Guiyang increasingly favored by multinationals
Updated: 2013-09-13 07:25
By Lyu Chang, Li Jun and Zhao Kai in Guiyang(China Daily)
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At a bustling national industrial park in Guiyang, the capital of Guizhou province, technicians with badges take a break for lunch in a crowded canteen.
They are a small portion of more than 30,000 people working in the Guiyang national high-tech development zone, home to some 3,000 international and domestic companies.
"Some have followed in the footsteps of big international players and large State-owned enterprises and came to Guiyang under the nation's Western Development Strategy," said Liu Qinghe, a researcher with the Guizhou Academy of Social Sciences.
"After years of development, companies are coming to settle down here, attracted by the local natural resources and economic development."
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Pictured here is an expressway network in Guiyang. Local authorities have invested heavily to improve infrastructure in a bid to pave the way for more investment. Provided to China Daily |
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Terraces cover the hills outside a village near Guiyang, capital of Guizhou province. Wu Dongjun / for China Daily |
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Miao women dressed in traditional ethnic costumes perform at an agricultural expo. Qiao qiming / For China Daily |
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Snow falls on a lake in the provincial capital, which is famed for its well-preserved ecosystem. Qin Gang / for China Daily |
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Waterfalls offer a natural spectacle to tourists in the suburb of Guiyang. Peng Nian / for China Daily |
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Pictured here is a modern international conference center in Guiyang. Wu Weidi / for China Daily |
Indeed, Guizhou, a mountainous and multi-ethnic province, has become a hotspot for foreign investment as it has accelerated the pace of economic expansion through technological innovation.
Data from the provincial statistics bureau show that Guizhou registered 12.5 percent GDP growth in the first half of this year, 4.9 percentage points higher than the national average during the period.
And the provincial government has set this year's GDP growth target at 14 percent, the highest in China.
To help further boost local development, Guizhou hosted several international events in its capital Guiyang, including the China International Alcoholic Beverages Expo and China Guiyang Fair for Investment and Trade.
The international fairs as well as different kinds of forums are providing a powerful catalyst for the province's economic boom.
During the second session of the alcoholic beverage fair in September 2012, deals worth more than 10.7 billion yuan ($1.75 billion) were signed, according to data from the expo's organizing committee.
Chen Gang, Party chief of Guiyang, has promoted the partnership between Guiyang and Zhongguancun, dubbed "China's Silicon Valley", in northwest of Beijing.
A less-developed capital city in southwestern China, Guiyang needs to accelerate the pace of development, but at the same time "we should also protect the ecological environment, and bring about the integration between innovation-driven development and ecological preservation," Chen said.
More than 50 companies based in Zhongguancun are planning to establish businesses in Guiyang later this year, with investments in IT, biotechnology and electronics manufacturing sectors.
"We learned more about the investment policies and environment in Guizhou and also found potential business opportunities, such as the first metro line that will be built in Guiyang, the Guizhou Vocational Education City project, and several planned city complex projects in Guizhou," said Xiong Wei, vice-president of Siemens Ltd China, which set up a branch office in Guiyang in 2012.
Nice environment
He said Guizhou province is a key market for Siemens in China. It has great potential as a beneficiary of the western development campaign.
"A strong plan and support from the central and local governments for western development has no doubt been part of the success story for Guiyang," he said.
Last year, China outlined a set of policies specifically designed to promote Guizhou's development by pouring money into the province.
Under the western campaign, tax breaks are offered to firms that set up in the region.
"Another reason that we chose Guiyang to develop our businesses is that the city has an ecological environment that many other places don't have for people to take root in," he said.
"It is important because to find a nice and green place to live in is what many young professionals are looking for."
From 2007 to 2012, the city's energy consumption fell by 26.8 percent. Its forest coverage rate hit 42.4 percent, all of its sources for drinking water met the State requirement and it reported good air quality on 95 percent of the days in a year.
In addition, Guiyang, the capital city of Guizhou province, is the regional center of politics, economy and culture as well as one of the most important hubs of transportation, communications and tourism in southwest China, Xiong said.
