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Shandong: Market Profile

Major Economic Indicators

Economic Indicators2015Jan-Nov 2016
ValueGrowth
(%, y-o-y)
ValueGrowth
(%, y-o-y)
Gross Domestic Product (RMB bn)6,300.28.014,870.437.51
Per Capita GDP (RMB)64,1687.31
Added Value Output
   Primary industry  (RMB bn)497.94.21351.734.11
   Secondary industry (RMB bn)2,948.67.412,197.136.41
   Tertiary industry (RMB bn)2,853.79.512,321.639.21
Value-added Industrial Output2 (RMB bn)7.516.81
Fixed-assets Investment (RMB bn)4,738.213.94,702.910.5
Retail Sales (RMB bn)2,776.110.62,768.410.3
Inflation (Consumer Price Index, %)1.22.0
Exports (US$ bn)144.1-0.4124.3-2.6
   By foreign-invested enterprises (US$ bn)56.1-9.946.5-9.3
Imports (US$ bn)97.7-26.187.2-0.1
   By foreign-invested enterprises (US$ bn)37.3-16.629.4-11.8
Utilised Foreign Direct Investment (US$ bn)16.37.315.00.1

Notes:
1
In Renminbi real term
2
For all state-owned and other forms of enterprises with annual sales over RMB20 million
3
Jan-Sep 2016

Sources: Shandong Statistical Yearbook 2016, Shandong Statistical Bureau, China Customs Statistics, 12.2015, 11.2016

 

General Background

Shandong lies in the Bohai Bay economic region. It spans a total area of 156,700 sq kilometres. Total population stood at 98.47 million in 2015. Jinan is the provincial capital of Shandong. Other major cities include Qingdao, Yantai, Zibo, Weihai, Weifang, Dongying, Rizhao which are collectively known as the cities cluster in the Shandong peninsula. The cities cluster represented 62% of Shandong’s GDP in 2015. Qingdao and Yantai are two of the major ports in China.

Shandong’s private sector has developed very quickly. The total number of private enterprises reached 1.34 million in 2014, compared to 363,000 in 2006.

Industries

Shandong is endowed with agricultural and marine resources. As a base of agricultural and marine production, Shandong has developed strong food manufacturing and food processing industries. Yantai is an especially important export base of agricultural products, focusing on apples, peanuts and vegetables. The long coastline of Shandong has also endowed it with strong potential in developing industries such as offshore petroleum, seaside tourism and seawater utilisation.

 

Composition of GDP (%)

 20052015
Primary10.6
7.9
Secondary57.446.8
    Industry51.7
41.1
Tertiary32.0
45.3

Source: Shandong Statistical Yearbook, 2016

 

Due to the rich natural resources, particularly oil (it has one of the leading oil fields in China--Shengli Oil Field) and coal, Shandong’s excavating and energy industry is very strong. Industries are mainly located in Qingdao, Yantai, Weifang, Jinan and Weiha.

 

Output Share of Leading Industry Groups (2015)

 Share of value-added industrial output (%)
Raw chemical materials and chemical products10.0
Processing of food from agricultural products7.7
Manufacture of general purpose machinery6.1
Manufacture of non-metallic mineral Products5.9
Textile industry
5.8
Manufacture of special purpose machinery4.6
Manufacture and processing of non-ferrous metals4.6
Manufacture of automobile4.4
Manufacture of electrical equipment and machinery3.8
Manufacture and processing of ferrous metals2.6

Notes:  All state-owned enterprises and other forms with annual sales over RMB20 million
Source: Shandong Statistical Yearbook 2016

 

Shandong’s industrial output has been dominated by heavy industry which accounted for about 68% of the gross industrial output. Nonetheless, Shandong is also a cradle for many national giants in light industry. Shandong has successfully promoted many famous brands such as Haier Electronics, Hisense Electronics, Tsingdao Beer, Qingqi Motorcycles, Kongfujia Liquor and Weifang Kite etc.

Within the tertiary sector, wholesale and retail trade was the biggest sector, which had an output value of RMB841.6 billion (+9.7%) in 2015. Other services sectors enjoyed fast growth included services to households, finance, hotel and catering services.

