Comprehensive Analyses of Advantages & Risks in Sishui

Ⅰ. Advantages.

?1. Rich Labor Resources & Lower Cost.

1) Rich Labor Resources. There has a population of 603,000, among which 404,200 are within 18-60 ages. The number of migrant workers keeps above 200,000 all the year round. According to statistics at the end of 2006, the number of people doing transportation business is about 6,600.

2) High-quality Workers. Every year in Sishui, about 120,000 people go out for work. Being diligent and honest, they are welcomed widely by enterprises. In this way, Sishui is the five-chief-county exporting labors in Shandong Province.

3) Lower Cost.

The following is the common wages of workers in transportation business.

Common Worker Wage                 About 600 / 1000RMB/month

Ordinary Driver Wage                About 1500-1600 RMB/month

Long-distance Transport Driver Wage                 About 2000 RMB/month

Manager Wage                 About 1200 / 3500 RMB/month

Office Wage (Finance, Personnel and so on)                About1000 / 2599 RMB/month

Skilled worker wage (Repair, Safe and so on)                 About 1000 / 1500 RMB/month

The wages level in Sishui is only 50% than that in east coastal areas of Shandong, and 30% comparing with Delta Region of Yangtze River, also much lower than Delta Region of Pearl River. So, the development of logistic projects in Sishui has definitely advantages at cost.

2. Deep Influences by Confucianism.

Being next to Qufu where is known for Confucius, Sishui has been influenced by Confucianism for more than 2,000 years. People here believe in ceremony, benevolence and honesty. So, Sishui is also called “the county of faith”.

3. Advantageous Location & Convenient Traffic.

1) Advantageous Location. Sishui is located in middle-south of Shandong Province where is also a middle-east coastal province in China. Here is the transitional part from developed east coastal regions to under-developing middle & west regions. Being in the middle position at location and economy, Sishui has the advantages to realize high efficient goods flow, materials circulation and information flow.

In addition, there are suitable distances between Sishui and other major -medium cities (such as Jinan, Taian, Jining, Linyi, etc.) and traffic hinge cities (such as Yanzhou City. ). So, it is easy to organize transportation. Also, taking a long view of the matter, it is very possible to encounter traffic jam or paralysis in major-medium cities and traffic hinge cities.

2) Convenient Traffic. Many important transportation lines pass through Sishui and its periphery. Here is the center for transportation from east to west and from north to south.

① Highway. There are 327 National Highway and Rizhao-Dongmin Motorway in Sishui. Also, being near Beijing-Shanghai Motorway and Beijing-Fuzhou Motorway, it is very convenient to drive directly from Sishui to major cities in the east of China within one day.

Distances between Sishui and Major Cities by Highway

②Railway. The two railways, Beijing-Shanghai Railway & Yanzhou-Rizhao Railway, pass through Sishi in the south and on the west separately. It is available to touch every major cities by railway in Sishui. Also, being near Beijing-Shanghai High-speed Railway, the distance between Sishui City and Qufu Station along the railway is only 10 KM. It will only take 2.5 hours from Sishui to Beijing and Shanghai in 2010. Besides, because Yanzhou-Rizhao Railway is connected with New Eurasia Land Bridge, Sishui is combined with EU by railway.

Distances and Time Needed from Sishui to Major Cities by Railway

③ Port. The distance between Sishui and major ports in China, such as Tianjin Port, Qingdao Port, Rizhao Port, Lianyungang Port,etc. , are all within 500 KM. Also, there are motorways and railways between Sishui and these ports.

④ Airport. Being whole journey motorway, it takes only 2 hours to drive from Jinan Yaoqiang International Airport to Sishui. Jinan Airport is doing passenger & goods transportation services and common air services. Having 133 leaving-port flights every week and linking more than 40 cities & Hong Kong, Korea, Thailand, Russia, etc., its annual passenger transport is 800,000 people and the amount of goods is 15,000 tons.

4. Adequate Infrastructure & Cheap Land.

1) Adequate Infrastructure.

① Water. As the birthplace of Sihe River, Sishui has rich water resources, including numerous springs. The common water reserve is 500 million cubic meters. The water facilities are complete and used easily. The water price is much cheaper.

② Electric Power. The annual electric power in Sishui is 3 billion KWh. At present, only 1billion KWh are used. So, still two third electric power are available.

③ Communication. There are five telecommunication companies in Sishui, including CNC, CMCC, China Unicom, China Tietong & China Satcom. Non-gap communication had been realized.

④ Necessary Facilities. Having four-star hotel-Shengyuan Hotel, more than ten high-level apartments districts, and many beautiful places for relaxation and holiday, Sishui can supply better work & live conditions.

⑤ Economic Development Zone. There are complete road, water, drainage, electric power & telecommunication networks in the zone. Also, the zone was programmed scientifically. It’s already called one of the most attractive zone in Shandong.

2) Cheap Land.

According to "The Whole Nation Standard for Industrial Estate Sell Price ", 15 grades was divided throughout the country. Sishui County is in comparatively lower 13 grade, and the industrial estate sell price is RMB 96 per square metre. The price is much lower than developed regions such as Delta Region of Yangtze River & Delta Region of Pearl River, also at lower level in Shandong. Also, in order to promote foreign investments, local government made a preferential price of RMB 83 per square metre. If the final land price exceeds the preferential price, local government will give finance supports, such as science and technology development funds and infrastructure construction funds, etc., to make up the exceeding part.

5. Successful cooperations with Holland Friends.

Sense Garments (Sishui) Co., Ltd, which began in Aug. 2006, is held by Mr. Peter, a Holland businessman. Only eight months later, the company got profit. Now, its second phase is under construction. The speed is seldom, even in China.

Besides, North-Holland Province in Netherlands and Shandong Province are friend provinces. The exchange activities are held every year. In May 2005, county leaders of Sishui visited Holland. In Oct. 2006, the vice governer of North-Holland Province met county leaders of Sishui in Jinan.

6. Strong Support with Foreign Investment from Local Government.

1) Foreign capital projects can enjoy special preferential policies.

2) The development of logistic is considered an important step to improve investment environments and economic growth by local government. So the government is making great efforts to provide necessary conditions. Meanwhile, the government also want to improve the management of local logistic business by introducing foreign capital.

3) The government will provide “nurse” style services for foreign-funded enterprises. These services mainly include three aspects: free agent services to get investment approval, services in every domain during preparation, usual services after enterprises going into operation. Besides these, the government will specially assign one or two person to serve each foreign-funded enterprise.

Ⅱ. Risks.

1. Insufficiency of logistic managerial talents.

Because the scale of logistic education in colleges is still smaller, logistic managerial talents are insufficient at present in China.

2. Logistic market in China is still not fully developed.

Because logistic business starts later in China, technical standards aren’t systematic and also have many differences and flaws.

3. Division of Transportation Management.

Because different transportations belong to different departments in China, there are steep competitions among them. The transportation cost may be raised. Also, because highway transportation businesses are managed based on administrative areas, the transport potency isn’t fully used.