Russia is on the rise, Japan is on the ebb.
In 2022, Dalian's import and export to Japan will experience a negative growth of 2.6%. During the same period, the growth rate of Dalian’s import and export to Russia was as high as 59.5%, and it even soared to 74.2% in the first quarter of this year.
The former is getting farther and farther, and the latter is getting closer.
As early as ten years ago, 'Russia's advance and Japan's retreat' had already laid the groundwork in Dalian. MV Yongsheng set off from Dalian Port for the maiden voyage, loaded 16,540 tons of export steel and equipment at Jiangsu Taicang Port, and then turned back and sailed into the Bering Strait .
Subsequently, the ship crossed the Arctic Circle next to Russia and arrived in Rotterdam, Europe, becoming the first merchant ship in the history of Chinese navigation to cross the Arctic Northeast Passage.
In the same year, a month after the merchant ship arrived in Europe, 900 employees were pacing back and forth at a Japanese Toshiba factory in Dalian, anxiously waiting for an official document about the abolition.
Dalian, which was at the mercy of Japan and Russia in history, is now facing a new turning point in its destiny as its northern neighbors are looking eastward with all their might.
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Russia
The relationship between Russia and the Northeast has once again returned to the spotlight on the stage.
In the first quarter of 2023, the import and export of Heilongjiang Province to Russia was 49.04 billion yuan, a year-on-year increase of 24.5%. Liaoning's import and export to Russia was 11.12 billion yuan, a year-on-year increase of 63.2%. The total value of trade between Jilin Province and Russia was 5.73 billion yuan, a year-on-year increase of 92.3%.
Behind the surging trade is that Russia is accelerating its 'look east'. Since the outbreak of the Russia-Ukraine conflict, the Western world has launched multiple rounds of sanctions against Russia, adopting various methods such as restricting crude oil exports, freezing freight routes, blocking high-tech, and financial sanctions, in an attempt to drive Russia out of the game.
At the crossroads of history, the eastward strategy has become an inevitable choice for Russia, and even opened up the 'dead end road' that had been blocked for 163 years, and reopened the port of Vladivostok to Jilin Province.
In this wave of eastward tide, the Northeast region, which has a geographical advantage, will undoubtedly enjoy the biggest channel dividend. And Dalian is undoubtedly the one that has received the most attention.
As the most economically powerful city in the three northeastern provinces, Dalian is the most important import and export hub for the entire Northeast, and is the central node of the Northeast Asian economic circle.
In addition, Dalian Port is the only port in Northeast China included in the 'Belt and Road' territory. Its natural conditions are extremely superior and it is a natural deep-water ice-free port. Starting from here, it is expected to revitalize the economic lifeline of the entire Northeast.
In the new historical period, there is actually a huge space for cooperation between Dalian and Russia in the future.
From the perspective of import and export structure, Russia and Dalian are extremely complementary. 80% of the Russian Far East's exports are energy and fuels, and 10% are wood and pulp products. More than 50% of imports were machinery and equipment, 11% were food, and 11% were textiles and footwear.
Dalian's top imported material is crude oil, accounting for nearly 40%. More than half of the exported goods are mechanical and electrical products, another 10% are agricultural products, and 9% are labor-intensive products.
Therefore, bilateral trade exchanges have an unlimited imagination.
The first is energy. Russia's oil reserves are 17% of the Asia-Pacific region's, and its natural gas reserves are 27% of the Asia-Pacific region's. The petrochemical industry is the first pillar industry in Dalian, accounting for more than 40% of the total industrial output value.
Dalian is being built into one of China's three major oil transfer and storage centers, and the demand for crude oil here will show explosive growth in the future. The growth rate of Dalian's imported crude oil will soar from 11.2% in 2021 to 37.8% in 2022.
China's oil and gas companies can cooperate with Russia to process energy with the help of Dalian's mature oil extraction and processing technology base, and at the same time use the location advantage of Dalian Port's proximity to Russia for transit exports.
The second is new energy. The world's energy is undergoing a transformation, and Russia is well aware that the world's demand for fossil energy will further decrease in the future. Russia has always had abundant reserves of new energy, including hydrogen energy, but it has suffered from failure to realize industrialization.
In contrast, Dalian has already realized a complete hydrogen energy industry chain, which makes Dalian and Russia have a huge space for cooperation in hydrogen energy development.
