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Cablegate: U.S. Firm Plays Chongqing Connections Against Central

VZCZCXRO7845
RR RUEHGH RUEHVC
DE RUEHCN #0214/01 2731105
ZNR UUUUU ZZH
R 301105Z SEP 09
FM AMCONSUL CHENGDU
TO RUEHC/SECSTATE WASHDC 3437
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHCN/AMCONSUL CHENGDU 4129

UNCLAS SECTION 01 OF 02 CHENGDU 000214

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EIND EINV ELTN ETRD PGOV CH
SUBJECT: U.S. FIRM PLAYS CHONGQING CONNECTIONS AGAINST CENTRAL
GOVERNMENT

CHENGDU 00000214 001.2 OF 002


1. (U) This cable contains sensitive but unclassified
information - not for distribution on the Internet.

2. (SBU) Summary: TY Lin International China (TYLI China), a
U.S. bridge and transportation consulting firm, has used its
position of being headquartered in Chongqing to great advantage,
using its close relations with the municipal government to
secure help in dealing with the central government and bringing
all of the firm's China offices under the technical licenses of
the Chongqing office to overcome extremely high bureaucratic
hurdles for approval in other provinces, they told us. In
addition to several current Class A licenses, the firm hopes to
secure a license for rail projects, but participation in rail
and urban planning projects is limited by the government due to
"security" concerns. End Summary.

3. (U) Consul General met September 22 with Chwen Siripocanont,
Senior Vice President of U.S.-based international bridge and
transportation consulting firm TY Lin International at the
company's China headquarters in Chongqing. Originally
established in 1954 in San Francisco by a Chinese-American, TY
Lin International Chongqing was established in 1994 and focuses
on urban transportation infrastructure, including bridge,
roadway, and rail transit projects. In 2009, TY Lin's offices
in Shanghai, Shenyang and Tianjin were unified under the
Chongqing office's licenses, forming TYLI China. The company
now has over 300 professionals, 200 of whom are based in
Chongqing.

Chongqing Relations Help with Central Government
--------------------------------------------- ---

4. (SBU) Siripocanont, who is a naturalized U.S. citizen from
Taiwan, said that most other design firms have their
headquarters in Shanghai, so that Chongqing's Municipal
Government appreciates TYLI China's early choice of the city for
its home. TYLI China's good relationship with Chongqing has
resulted in a preferential income tax of 15 percent compared to
the 25 percent national average. TYLI China has also been able
to use these close relations to influence the central
government. Explaining that foreign firms need central
government approval to use the word "China" in their name,
Siripocanont said that when TYLI China applied in Beijing for
such approval, the Chongqing government provided essential
assistance. The firm also plans to use its close relationship
with the Chongqing government to attempt to secure a license for
rail planning.

Using Chongqing Licenses to Cover Other Offices
--------------------------------------------- --

5. (SBU) TYLI China had a distinct advantage over other firms
attempting to get approval to do bridge and transportation
design work in China owing to the fact that TYLI Chongqing was
able to secure licenses in 1994 when the door to this industry
in China was briefly open, Siripocanont explained. To outside
observers, the door now appears wide open, but in fact the steps
required to obtain licenses are very onerous and so TYLI China's
other offices were not able to get licenses from other
provincial governments. When the firm decided to expand, it was
able to consolidate other offices under the Chongqing office's
licenses. (Note and Comment: China's WTO commitment for the
construction industry was to allow wholly foreign-owned
enterprises to operate with few restrictions within three years
of accession. The letter of the commitment appears to have been
met, though it is appears that the spirit of it is not if
China-experienced firms like TYLI are having to resort to
organizational acrobatics and leveraging local "guanxi"
(relationships) in order to obtain the needed licenses. End
Note and Comment.)

TYLI China's Unique Position in Western China
---------------------------------------------

6. (SBU) TYLI China was one of the first Sino-Foreign joint
ventures approved by the Ministry of Construction and the
Ministry of Foreign Trade and Economic Cooperation to receive
Class A approval for engineering consulting, municipal planning,
and urban planning services (though not general urban planning),
as well as having recently been awarded Class A status for
environmental design. Most foreign design companies operating
in China are only allowed to do master planning and
consultation, but not design work, Siripocanont said. TYLI
China is the only foreign design firm in western China which has
government licenses to do planning, consultation, and design
work.

Limited Urban Planning and Rail Due to "Security"
--------------------------------------------- ----

7. (SBU) TYLI China is not, however, allowed to do general urban

CHENGDU 00000214 002.2 OF 002


planning, as this is considered too sensitive, Siripocanont
said. Foreign firms are only allowed to do Class B urban
planning, though when the government is ready to refine master
urban plans that have been conducted by local firms, TYLI China
can then get involved due to its Class A engineering license.

8. (SBU) Nor is the firm able to secure a license for rail
planning, as rail and airports are considered "security" issues
in China, she continued. The company attempted to get involved
in traffic management work with the Public Security Bureau's
Traffic Management Department, but they were unwilling to
cooperate as plans for an Intelligent Transportation System
(ITS) were deemed too sensitive due to the need for an extensive
system of cameras and closed-circuit television. TYLI China
opted instead to enter into a joint venture with the Chongqing
Rail Design Institute (TYLI China taking a 25 percent stake),
but because TYLI China has no rail license they cannot do any
work beyond Chongqing without forming additional joint ventures
in other provinces.
BROWN

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