The Research of Agricultural Sector in Sichuan Province, Xie Yuhao

February 13, 2015 The Research of Agricultural Sector in Sichuan
Province
Internship Report
Author:
Yuhao Xie 2218030
NBI INTERNATIONAL
Presentedto:
Ms. Yen
Ms. Dieteren

NBI INTERNATIONAL Fontys Universityof AppliedSciences
2
Table of contents
1. Executive summary....................................................................................................... 4
2. Introduction ................................................................................................................. 5
3. Research method and limitations................................................................................... 6
4. Literature review .......................................................................................................... 6
5. Macro analysis of Sichuan.............................................................................................. 7
5.1 DESTEP analysis of Sichuan................................................................................... 7
5.1.1 Demographic aspects of Sichuan ................................................................ 7
5.1.2 Economic aspects of Sichuan...................................................................... 8
5.1.3 Socio-cultural aspects of Sichuan.............................................................. 10
5.1.4 Technological aspects of Sichuan.............................................................. 12
5.1.5 Ecological aspects of Sichuan.................................................................... 14
5.1.6 Political-legal aspects of Sichuan .............................................................. 16
6. Meso analysis of Sichuan............................................................................................. 17
6.1 Meso environment ............................................................................................ 17
6.1.1 Agricultural/food Industry analysis ........................................................... 17
6.1.2 Distribution analysis ................................................................................ 19
6.1.3 Customer analysis.................................................................................... 20
7. Reference................................................................................................................... 22

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List of tables
Table 1. Age distributionin Sichuan................................................................................... 7
Table 2. Industrial structure of Sichuan.............................................................................. 8
Table 3. Industrial added value of Sichuan.......................................................................... 8
Table 4. Education condition of Sichuan........................................................................... 10
Table 5. Education condition of Sichuan 2........................................................................ 10
Table 6. Another basic information about education condition of Sichuan ......................... 11
Table 7. Some basic data about agricultural industry of Sichuan in 2013 ............................ 17
Table 8. Some basic data about distribution of Sichuanin 2013 ......................................... 19
Table 9. The consumer prices changedin 2013................................................................. 20

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1. Executive summary
NBI International provides business opportunities to global public and private parties. Now
theyplanningextendtheirbusinessonfood/agriculture industrytoa new market,a Chinese
province—Sichuan.Thisreportiscommittedtoprovideaclear,detailed descriptionof Sichuan.
Analyze the advantagesanddisadvantagesof conductingbusinessinthisprovince.Trytogive
some advicestosupportNBI Internationalmakestheirdecision.
Whenitcomesto newmarkets,researchalwaysplaysanimportantpart,therefore use some
tools to analyze the market is a crucial mission. Not only because of their unique style that
matches NBI International’s values, but it can also gain an enormous opportunity to extend
theirbusinessmore effectiveandefficient.Inthis report,the dataare basedondeskresearch
in many diverse aspects of Sichuan. And focus on food/agriculture industry. Exploratory
research, deceptive research and causal research will be used in the following chapters.
Meanwhile,the authorwilluse aSWOT analysistable todisplaythe resultsof thisreport.
SWOT analysisof doingbusiness inSichuanforNBIInternational
STRENGTHS
 Superiorgeographicconditionforagriculture
 Huge amount of potential customers
 Higheconomicpotential
 Top outputof agricultural products inChina
 Developinghigh-techindustry
 Developeddistributionchannels
WEAKNESSES
 Lack of sunshine
 Soil erosion
 Agingproblem
 Pooreducationcondition
 Consumerpricesincreasing
 Corruption
OPPORTUNITIES
 The government is already created plans to
improve their education, solve soil erosion
problem, anti-corruption and make Sichuan
more opento foreigninvestors
THREATS
Internal
 Existingstaff workingintensityistoohigh for
NBI already extend their business to many
countries
External
 Intense competition

