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### Viewing cable 06GUANGZHOU14936, LONG MARCH: QUANZHOU - IT'S HARD TO BEAT XIAMEN

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
06GUANGZHOU14936 | 2006-05-21 23:47 | 2011-08-23 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Consulate Guangzhou

`

    VZCZCXRO2103
    RR RUEHAG RUEHCN RUEHDF RUEHGH RUEHIK RUEHLZ
    DE RUEHGZ #4936/01 1412347
    ZNR UUUUU ZZH
    R 212347Z MAY 06
    FM AMCONSUL GUANGZHOU
    TO RUEHC/SECSTATE WASHDC 8261
    INFO RUEHOO/CHINA POSTS COLLECTIVE
    RUCNMEM/EU MEMBER STATES COLLECTIVE
    RUCPDOC/USDOC WASHDC
    RUEAIIA/CIA WASHDC
    RUEKJCS/DIA WASHDC
    RHHMUNA/HQ USPACOM HONOLULU HI

` `

    UNCLAS SECTION 01 OF 03 GUANGZHOU 014936

    SIPDIS

    SENSITIVE
    SIPDIS

    STATE FOR EB, R, EAP/CM, EAP/PD, DRL
    STATE PASS USTR - STRATFORD, CELICO
    USDOC FOR 4420/ITA/MAC/MCQUEEN, DAS LEVINE
    USPACOM FOR FPA

    E.O. 12958: N/A
    TAGS: ECON PGOV ETRD EINV CH
    SUBJECT:  LONG MARCH: QUANZHOU - IT'S HARD TO BEAT XIAMEN

    REF:  A) Guangzhou 13562 B) Guangzhou 13384 C) Guangzhou

    13385 F) Guangzhou 14707 G) Guangzhou 14818 H) Guangzhou
    14848

    ¶1.  (SBU) Summary: Quanzhou, the wealthiest city in Fujian
    and itself a coastal city in the southern part of the
    province, strikes a contrast to Xiamen as the city neglects
    its vast potential as a tourist and economic hub through
    poor intellectual property rights protection and
    conservative planning.  As the last major stop on the
    Consulate Guangzhou's long march trip, Vice-Mayor Zeng
    discussed the city's transformation from agrarian society to
    a shoe-producing center with help from Taiwanese investment.
    Well taken care of local religious and historic sites offer
    hope for the city to expand revenues through tourism.
    Sadly, unenthusiastic efforts by local officials to secure
    intellectual property rights (IPR) in a city known to have
    IPR problems will possibly affect the levels of foreign
    direct investment in the city.  End Summary.

    WHAT A DIFFERENCE AN HOUR CAN MAKE
    -----------------------------------

    ¶2.  (U) Approximately 100 kilometers north of Xiamen along
    the coast of Fujian province lies Quanzhou.  Although the
    drive was a little more than an hour, the contrast between
    the two cities was striking.  Where Xiamen's outskirts
    appeared planned with an abundance of parklands and whose
    major arteries lead one along its well-preserved coastline,
    Quanzhou is a hodgepodge of decaying and restored housing
    and factories that belie the city's status as wealthiest in
    Fujian.  Roadways gave no hint that you were still along the
    coast or that this once proud city was formerly a major port
    of the Cong and Yuan Dynasties.

    ¶3.  (U) Quanzhou Vice-Mayor Zeng Huabin stressed that
    Quanzhou is a progressive city leaving agriculture behind,
    claiming only 5% of the population remained agrarian.  He
    emphasized that tourism and goods manufacturing were the
    economic engine of today's Quanzhou and would be the base on
    which to build the city's future.  As an example of
    Quanzhou's ability, the Vice-Mayor stated factories in the
    city had manufactured 950 million pairs of shoes in last
    year alone.  He cited heavy investment from Taiwan as being
    a major factor in driving this change in the city.  Vice-
    Mayor Zeng also proudly announced Quanzhou's sister-city
    agreement with San Diego and stressed Quanzhou would soon
    send a delegation to visit its younger sister across the
    Pacific.

