Due to its strategic location in south-central China as well as its abundance of grain, Hunan province was once a strategic spot for various Chinese military forces in ancient times. Now the province wants to turn itself into a stronghold for businessmen who want to explore new opportunities.
Following the 2008 Hunan (Shanghai) Investment Conference in mid-June, the province is looking to the east Yangtze River Delta to draw more foreign capital and accelerate its industrial development. It is expecting to build up its processing and manufacturing industries during the eastern coastal cities' current industrial transfer.
Due to escalating costs for both land resources and labor, companies in the Yangtze River and Pearl River deltas are increasingly looking to the middle and western regions for cost control and seeking new development as well.
Sponsored by the Hunan provincial government, the weeklong event boasted a total investment volume of over $40 billion, with more than 800 key investment projects covering infrastructure, energy, logistics, financial service, tourism, cultural and creative industry.
An annual survey from the American Chamber of Commerce in Shanghai shows those US investors in China are facing rising costs in terms of salaries and wages, real estate, distribution and transportation.
As a result, about 5.5 percent of the companies surveyed say they are already investing in inland provinces like Hunan, and over 36 percent say they would set up operations in second- and third-tier cities and interior areas such as Hunan.
"Business costs in Hunan are 30 percent lower than in the coastal areas," says Gan Lin, vice-governor of the province, adding that over 40 of the world's top 500 companies have already set up their operations in Hunan.
"Being adjacent to the Yangtze River Delta in the east and the Pearl River Delta in the south, Hunan is well positioned to serve as an ideal locale for companies suffering from squeezed profits in the coastal areas and looking to invest in inland China."