Tourism

Shandong is a popular tourist spot, going for the charming and romantic beachscape or the beautiful buildings with typical European style. In 2015, Shandong attracted 650 million (+9.2%) domestic tourists with a revenue of RMB650.5 billion (+13.9%). Overseas tourists reached 4.61 million (+3.4%) generating a revenue of US$2.9 billion (+6.7%).

Foreign Trade

In 2015, the US was Shandong’s leading export market, followed by Japan and Korea owing to geographical proximity. Major exports included machinery, electronics, textiles, garments, vehicles and related parts, plastics and related products, base metals and related products.

South Korea was the largest import source, followed by the US, Australia and Brazil. Major imports included minerals, machinery and electrical equipment, seeds and fruits, plastics and related products.

In 2015, Shandong exported US$5,583 million worth of goods to Hong Kong, and imports from Hong Kong amounted to US$246 million.

Foreign Investment

FDI in Shandong are mainly in the manufacturing sector. By the end of 2015, manufacturing sector accounted for 65.8% of the cumulative total of utilised FDI. In 2015, FDI going to the tertiary sector accounted for 37.2% of the total FDI. Real estate is important, accounting for 39.4% of the cumulative total of utilised FDI in the tertiary sector by the end of 2015.

 

Chart: Utilised FDI of Shandong
Chart: Utilised FDI of Shandong

 

Hong Kong surpassed South Korea and became Shandong’s largest source of FDI. In 2015, FDI from Hong Kong accounted for 46.3% of Shandong’s utilised FDI. In 2015, other major foreign investors came from South Korea, Singapore and Japan. Qingdao, Yantai and Jinan are the primary destinations of overseas investments.

Multinational companies such as the German Metro, Siemens, the French Carrefour, Daewoo, LG and Samsung of South Korea, Toyota of Japan, Kellogg’s of the US have already set up their subsidiaries in Shandong.

Consumer Market

Shandong is the second largest consumer markets (in terms of retail sales) among all mainland provinces and municipalities, only after Guangdong. Retail sales of consumer goods increased by 10.6% to RMB2,776.1 billion in 2015, accounting for 9.2% of the national total. Major commercial centres are located in Jinan, Qingdao, Yantai, and Weifang. In 2015, annual per capita disposal income of urban households grew by 8% to RMB31,545.

The landscape of retail distribution in Shandong is changing rapidly in recent years. While the importance of traditional department stores has declined, various forms of modern operation such as shopping malls, supermarkets, warehouse type markets, chain stores, and convenience stores are prolific.

 

Composition of Per Capita Expenditure of Urban Household (%)

 20002015
Food34.727.8
Clothing13.39.8
Household articles11.27.4
Medicine & healthcare services6.47.1
Transportation & communications7.013.8
Recreation, cultural & education14.2
10.8
Residence7.920.4

Source: Shandong Statistical Yearbook, 2016

 

Major department stores and shopping centres in Shandong include Shandong Yinzuo Shopping Center (山東銀座購物商城), Zibo Department Store Building (淄博百貨大廈), Qingdao Liqun (青島利群) Group Co. Ltd., Jinan Hualian (濟南華聯) and Yantai Zhenhua Department Store (煙台振華百貨), etc.

In recent years, many foreign investors have set up joint venture retail outlets in Shandong’s major cities. Foreign department stores/supermarkets in Shandong include AEON, Carrefour and Metro.

 

Economic Indicators of Major Cities (2015)

CitiesGDP
(RMB bn)
Per Capita GDP
(RMB)
Gross Output
Value of Industry
(RMB bn)1
Retail Sales
(RMB bn)
Export value
(US$ bn)
Jinan (濟南) 610.085,919530.7341.05.9
Qingdao (青島) 930.0102,5191,679.6371.445.3
Zibo (淄博) 413.089,2351,113.6195.05.8
Yantai (煙台) 644.691,9791,529.7267.928.0
Weifang (濰坊) 517.155,8241,252.9227.712.9
Weihai (威海) 300.2106,922693.3131.212.6

1 For all state-owned and other forms of enterprises with annual sales over RMB20 million
Source: Shandong Statistical Yearbook 2016

 

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