China's Far West Is Attracting Foreign Companies

Cheap labor and lower start-up costs are luring foreign companies to Chengdu, helping to revitalize an ancient city in western China determined to close the gap with the more prosperous east. Chengdu, China's western cultural and economic capital for centuries, has engineered a partial revival by raking in record foreign investment over the last six years, and vaunts the presence of 78 blue-chip companies.

Motorola, IBM, Intel, Coca Cola and Toyota have led the charge of top brands that together have poured hundreds of millions in new factories, with Swedish retail giant Ikea and German software giant SAP set to be the newest arrivals.

"Companies are considering Chengdu because everything is cheaper here," Wang Yi, an official with the China Council for the Promotion of International Trade, said. "The start-up costs are much higher in the eastern areas of China and the competition is fiercer." Average worker salaries of around 700 yuan (US$88) a month lag well behind those in premier economic centers such as Shanghai and Guangdong in the south, where the average worker makes at least double that amount.

Chengdu's economy has roared ahead, with average annual growth of 13% over the last several years -- well above the 10% national average.

In a bid to boost the poverty-stricken western regions of China, the central government launched the "Develop the West" campaign six years ago. Today, Chengdu shines with new highways, bridges, a first-class technology center and an international airport -- evidence of the billions of dollars that Beijing has ploughed into infrastructure.

Copyright Agence France-Presse, 2006

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