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Nanning plant to consolidate firm's 'moving inland' strategy
Foxconn Technology Group, a major manufacturer of Apple Inc's products, is expanding the production of smart devices in southern China, according to a report.
Experts said the latest investment, reportedly worth 5 billion yuan ($802 million), in Nanning, capital of the Guangxi Zhuang autonomous region, will enable Foxconn to consolidate its "moving inland" strategy. This is in line with the city's plan to boost electronics industries.
Hon Hai Precision Industry Co Ltd, Foxconn's parent, has signed an agreement with the local government to build a tablet and smartphone plant in the city, China Business News reported on Friday.
The investment aims to win Nanning a reputation as a modern manufacturing, commercial and logistics center in the region, it quoted Foxconn chief Terry Gou as saying.
Liu Kun, a Shenzhen-based spokesman for the company, declined to confirm the report, saying that all ongoing projects on the Chinese mainland will be announced through the Taiwan Stock Exchange, on which Hon Hai is listed.
But he told China Daily that Shenzhen, Zhengzhou and Chengdu remain the key hubs for Foxconn. The three cities serve the country's southern, central and western markets.
Nanning's economic planning body has said it wants to attract companies like Foxconn to the city.
"Electronics is definitely a prioritized industry in our economic outline," said Cao Xiaojun, an official with the city's development and reform commission, who oversees industrial planning.
Cao said companies like Foxconn will create a win-win situation by bringing in more capital and consolidating the industrial chain.
Cao said investors can make full use of Nanning's geographic advantage as a gateway to member countries of the Association of Southeast Asian Nations.
"As a result, we are seeing a growing number of companies setting up their regional bases in Nanning," she said.
The government will provide incentives to encourage emerging industries to come to Nanning, Cao added.
China Business News said Foxconn has completed the first phase of the plant, and large-scale recruitment is on the agenda. The Nanning complex will mass-produce LCD screens for tablets and TVs, and communications equipment including routers.
Sun Lijian, senior economist at Fudan University in Shanghai, said: "Judging from previous investments, it is safe to say that preferential policies like tax incentives from local governments are the gravitational pull for Foxconn. That's usually where they see new market buoyancy."
The company has a large presence across China, with one of its latest ventures being a distribution center in Shanghai. Construction began in May.
Market watchers said Foxconn is also considering investment in the US and is assessing cities such as Detroit and Los Angeles as possible factory locations.
"That is, again, in line with a renewed focus on manufacturing in the US, as Washington struggles to stimulate the economy and create jobs," Sun said.
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