Top Biz News

Companies go west for development

(China Daily/Xinhua)
Updated: 2009-12-28 08:08

"Since mid-September, all the trucks transporting our products have been fully-loaded, queuing in a long line outside our company," said Yang Jinfu, manager of a private food oil company.

Yang's company set up a factory at Qinzhou Port Bonded Zone in southwestern Guangxi Zhuang autonomous region seven months ago.

"At first, we came here to look for sales markets. However, such a huge market potential in the western region inspired us to set up a factory here," Yang added.

Yang's company was headquartered in southeastern China's Fujian province where the export-oriented economy has been heavily stricken by shrinking foreign orders amid the global financial crisis.

China's vast western region, however, has taken the chance to actively attract investment and explore new domestic markets by speeding up its own infrastructure construction.

After 10 years of China's strategy to develop its western region, economic zones in the west have become an emerging engine that is driving China's economy.

The Beibu Gulf Economic Zone in Guangxi, where Qinzhou Port Bonded Zone is located, is one of the three economic zones in China's western region.

As the only river estuary in China's western region, the Beibu Gulf Economic Zone has witnessed rapid construction development since the plan for Guangxi Beibu Gulf Economic Zone Development was approved by the central government in January 2008.

"When Qinzhou Port Bonded Zone opened five years ago, we couldn't find it on a world nautical chart," said Yang Lizhong, general manager of Qinzhou Oriental Resources Co Ltd. "Foreign ships were reluctant to come here. The municipal government had to pay $120,000 to persuade a foreign ship to unload here."

Now the Qinzhou Port has become an important maritime hub in the Beibu Gulf with an annual throughput of more than 52 million tons and has formed a chain of ports in the Beibu Gulf with neighboring Beihai city's Tieshan Port and Fangcheng Port.

"China's western region has been closely connected to the world," Yang said. Improving communication and a favorable geographical location added appeal to the Beibu Gulf area, which saw an increasing inflow of investment and logistics to meet local growing consumption.

For example, Yunnan and Guizhou provinces and Guangxi Zhuang autonomous region have seen an increase in oil consumption of at least 10 percent per year, while Guangxi alone produces 800,000 tons of oil annually, meeting a small proportion of the overall demand.

A PetroChina refinery project with an annual capacity of 10 million tons has been established in the Qinzhou Port Economic Development Zone. The 20-billion-yuan project, upon completion in 2010, will not only help the southwestern region end its oil shortage, but also bring downstream industries with a total investment of more than 78 billion yuan to set up in the Beibu Gulf region.

"The largest petrochemical base in southwest China will emerge here, changing the whole economic structure of Guangxi," said Huang Yi, chief of Qinzhou's Business Promotion Bureau.

According to Huang, in 2008 alone, the city of Qinzhou introduced investment totaling 15.76 billion yuan, including 41 large-scale projects. International companies such as SK Telecom of South Korea, and Japan's Marubeni and Mitsui have also come to Qinzhou to discuss cooperation.

The Chinese government initiated the strategy of developing its vast western region in 2000. Since then large projects such as the transmission of natural gas and electricity from west to east have marked the first period of development.

The second period of the western region development will focus on innovation and the cultivation of key areas and new growing industries. After the Beibu Gulf Economic Zone was established, the development planning for the Guanzhong-Tianshui Economic Zone was approved by the State Council in 2009.

The three key economic zones are expected to act like a three-cylinder engine to boost the economy in west China, upgrading its industry structure, and promoting the development's quality.

For instance, the Chengdu-Chongqing area has been lagging behind in the IT industry compared with other regions due to its geographic position, though it boasts many IT talents and old electronic industry bases.

The financial crisis has forced the IT and relevant industries to speed up moving to the IT talent-rich western region with lower costs in human and natural resources.

In October, Intel announced it would make an investment of $75 million in its Chengdu plant. By the end of November, Intel had finished moving its assembly and test plants from Shanghai to Chengdu. Before that, Taiwan's Foxconn Technology Group had just contracted to invest $1 billion to build a manufacturing base in Chengdu.

In August 2009, Hewlett-Packard made Chongqing home for its 20 million laptop program. The city also signed with Taiwan's Quanta company to build a processing base for its 40 million laptops. It's estimated the revenue for the altogether 60 million notebooks could reach $80 billion.