The third is fishery. Russia has ideal conditions for the development of aquaculture, while China has become the world's largest producer of aquaculture.
Dalian's enterprises already have very advanced breeding technology, tools and modern management experience, and can cooperate with Russia at the technical level to jointly build a very large-scale cold chain logistics and seafood trade center in the Asia-Pacific region.
The fourth is in the shipping industry. In the past, most of the maintenance of Russian fishing boats was handed over to South Korea, but in the new world structure, Dalian, as an important research and production base of Chinese ships and marine engineering equipment, can afford the overflow of new Russian fishing boat construction and old boat maintenance. business.
In 2020, the trade between China and Russia is only 107.7 billion U.S. dollars, but it will soar to 146.8 billion U.S. dollars in 2021, and it will soar to 190.2 billion U.S. dollars in 2022.
The two sides also proposed that the bilateral trade volume should reach 250 billion U.S. dollars by 2024. As long as Dalian digs deeper into cooperation opportunities, it is entirely possible to take the biggest slice of the pie. The balance of history is tilting toward Dalian.
Japan
Just as Russia is gradually becoming the economic hinterland of Dalian and even Northeast China, the connection between Japan and Dalian, which is across the sea, is relatively weakening.
Over the past forty years, Japanese capital has been deeply embedded in Dalian and has become an important support for economic development.
According to Friedman, the author of 'The World Is Flat', Dalian's geographical location is very superior, and it is only an hour's flight away from South Korea and Japan. In addition, it also has a large number of talents who are proficient in Japanese, which makes it an outsourcing market favored by Japanese companies.
As early as the Japanese occupation period in the last century, there were 500,000 Chinese, 200,000 Japanese and Koreans living in the land of Dalian. Japanese is the common language for communication between the people of the three countries.
Later, in the 1990s, the Eastern Lion revived, and the whole country was obsessed with crazy English, but Dalian found another way, and everyone from dolls to college students was learning Japanese.
Since 1990, Dalian has held Japanese speech contests for middle school students for 30 consecutive years. In Dalian's colleges and universities, both liberal arts and sciences have opened Japanese subjects. Because in the job market in Dalian, Japanese is a hard currency, and it is more popular than knowing English.
The elimination of language barriers has rapidly increased the attractiveness of Dalian, and countless Japanese capitals have poured in.
American reporter Thomas described it in this way in 2004: Japanese companies can hire a software engineer’s salary in their own country, in addition to hiring 3 software engineers in Dalian, they can also hire a roomful of call center operators.
Such low labor costs can reduce the cost of Japanese companies by 30%-40%, and there is no reason to reject Dalian.
Since 1998, in just 5 years, more than 2,000 Japanese companies have settled in Dalian, and a 'Chinese version of Bangalore' was born, which also became the starting point of Dalian's software industry.
Dalian's actual use of foreign capital ratio
In 2019, Japanese investment in Dalian reached a record high of US$160 million, accounting for 25% of all foreign capital.
Amount of foreign capital actually used in Dalian (10,000 U.S. dollars)
In 2020, Nidec Corporation will build a motor production base in Jinpu New District, Dalian. In 2022, a joint venture between Toyota and Panasonic will start construction of a third plant in Dalian. THK, a Japanese machinery parts manufacturer, also plans to build a new factory in Dalian in early 2023.
Japanese investment is still flying in the land of Dalian like snowflakes, and Japan is still the most important trading partner of Dalian, but behind the seemingly busy scene, the turning point has already arrived.
From the perspective of foreign investment, in 2021, Japan will no longer be the largest source of foreign investment in Dalian, and South Korea will become the country with the largest investment in Dalian, while Japan will rank fourth.
From the perspective of foreign trade and export, in 2007, among the top 50 export enterprises in Dalian, the 3rd, 5th, 6th, 8th, and 10th were Japanese-funded enterprises. But by 2018, among the top 10 export companies, the ranking of Japanese-funded companies has dropped to 7th, 9th, and 10th.
List of Top 100 Dalian Export Enterprises in 2018
In recent years, along with the growing strength of China's economy, its land costs, labor costs, and financing costs have all been rising slowly, making it difficult for Dalian to maintain its past 'low cost' advantage.