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2. Introduction
The final goal of this report is providing sufficient information about macro and meso
economic environment of Sichuan province. Support for NBI to analyze the situation of
cooperationwithagricultural/foodsectorinthisprovince.
NBI International was founded with the mission to
strengthen international trade relations. They provide
business opportunities to global public and private parties, offer support and cooperation in
the development of export opportunities and inward investment promotion for nations
worldwidethroughconsultationandfacilitation.The matchmakingprogramgeneratesoneto
one industry-focused meetings with high-level decision makers. Every year policymakers,
entrepreneurs and investors from 60 countries gather to acquire information about new
worldwide developments,investmentandtrade opportunities.
Sichuan,usuallyknownas “Land of Abundance”,is
a province where located insouthwest China, on
the upper reaches of Yangtze River, neighboring 7
provinces and municipalities. It is the 5th largest
province inChina covering an area of 485,000 km2
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A population of 87 million (include floating
population) ranksthe 3rdmostpopulatedprovince
in the country. There are 21 municipalities
(prefectures) with 181 counties under Sichuan
provincial administration. The total value of
production, total cereals production, total industrial production value and total amount of
social commodity retail account for 1/4 of total for all the 12 provinces and autonomous
regions in west China. Industries like Information technology, mechanics,pharmaceuticals,
chemical,foodandtourismplayanimportantroleinChina.Sichuanisthelargestcentral place
for commoditydistributingandcollectingin the westChina. Chengdu, the capital city of this
province,also a centerfor trading,finance,science&technologyandhinge fortransportation
and telecommunication.
Whether economic perspective or popularity perspective, Sichuan has huge development
potential.The government attachimportance toattractforeigndirectinvestment.Theymade
a policynamed “Sichuanopeninguptooutside”onthe basis “wideopeninguppromote great
development”. Sichuan has established cooperative relations on economic and trade with
around200 countriesandregions.UnitedStates,Germany,SouthKorea,Thailand,France and
Singapore have established consulates in Chengdu. 283 of Fortune Global 500 open
operations or branches in Sichuan. In 2005, Sichuan successfully sponsored the first session
Cooperation and Development Week for Sichuan International Friendship Cities,France Day
and Sichuan-Russia Week. In 2014, new added 2 foreign consulates in Chengdu, total of 12.
For these reasons, in this province NBI can find plenty of opportunities to find suitable
cooperative enterprise.

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3. Research method and limitations
As with the theoretical framework and methodology, it is important to demonstrate that I
have read otherstudiesinthe areaof research.Iwill addressthe strengthsandlimitationsof
the methods in similar research and justify why I choose them. In this report, business-to-
business marketsare the mainsubject.SoIwill focusonorganizationsinSichuan.
In the method,the followingaspectswill discussed:
Data collection
Desk research will be applied in this report. Then, the problem is where I can find useful
information.Usually,datafromwebsiteof governmentorsome otherstatistical agenciesare
valuable.
Limitations
Because mostof the dataare secondarydata.Perhapsthe original dataisoutof date.Toavoid
thissituation,Iwill concentrate onthe latestinformationasmuchas possible.
4. Literature review
To analyze the environment of Sichuan I choose both macro and meso analysis. The macro
environmentof anarea isthe external environmentof the company.Itisnotpossible forNBI
to change the macro environment.Macro analysis includes DESTEP analysis tool, it will lead
to the opportunitiesand threats of this province. DESTEP is an analysisthat goes over these
aspects;
Demographic:
The size,growth,andstructure of targetmarket/area.
Economic:
The national income andfinancial situationof targetmarket/area.
Social:
Values,norms,lifestyle,andbehaviorof targetmarket/area.
Technological
Level of “know-how” when it comes to Information Communication Technology and the
impactof technologyintargetmarket/area.
Ecological
Environment-related regulations, safety, energy, and sustainability levels of target
market/area.
Political
The target country’slawsandregulationsthatmustbe takenintoaccount.

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5. Macro analysis of Sichuan
5.1 DESTEP analysis of Sichuan
5.1.1 Demographicaspectsof Sichuan
Key words:plentyof laborresources,mobility of labor,aging area
At the endof 2012, Sichuan has a residentpopulationof 80.76 million(include 75.75 million
Han Chinese and 4.91 million people from other 55 peoples), the urban population is 35.16
million and the rural population is 45.61 million.The urbanization rate is 43.53 percent, 1.7
percenthigher than that of last year. There are a total 797 thousandnewborns in 2012. The
birth rate is 9.89 per thousand, growing by 0.10 per thousand. The death population is 558
thousand with the death rate being 6.92 per thousand, growing by 0.11 per thousand. The
populationgrowthrate is2.97 perthousand.(Statisticsof Population,2013)[1]
Table 1. Age distributionin Sichuan
The data based on Fifth (in 2000) and Sixth (in 2010) Population Census of the PRC
These information demonstrates that in Sichuan every 5 working-age population only is
required to bear less than 2 children and senior people. The population age structure is in a
golden age. This structure means Sichuan has plentyof labor resources, less burden, higher
savingratesand demandlevel.
Sichuan is the most important province of labor export in China, the mobility scale of labor
export expanded year by year. In 2000, the number of labor exports from Sichuan only 6
millionpeople.Tenyearslater,the data increasedto 10.5 million.Dependingondata of the
SixthPopulationCensusof the PRC,more than20.91 millionpeople movedoutSichuanmore
than half year.In these people,49.77 percentof themstill inSichuanprovince,mostof them
movedtolarge andmedium-sizedcities.Theresttrytofindworkinotherprovinces.(Li Junxia,
2014)[2]
However, the concern, is aging problem. The definition of retirement ages may vary but a
typical cutoff is65years,andnowadaysasocietyisconsideredrelativelyoldwhenthe fraction
of the population aged 65 and over exceeds 8-10%. (Gavrilov and Heuveline, 2003)[3]
Accordingto the definitionandstatistical data,Sichuanisalreadyanagingarea,the nextfew
yearsthe expenditure onhealthcare andmedicine will be increased.

