Ready for the big league

"With Lanzhou being selected as the only state-level new area in Northwest China, Gansu will have a new growth engine," Song says.

"Our business will be largely enhanced as the construction of the new area itself will need huge amounts of concrete."

The company plans to hire more than 700 staff members, with 70 percent of them from local colleges and technical schools.

"Generally speaking, labor costs in Gansu are two thirds of that in other provinces."

But Song also questions whether the city officials have earmarked proper plans and strategies for sustainable development in the future.

A total of 2.38 billion yuan ($382 million) from Chinese banks has been received to support the financial needs of enterprises in Lanzhou New Area. [Photo/China Daily]

"Lanzhou is a typical western province, short of water and green trees. I think the situation can change, but it requires long-term efforts from the local government for at least 20 years."

Li says environment protection is the crucial issue in attracting investment and developing the new area.

The local government has taken the first steps in this regard by planting 5.6 million trees in 29 sq km of the afforested areas. The new area envisages replanting 33 sq km of afforested areas every year to boost business and tourism.

Many other companies are being drawn to the new area because of favorable financial and tax policies.

"Good supporting policies and fund-raising environment will make a huge difference for our company," says Wei Mingguang, chief executive of Gansu JOY Agricultural Technology Co Ltd. "We have better access to loans from banks and can leverage a large amount of money to start the project."

Spread over 0.42 sq km in the new area, the company plans to make sunflower oil, sunflower protein, and conduct research and development of sunflower seeds at its industrial park.

"Seed costs will be reduced by more than 80 percent if we can use our own seeds rather than the imported seeds."

Production is expected to start by the end of the year. The company reported sales of 200 million yuan in 2011, and expects to end this year with sales of around 300 million yuan.

JOY's total investment in the park is around 1.87 billion yuan. The first stage of investment is more than 400 million yuan with 200 million yuan coming from private capital and the rest from bank loans.

"Without enough financial support, it would be impossible for us to start such a big project," Wei says. According to Wei, what Lanzhou really needs is to create a strong brand, and the new area is the best candidate for it.

Li says that a total of 2.38 billion yuan from Chinese banks has been received to support the financial needs of enterprises in Lanzhou New Area.

The area's GDP is expected to reach 50 billion yuan by 2015 and 270 billion yuan by 2030, and its population is likely to exceed 500,000 by 2020.

"We will fully utilize the opportunity to create a proper management and investment environment, and try to build the Lanzhou New Area into the most attractive and competitive region in Gansu, even in western China," he says.

Zhao Yinan contributed to this story.

Contact the writers at linjingcd@chinadaily.com.cn and xuechaohua@chinadaily.com.cn