Samsung arrives, resolves 'Shaanxi paradox'

More than a decade ago, Shaanxi was known for a queer juxtaposition of powerful resources in research, education and backward economy. Today, the "Samsung effect", which represents technological sophistication, gigantic investment and the driving force of industry, has testified to a combination of advantageous resources in this province of western China.

A fusion of resources

When the world economy remains sluggish and the Chinese economy slows down, the gigantic input of Samsung Electronics in Shaanxi demonstrated not only the attractive market size here but the enhancement in local capability to accommodate sophisticated industrial projects as a result of China's west development strategy. The project is a plant of NAND chips, a product widely used in smart cell phones and tablet PCs, while China has become the world's largest producer and consumer of these IT products, taking up around 40% of the world total.

Why a project coming for China market opportunities chose to settle in Xi'an, the provincial capital of Shaanxi? As Dr. Oh-Hyun Kwon, CEO and vice chairman of Samsung Electronics, put it, Xi'an is a central city of western China, which has many major customers of Samsung around it and its regional advantage enables Samsung to respond to customer needs quickly and efficiently.

Xi'an's advantage in industrial growth is also stressed. Kim Yong-kwan, senior vice-president of Samsung Electronics, said, "Xi'an is an important education base of China, which produces nearly 20,000 IT masters and Ph.Ds every year, a fact very conducive to IT enterprises. The city also has steady supply of water, electricity and natural gas which, plus convenient transportation, serves a base for chip industry. "

"The research and education resources played an important role in luring the Samsung project in, which again broke the embarrassing 'Shaanxi paradox"', said Zhao Hongzhuan, director of the administrative committee of Xi'an High-Tech Industries Development Zone (XHTZ).

Shaanxi is a big province of China in terms of education resources, for it is home to more than 80 higher learning institutions, nearly 1,000 research institutions and more than 1 million researchers and technicians, but its economic aggregate used to rank behind many other provinces, striking a sharp contrast which was named "Shaanxi paradox".

"Without the support of energy supply, transportation, biology and government service, education resources cannot change into economic advantages by themselves," said Gu Mengbin, an expert on financial investment with Shaanxi Academy of Social Sciences, "after more than a decade of western development, Shaanxi has successfully 'fused' its resource advantages to accommodate industrial growth."

Jump to the opportunity

Only five months elapsed from signing contract to breaking ground. "I will not hesitate to give full mark to the preparations here," said Dr. Oh-Hyun Kwon.

After signing the contract, a command group consisting of leaders of Shaanxi province and Xi'an city was set up, said Wei Minzhou, Party chief of Xi'an, and a dedicated office was established at the provincial reform and development commission to exercise centralized leadership over the project.

In only five months, more than 3,000 households in seven villages were relocated to make room for the project; by the end of August, the project had been pulled through a dozen state departments; Xi'an High-tech Comprehensive Bonded Area, the seat of the project, used only 88 days from June to September to obtain approval. "Semiconductor memory is a 'speed first' industry and our preparations create a new record of 'Shaanxi speed,'" said Wei.

"Both provincial and city governments rendered us great support," said Kim Yong-kwan, "and the central government also gave us much encouragement so the project could go through examination and approval quickly and enter construction."

Apart from the speedy preparations, efforts to bring in the project also displayed a sense of opportunity.

For four times, Samsung sent teams to Xi'an for project inspection. They were met by the local business-invitation team, who answered more than 1,000 questions with efficiency. Leaders from both provincial and city governments also joined to answer questions.

Shaanxi once missed many opportunities for growth, said Zhao Hongzhuan, and the successful introduction of Samsung displayed an eagerness to seize opportunities.