Now, the German company made a presence in such sectors as energy, healthcare and infrastructure in Guiyang and hopes to bring in advanced technologies and high-quality products and solutions to support the development of the local infrastructure, Xiong said.
More investment
Another company that is benefiting from the economic growth in the province as well as the government's support is the Swedish telecom giant Ericsson, which first entered in 2009.
"Guiyang has its own advantage for enterprises compared to other regions, such as the environment and labor cost. We want to cooperate more and invest more in the city," said Liu Guolai, vice-president of Ericsson (China) Co.
In July, Foxconn Technology Group, a Taiwan-based electronics contract manufacturer, announced it would establish facilities in Guiyang.
Terry Gou, Foxconn's chairman, said the plants established in the inland areas would adopt the most advanced technology and have as little negative influence as possible on the environment.
"Being closer to the pool of workers has always been one of the major reasons," said Louis Woo, a spokesman for Taipei-based Foxconn.
"Henan and Sichuan have always been the largest sources of migrant workers. That was why we moved to both of these provinces to tap their labor pool."
Wages in the two provinces have surged 120 percent in the past six years because of economic growth, increasing local competition for labor nationwide.
Companies like Foxconn, which assembles Apple's shiny tech gear, will benefit from the huge pool of cheap labor in Guiyang.
Wang Jin, vice-president of Goldwind Science & Technology Wind Power Equipment Co Ltd., said he plans to invest in Guizhou in the near future.
"We are prepared to invest in Guizhou but are waiting for wind power developers to make a decision because our company largely depends on State-owned enterprises," Wang said.
He said that Guiyang's climate is its advantage, but it is also a weakness for wind power generation.
"Due to the high altitude and air humidity in Guizhou, the condensation can easily form so that it would cause many technical problems for running large equipment," Wang explained.
"However, we have overcome those problems through years of hard work."
He said that if wind power developers are willing to invest in Guizhou during the new round of western development, "we will also invest here because our company actually undertakes the equipment supply for those enterprises".
Wang stressed that the company is more concerned with the local government's concept and long-term planning rather than preferential policies because "even though they may help us pay less taxes for a time, it is short-sighted for the company's whole development".
"The market is the core element for the company, so that we need to focus on the government's development interests and plans instead of looking to save money on taxes, otherwise the cooperation would not go smoothly," Wang said.
Not just about yields
But investing in Guizhou is not all about high yields.
Experts said that infrastructure in inland areas seems to be 10 to 15 years behind coastal regions in some places, and a lack of professional high-tech personnel is another drag on local business development in Guizhou.
Liu Chuanzhi, the founder of Lenovo and chairman of Legend Holdings, said: "It is necessary to renew efforts to improve local infrastructure and lay a solid foundation for the development of the demonstration zone.
"For some startup companies, the government should give more support such as rented office and tax preferences."
Though investing in Guiyang is challenging, it can also be profitable, said Liu Kening, chairman of Sefran China, a French aerospace and security manufacturing company.
Guiyang is not an unfamiliar place for the French Fortune 500 company. In 2006, Sefran established a joint venture in Guiyang for mainly producing components for aircraft engines.
Guillaume Mornand, general manager of Sefran China's southwest region, said Guiyang is an ideal place for foreign companies to seek out business opportunities.
"There are many local companies here willing to cooperate with us," said Mornand, adding that foreign companies like Sefran can find a friendly environment for both the local government and business partners in Guiyang.
Sefran China has many branches in China, including ones in Suzhou, Xi'an, Beijing and Shanghai. Compared to those cities, Guiyang has many challenges for foreign companies, but the market is much wider since there is less competition in Guiyang than there is in eastern cities.
"We are planning to increase investment budget for our branch in Guiyang," said Liu Kening, who believes there is a bright future for foreign firms here.
"The support from local government is very important for foreign companies, and there's no reason to miss Guiyang if you are a foreign company and want to expand business in China's southwest region," he said.
Contact the writers at lvchang@chinadaily.com.cn, lijun@chinadaily.com.cn and zhaokai@chinadaily.com.cn