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UNCLAS SECTION 01 OF 04 GUANGZHOU 011352 
 
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STATE FOR EB, R, EAP/CM, EAP/PD, DRL 
STATE PASS USTR 
USDOC FOR 4420/ITA/MAC/MCQUEEN, CELICO, DAS LEVINE 
USPACOM FOR FPA 
 
E.O. 12958: N/A 
TAGS: ECON KIPR SCUL ETRD EINV CH
SUBJECT:  Short March:  Chaozhou -- One of Guangdong's 
Hidden Gems 
 
Ref:  Guangzhou 11065 and previous 
 
(U)  This document is sensitive but unclassified.  Please 
protect accordingly.  Not for release outside U.S. 
Government channels.  Not for internet publication. 
 
¶1.  (U) Summary: Displaced by Shantou after the Communist 
takeover as the key city of eastern Guangdong, Chaozhou is 
coming back strong basing its rise on its huge ceramic 
industry and strong representation in niche sectors such as 
wedding gown manufacturing, with strong business 
associations developing brand awareness and other 
intellectual property rights (IPR).  The government has 
shown substantial foresight, balancing economic development 
needs against quality of life issues and appears ready to 
exploit its considerable historical and cultural assets -- 
not to mention improving transportation infrastructure -- 
for a potentially huge boom in tourism.  The city possesses 
great dynamism, exploiting its comparative advantages while 
searching for new opportunities.  End Summary 
 
Chaozhou -- The Once and Future 
------------------------------- 
¶2.  (SBU) Entering Chaozhou in the next leg of the 
Consulate's "short march" to the "Chao-Shan" region of 
eastern Guangdong (reftel), we were whisked away to a 
spectacular pavilion and park complex built in the 10th 
century celebrating the famous Tang dynasty memorialist and 
philosopher, Han Yu, famous for denouncing Buddhism as a 
foreign superstition and who, as magistrate, regularized 
the agricultural system and drove away the crocodiles, 
thereby putting Chaozhou on the way to fortune and fame. 
That visit put the Consulate party in a very positive and 
excited frame in mind when Vice Mayor Chen Jianxin noted 
that Chaozhou was established 1600 years ago and was once 
just as important and as well known as Guangzhou as the 
major centers of civilization and commerce in Guangdong 
province. 
 
¶3. (U) The Vice Mayor noted that Chaozhou is 3,600 sq. km. 
in size and has a population of 2.5 million.  The GDP in 
2005 was RMB 28 billion (US$ 3.5 billion), 18th overall 
among cities in Guangdong province.  In 2004, the city's 
utilized FDI was over US$ 58 million.  These numbers may 
not look particularly impressive, but Vice Mayor Chen 
pointed out that Chaozhou's ceramics industry -- comprised 
overwhelmingly of local small and medium enterprises -- is 
number one in China, accounting for one third of China's 
total ceramic product exports.  Ceramics, together with 
textiles, agriculture, and consumer electronics make up the 
four pillar industries accounting for approximately 80% of 
the total exports from the city. 
 
¶4.  (SBU) Vice Mayor Chen also noted (not the last time we 
would hear this theme) that Chaozhou (also known as Teochow 
in older history books) is quite properly the real center 
of the "Chao-Shan" area.  Millions of overseas Chinese come 
from this region, mostly settling in southeast Asia, 
particularly Thailand and Indonesia, and whether they 
actually come from Jieyang or Shantou (known also as Swatow 
in older history books) or Chaozhou, they always identify 
themselves as coming from Chaozhou.  To be sure, Shantou 
has been officially designated the center of the region by 
provincial authorities and has a greater degree of economic 
development (in part because of its designation as a 
special economic zone in the first part of Deng Xiaoping's 
"reform and opening" of China), but Chaozhou has come on 
strong in recent years and is poised for even quicker 
economic growth. 
 
Roads, Railroads, Ports, and Zones 
---------------------------------- 
¶5.  (SBU) In a separate meeting presided over by municipal 
Deputy Secretary General Zeng Wuxiong, Development and 
Reform Bureau (DRB) Deputy Director Li Kongxi said that 
Chaozhou's 11th five year plan calls for major investment 
in infrastructure, including the completion of a highway 
network integrating the eastern Guangdong area and 
connecting the area as a whole to Guangdong and Fujian. 
 
GUANGZHOU 00011352  002 OF 004 
 
 
The current railroad line between Xiamen and Guangzhou has 
a station in Chaozhou, but a future high-speed line between 
Shanghai and Shenzhen will also feature a Chaozhou station. 
Meanwhile the replacement of the Shantou airport with a 
much larger regional one in Jieyang roughly equidistant to 
the urban centers of Jieyang, Chaozhou, and Shantou 
promises to shift some attention to Chaozhou away from 
Shantou. 
 
