Low cost, resources give Northeast an edge

SHENYANG: Multinational corporations are closing factories and slowing investment amid the global economic downturn but not in China's Northeast.

Business executives attribute their optimism and initiatives there to the region's reliable supplies of power, raw materials and cheap labor and the business opportunities in the Chinese market.

"We want to be able to take advantage of the strong market when the crisis is behind us," said Kirby Jefferson, general manager of Intel's Fab 68 .

Fab 68, in Dalian, a coastal boomtown in northeast China's Liaoning province, is Intel's first wafer fabrication plant (FB) in Asia. It broke ground in 2007 and is due to be operational by 2010.

Jefferson said the global chip giant had no plans to delay operation of the 2.5-billion-U.S.-dollar facility, despite the tough market conditions.

"Business will come back, business will get strong again. It's important that Intel has a very strong presence with manufacturing in China," Jefferson said.

Intel has made it clear that it wanted to produce computer chips locally to cut costs as China has emerged as a major consumer of the products.

China, also a huge market for many other products, has helped a number of foreign businesses partially offset trouble in other major markets amid the global recession.

China could also be the first major economy to recover from the global financial crisis with the help of the 4-trillion-yuan stimulus package, economists estimated.

Multinationals consider China an attractive destination for investment, because of its market size, higher market growth rates and cheaper labor, according to the World Investment Prospects Survey 2008-2010 by the United Nations Conference on Trade and Development.

General Electric (GE), the US technology and services conglomerate, also is planning expansion in the Northeast.

GE has four factories in Shenyang, capital of Liaoning, two newly opened last year. The plants produce wind turbines, gas turbines and A/C motorized drive systems for mining operations.

Jack Wen, president and chief executive officer of GE Energy China, said the company planned to add more investment and staff members to its two joint ventures in Shenyang this year.

The Northeast, including Liaoning, Jilin and Heilongjiang provinces, is "an important area in GE's future," as it has advanced heavy industries and plenty of government support, he added.

To help revive the old industrial base, the central government unveiled a series of policies in 2003, including tax cuts and subsidies for technology innovation, industry restructuring and infrastructure construction.

The region also has trained a huge army of cheap technicians and engineers, compared to the often low-skilled rural migrant workers in the South, Lin Muxi, professor of economics at Liaoning University, told Xinhua.

In the financial crisis, factors such as low cost and an advanced industry base put the Northeast in a better position to attract foreign capital than the southern coastal regions, Lin said.

ITT Corporation, the world's largest supplier of pumps and systems for transporting and treating water, is building its presence the Northeast.

Dong Ruiping, external affairs director for ITT China, said the company was planning to increase investment and expand operations in the Northeast. In 2007, ITT Corporation set up a $25 million plant in Shenyang.

Xinhua

(China Daily 03/30/2009 page5)