In the heart of China, small cities see big changes
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| Wei Xiaoming, deputy mayor of Hefei, the capital of Anhui Province. [Wang Wei/China.org.cn] |
![Wei Xiaoming, deputy mayor of Hefei, the capital of Anhui Province. [Wang Wei/China.org.cn]](http://images.china.cn/attachement/jpg/site1007/20110314/000cf1a48b7f0ee802e82c.jpg "Wei Xiaoming, deputy mayor of Hefei, the capital of Anhui Province. [Wang Wei/China.org.cn]")
The corporations that are appearing in the Wanjiang Economic Zone are a mix of expanding veteran companies and new start-ups basing themselves there. In 2008, Chen Hengshu came to Tongling with a partner to set up Tongling Chaoyuan Precision Electronics, a factory that produces printed circuit boards (PCB). At the time, there were already three established PCB companies in Tongling. Chen, who had been in the industry for 18 years in Shenzhen, was confident about his prospects in Tongling.
The PCB industry generated US$44 billion in 2009, the year Chaoyuan began production. China's PCB market share was 34.6 percent that year, and the country has been capturing a larger percentage over the last decade. This year, China is predicted to produce 36.6 percent of the world's supply of PCBs. The PCBs Chaoyuan produces use a lot of the copper produced by companies like Tongling Nonferrous Metals, forming a kind of supply chain among symbiotic industries in the region, driving down production costs and guaranteeing a steady customer base.
Foreign companies have been brought into Anhui, as well. The provincial government approved 203 foreign-invested projects worth US$3 billion in the first 11 months of last year. In Chaohu, for example, the China branch of Praxair, a leading industrial gas provider based in Connecticut, U.S., has signed an agreement with Anhui Huayi Chemical, an affiliate of Chinese chemicals giant Shanghai Huayi Group. Huayi is investing 35 billion yuan (US$5.3 billion) on a chemical industry park that will transform China's abundant coal reserves into popular industrial chemicals, such as methanol and ethyl acetate. Praxair is building one of Asia's largest single-train air separation plant at the park, which will provide Huayi with 3,000 tons of oxygen a day for its coking projects.
Most of the world's top companies with branches in Anhui are based in the provincial capital, Hefei. Unilever, Coca-Cola, Hitachi and Sanyo are among the 27 Fortune 500 companies with investments in Hefei. The city hopes to attract even more investments, especially from big-name global companies, said Wei Xiaoming, Hefei's vice mayor. It is a sentiment shared by many officials in charge of the Wanjiang Economic Zone, who speak in lofty sentiments about opening their cities but refrain from providing specific examples of how they plan on luring businesses. Anhui's income tax exemptions or reductions for foreign-invested companies are already quite generous: among them, a 3-percent reduction of local income tax; two years of no income tax payments; and further reductions depending on the type of company and its location. They also may qualify for import and value-added tax reductions or exemptions.
These policies are also coupled with more streamlined approval procedures, strategic and accessible locations, and low production costs. Still, Anhui may need all the advantages it can get for its plan for a development boom to succeed. The State Council's approval of the Wanjiang Economic Zone requires the region's GDP to be double the 2008 level, which was 581.8 billion yuan (US$88.6 billion). The per capita GDP also must be higher than the national average, and the region's urbanization rate must be 56 percent or higher. But if there are any doubts about what the Wanjiang Economic Zone will achieve, the official slogan may offer some insight: "Lay the foundation in the first year, achieve success in the third year, and realize great boom in the fifth year."