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5.1.2 Economicaspectsof Sichuan
Key words:economiccenterof western China,agriculturalbase,growing hi-tech industry
The national economyinSichuangrowsrapidly.Thisprovince isthe onlyone westernregion
figured in top 10 of China, also the transportation hub and the main engine of economic
development in western China. (‘Top 10 regions with highest GDP in China’, 2014)[4]
In the
year 2014, the total productionvalue amountto2.85 trillionCNY,upby8.5 percentoverthe
previous year. In 2013, non-public economy added value were 156.9 billion CNY, increased
12.1 percentthan2012, occurred 59.8 percentof the whole GDP.Accordingto data of 2014,
the fixedassetsinvestmentamountto 1514.16 billionCNY,up17.7 percenton year-on-year
basis.
In2014, the total retail salesof consumergoodsreach1166.58 billionCNY,upby12.7percent.
In the same year, from January to May, the total value of import and export reaches 172.35
billion CNY, up by 7.2 percent, utilized 10.65 billion USD of overseas investments. The fund
from other provinces which outside Sichuan, record 879.8 billion CNY. New overseas
investment enterprises break through 100, accumulative total more than 500, foreign
contractedprojectscompletedturnoverof more than7 billionUSD.
Table 2. Industrial structure of Sichuan
The data from National economy and society developed statistical bulletin of Sichuan[5] and Report on
the work of the Sichuan government for 2015[6]
Economicsector In 2012 In 2013 In 2014
Primarysector 13.8 13.0 12.4
Secondarysector 51.7 51.7 50.9
Service sector 34.5 35.3 36.7
Table 3. Industrial addedvalue of Sichuan
The data from National economy and society developed statistical bulletin of Sichuan[5]
Economicsector Addedvalue in2013(billion
CNY)
Compare with2012 Contribute rate toeconomy
Primarysector 342.6 3.6%↑ 4.4%
Secondarysector 135.8 11.5%↑ 62.3%
Service sector 92.6 9.9%↑ 33.3%
Sichuanisatraditional,majoragricultureprovince,one ofthe mainproductionareasfor grain,
cotton,oilseedsandtea.Total grain outputreaches33.87 milliontonsin 2014. Table 2 and 3
demonstrates the industrial structure and industrial addedvalue of Sichuan. The data show
thisprovince focusedonimprovingtheirservicesectorandinveststheirindustry.Alsowe can
see the percentage of primary sector keep declining in all the three sectors, but the
contributionrate wasraised.

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The reasonis the governmenttriestoincrease the technologycontentandefficiencyof their
agricultural production.As the previously stated, many people who live in Sichuan but work
in other provinces. This means Sichuan will lack of labor resources. Therefore, increase the
utilizationrate of agriculturalmachineorincrease thetechnologycontentare useful solutions.
In 2013, total powerof newlyaddedagricultural machinerywas2.432 millionkilowatts,total
power of agricultural machinery was 39.37 million kilowatts,increased 6.6 percent than the
number of 2012. In 2014, the added value of enterprises above designated size (annual
revenue above 20 million CNY) grows 9.6 percent, higher than average level of China (8.3
percent).

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5.1.3 Socio-cultural aspectsof Sichuan
Key words:improved significantly,poorprimary education,teacherresources
Table 4. Education condition of Sichuan
The data based on the Sixth (in 2010) Population Census of the PRC
Table 4 illustratesprimaryeducationconditionof Sichuanprovince isstill poor.Totally74.71
million people that more than 80 percent people only have a diploma of middle school or
lower.Peoplewhohave adiplomaof universityonlyoccurredlessthan10 percent.
There are two reasons: first one, children who from poor areas, their family does not have
money to support them to finish their studies; second one is lack of education resources for
adult education. Therefore, in the Report on the work of the Sichuan government for 2015
showed,the governmentisalreadystartedsome new plansto solve these problems.One of
them named the second phase of the three years of preschool education plan. In this plan,
the government decides build, rebuild and expand 468 public kindergartens to make more
childrenwhofrompoorareascanreceiveeducation.Furtherplansincludeincrease education
fundsaccountedformore than 4 percentof total GDP.
Table 5. Education condition of Sichuan 2 (every 100,000 people) (in thousand)
The data based on the Fifth (in 2000) and Sixth (in 2010) Population Census of the PRC
Education condition In 2000 In 2010
University (include college) 2.5 6.7
High school (include technical secondary school) 7.6 11.2
Middle school 2.9 3.5
Primary school 4.3 3.5
As table 5 showed, the education condition and educational level of Sichuan is raised
significantly during 2000 to 2010. Be compared to the number of Fifth Population Census of
the PRC,illiteracyrate decreasedfrom7.64percentto5.44percent,itincludesnearly2million
people. And for the government made some plans to build more schools, more people can
receive higherdegree of diploma,inthistable,itshowedonthe numberof people whohave
a diploma of primary school, it decreased from 4,300 people per 100,000 people to 3,500.
However,in2010, the proportionbetweenpeoplewhohave university,highschoolormiddle
school degree andthe whole populationstill lessthanthe national average by 2.26, 2.78 and
3.9 percent.The rate of people withauniversitydegree inevery100,000 people lessthanthe