¶6.  (SBU) In addition, Chaozhou intends to upgrade its 
harbor to accommodate 5,000-ton vessels and has set up a 
number of special economic experimental zones, including 
the Chaozhou Sanbaimen Economic Development Experimental 
Zone and the Raoping Taiwan Investment Experimental Zone to 
largely attract investments from overseas Chinese, 
particularly from Taiwan, Hong Kong and Southeast Asia. 
The Taiwan investors are targeted in particular due to the 
close proximity of Chaozhou to Kaoshiung, Taiwan's major 
port city.  These zones are still largely light industrial 
zones, aimed at producing a plethora of goods from sporting 
goods to toys to house-wares. 
 
Adding Gas To The Economy 
------------------------- 
¶7.  (SBU) Chaozhou also plans to diversify their economy, 
expanding into pharmaceuticals, high-tech, and heavy 
industries.  One of the planned projects is the 
construction of a liquefied petroleum gas distribution 
center with an annual capacity of 1.2 million tons. 
However, when asked about potential environmental concerns 
arising from the development of heavy industrial and energy 
refining, officials quickly backpedaled and said that they 
were only in the planning stages and that they have not yet 
gone forward until all environmental issues were examined. 
 
Unbroken China 
-------------- 
¶8.  (U) Turning to some of Chaozhou's industries, we 
visited the Fengxi Porcelain Exhibition Center.  The 
entrance way featured an enormous reproduction of the 
famous painting "On the River During Qingming" ("Qingming 
Shanghe Tu") comprised completely of ceramic materials. 
All the major Chaozhou ceramic manufacturers were 
represented in the exhibition center which doubled also as 
a museum featuring the long history of Chaozhou as a 
ceramics manufacturing center (because of the concentration 
of artisans settling in the area after escaping from 
turmoil in the north a millennium ago) and the huge 
diversity of products ranging from artistic figurines and 
Dresden porcelain-like flowered and filigreed bone china 
(not surprising since Dresden consciously copied older 
Chinese styles) to complete china services, including ones 
specifically ordered for use by the Chinese leadership in 
Beijing for state occasions. 
 
¶9.  (SBU) Next came a visit to Songhua Ceramics, one of the 
largest in Chaozhou and a manufacturer of dinner ware and 
home use items in a dizzying array of patterns, styles, and 
quality.  Company executives said that competitive 
pressures meant that Songhua had to constantly change its 
lineup of goods on offer.  Its export market was mostly 
Europe, and Songhua would either manufacture based on 
customers' designs or would design something itself and 
seek out potential customers.  This involved a considerable 
amount of product development and design, and hence Songhua 
was very supportive of strong IPR protection.  Songhua was 
not alone in this, and the Chaozhou ceramics industry has a 
very strong business association aimed not only at 
promoting Chaozhou as an overall "brand" for all ceramics 
produced there but also at resolving IPR disputes among 
association members efficiently without having to go 
through administrative or court procedures.  Moreover, the 
association was also very much engaged, along with 
municipal officials, for protecting local companies' 
products against IPR infringers elsewhere. 
 
Here Comes The Bride 
-------------------- 
¶10.  (SBU) We then visited a company representing one of 
 
GUANGZHOU 00011352  003 OF 004 
 
 
Chaozhou's important niche industries, wedding gown 
manufacturing.  Chaozhou companies produce over half a 
million wedding gowns and evening dresses a year, primarily 
for export to the United States.  The industry is 
concentrated in the Chaozhou area due to the availability 
of skilled workers able to do the intricate embroidery 
needed on wedding gowns and dresses.  Wellpute Chaozhou 
Garment Factory Ltd. President Lin Yang pointed out he and 
his competitors have done very well and that because of the 
high skills needed for employees, they are well rewarded by 
Chinese standards.  Working conditions appeared good, and 
skilled seamstresses are able to earn up to RMB 8,000 (US$ 
1000) per month with chief designers making much more. 
Some of the gowns already had price tags for their 
destination companies, allowing the dresses to be delivered 
directly to the stores for immediate sale.  In addition, 
manufacturers appear to take great pains to protect the IPR 
of their clients.  For example, Wellpute has completely 
separate facilities to manufacture gowns for different 
clients, thus preventing any leakage of designs from one 
customer's product line to another. 
 
