A hub of high-tech output

Semiconductors are just one area in which the city of Kunshan is excelling

Kunshan is a small city that has become a powerhouse out of all proportion to its size. That stature, based on its extensive know-how in electronic components, is reflected in Kunshan New and High-Tech District, about 5 kilometers from the city center.

In little more than four years since the district was set up it has managed to set up a complete electronic components industrial chain. For example, the design, research and development, testing and manufacture of semiconductors such as gallium nitride, used among other things in electrical circuits, now forms a semiconductor industrial base.

Last year GDP in the district was 74.2 billion yuan ($12 billion; 9.7 billion euros). Total industrial output was worth 218 billion yuan, 64 percent of that from high-tech industries. The district's exports were worth $3.9 billion (3.1 billion euros) and its exports were worth $3 billion.

Kong Weihua, deputy director of the district's management committee, who has worked in the district since it was set up, says its growth epitomizes Kunshan's success in upgrading and transforming its electronic components industry.

"Kunshan had a reputation as a strong manufacturing base for electronic components," Kong says. "We are keen to develop high value-added businesses to help the industry grow here."

The city has a huge advantage in developing high-tech businesses as a result of its rich talent pool. It has partnerships with world-renowned universities including Carnegie Mellon University, the Massachusetts Institute of Technology, Tsinghua University, Peking University and the Chinese Academy of Sciences, Kong says, adding that Duke University has a new campus in the district.

Ren Mian, managing director of Dynax Semiconductor, which says it is the only company in China that has developed gallium nitride electronics devices, says the district gives him a keen sense of achievement.

"I remember very clearly that on Aug 30, 2011, the first day I arrived in Kunshan, and came to the district to inspect our company's construction site, and all there was to see was grass," says Ren, 42, speaking in Dynax's headquarters there.

"The big changes that have taken place since are clear for all to see."

Dynax was founded in September 2006 and arrived in Kunshan five years later. After more than three years' growth, it employs about 150 people in Kunshan, and its manufacturing plant, covering 13,000 square meters, can produce 6,000 3-inch gallium nitride wafers a year.

Dynax Kunshan expects to have sales revenue of about 50 million yuan this year and 180 million yuan next year, Ren says.

"Electronic devices using gallium nitride are really quite new and are having an impact worldwide. They can reduce energy consumption by 70 percent compared with other similar products. It has taken us just eight years to bring our products to large-scale production, which in terms of speed is a virtual miracle in the semiconductor industry.

"The district enjoys many advantages in developing the electronic components industry, such as a complete industrial chain and all that goes with it."

Other advantages include the availability of skilled labor and government incentives, says Ren, an MBA graduate of Duke University.

"One of the most important things for us is that the district is an abundant source of talent. In addition, the local government is determined to develop innovative industries like ours, and the incentives offered include favorable land prices."

The average age of Dynax's employees is 29 and a half. Among them, 10 employees have doctorates, more than 45 have master's degrees and 80 have undergraduate degrees or above.

"Based on our strong growth in Kunshan, our aim is for Dynax Semiconductors to be listed on the A-share market within five years," Ren says.

Chen Shunlang, general manager of Advantech Technology China, says the district and Kunshan provide a strong backbone for the company's growth in China.

Advantech, whose headquarters are in Taiwan and which celebrated its 30th anniversary last year, makes large and medium-sized computers and electronic sensors. It has about 90 subsidiaries and offices in 22 countries and regions worldwide, 51 of which are in China, and employs 3,200 people.

Its sales revenue last year was $1.03 billion globally, about 22 percent, $230 million coming from China, and it says it expects that figure to rise to 3.6 billion yuan by 2018.

Advantech came to Kunshan in 2002, mainly for manufacturing, and since 2005 has done a lot of research and development. It opened a research and development center covering 27,000 square meters early this year, and about 300 research and development employees work in the city, Chen says.

About 6,000 people have visited the center, says Chen, who is responsible for Advantech's manufacturing in China.

"Kunshan has a complete system for manufacturing industries and labor is very cheap. The Kunshan government is efficient and has a very good service ethic, and that has greatly helped Advantech grow its business.

"About 60 percent of our products are made here, and the rest in Taiwan, our other international manufacturing site."

More than 10 percent of sales revenue goes into R&D, he says.

Luo Huancheng, general manager of Advantech Technology China, who is responsible for marketing, says China is important for the company, and Kunshan plays an important role in developing this market.

Worldwide Advantech has 35 production lines, and expects that to increase to 50 by the end of next year. There are four in Kunshan, and it is expected that within two years that will rise to 10 to 15, all located in the R&D center, Luo says.

Contact the writers through huhaiyan@chinadaily.com.cn

(China Daily European Weekly 11/21/2014 page25)