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national average aquarter,ranked26 inChina.The percentage of peoplewhohave aprimary
degree isstillmore thanChinese average 7.85percent.Illiteracyrate islikewisemore thanthe
average level 1.36 percent, ranked 8 in China. (The Bulletin2010 Sixth Population Census of
the PRC of Sichuan,2012)[7]
Table 6. Anotherbasicinformationabouteducationconditionof Sichuan
The data from National economy and society developed statistical bulletin of Sichuan for 2013
Educationlevel Numberof school Enrollmentstudents Studentat school
Primaryschool 7,257 950 thousand 5,260 thousand
Middle school 3,895 879 thousand 2,717 thousand
Highschool 735 512 thousand 1,516 thousand
Technical secondary school 595 531 thousand 1,302 thousand
University (include college) 103 377 thousand 1,271 thousand
Master trainingunits 42 28 thousand 88 thousand
Table 6 illustratesome otherbasicinformationabouteducationconditionof Sichuanprovince.
We can see this province have plenty of students but their teacher resources are still not
enough. In the end of 2013, Sichuan have 25,000 different level of schools, 977 thousand
teachingandadministrativestaff, include 812 thousand full-time teachers. Normally,
universitiesandmastertrainingunitshavethe mostteacherresources,itmeanstheresources
will concentrated in universities. Teacher resources still shortage in primary education.
Promotingeducation isstill acrucial workforthe governmentinthe nearfuture.

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5.1.4 Technological aspectsof Sichuan
Key words:improving technologystrength,governmentsupport,hi-tech zones
Atthe endof 2014,Sichuanprovince has1,779hi-techenterprisesabove designatedsize (here
meansannual revenueabove20millionCNY),achieve 1,052.14billionCNYof valuesof output.
Be compare with 2013, up 10.4 percent on year-on-year basis, total assets were 1,034.65
billionCNYwith9.69 millionemployees.
The total value of output of high-tech industry in 2014 was 1,223.05 billion CNY, up by 18.3
percent than the previous year. Meanwhile, contribution rate of high-tech industry export
deliveryvalue occurred 92.4 percent of industrial export delivery value growth. In the same
year,provincial financial departmentarranged2billionCNYtosupport100strategicemerging
industries projects. The government emphasizes enterprise as the main body of innovation,
3,270 inventionpatentsauthorized.
In order to provide a superior environment to develop technology and attract foreign and
domestic hi-tech companies, Sichuan established three technological development zones
whichare locatedinChengdu(capital city) andMianyang(the secondbiggestcity).
ChengduEconomic and Technological DevelopmentZone(CETDZ)
Chengdu Economic and Technological Development Zone was approved as state-level
development zone in February 2000, planned construction area is 56.34 km2. The zone lies
12.6 km eastof Chengduand28 km to ChengduShuangliuInternationalAirport(CTU).CETDZ
has attracted investors and developers from more than 20 countries to fulfill their projects
there. Industries encouraged in this area include mechanical, electronic, new building
materials,medicineandfoodprocessing.In2012, itranked25 inall the Chinese development
zones.
ChengduHi-TechIndustrial DevelopmentZone (CDHT)
Firstestablishedin1988, ChengduHi-techIndustrial DevelopmentZone ranksthe 4thamong
all the China’s state-level hi-tech zones and is strongly supported by national provincial and
municipal authorities. In 1991, it was approved as one of the first national hi-tech
developmentzones.Withanareaof 130 km2,comprisesof the SouthParkandthe WestPark.
The floorspace of SouthPark is 87 km2, it focusingon creatinga modernizedindustrial park
of science and technology with scientific and technological innovation, R&D incubation,
modern service industry and Headquarters economy playing leading roles. Priority has been
given to the development of software industry. The West Park aims at building a
comprehensive industrial park targeting at industrial clustering with complete supportive
functions. The West Park gives priority to three major industries: electronic information,
biomedicine andprecisionmachinery.
There are 33,237 companies registered in the CDHT, among which 1,115 companies are
foreigninvestedenterprisesincluding over120 Fortune 500 and worldrenowned companies.

