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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