By staff reporter LI WUZHOU

THE cure for a disease like cancer has so far proved elusive, and with 10 million people diagnosed each year, the need for medical and pharmaceutical companies to come up with results is crucial. One Chinese company, the Yantai Medgenn Corporation, in Yantai, Shandong Province, hopes to be getting close with its genetic medicine, YH-16. This company will be putting its product on the market next summer, having been aided greatly by the nurturing business environment cultivated by the city of Yantai.

Mainly known as a tourism city and summer resort, Yantai now attracts many domestic and foreign investors seeking to expand their businesses in this beautiful seaside city. Located in the Jiaodong Peninsula in east China, Yantai was forced opened as a trading port in 1861 by the British and French allied forces during the Qing Dynasty (1644-1911). Nowadays, it has a solid industrial base, evidenced by its 1984 appointment by the Chinese central government as one of the first open coastal cities during China's early stages of opening to the outside world.

Daewoo Heavy Industries plant is one of the many foreign businesses to invest in Yantai's technological center.

In two decades Yantai has developed into an international industrial city, specializing in the automobile, fiber, machinery, telecommunications and pharmaceutical industries. There are also six institutions of higher learning and more than 30 scientific research institutes in the city. The latest technologies, such as online banking and tax payment and long-distance medical treatment, have been widely applied throughout the city.

Business in Yantai has been booming in recent years -- the city's economic growth indexes have been higher than 30 percent for several years, and its comprehensive economic capability ranked 9th among China's 33 state-level development zones. Foreign investment has been rapidly increasing; last year alone, Yantai utilized US$ 131 million of foreign investment, an increase of 63 percent over the previous year. Many large, well-known foreign enterprises, such as Daewoo Heavy Industries and Machinery, LG Electronics, General Motors and Nippondenso Corporation, have all invested in Yantai. Hon Hai Group, the largest Taiwanese business collective, also sent a business investigation group to Yantai in the summer of 2003 and signed an investment intention agreement. Of the top 500 enterprises of the world, more than 20 have established offices in Yantai. There are now overseas enterprises from more than 70 countries and regions in Yantai with total investment of over US $30 billion.

Friendly and Familiar Investment Environment

Another factor prompting investment in Yantai is its highly efficient local authority. Once a proposed investment project is examined and approved, the procedures are overseen by a special department of the Yantai Development Zone at no cost to the investor. If foreign enterprises encounter any difficulties throughout the process, they can contact the Trouble Shooting Office, which goes to work immediately and finds a solution within three days.

"I am happy to be working in Yantai. It has plenty of green areas and a pleasant environment. Sometimes I feel like I'm in Europe," said the general manager of Michael Weining (Yantai) Machinery. Many other overseas investors share his views. The attraction of Yantai for investors lies in its standardized investment policies and its beautiful and comfortable natural environment. As a seaside city, it has long beaches, mild climate and large green areas. Moreover, the Yantai Development Zone has rejected environmentally unfriendly enterprises since its inception in order to ensure a healthy ecology. Not only is the city very selective when considering investment projects, its policies reflect the desire to prevent pollution. There are only two chimneys in the development zone. They belong to the heat and power plants needed for power supply, and both have been filtered to prevent hazardous emissions. The zone has ruled that the two plants must use at least 30 percent of their profits for pollution control.

"We provide complete and caring services to enterprises in our zone," said Yang Xiguo, director of the South Korea Division of the Investment Promotion Department of the Yantai Development Zone. "All enterprises in our zone have been growing under our tender care." Practical problems of the investors have also been solved by the zone administration, such as beautifying the living environment and setting up international schools and hospitals to suit the needs of their family members.

To solve their financing difficulties, the development zone set up the Silver Bridge Bonding Company. This endeavor has proven hugely successful in dealing with many of the investing companies. The Shiwei Telecommunications Company sought help when its development was hampered by a loan shortage. The Silver Bridge guaranteed provision of loans of an amount three times the registered capital, helping the company to win a market share and expand its business.

Another firm, the Dongxing Company, obtained secured loans, and also attained cooperation with Nippondenso with the help of the development zone. It ultimately received another 200 million yuan in loans for the second phase of its expansion project and gained a 2 million yuan profit that year. The zone administration also provides 30 million yuan in research expenses for Yantai Medgenn. Altogether, some 80 companies have benefited from this financial guarantee service, receiving more than 200 million yuan of funds for their business development.

"I have worked 11 years for my company and so far the zone has not asked for one cent from any enterprise," said Mr. Yu Yinglin, director of the Planning and Information Department of Zhenhai Group. "This is very rare in China." The Yantai Development Zone has strict regulations forbidding its service organizations from demanding money from enterprises. Any infringements are severely punished.

Hot Spot for ROK Investors

Out of all the foreign investment in Yantai, 47 percent comes from the ROK. Yantai is only a one-hour flight from Seoul, as well as from Beijing, Shanghai and Tokyo, so ROK businesspeople come here to play golf, which is much cheaper than in Seoul. "There are many talents in Yantai. The education standard of eastern China is high, and rules and regulations are very clear," said Kenneth J Chae, general manager of Daewoo Heavy Industries Yantai, in fluent Chinese. During the Asian financial crisis, leaders of the development zone frequently asked Chae if his enterprise was in any difficulty or needed any help. This "tender care" from the development zone enabled Daewoo Heavy Industries to rapidly increase its market share. It soon became well known throughout China.

Chae, now president of the Yantai Korean Chamber of Commerce, was honored with the Bronze Tower Award by the president of ROK in 2002 in recognition of the miraculously quick development of his enterprise in Yantai. He is now an honorary Yantai citizen. To reciprocate, he acts as a consultant for China's Western Development and donates at least 500,000 yuan annually to the Hope Project, which helps impoverished school children.

Yantai enjoys a good reputation in South Korea. It now has 1,380 ROK investors, a South Korean residential village and a Korean school. Choong Nam Vheong, the ROK deputy general manager of Langchao LG Digital Mobile Communications, came to work in Yantai at the suggestion of a friend, and found many successful South Korean investors living in the city.

"The Chinese government and people are very encouraging to our foreign investors, and I feel China a good place to initiate and develop new business. China is a place full of opportunities and hope."