    TOURIST POTENTIAL EXISTS
    -------------------------

    ¶4.  (U) Getting past first impressions, a tour of Quanzhou's
    tourist highlights revealed that the city does have much to
    market.  In addition to a well-preserved city center that
    has worked with UNESCO to maintain its original appearance,
    Quanzhou has a treasure of archaeological sites and
    religious relics in excellent condition.  Quanzhou was once
    the terminus of the Maritime Silk Road and, as such, was
    home to merchants and sailors from many diverse nations of
    the Middle East, Europe, and Asia.  The long and largely
    peaceful co-existence of these diverse peoples for almost
    five centuries left Quanzhou with a varying array of
    mosques, churches, temples, monuments, and cemeteries.
    Unfortunately, earthquakes and time have devastated many of
    these sites, but many pieces connecting to this storied past
    can still be found.

    ¶5.  (U) The Quanzhou Museum of Maritime History houses a
    surprisingly large array of these artifacts covering Islam,
    Christianity, Hinduism, and the Manichean faith.
    Gravestones from both Muslim and Christian graves have been
    salvaged showing scripts in Arabic, Spanish, or English on
    one side and carved Chinese characters on the other.  The
    amount of Islamic artifacts unearthed is so large that a new
    Islamic History wing of the museum is about to be opened.
    The setting and quality of the museum and its displays are
    on par with any found in China.  The city also boasts
    religious sites such as Lao Jun Rock, an enormous carved
    statue of the deified founder of Daoism, the Sacred Tombs of

    GUANGZHOU 00014936  002.2 OF 003

    Islam at Lingshan Hill, still in pristine condition,
    Qingjing Mosque built in 1009, and the Buddhist Kaiyuan
    Temple Complex with two giant granite pagodas looking out
    over the city.  It is this depth and variety of religious
    and cultural history that the city is attempting to exploit
    as a lure for tourists.

    DEVELOPMENT - A PLAN WITHOUT DETAIL
    ------------------------------------

    ¶6.  (SBU) Quanzhou city officials Mr. Hong Liangquan, Deputy
    Director of the Economic & Trade Bureau and Director of
    Quanzhou Office of Rectification and Standardization of
    Market and Economic Order (MORO), Mr. Xu Qinghai, Deputy
    Director of the Quanzhou Administration of Industries and
    Commerce, Ms. Huang Danping, Director of the Quanzhou
    Intellectual Property Office, and Mr. Zhang Fan, Deputy
    Director of the Press and Copyright Bureau discussed
    Quanzhou's 11th five-year development plan and IPR education
    and enforcement efforts.  While development plans in Xiamen
    were about creating opportunities for the city, Quanzhou's
    development seems to be driven less by creating
    opportunities and more by seizing whatever opportunities
    come the city's way.  Quanzhou currently is the richest city
    in Fujian province by GDP and is primarily a center of
    textile, shoe, and handicraft manufacturing, due in great
    part, to Taiwan investors.

    ¶7.  (SBU) Director Hong read most of the city's 11th Five
    Year Development Plan, a plan that was long on goals, but
    short on details about how to get there.  One stated goal
    was to double government revenues by 2010 but this
    projection relies solely on maintaining the city's current
    GDP growth rate for the remainder of the decade.  Lowering
    energy consumption per unit of GDP by 10%, modernizing
    agriculture, developing 100 new enterprises, increasing
    medical benefits for farmers, restoring the port to its
    former glory, and better utilizing Quanzhou's local history
    and cultural resources for tourism were other stated goals
    (mostly in accord with national directives for the 11/5
    plan), but no roadmap was presented.  When questioned about
    what tourist promotion could be done, local officials could
    only respond with excuses that the city had poor funding,
    was in a bad location, and could not compete with the
    wonders of Beijing, Shanghai, and Xian.

    INTELLECTUAL PROPERTY RIGHTS -
    UNENTHUSIASTICLY MEETING MINIMUM REQUIREMENTS
    ---------------------------------------------

    ¶8.  (SBU) Nearly all current investment in Quanzhou comes
    from Taiwan and overseas Chinese who have roots in the area.
    It is unclear how much more can be drawn from this well,
    though many of the Taiwan-invested shoe and apparel
    companies are also pirating and counterfeiting legitimate
    goods on the side.  Quanzhou is viewed by many U.S.
    businesses as a major center for counterfeit production.
    While a few major American companies such as Wal-Mart, Nike,
    and ADM are invested in enterprises in the city, plans for
    an ExxonMobil refinery are currently on indefinite hold
    despite local officials' enthusiasm for the project.
    Quanzhou's past IPR problems make further investment from
    American and other foreign firms a shaky assumption at best.

