Cheaper costs in west draw foreign business
Chengdu attracting record foreign investment and many blue-chip
companies
Jul 17, 2006
The Straits Times
CHENGDU - CHEAP labour and lower start-up costs are luring foreign
companies to Chengdu, helping to revitalise an ancient western city
determined to close the gap with the more prosperous east.
Chengdu, China's western cultural and economic capital for
centuries, has engineered a partial revival by raking in record
foreign investment over the past six years, and vaunts the presence
of 78 blue-chip companies.
Motorola, IBM, Intel, Coca-Cola and Toyota have led the charge of
top brands that together have poured hundreds of millions of
dollars into new factories. Swedish retail giant Ikea and German
software giant SAP are next in line.
Chengdu's economic boom can also be seen in the towering new
five-star hotels which host a growing number of foreign trade
delegations drawn to the river city, teeming with new restaurants
and luxury retail boutiques.
'Companies are considering Chengdu because everything is cheaper
here,' said Mr Wang Yi, an official with the China Council for the
Promotion of International Trade. 'The start-up costs are much
higher in the eastern areas of China and the competition is
fiercer.'
China's shoe industry is one sector that has already started moving
operations to Chengdu in hopes of taking advantage of cheaper
production costs, despite greater logistical challenges.
Ms Emmanuelle Hermandesse, manager for the Sino-French children's
shoemaker Great Yield, bets that in five years' time, Chengdu will
rival the traditional eastern shoe powerhouses of Fujian, Zhejiang
and Guangzhou.
'You're paying a little more for transportation, but you're making
that up with cheaper labour,' said Ms Hermandesse, who has
relocated her main factory from south-eastern Fujian province to
Chengdu.
Chengdu's economy has roared ahead, with average annual growth of
13 per cent over the past several years - well above the 10 per
cent national average - but officials are still cautious about the
city's prospects.
'We have favourable economic policies such as lower taxes but, in
reality, we are still slightly behind the curve in Chengdu and this
makes it more difficult to attract foreign companies,' said Mr
Wang.
Today's Chengdu boasts highways, bridges, a first-class technology
centre and an international airport - evidence of the billions of
dollars that Beijing has ploughed into infrastructure.
But that investment has yet to translate into direct wealth for
most of the city's 7.5 million residents. Average worker salaries
of around 700 yuan (S$140) a month lag well behind those in premier
economic centres such as Shanghai and Guangdong in the south, where
the average worker makes at least double that amount.
Mr Richard Morgan, a Chengdu-based consultant working on Sino-EU
business development projects, said that the onus is now on Chengdu
and other western regions of China to become more
entrepreneurial.
'The 'Develop the West' campaign has helped to develop
infrastructure and provide valuable incentives to foreign companies
but Chengdu and other western regions must increasingly rely on
entrepreneurship and the private sector to market themselves as a
destination for foreign investment,' Mr Morgan said. -- AGENCE
FRANCE-PRESSE
