Foreign firms finding new fields

Construction of the Singapore-Sichuan Science and Technology Innovation Park begins in Chengdu, Sichuan province, on May 8. The park, with an investment of 20 billion yuan ($3.17 billion), will feature such industries as technology commercialization, modern manufacturing and services. [Photo / China Daily]

Cheaper, quality labor

Beyond local governments that are eager to attract companies, China's western region offers lower labor and operational costs, a plentiful supply of skilled workers and increasingly improved public accommodations.

Zhao said Xi'an's success in attracting Samsung was the result of several attributes: a stable supply of technicians, preferential policies, good infrastructure and efficient government services.

Among cities in China, Xi'an has the third most universities and institutes, from which more than 1 million students graduate every year.

Although it's an inland city, "companies can still gain access to coastal regions and developed markets overseas through ports, highways and rail links," Zhao said. "And that can guarantee that the time needed to take a trip from Xi'an to Hong Kong, Seoul and other business centers will only be from two to three hours."

Such attributes helped drive the amount of foreign investment in the city upward by close to 30 percent in 2010 and 2011.

The central government, to help the western region catch up with its coastal areas, introduced a western development policy in 2000.

Shaanxi province had 3,800 kilometers of expressways by 2011, which was the most in any province of the western region.

The province also plans to spend 170 billion yuan ($26.9 billion) to build an extra of 2,000 kilometers of expressway.

Chongqing, a large city in the southwest, has done much to attract foreign investment in the past two years.

In 2011, $10.53 billion of foreign investment went into the city, the eighth largest amount recorded in the country that year, accounting for one-fifteenth of the country's total.

More than 200 of the top 500 businesses in the world have opened outlets in Chongqing, Lan Qinghua, chief of the Chongqing Statistics Bureau, said in March. Lan said Chongqing is committed to opening up its economy.

"China's western region now has the attributes investors need: an enlarging consumer market, water, electricity, land, energy and labor resources and talented workers," said Li Qian, director in charge of managing foreign direct investment into Chongqing.

"In the next decade, the region will see the amount of foreign direct investment it attracts increase greatly."

Faster growth

"Samsung's decision will prove to be a great stimulus to Shaanxi's economy," said Zhao Zhengyong, governor of the province.

For one, it will help Shaanxi transform its industrial structure, he said.

The Samsung project is expected to attract investments in Xi'an from close to 200 companies and lead to the creation of more than 10,000 jobs.

The Shaanxi provincial government has set its target for economic growth this year at 13 percent, up from 12 percent last year.

That far exceeds this year's national growth target of 7.5 percent, which was announced by Premier Wen Jiabao earlier this year.

Chongqing, for its part, is aiming for 13.5 percent growth, and Chengdu, in Sichuan province, is expecting to have growth of 12 percent.

Last year, Chongqing's economy grew almost 16.4 percent, faster than the national economy, which increased by 9.2 percent. Chongqing's rate was also nearly doubled the 8.2 percent rate seen in Shanghai, China's financial hub. Chongqing has set itself the goal of attracting $11 billion in foreign direct investment this year.

Labor, meanwhile, has quickly become more expensive in China in the past few years, helping prompt some foreign companies, including the world's leading sportswear maker Nike, to move their factories from China out to countries such as Vietnam, where work can be obtained for less.