All eyes on Hunan，strategic location in China:
Due to its
strategic location in south-central China as well as its
abundance of grain, Hunan province was once a strategic spot for
various Chinese military forces in ancient times. Now the
province wants to turn itself into a stronghold for businessmen
who want to explore new opportunities.
Following the
2008 Hunan (Shanghai) Investment Conference in mid-June, the
province is looking to the east Yangtze River Delta to draw more
foreign capital and accelerate its industrial development. It is
expecting to build up its processing and manufacturing
industries during the eastern coastal cities' current industrial
transfer.
Due to
escalating costs for both land resources and labor, companies in
the Yangtze River and Pearl River deltas are increasingly
looking to the middle and western regions for cost control and
seeking new development as well.
Sponsored by
the Hunan provincial government, the weeklong event boasted a
total investment volume of over $40 billion, with more than 800
key investment projects covering infrastructure, energy,
logistics, financial service, tourism, cultural and creative
industry.
An annual
survey from the American Chamber of Commerce in Shanghai shows
those US investors in China are facing rising costs in terms of
salaries and wages, real estate, distribution and
transportation.
As a result,
about 5.5 percent of the companies surveyed say they are already
investing in inland provinces like Hunan, and over 36 percent
say they would set up operations in second- and third-tier
cities and interior areas such as Hunan.
"Business
costs in Hunan are 30 percent lower than in the coastal areas,"
says Gan Lin, vice-governor of the province, adding that over 40
of the world's top 500 companies have already set up their
operations in Hunan.
"Being
adjacent to the Yangtze River Delta in the east and the Pearl
River Delta in the south, Hunan is well positioned to serve as
an ideal locale for companies suffering from squeezed profits in
the coastal areas and looking to invest in inland China."
But Hunan is
not only on the lower-cost side. The province has a sound
industrial chain with engineering machinery, non-ferrous
metallurgy, information technology, software and food processing
ranking high within the country. Two of China's leading
engineering machinery manufacturers, Sany Heavy Industry and
Changsha Zoomlion Heavy Industry Science & Technology
Development Co Ltd, are in Hunan.
"Many people
don't know how advanced manufacturing has become in Hunan, which
truly is world-class," says Jeffrey Bernstein, an independent
director at Valin Steel Tube and Wire Co Ltd based in Hunan's
provincial capital Changsha. He is also the chief trade
representative for the United States state of Ohio in China.
"Hunan is
logistically favorable to companies looking to invest in inland
China," says Bernstein. "It is attractive to foreign companies
that are seeking access to new markets as the people there are
getting increasingly wealthy and many suppliers and customers
could be found there."
The interest
in foreign direct investment in Hunan is amply reflected in the
18 percent growth rate in airport traffic and almost 10 percent
in logistics cargo last year. According to Bernstein, there is
already $6.4 billion of foreign direct investment in Hunan, and
of that $4.4 billion has been used.
The province
is also accelerating the improvement of its business environment
and offering investment incentives through the construction of
large-scale logistics centers, human resources training,
preferential policies and the development of other related
service industries.
However,
Hunan still needs to build on its R&D capabilities and speed up
innovation in the manufacturing industry, says Xiang Lili,
director of the provincial commerce department.
"While we
welcome labor-intensive manufacturing industries to help absorb
the labor force in Hunan, we also want to attract more high-end
manufacturing industries such as electrical information,
bio-pharmaceutical and new materials in first-tier cities to
build up independent innovation and create our own brands," says
Xiang.
Changsha, for
example, is fast climbing up the industrial value chain with the
development of service outsourcing. As one of the first few
cities in China approved by the government as a base for the
development of service outsourcing industry, the city now boasts
700 enterprises within the industry. Many of them are engaged in
overseas service outsourcing business, especially in software
and animation.
With strong
science and technology strength and abundant talent, the city
provides one-stop service for companies looking to invest there
and help build up their core business, says Zhao Yuesi, director
of the municipal economic committee.
Resource
preservation is also a top priority, says Zhou Qiang, governor
of the province.
In December
2007, three cities within the province - Changsha, Zhuzhou and
Xiangtan - were officially tapped to be "national pilot zones
for developing an environment-friendly and a resource-saving
society". These cities will usher in a new model of
industrialization and urbanization in China, Zhou says.
(China Daily 06/30/2008)