Bring On The Tourists 
--------------------- 
¶11.  (U) The strength of the ceramics and wedding gown 
industries is based on the high sense of fine cultural 
achievement, and so it is not surprising that Chaozhou 
intends to play its strong cultural hand through heavy 
investment in tourism.  In addition to the Han Yu Temple 
complex, Chaozhou also features a completely rebuilt 
Kaiyuan Temple -- trashed during the Cultural Revolution -- 
featuring the intricate raised embroidery distinctive to 
Chaozhou and finely detailed giant Buddhist images produced 
by Chaozhou's famous woodcarving artisans (also known for 
their work in Sino-Thai Buddhist temples).  It is said that 
even Han Yu, known for his anti-Buddhist stance, relaxed 
that posture after extended meetings with the Kaiyuan 
Abbot. 
 
¶12.  (U) Just as stunning as the Han Yu and Kaiyuan 
Temples, a large portion of its Ming Dynasty-era city walls 
survives, centering on the Guangji Gate, around which a 
tourist shopping and dining area is being developed. 
Opposite the gate, is the Xiangzi Bridge, a "stone pivot 
bridge" unique in the world.  In the 1950's the original 
bridge was largely dismantled, but with a forty percent 
contribution from Hong Kong tycoon Li Ka-shing through his 
foundation, the city is restoring the bridge's original 
wooden structure, including recreating the original wooden 
pontoon bridge that spans the middle of the bridge that 
pivot to allow ships to sail down the river.  Each of the 
bridge's large stone pillars feature wooden pavilions that 
can be used as shops or restaurants.  The Guangji Gate and 
the Xiangzi Bridge could easily become one of the most 
picturesque scenes in China, once the bridge restoration is 
completed in September. 
 
¶13.  (U) In addition, Chaozhou has built more modern 
attractions, including a massive central square in the 
heart of the city.  For one hour each evening, residents 
and visitors can enjoy a free water and light show with 
hundreds of synchronized lights and water fountains as well 
as a massive water screen that displays music videos and 
video clips.  Despite costing RMB 10,000 each evening to 
display such a performance, the shows are very popular and 
attract people from Shantou and Jieyang, which are less 
than a hour's drive away.   Besides government buildings, a 
museum and several new shopping areas will surround the 
square.  Moreover, new "old" projects also are likely to be 
major drawing cards, such as the Tanfuyuan complex, located 
in a beautifully tranquil setting and featuring a replica 
of the "Palace to Receive Thai Tribute," a Buddhist temple 
complex, and a Confucian-inspired school aimed at teaching 
the Chaozhou dialect to Thai-Chinese students -- all built 
through the generous contribution of the late third 
generation Thai-Chinese tycoon Guo Fengyuan. 
 
Some Tourist Development Problems 
--------------------------------- 
 
GUANGZHOU 00011352  004 OF 004 
 
 
¶14.  (U) Deputy Director of the Tourism Bureau Zheng 
Yongning, while clearly exulting in the sights available in 
Chaozhou, noted that the city lacks name recognition among 
foreigners and is not very well connected to areas outside 
of eastern Guangdong and the Pearl River Delta.  To be 
sure, the new airport in Jieyang could help funnel some 
additional domestic tourists to Chaozhou, but the city also 
lacks quality hospitality facilities, such as high class 
hotels.  Tourism cooperation efforts with Jieyang and 
Shantou not to mention a tourism development cooperation 
agreement among 18 municipalities in Guangdong province 
have not panned out well. 
 
Comment: A Hopeful Future 
------------------------- 
¶15.  (SBU) Chaozhou has a strong entrepreneurial feel to 
it, and its cultural aspects make it clearly the most 
attractive place when compared to sleepy Jieyang and sleazy 
and slightly dangerous Shantou.  One of its weaknesses -- 
perhaps indicative of the region as a whole -- is the lack 
of quality tertiary education facilities to provide the 
educated workers necessary for high-tech industries and the 
managerial talent to found and run enterprises.  Still, 
with cultural and natural attractions that can potentially 
make Chaozhou as well known as Guilin, improved tourist 
infrastructure, better marketing, and concentration on its 
strengths Chaozhou may indeed restore the glory of its 
previous days when it was the shining rival to Guangzhou. 
 
¶16.  (SBU) Departing Chaozhou, we next head for Huizhou -- 
not really part of "Chao-Shan" country, but a needed rest 
for the night on the long way back to Guangzhou.  Moreover, 
Huizhou gave us an opportunity to stop in at television and 
telephone manufacturer TCL -- the main subject of our next 
message in the "short march" series. 
 
Dong