Business
May 27, 2005
Multinationals eye on central China
Having detected its huge potential, many multinational corporations have started a race to win niches in the central Chinese market.
The recent Investment and Trade Expo 2005 in Anhui, China, which ended Friday, attracted more than 50 Fortune 500 companies, such as Morgan-Stanley, Siemens, Hitachi and Citigroup.
Siemens alone signed a contract to add an investment of 18 million US dollars to extend its refrigerator production line in Chuzhou City of Anhui Province.
Mr. Divijak, deputy general manager of the Siemens-funded BSH Company said that as the market in east China becomes saturated and operating cost increases there, the neighboring central China regions will become Siemens' first choice for market expansion.
Statistics from Wuhan, the largest city in central China, welcomed 72 Fortune 500 firms to investigate its local market last year. Eight of 72 signed formal contracts with this capital of Hubei Province.
Jiangxi Province, a major agricultural operator in the past, absorbed 2.05 billion US dollars in foreign investment last year, ranking the first central China.
To balance regional development in the country China has initiated a new strategy of developing its center regions, to be followed by the development of the vast western region and the rejuvenation of its northeast industrial base.
Covering 1.02 million sq kms, or 10.7 percent of China's total land area, the central region produces 23 percent of China's total GDP. It is also in a geographical location which links China's west and east, and north and south.
A senior manager from Merril Lynch said Anhui is close to the Yangtze River delta and because of convenient traffic conditions, the low cost of labor and land, Anhui should be able to attract permanent investment as companies migrate from the coastal provinces inward rather than just becoming a temporary home for low cost export production.
Some foreign firms landed in central China quite early and have achieved success, setting examples for other foreign businesses.
Hefei Hitachi Construction Machinery Corporation gained the best profits of all enterprises funded by Hitachi Group abroad, and its sales volume ranked first in the Chinese market for three consecutive years to the end of last year.
After ten years of investment in China, Siemens has begun to gain extensive profits and is going to increase its investment in Anhui from 70 million US dollars to 100 million US dollars.
On the other hand, a large number of foreign businessmen are still waiting to see what policies and actions will be taken by central China provinces to improve the investment environment.
Guo Jinlong, secretary of the Anhui Provincial CPC (Communist Party of China) Committee, said Anhui will commit itself to serving the public and protecting the rights of investors according to laws, and will speed up the establishment of a social credit system that serves the creation of a favorable investment environment.
Source: Xinhua
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