Overseas hi-tech sector eyes west China

China's relatively undeveloped western regions have become a magnet for foreign investment in the hi-tech sector, thanks to policy incentives, a potential large market and a rich talent pool.

At the ongoing five-day annual Investment and Trade Forum for Cooperation between East and West China in the northwestern city of Xi'an, more than 1,200 foreign investors from 57 countries have been searching for local partners for more than 300 investment projects they have brought. This year, many projects focus on hi-tech fields.

"We've seen a growing quantity of foreign capital flowing into a much wider range of industries in west China in the past decade since the country first initiated the 'go west' drive. Foreign enterprises have shifted their focus to hi-tech, new energy, energy-saving and environment-friendly industries from infrastructure construction," said Gan Jianyong, of the China Council for the Promotion of International Trade.

Xu Zheng, General Electric's vice president for northwest China, told Xinhua that the company's westward strategy is in line with the ongoing shift in the country's growth pattern.

"We expect to receive policy incentives as the country continues to push forward economic restructuring and industrial gradient transfer from east to west," added Xu.

General Electric signed a contract with China XD Electric Co., Ltd. on Saturday to establish a joint venture to employ GE technology to produce power transmission equipment.

In July 2012, General Electric set up one of its three worldwide innovation centers in Xi'an to develop lighting, aviation and energy products.

Over 2.9 billion U.S. dollars in foreign capital was introduced to Shaanxi last year, up 24.7 percent year on year. West China's actual utilized foreign capital reached 9.92 billion U.S. dollars in 2012.

Currently, 80 Fortune 500 enterprises have set up branches in the province. Some 243 Fortune 500 enterprises have offices in southwest China's Sichuan Province and more than 200 in Chongqing Municipality.

"With ever-improving infrastructure and support services, west China has become a large market waiting for enterprises to explore," according to Seung-Ho Lee, CEO of Korean enterprise ProMECS Co.,Ltd., which has plans to develop welding robots in the region.

When Samsung Electronics established its memory chip fabrication line in Xi'an in September 2012, its CEO, Kwon Oh-hyum, said Samsung chose to settle in the city in order to be close to its customers.

The first phase of the tech firm totaled 7 billion U.S. dollars while the second phase is expected to reach 30 billion U.S. dollars, both the single largest investment by Samsung in China, and the largest foreign hi-tech project west China has attracted since the start of the country's reform and opening up.

Foreign enterprises are also attracted by west China's plentiful talent reserve.

The Chicago-based software company Thoughtworks shifted its China office to Xi'an after operating in Beijing for four years.

"Xi'an's human resources in information technology and the market opportunity are the reasons why we came," said Hu Kai, general manager of Thoughtworks's Xi'an office. Hu said he feels an atmosphere for technological innovation and exchange in the city.

"Xi'an offers technical personnel in aviation, chemical engineering, as well as energy sectors that GE innovation center needs," he added.

With nearly 100 universities sending 250,000 graduates to the job market annually, Shaanxi Province is able to support six National Hi-Tech Industrial Development Zones, 683 science and technology programs and over 900 research institutes.

"Dell set up its global operations facility in Chengdu because we believe the city's mature education system can nurture and retain talents," explained Huang Yunfei, head of the program for Dell.

However, foreign enterprises are expecting more from regional governments in west China.

"As a foreign enterprise, we want the opportunity to earn special research funding from the government, and participate in the country's major research projects in science and technology, just like what domestic enterprises do," said Xu.

He said this will encourage foreign enterprises to pump additional investment into China and move more research and development projects to the country.

"Foreign enterprises in turn contribute to the country's scientific and technological progress. It's a win-win solution," according to Xu.

He added that a more service-oriented government is needed to attract foreign businesses. "The regional government can carry out its policy with more transparency and execution."

Another big thing on the wish list for foreign enterprises is a better transportation system.

"Better transport including interprovincial highways and urban subways is a must if the region wants to attract more foreign investment," believes Park Dong Sik, China branch president of Sandeul Information Communication Co., Ltd.

The "go west" drive, initiated in 2000 to boost the less developed west, covers six provinces, five autonomous regions and Chongqing Municipality, accounting for more than 70 percent of the mainland's area.

China's western development strategy involves infrastructure construction, attracting foreign investment, and increased efforts in ecological protection, education and talent retention.