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In 2013, Chengdu Hi-tech Industrial Development Zone added value 104 billion CNY, an
increase of 19 percentoverthe previousyear.
Mianyang Hi-TechIndustrial DevelopmentZone
Founded in 1992, located in west of Mianyang with a planned area of 105 km2. The zone is
situated 96 kilometers away from Chengdu, and is 8 km away from Mianyang Airport. The
zone isa leaderinthe electronicinformationindustry,biological medicine,new materialsand
productionof motorvehiclesandparts.There are more than136 high-techenterprises inthe
zone and they accounted for more than 90 percent of the total industrial output of this
province. In 2009, the regional gross domestic product of this zone was 10.4 billion CNY,
increased21.7 percentthan2008.

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5.1.5 Ecological aspectsof Sichuan
Key words:variousterrains,rainy and warm,abundantresourcesforagriculture
SichuanProvince islocatedinthe upperreachesof the YangtzeRiver,betweeneastlongitude
92°21' to 108°12' and betweennorthlatitude 26°03 ' to 34°19' , 1,075 kmfrom itseast
to west, and over 900 km from its north to south. The topography over the whole province
differsenormouslyfromeasttowestwithcomplexandvariousterrains,includingmountains,
hills, plains, and plateaus, accounting for 77.1, 12.9, 5.3, and 4.7 percent respectively of the
total area. The whole province can be divided into three major parts: the Sichuan Basin,the
SichuanNorthwestPlateauandthe SichuanSouthwestMountains.
The Sichuan Basin is one of the four largest in the country, surrounded by mountainous
regions. It is covering an area of 165 thousand km2 and the regional climate is warm and
humid,warm inwinterand hot in summer,mostareas with annual rainfall of 1,000 to 1,200
mm, 50 percentof whichis concentratedinthe summerand at night.The annual temperate
of 16 to 18 degreesandaccumulatedtemperature of 4000 to 6000 degrees.Inthisareafrost-
free periodof 230 to 340 daysand fewersunnydaysandshortyear-roundsunshine duration
of 1,000 to 1,400 hours, 600 to 800 hours fewer than areas of the same latitude in the
downstreamYangtze Riverarea.
The northwestof SichuanProvince isNorthwestSichuanPlateau,belongingtothe southeast
cornerof TibetanPlateau,average elevationof 3,000to 5,000 meters,alpine climate, covered
with alpine meadow vegetation. The dominate climate is cold temperate with a cold winter
and collection summer. Valleys here are dry and warm while the mountains are humid and
cold,lackingof hydrothermal.The annual averagetemperaturehere only 4to12 degreesand
annual average rainfall of 500 to 900 mm.Year-roundsunshinedurationamountsto1,600 to
2,600 hours.
The annual average temperature in Southwest Sichuan mountain area is 12 to 20 degrees.
There is no distinctive season. Due to fewer clouds and a large number of sunny days, the
year-round sunshine durationreaches 2,000 to 2,600 hours. But there is comparatively less
annual rainfall,900to 1,200 mm, and distinctivewetanddryseasonswiththe durationof dry
seasonof 7 months.90 percentof the rainfall are concentratedfromMay to October.
Sichuan has rich soil types and abundant water resources, because there are nearly 1,400
riversand streams,this province alsowell-knownas “a province witha thousandrivers”.
Their soil resources including 25 soil types, 66 subtypes, 137 soil geniuses, 380 soil species.
And the water, average yearly precipitation is about 488.975 billion cubic meters. These
resourcesmake highlydevelopedagriculture inSichuan.The landsin West SichuanPlainare
fertile andwithhighproductivity,the patternof agricultural use isdouble croppinginayear.
However, for economy developing, the area of forest was continuous decrease. The
governmentpaysattentiontoit.In 2013, the annual afforestationonbarrenhills,wasteland
or sand to 2 million m2. The complete natural forest resources protection project of 520

15
thousand m2, to complete the project of returning farmland to forest area of 190 thousand
m2. At the end of the year, actual forest area was 177.1 million m2, total 27 wetland parks,
including 13 provincial wetland parks (5 new batches in 2013), 14 national wetland park (4
new batch in 2013). Forest coverage rate was 35.5 percent, an increase of 0.2 percent over
the previous year. There are 19.2 million hectares of forests with a coverage rates of 29
percent.