Moreover, due to the double impact of the game of great powers and the new crown epidemic, global companies are shrinking their overseas production territory year by year. Some choose to return to their home countries, and some transfer their production positions to countries such as Southeast Asia. For example, in 2018, Japanese companies such as Mitsubishi Electric, Komatsu, and Toshiba Machinery began to transfer part of their production in China to other countries.
Although the number of Japanese companies in Dalian is declining, it still ranks third in the world
Dalian has turned over the history of Japanese companies as the main line in the information service industry, and the manufacturing industry is still waiting for the final answer.
Over the past 20 years, due to seizing the opportunity of Japanese service outsourcing, Dalian's software industry has risen rapidly from scratch. And Dalian is well aware of the limitations of Japanese companies, and has been trying to make more attempts in the upstream business, European and American regions, and emerging Internet businesses for many years.
Walking into the Dalian Software Park in the high-tech zone, rows of office buildings tower into the sky, and there are more than 130 Fortune 500 and industry-leading companies from all over the world.
A group of European and American companies such as IBM, Hewlett-Packard, Accenture, and Cisco have chosen to develop new businesses such as shared service centers, data development and financial background service centers, data warehousing, and cloud computing. A number of leading local outsourcing companies such as Neusoft, Pactera, Dalian Huaxin, and Yida Information have emerged here.
Today's Dalian Software Park, in terms of quantity, is home to local companies, European and American companies, and Japanese companies. From a business point of view, it has extended from simple outsourcing services to artificial intelligence, big data and cloud computing, intelligent manufacturing, and the Internet of Things. .
Contradiction
Open the map of Dalian, and you will find an interesting contradiction.
On the west side of the city, the streets are all in the shape of small squares, while the streets on the east side are radial in the center.
It is obviously the same city, why the difference in road planning is so big. The answer is hidden in history: the east came from Russia, and the west from Japan.
Behind this design with different styles, it shows the contradictions that Dalian is carrying. Throughout Dalian's century-old history, it seems to be a very contradictory city.
The first is identity. This is a city in the Northeast, but also a city that is not in the Northeast. Although Dalian is located in the northeast, its latitude is lower than that of Tianjin. Here, the ice and snow in the Northeast does not exist, and the cool summers and warm winters and abundant seafood have instead become the impression many people have of Dalian. This is the reason why many people can't find the feeling of Northeast China at all in Dalian.
The second is economically. As the largest city in Northeast China, Dalian’s GDP is actually only more than 843 billion yuan, which is only equivalent to 26% of Shenzhen’s and 44% of Wuhan’s. It lacks sufficient weight in the country. But on the other hand, its LNG ships, aircraft carriers, CNC machine tools, as well as equipment manufacturing, shipbuilding, etc., enjoy the top voice in the country, which is unmatched by many high-rise buildings in other cities.
Moreover, one of the fixed venues for Davos each summer is Tianjin and the other is Dalian. In the summer, more than 2,000 political and business leaders, academic experts and media representatives from nearly 100 countries and regions will fly to Dalian from all over the world to attend this international event. This kind of glory is not even enjoyed by members of the Trillion Club such as Nanjing, Wuhan, Suzhou. Instead, Dalian, a somewhat peripheral city, has become the starting point for conveying the economic weather vane to the world.
The last is the development strategy. This is a city tossing back and forth between the secondary and tertiary industries. In the 1990s, when many coastal cities across the country were still working hard in the manufacturing industry, Dalian bucked the trend and implemented the industrial policy of 'retire two and enter three' in advance.
It relocated the heavy industry enterprises in the city, and turned around to start the tertiary industry and high-tech industries. The ultimate goal is to become 'Northern Hong Kong', a modern international city dominated by high-end service industries such as finance, commerce, and information.
This choice is actually very similar to Zhuhai back then. That small southern city advocated environmental protection, rejected the 'three to one compensation' industry, and advanced the development of tourism, exhibitions, and high-tech service industries. However, the same policy of 'retire two and advance three' made the fate of Dalian and Zhuhai the same. They both missed the best economic dividends and were eventually overtaken by other cities.
At the beginning of the 21st century, under the call of revitalizing the Northeast, Dalian once again chose to return to the secondary industry and returned to the track of 'heavy industry'. Petrochemical, shipbuilding, equipment manufacturing, etc. are making rapid progress.
