Qingdao, the new economic powerhouse on the southeast coast of Shandong province, saw its first South Korean investor in 1989, and now South Korea is one of its most significant partners, according to Qingdao's mayor.

Economic ties between the two increased as coastal South Korean cities like Busan, Inchon and Ulsan began cooperating closely with Qingdao, said Mayor Xia Geng.

By September of this year, the city had a whopping 10,695 South Korean-backed projects, with $20.78 billion worth of contracts and $12.7 billion in actual investment, the city's bureau of commerce reports.

In fact, South Korean-funded projects account for 48.25 percent of Qingdao's foreign investment, so obviously South Korea is the largest overseas investment partner.

And, that connection has become much more diverse. Sun Hengqin, director-general of the commerce bureau, said, "The focus of South Korean investment has changed from labor-intensive, export-oriented projects to capital- and technology-intensive projects.

"These cover more than 40 sectors, including finance, insurance, animation, machinery, electronics and chemicals."

In the first half of this year, Qingdao approved 156 South Korean-funded projects, an increase of 67.7 percent year-on-year, with contractual value growing 39.7 percent.

One good example of this is a $30-million Sino-Korean project to make oil out of used tires. This is expected to get 40,000 tons of diesel fuel out of 100,000 tons of old tires annually.

A large number of South Korea's leading companies like Hyundai, LG and Samsung have operations in Qingdao.

So, the city has opened a number of South Korea-oriented industrial parks in the auto parts, garment, foodstuff and handicrafts sectors.

More than 100,000 South Korean expatriates call Qingdao home and an increasing number of Korean restaurants, stores and schools facilitate their style of life there.

At the same time, Qingdao has itself been active in South Korea. By September, a total of 92 Qingdao-backed companies had been established in South Korea, with $42.8 million worth of investment.

South Korea is not only Qingdao's largest investor, it is also the largest trade partner.

Last year, trade between the two next-door neighbors was worth $7.04 billion. In the first three quarters of this year, the figure was $5.98 billion. That covers $2.46 billion in Qingdao exports and $3.51 billion worth of South Korean imports.

China Daily

(China Daily 11/26/2010 page24)