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5.1.6 Political-legal aspectsof Sichuan
Key words:optimizeinvestenvironment,structuraltax reduction,anti-corruption
The politicsof Sichuanisstructuredinadual party-governmentsystemlikeallothergoverning
institutions in mainland China. The Governor of Sichuanis the highest-ranking official of the
People's Government of Sichuan. However, in the province's dual party-government
governing system, the Governor has lesspower than the SichuanCommunist Party of China
Provincial Committee Secretary,colloquiallytermedthe "SichuanCPCPartyChief".
The SichuanProvincialCPCCommissionandthe Governmentattachgreatimportance tobuild
a better investment environment. While improving transportation, telecommunication and
energy supplying.They improve government functionsand ways of working, optimize soft
investment environment. They keep check, revise and enact relevant laws and regulations,
open more fields for foreign investment and non-government investment. Government
Service Centersof provincial andcitylevel have establishedfor“one stopservice”.Toprotect
investor'sright,establish law-breakingreportcenter.
According to the Report on the work of the Sichuan government for 2015, the government
will continue to implement structural tax reductions, it will benefit for 450 thousand self-
employed companies. The threshold of value-added tax and sales tax will be increased to
20,000 CNY,the thresholdisalsothehighestinChina.Setupenergy,waterinvestmentgroups
and Sichuanprovincial publicresourcesexchange centertoboostinvestment.
Meanwhile, the government implements a more active employment policy, combining with
the major industriesinhumanresourcesandemploymentpromotionwork.Promotingyouth
practice bases construction, micro credit projects and youth entrepreneurship. Sichuan
government increase the minimum living standard, ensure more people join endowment
insurance and new rural social pension insurance. These measures are ensure youth can
concentrate ontheirworkwithoutworriesfortheirelders.
Because Chinese government focuses on the fight against corruption. Three public
consumptions is the most famous one. It refers to Chinese mainlandfiscal appropriation for
abroad (boundary) fee, government vehicle purchase and operating cost, official business
expenses.Because of the three costsrelatingtouse publicfunds totravel,eatand drink;use
governmentcarfor private purpose andotherbad behaviors.Itbecomesacommonconcern
of the community. As Sichuan government published,in 2013 the financial budget for three
publicconsumptionsonly7.18 hundredmillionCNY,keepdecreasingby1.25 percent.
Also in 2014, Central Commission for Discipline Inspection arrested a large number of
embezzlers in Sichuan, includes Zhou Yongkang, the former Standing Committee of the
PolitburoStandingCommitteeof the CommunistPartyof China.Allof these thingscouldhelp
create a more liberal investmentenvironment.

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6. Meso analysis of Sichuan
6.1 Meso environment
Meso environmentisthe settingbetweenthe macroand micro opportunities. Inthisreport,
it isthe industryinwhicha companyoperatesandthe industry’smarket(s).
6.1.1 Agricultural/foodIndustryanalysis
Key words:agriculturalbase,increasing output, soilerosion
Sichuanisfamousfortheiragriculture inChina,theirgrain acreage and total outputall ranked
top five inChina.Theirtotal productionof pork, beef andmoutonalso rank firstnationwide,
and production for cotton, silk, tea, citrus, tung oil, dairy products playan important role in
China. According to the statistical data in 2006, Sichuan province has 7 countries ranked
Chinese top100 highestoutputof grain and16 countriesalsoranked Chinese top100highest
outputof meatcountries.
Table 7. Some basic data aboutagricultural industryof Sichuanin2013
The datafrom Nationaleconomy and society developed statisticalbulletin of Sichuan[5]
Subject unit In 2013 Compare with2012
Addedvalue of primaryindustry billionCNY 342.6 2.6%↑
Oil crops acreage millionkm2
1.26 1.4%↑
Medicine acreage millionkm2
0.10 2.2%↑
Vegetableacreage millionkm2
1.28 2.4%↑
Aquaculture area millionkm2
0.20 2.6%↑
Total outputof grain milliontons 33.9 2.2%↑
Total outputof cookingoil milliontons 2.90 1.4%↑
Total outputof vegetable milliontons 39.1 3.9%↑
Total outputof tea milliontons 0.22 4.9%↑
Total outputof fruit milliontons 7.19 4.9%↑
Total outputof medicine milliontons 0.40 2.3%↓
Total outputof hog million 73.1 2.0%↑
Total outputof cattle million 2.64 4.2%↑
Total outputof goat million 15.8 1.3%↑
Total outputof poultry No data 2.9%↑
Total outputof rabbit No data 3.4%↑
Total outputof egg No data 0.8%↓
Total outputof milk No data 1.5%↓
Total outputof aquaticproduct milliontons 1.26 6.0%↑
Table 7 illustrate the detailed total output of Sichuan of different kinds of product. As this
table showed,the outputof majorityproducts were increased,onlythe outputof medicine,
eggand milkdecreased. The mostimportantreasonis the investmentof Sichuanprovince for
agriculture keep increasing. The investment have three important trends: the amount of