    ¶9.  (SBU) Quanzhou has three agencies, focused separately on
    Trademarks, Copyrights, and Patents, under the broad
    supervision of the Office of Rectification and
    Standardization of Market Economic Order (MORO) which are
    assigned to combat IPR violations within the city.  The
    city's IPR plan meets the Chinese State Council and
    provincial government assignment to implement IPR protection
    but the emphasis is on promotion of IPR for local companies
    and on Quanzhou's interagency cooperation.  This type of
    development has become a common focus of many the IPR
    development efforts of many cities.  Much less emphasis
    appears to be placed on the actual discovery, combating, and
    prosecuting of IPR violations, especially those involving
    foreign companies.  To illustrate this imbalance, most facts
    presented by officials were about the numbers of locally-
    registered trademarks and copyrights and local promotion
    events.  It was only after questioning about criminal

    GUANGZHOU 00014936  003.2 OF 003

    transfers that officials commented, almost casually, that a
    case in Quanzhou regarding a local person manufacturing
    counterfeit products ended with a fine of RMB one million
    (USD 120,000) and was cited as a national Top 10 case for
    IPR enforcement by Beijing for the year 2005.  What should
    be a source of pride for the agency was strangely brought up
    only as an afterthought.

    ¶10.  (SBU) Overall, the presentations implied, and in many
    cases outright stated, that Quanzhou lacks interest in IPR
    enforcement.  Key areas of health and safety, such as food
    and drug patents and complaints of counterfeiting, are under-
    investigated.  Thresholds for criminal transfer and
    prosecution use the counterfeit product cost rather than the
    genuine product price for computation of total value, making
    most cases fall well below the threshold for criminal
    investigation.  Staffing is inadequate in most agencies for
    investigation of cases, and in some areas such as patent
    violations; most violations are not acted upon unless a
    complaint is made by a local association of businesses.
    Even among local government offices, IPR violations are
    still found.  The county and district governments have still
    not finished implementing a mandated "No Piracy Program" for
    software use on government computers, largely due to a lack
    of funding for new software.  While local trademark and
    copyright registration is high and cases of local company
    versus local company seem to get government attention, the
    current environment is still not as welcoming as it should
    be for foreign enterprises seeking to produce goods in a
    manufacturing center such as Quanzhou.

    Comment:
    With Such Poor Planning,
    How Did Quanzhou Get to Be So Wealthy?
    --------------------------------------

    ¶11.  (SBU) Despite its wealth, Quanzhou contrasts poorly
    with Xiamen in terms of both detailed planning and
    implementation of its next five-year plan.  The basic
    building blocks for a prosperous and important city are
    still there but Quanzhou, despite its wealth, has yet to put
    together a coherent program for its improvement.  Not unique
    among cities visited during the long march, Quanzhou seems
    content to be dependent on foreign direct investment,
    especially from Taiwan, as its primary means of development,
    without a backup plan.  End Comment.

    ¶12.  (U) Officials visited include:
    Zeng Huabin         Vice Mayor
    Zhuang Zhimin       Deputy Secretary General
    Hong Liangquan,     Deputy Director of Economic & Trade
                        Bureau and Director of Quanzhou Market
                        Order Rectification Office (MORO)
    Xu Qinghai,         Deputy Director of Quanzhou
                        Administration of Industries and
                        Commerce
    Huang Danping       Director of Quanzhou Intellectual
                        Property Office
    Zhang Fan           Deputy Director of Press and Copyright
                        Bureau
    Wang Jinding        Director, FAO
    Ding Feng           Deputy Director, FAO
    Huang Decong        Deputy Section Chief, FAO
    Wu Jihuai           Vice President, Quanzhou Overseas
                        Chinese University
    Liu Bin             Director, Executive Office, Quanzhou
                        Overseas Chinese University
    Xiang Shimin        Director, FAO, Quanzhou Overseas Chinese
                        University

    DONG

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