Denise Tsang – SCMP – Updated on Apr 22, 2008
Guangdong, which is evicting manufacturers of low-value products on grounds that they pollute the province, is attracting investors with land and cash subsidies to foster service industries instead.
The Luogang district, part of Guangzhou’s economic development zone, yesterday signed agreements with about 15 domestic and foreign companies – including some from Hong Kong, Germany and the United States – in deals totalling US$560 million.
The companies will set up outsource service centres, headquarters or research and development units in the district, as well as provide logistics and financial services from there.
On offer are sweeteners including one-off cash grants of 700,000 yuan (HK$781,472) to 20 million yuan, land and rental subsidies, reimbursements on staff training costs and rail and road infrastructure.
The incentives run in tandem with draconian measures including cuts in tax rebates and tightened environmental requirements to snuff out industries deemed energy-consuming, resource-intensive and polluting.
“We have favourable policies for companies that aim to provide greater value-added services in the economic development belt,” said Xue Xiaofeng, the chief of Guangzhou’s economic development zone.
Hong Kong-based electronics maker Matsunichi Group plans to set up headquarters inside the zone while peer e-Commerce Logistics will build a centre for supply chain management.
Other investors are consulting firm AC Nielsen, Italian fashion company Vasto and telecommunications service provider China Direct Telecom. They will join 2,500 foreign firms already in the economic zone.
Among the most tempting incentives is a cash subsidy of 500 yuan per square metre for financial institutions and outsourcing service providers if they buy property in the economic zone, according to Mr Xue.
There is also a bonded logistics park to be connected by three metro rail lines and four light rail links to serve the Pearl River Delta region.
Guangdong has seen the exodus and demise of 10,000 factories in the past year as the province forces manufacturers to move up the value and technology chain. The trend has yet to let up as power and labour shortages and rising costs continue to hurt industries, say some trade groups.