten years ago. Now that the conditions are ripe, and the people of the times and places think of it, they begin to do it. Chongqing has really brought back the parts and components, and we believe R&D will be brought back. Some companies Already have plans for research and development bases, these companies have expressed that they are engaged in research and development bases here, and the overall system benefits better.

The domestic foreign exchange management system was moderately adjusted and foreign cooperation and joint ventures deepened. At the end of last year, we talked about these projects. Now we can say that the settlement of several hundred billion and hundred billion U.S. dollar notebook computers is in Chongqing, and then the whole machine is processing Chongqing also manufactures parts and components in Chongqing. The processing trade has a smile curve. The final assembly is at the bottom of the smile curve. The sales settlement is high-end. Parts manufacturing and research and development are also high-end. When you cluster parts and components at you, it is actually equivalent to high-tech. Manufacturing, high-density capital investment in Chongqing. In this way, we left the whole process of high-end manufacturing R&D, sales settlement, and final integration of the smile curve in Chongqing.

Household registration reforms, public rental housing, and large investments in education over the years have provided processing trade companies with a “backyard” that can be assured.

Another notable feature of processing trade is that it is labor-intensive. Some enterprises have hundreds of thousands of employees and they all live in factory dormitory areas. Enterprises manage their operations and control their lives. Problems can be solved if they fail. The enterprise-run society is a matter of planned economy. Now state-owned enterprises have abandoned it, and they abandoned it in the 1990s. Now that the market economy is an open era, business management is not a good thing. From the government, it is also an investment environment issue.

We propose that enterprises should focus on production and management, and social affairs should be handed over to the government. In this regard, Chongqing’s household registration reform and the construction of large-scale public rental housing have played a role in optimizing the investment environment. Employees entered the community, urban areas, and government-managed communities in the area after they left the factory gate. They include neighborhood committees and street management committees. Accounts can be resolved. There are public rental flats to help you settle down. The employees have the conditions to marry and have children, and they are just as normal as other Chongqing citizens.

There is education. Education is one of the issues that has received the most extensive attention. In this regard, Chongqing is one of the few provinces and cities in the country that has guaranteed investment in education for 4% of GDP for many consecutive years. The guarantee of funding has enabled Chongqing to achieve the highest quality in the western region. The basic "General 12", the university's gross enrollment rate reached 30%, and it annually delivered 170,000 college graduates and 200,000 secondary school graduates, providing human resources for processing trade. The leading education system in the western region and the continued investment in education have also relieved the worries of the children and the elderly as well as the employees of processing trade enterprises.

We are not only working with Hewlett-Packard, but also with Cisco, working with other world-renowned brands, OEM companies, and component companies. In the process, local companies in Chongqing will grow up and we will continue to chase them. HP 4000 We are still pushing tens of millions of printers, tens of millions of digital cameras, and tens of millions of 3G mobile phones. Or there are other electronic products, including millions of routers, servers, and communications equipment. We are not only talking with HP, but also with Cisco, with the macro? , with other world-class brands, various OEM companies and parts companies. In this cooperation, the local foundries and parts factories in Chongqing, and even local brands at a certain stage, will come out - the organization system or the division of labor and cooperation. The key is to make the two ends of processing trade out, three out and four out. It becomes one head, two heads, three heads, and sells.

The transformation of the traditional processing trade model with the scientific concept of development is a case of changing the development mode of processing trade. What is the conclusion of this case? Some theorists of ours have criticized the coastal processing trade for 20 years, saying that this is a livelihood of asceticism. Chinese manufacturing should not be like this. It does not require you to do this, and the processing trade is unreasonable. This statement is biased. Processing trade is the result of a rational division of labor in modern manufacturing. Each section is divided into the most capable companies, and then a modern organization system is used for communication to form an integration. This is a change in the way of economic organization. It is reasonable. We must not completely negate this model because we have only done low-end work. The key is that we not only have to do low-end, but also sell settlement, parts manufacturing, research and development, and leave the whole process of the smile curve in China, stay in the mainland, and stay in the west. Chongqing can at least say that this goal has been initially achieved on laptops.

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