18
investment raised year by year, forms of investment become more diversification and
practitionersincreased.
During2001 to 2009, Sichuanprovincial governmentinveston primaryindustry accumulated
to119.9 billionCNY,accounted8.8percentof the wholeprovincialfiscalexpenditure.Inthese
nine years,the moneyinvestedonagriculture raised4.3 times,annual growth rate was 20.3
percent.Especiallyafter2005, the data became 30 percentperyear,in2007 reacheditspeak
which was 53 percent. Meanwhile, government applied some policies to reduce the burden
of peasants. For example, abolishedagricultural tax and encourage rural credit. In 2009, the
total amount of agricultural loan was 87.5 billion CNY, accounted 17.8 percent of the total
amountof short-termloan.Inthatdecade,Sichuan addednewlyagricultural loan56.4billion
CNY, nearly twice than before. It makes farmers have more money to improve their
productive fixedassets.During 2000 to 2009, the cost on productive fixedassets increased
580 percent,annual growthrate was21.2 percent. (FengJiuxian,2010)[8]
At the end of 2013, the whole province has 375 thousand legal entities and 1,800 thousand
self-employed venture with a certificate. There were 14.64 million people working for
secondary and service sectors. Be compare with the data at the end of 2008, added 3.56
million people. Also during 2008 to 2013, the number of self-employed people with a
certificate raised by 8,200 to 4.58 million. Meanwhile, there were 926 thousand people
engagedinagriculture,forestry,animal husbandryandfisheries,includes2,000self-employed
people withacertificate.
However, the mainproblemsof Sichuanagriculture still needtosolve.Firstone issome area
didnot receive irrigationwatereffectivelyandefficiently.Secondone is soil erosion.
In 2013, Sichuan province newlyaddedeffective irrigationarea8,000 km2
,at the endof this
year,the total effective irrigationareawere 2,647,000 km2
.Meanwhile,decrease soilerosion
area of 2,460 km2
, the total were 77,230 km2
. These provides superior conditions for
agricultural orfoodsector companies developingtheirbusiness inthisprovince.

19
6.1.2 Distributionanalysis
Key words:developed road system, first-classinfrastructure,cheaperand fasterdistribution
Until the endof 2012, the total mileage of highways inSichuan reach29000 kilometers. 5500
kilometersexpressways (2014), ranked fifthinChina.The numberof total railway can reach
6380 kilometers in 2015. Sichuan have 4000 kilometers inlandwaterwayand 6 more than 1
milliontonsof annual throughputhavens.Sichuanhas10civilianairports,ChengduShuangliu
International Airport is the biggest one. In 2013, Shuangliu Airport ranked 44 in top 50
worldwide airportcomparisons.(AirportTrafficReport,2014)[9]
Asthe researchin2005 showed,the totallengthof opticalcable isaslongas203,000 km,long
distance call reaches 909,000 lines and the capacity for local programmed-controlled
switchboard reach 41.45 million sets. The telephone coverage in Sichuan accounts for 38
percent, with stationary phone 18.3 percent. The newly increased capacity for power
installationis2.72millionkWinyear2005.
Table 8. Some basic data aboutdistributionof Sichuanin2013
Subject Unit In 2013 Compare with2012
Turnoverof freighttraffic billionton-km 243.8 8.1%↑
Road billionton-km 148.5 12.0%↑
Railway billionton-km 82.0 0.3%↑
Air billionton-km 0.80 14.3%↑
Water billionton-km 12.4 20.1%↑
Turnoverof passengers traffic billionpeople-km 192.4 10.6%↑
Road billionpeople-km 10.7 6.3%↑
Railway billionpeople-km 31.0 2.3%↑
Air billionpeople-km 54.3 26.2%↑
Water billionpeople-km 0.27 1.3%↓
Business volumeof post
and telecommunication
billionCNY 77.0 11.1%↑
Business volumeof post billionCNY 8.3 15.1%↑
Business volumeof tele billionCNY 68.7 10.8%↑
Table 8 demonstrates the distribution power in different channels of Sichuan in 2013. The
trendisturnoverof freighttraffickeepimproving,especiallyroad,airandwaterfreighttraffic.
The reasonisgovernmentconcentratingtheireffortsoninfrastructure construction.The main
projectsare highwayandhigh-speedrailway.In2014, expresswayadded500 kilometersand
the government costs more money on building high-speed railway. They planned the total
mileage of high-speedrailwayshouldreach2500 kilometers,accounted to10 percentof the
total mileage in China until 2015. Meanwhile, the government also planned to build and
upgrade a transportnetworkcoveredeightbigcitiesinSichuan.Itmeansinthe nearlyfuture,
productdistribution inSichuanwillbe easier,faster andcheaper.

