Eleven years ago, Fuling Chinese Traditional Medicine Factory was a small company with just three mud-brick workshops, seven production vats and two poor pulverizers.

But now, the firm has become China's biggest traditional medicine giant -- Taiji Group -- with three listed companies and 54 subsidiaries, and annual gross sales of 5.5 billion yuan (US$671 million) in 2002.

This dramatic change was brought about by the Three Gorges Project, the largest water conservancy project in China, which will be completed in 2009 at an estimated cost of 180 billion yuan (US$21.8 billion).

"When the factory was almost on the edge of bankruptcy in the 1980s, board chairman Bai Lixi led all workers to sell home-made drinks with traditional medicine on the streets," recalled Wang Xiaojun, executive vice-general manager of the group.

"Located below the 135-meter water level, our factory was listed for relocation and we had to move out," Wang said. "It was the government allowances that saved us."

From 1992 till last year, Taiji Group has received migrant allowances of over 15 million yuan (US$1.83 million). All the money was used in relocation.

"So much money means little to today's Taiji, but it was really helpful to us in that difficult time," said the manager.

With the financial support, the group made a series of technical reforms. It built Asia's largest syrup production base in 1994 and by 2003, it had set up one national center, two provincial centers, four research institutions and 13 doctoral working sites for Chinese traditional medicines.

"We're expecting a breakthrough of 10 billion yuan by 2007," said Wang. "The group will emerge on the world stage from the Three Gorges." To date, 1,043 enterprises in the Three Gorges area have been relocated, 820 of which were below the 135-meter water level.

Like Taiji Group, many small enterprises in the Three Gorges area have sprung from the mountains along the Yangtze River. They have successfully seized opportunities and become new business stars in the region.

China's biggest ramie company, Jindi Industrial Group, used to be a small spinning mill below the 135-meter water level. After it moved to Fuling District of Chongqing Municipality, it developed rapidly to achieve annual sales of over 167 million yuan (US$20.4 million) in 2002.

Set up in 1994, the Wahaha Fuling Company was born with the help of Wahaha Group in Hangzhou, capital of east China's Zhejiang Province. Three small enterprises below the 135-meter water level merged to form the group.

The company has become a major player in the food industry, with more than 1,200 employees and an annual production value of 600,000 million yuan (US$73 million).

"The relocated enterprises have more opportunities under the government policies and allowances and are seeing a vigorous revival after relocation," said Christopher A. Spohr, project economist of the Asian Development Bank.

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