The Jincheng Economic Development Zone Takes off

THE four-square-kilometer Jincheng Economic Development Zone (EDZ) in southeastern Shanxi Province has everything it takes to serve as a prime manufacturing hub: it is traversed by the north-south Taiyuan (Shanxi)-Jiaozuo (Henan) Railway; is adjacent to several major roads, including National Highway 207, the Jincheng-Changzhi (Shanxi) Expressway, the Jincheng-Jiaozuo Expressway, the Jincheng-Yangcheng (Shanxi) Expressway and the Jincheng-Zhanglukou (Henan) Highway; and boasts a modern infrastructure, supported by a comprehensive range of services and a skilled workforce, guaranteeing that every investment will quickly yield results.

Savvy investors will not want to miss an important opportunity such as this. For example, two months after the zone’s establishment in January 2006, Foxconn, one of the world’s top 500 companies, spent US $500 million to set up a sci-tech industrial park, and in 2007, the Jincheng EDZ reported a production value of RMB 682 million, a 27.5 percent increase over the previous year.

Its value-added industrial production jumped 41 percent during the same period, to RMB 260 million, 52 percent of which(RMB 135 million) came from hi- and new-tech industries, while overall revenues grew 27 percent to RMB 127 million.

The growth of the local import-export sector was even more remarkable. Imports rose 282 percent to US $46.09 million, while exports jumped 92 percent to US $21.73 million. A new investment record was also set, with the zone attracting US $133.39 million in foreign investments, outperforming all of its provincial rivals in Shanxi Province.

Facilities and a Can-do Attitude

Nothing is more attractive to manufacturers looking to invest in new production facilities than industrial parks that offer a full range of utilities and services backed by a skilled workforce. Over the past few years, the Jincheng EDZ has dedicated more than RMB 700 million to developing new infrastructure, installing the “seven basics” C roads, water, power and gas supply, heating, communications and Internet connectivity, as well as level ground.

The zone is now interconnected by 15 kilometers of paved roads, its two waterworks deliver a daily total of 50,000 tons of tap water, its 110 KV transformer substation and 10 KV switching station are able to meet all the power requirements of resident factories, and its two centralized heating stations can service two million square meters. This year, the zone built its first coal-bed gas supply station, which is able to deliver 5,000 cubic meters of gas per hour.

As impressive and sophisticated as an area’s infrastructure might be, however, it is still the human element that represents the decisive factor in the performance of any given establishment. Therefore, the administrative committee of the Jincheng EDZ has committed itself to practicing consistency and transparency in all of its policy decisions, as well as to uphold prevailing industry standards and the rules of fair market competition.

It has offered investors a series of incentives and preferential policies to attract capital, technologies and professional personnel, and has streamlined administrative tasks by locating all government departments concerned with business registration and administration in a single location inside the zone. For key projects, the committee assigns dedicated personnel to assist with the whole process of moving into the zone. It has trained its staff members to regard themselves and everything they do as critical to the zone’s image among investors, and their guiding principle can be summarized as “making investors happy and helping them make money.”

Selective Admission

Although it is eager to attract investment, the Jincheng EDZ is still highly selective in its choice of enterprises. Only those manufacturers able to optimize the local industrial infrastructure and enhance the competitiveness of its products are welcome. In addition, it has set up special sub-zones for support factories to give its manufacturers an advantage of scale.

J.K.I. Precision Industry (Shanxi) Corporation, for instance, is a wholly foreign-funded company in the zone’s International Foundry Industrial Park. It imports high-precision processing equipment from Japan, Germany and the U.S to produce finished parts for automobiles, motorcycles and air-conditioners using rough castings made by other companies in the zone, thereby multiplying the zone’s value-added production several fold.

At the end of 2006, the first stage of the Foxconn Sci & Tech Industrial Park entered operation. Currently, several zones are under construction that will be set aside for silk and hemp production, while an additional area within the park will be assigned to small and medium-sized private companies. To date, the zone has promoted the development of several key industries, including optoelectronics, precision casting, silk and linen garments, biopharmaceuticals, new materials and modern trade and services. Taken together, these have dramatically boosted the momentum of the Jincheng EDZ’s economic growth.

Investments Stream In

To date, the Jincheng EDZ has accommodated 12 foreign-funded enterprises with a total investment of nearly US $600 million, ranging from optical electronics and machinery to real estate.

And as the scale of foreign investment grows, so, too, does its quality. The US $500 million Foxconn Sci & Tech Industrial Park, for example, covers more than 69.2 hectares and will focus on the manufacture of high-tech products, such as optical communications, lens modules, precision molds, and automation equipment. Upon completion, its annual production value will be an estimated RMB 10 billion, and it is expected to generate RMB 1 billion in taxes every year, along with 25,000 jobs.

In addition, a number of projects in the zone have filled vacant niches in Shanxi Province, including a joint venture between the locally based Lanhua Group and the South African company HS to produce explosion suppression equipment for mines, Globalight Technology Co. Ltd. to manufacture LEDs, and a vehicle fuel gauge project launched by Xiangcheng Scientific and Technological Electrical Appliance Co., Ltd.

New- and Hi-tech

Industries a Priority

Over the past few years, the Jincheng EDZ has accelerated its support for projects dealing in new and high technologies, and has worked out various incentives to that end. So far, six of its projects are listed in national programs for sci-tech research and development, and dozens of enterprises are involved in the programs at the provincial and municipal level. It also hosts seven enterprises dealing in new and high technologies, as well as two provincial-level technological centers.

Globalight’s LED semiconductor light source project, to which the company owns the sole intellectual property rights, has joined the 863 Program, China’s strategic plan for hi-tech research and development. At the same time, the special ceramics project run by Fuji New Materials Co., Ltd. has been approved for inclusion in theTorch Plan, a national program to boost the industrialization and global export of new- and hi-tech products, and the auto fuel gauge indicator produced by Xiangcheng Scientific and Technological Electrical Appliance Co., Ltd. has also won a slot in the Torch Plan.

With the steady expansion of the new- and hi-tech sector in the Jincheng EDZ, its value-added production finally surpassed that of traditional industries last year, making up 52 percent of the EDZ’s entire industrial value-added production. Barely three years old, the Jincheng EDZ has demonstrated a remarkable dynamism and potential, as well as met all the essential criteria for new business and investment opportunities.