20
6.1.3 Customeranalysis
Key words:increased income,morecostof living,improvelife quality
The statistical data showed in 2013, per capita income of urban household is 23,894 CNY,
urban percapita disposableincome is 22,368 CNY. (‘Last year, urban per capita disposable
income of Sichuanprovince is22,368 CNY.Rankedno.22of the country’,2014) [10]
The income
from wage was 14,976 in 2013, rose 5.1 percent than previous year. Meanwhile, per
capita consumption expenditure also went up by 8.6 percent, the number is 16,343. The
resident expenditure, family equipment and service expenditure, transport and
telecommunications increased remarkably, which are 2.9, 9.0 and 12.3 percent. The
ConsumerPrice Index(CPI)increased2.8percentthan2012, detailedprice increase willshow
in the following table. For urban residents their Engel Coefficient was 39.6 percent and for
rural residentswere43.5 percentin2013.
(National economy andsociety developed statistical bulletinof Sichuan,2014)[5]
Table 9. The consumerpriceschangedin2013
Subject Province-wide Urban Rural
Consumerprice 2.8%↑ 2.8%↑ 2.8%↑
Food 4.8%↑ 5.0%↑ 4.5%↑
Grain 3.1%↑ 3.1%↑ 3.0%↑
Cookingoil 1.4%↑ 1.7%↑ 0.6%↑
Pork 0.0% 0.1%↑ 0.2%↓
Egg 6.6%↑ 6.7%↑ 6.5%↑
Aquaticproduct 4.4%↑ 3.7%↑ 5.9%↑
Vegetable 8.8%↑ 8.1%↑ 11.3%↑
Cigarette andwine 0.6%↓ 0.4%↓ 1.0%↓
Clothing 0.8%↑ 1.1%↑ 0.1%↑
Familyequipmentand service 1.9%↑ 2.4%↑ 0.7%↑
Healthcare 2.2%↑ 1.3%↑ 4.1%↑
Transport andtelecommunications 0.0% 0.0% 0.2%↑
Entertainment,educationproducts 1.6%↑ 2.0%↑ 0.6%↑
Resident 3.7%↑ 3.4%↑ 4.1%↑
As Table 9 showed, in 2013, the price of most products was increased. The crucial reason is
people cost more on resident and food. Because of this reason, customers reduce their
expenditure on shopping in the store but choose on shopping online for this way is cheaper
and flexible.The surveyshowedin 2014, the total amountof online retail turnoverwasover
thanone hundredbillionreachedto142.85billionCNY,dramaticgrowth54.7percentonyear-
on-yearbasis.

21
Anothernoteworthyphenomenonis upgrade product,like car,becomesanew supportpoint
for the economy.In2014, the salesamountof vehicle andrelatedpetroloccurred23 percent
of the total salesvolume.Atthe same time,salesvalue of electronicgoods like smartphone
and tabletalsoincreasingrapidly.Sichuancommercial office monitorednine keyenterprises,
theirsalesvolume of 3gmobile phonegrowthnearly50percentonyear-on-yearbasis.These
data demonstrate althoughthe costof livingincreased,peoplestillwantto improve theirlife
qualitybutinanotherway.

22
7. Reference
[1] Statisticsof Population.(2013, March 27)
RetrievedJanuary19,2015, from
http://www.sc.gov.cn/10462/10778/10876/2013/3/27/10253740.shtml
[2] 李俊霞 (2014) 人口流动对农村经济社会发展的影响研究
Li Junxia(2014) The research of influence of population flow to rural economicand social
development
RetrievedFebruary03,2015, from
http://www.sss.net.cn/ReadNews.asp?NewsID=50915&BigClassID=27&SmallClassID=93&bel
ong=sc
[3] LeonidA. Gavrilov andPatrick Heuveline(2003). Aging of Population
http://longevity-science.org/Population_Aging.htm
[4] Top 10 regions withhighestGDP inChina.(2014, April 01). Chinadaily
http://www.chinadaily.com.cn/bizchina/2014-04/01/content_17393546_8.htm#Contentp
[5] 2013 年四川省国民经济和社会发展统计公报
National economy andsociety developed statistical bulletin of Sichuan for 2013 (2014,
March 04)
http://www.sc.gov.cn/10462/10464/10465/10574/2014/3/4/10294729.shtml
[6] 2015 年四川省人民政府工作报告
Reporton the work of the Sichuangovernmentfor2015 (January28, 2015)
http://www.sc.gov.cn/10462/10464/10797/2015/2/5/10326259.shtml
[7] 四川省 2010 年第六次全国人口普查主要数据公报
The Bulletin2010 SixthPopulationCensusof the PRCof Sichuan(2012, February28)
http://www.stats.gov.cn/tjsj/tjgb/rkpcgb/dfrkpcgb/201202/t20120228_30404.html
[8] 冯久先 (2010) 四川农业生产投入与效益状况分析
FengJiuxian(2010) The analysisof Sichuan agriculturalproduction inputand benefits
RetrievedJanuary 30,2015, from
http://www.sc.stats.gov.cn/tjcbw/scsq/2013_702/201301/rdts/201011/t20101129_13948.h
tml

23
[9] AirportTrafficReport(2014, April 01) (p.32)
http://www.panynj.gov/airports/pdf-traffic/ATR2013.pdf
[10] 去年四川城镇人均可支配收入 22368 元, 排全国第 22 位
Last year, urbanpercapita disposable income of Sichuanprovinceis22368 CNY. Ranked
no.22 of the country (2014, January21). Sichuanzaixian
http://sichuan.scol.com.cn/dwzw/content/2014-01/21/content_6795409.htm?node=968

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