A worthy investment

Of China's coastal cities, Dalian has become one of the most popular with foreign investors. It has also become the country's top technology service outsourcing center, particularly for software, for firms based in Japan and the Republic of Korea, according to its vice-mayor Xing Liangzhong.

In the past three years annual foreign investment has doubled and redoubled year on year: 115 percent in 2004, 141 percent in 2005 and 124 percent last year.

"The growth rate ranked the first not only in the cities of Northeastern China, but was among the leading places of all coastal areas," Xing said.

To date, 84 of the world's top 500 companies are represented in the city with 17 research and development centers, nine logistics centers and nine regional headquarters.

More than 141 major projects had a single investment of $10 million or more.

The projects, mostly specializing in equipment manufacturing, electronic information and services, achieved a total sales value of 73.6 billion yuan ($9.8 billion) in 2006, with a tax revenue of nearly 4.9 billion yuan.

On March 26, US chip giant Intel Corp announced it was to invest $2.5 billion on a 12-inch wafer fabrication plant in Dalian.

The production line, with an initial monthly capacity of 52,000 pieces of chipsets using 90-nanometer process technology, is estimated to have an annual revenue of $2.7 billion.

Construction of the factory starts later this year, with production to begin in 2010.

STX Shipbuilding Co, South Korea's sixth-largest shipbuilder, is to spend a total of $900 million to establish another base in Dalian, larger than either of its other ventures in China, which specializes in ship parts and build vessels.

The official said given its recent 200-ton shipbuilding project with COSCO Shipping Co, Dalian is promising to grow into "China's and even the world's largest" shipbuilding foundation.

"Those major projects have greatly motivated Dalian's internationalization, and are also significant to further promote itself into an international outsourcing destination," Xing said.

Dalian's economy used to rely a great deal on heavy industries such as shipbuilding and chemicals. But for the past decade it has been trying to develop sectors such as finance and information industry in it's modernization bid.

In recent years, the city has become a major outsourcing destination, particularly for software, for firms based in Japan and the Republic of Korea.

The additional revenue generated by companies engaged in outsourcing has been growing at an average annual rate of 50 percent, reaching 8 billion yuan ($1 billion) last year.

"And the growth is expected to keep up its momentum in the coming years," Xing said.

What's more, such companies today employ about 60,000 people and have created 300,000 more jobs in related industries, he said.

(China Daily 09/07/2007 page40)