At this time, the software industry, which originally had a strong first-mover advantage, has not improved much. Seeing that Nanjing, Jinan, and Chengdu have successively become well-known software cities, Dalian's software industry has not been successfully upgraded, and it mostly stays in the middle and low-end chain of software outsourcing services.
Thirty years ago, Dalian was still one of the top ten star cities in the country, competing with Qingdao for the third city in the north. However, in just ten years, the gap between Dalian and Qingdao has climbed from more than 30 billion yuan in 2013 to more than 800 billion yuan in 2022.
Today, Qingdao has successfully transformed from heavy industry to light industry by relying on the production of home appliances, food and beverages, etc., and has become an important light industry manufacturing base in northern China. Well-known enterprises such as Haier, Hisense, Tsingtao Brewery, and Double Star have emerged.
On the other hand, Dalian has 'sinked' along with the entire Northeast, missed the golden period of development, and finally slowed down step by step.
However, Dalian still has a chance.
In the first quarter of 2023, the fastest growing area in Dalian is the equipment manufacturing industry, with a year-on-year increase of 24.6% in added value, 9.0 percentage points of the city's above-designated industries, and a growth contribution rate of 74.6%.
Being in the 'General Armament Department of the Republic' in Northeast China, Dalian still holds a lot of good cards in its hands - high-tech shipbuilding industry, rail transportation equipment industry, high-end CNC machine tool industry, and emerging industries such as new energy vehicles and biomedicine. industry.
Moreover, the location conditions of Dalian seem to be on the eve of great changes.
Ten years ago, the crew of the Yongsheng ship may still be worried about the safety factor of the Arctic route before leaving. Ten years later, with the accelerated melting of glaciers in the Arctic Ocean, China and Russia's assessment of the 'safety value' of this waterway has already been greatly improved.
As of 2018, Dalian's COSCO SHIPPING Group has dispatched more than 10 freighters to carry out more than 14 voyage missions in the Northeast Passage of the Arctic. in
The five cargo ships in 2017 mainly carried equipment, steel, pulp and other goods, and became the exploration of Chinese merchant ships conducting normal navigation in the Northeast Passage of the Arctic.
Some experts predict that by 2020, the navigation time of the Arctic Ocean may be extended to 6 months, and even by 2030, the Arctic Ocean will be open to navigation all year round.
According to the estimates of the Russian Northern Sea Route Administration, the transportation volume of the Arctic Northeast Passage will climb from 3.982 million tons in 2014 to 51.1 million tons in 2030.
Traffic in the Arctic Northeast Passage
Dalian Port plays an extremely important role in Russia's opening strategies such as the 'Coastal International Transport Corridor' from the Far East to the Asia-Pacific region and the 'Ice Silk Road'.
Not only that, in addition to the Northeast Passage along the coast of Siberia, the Arctic Route also includes the Northwest Passage along the coast of Canada. These two golden waterways.
Compared with traditional routes, traveling to Europe and the east coast of the United States via these two waterways can greatly reduce the voyage and reduce shipping costs.
In the future, in this brand-new world navigation and trade system, Dalian will be promoted from a branch to a center at once, becoming the first choice for inland China and the transfer of foreign-owned industries.
Politically, the Arctic route will be a major fulcrum of national security. Economically, it outlines a larger imagination space for Dalian, and also lays a historical foreshadowing for the revitalization of the old industrial base in Northeast China.
references:
1. Research on the docking of Northeast China and Russian Far East Opening Platforms under the New Situation, Guan Heqi, Heilongjiang University, 2022
2. Historical Investigation of Dalian Free Port System during Japanese Colonial Rule, Shi Shantao, Modern History Research, 2020
3. Policy recommendations for promoting economic and trade cooperation between Dalian and Eastern Russia in the post-crisis era, Gao Xin, Heilongjiang Foreign Trade and Economic Cooperation, 2010
4. Jointly build the Arctic waterway and develop the 'Ice Silk Road', Lu Naxi; Lu Shanbing, Western Development, 2018
5. The world is flat, Thomas Friedman, Hunan Science and Technology Press, 2006
6. Why are Japanese companies in Dalian unable to retain their employees? Hu Wancheng, Nanfengchuang, 2019
7. As far as the eye can see, the sea and the sky are wide-discussion on Dalian's economic development strategy, Lin Haifeng, Hejun Consulting, 2019
8. Dalian Economic Development in the Century, Sun Wenbo, Hejun Consulting, 2019