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Chengdu sets its sight on global auto center
By Wang Yanlin |
February 5, 2013, Tuesday
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Print Edition
Print Edition
BOASTING an annual production of 350,000 vehicles last year, Chengdu's burgeoning auto industry has compressed into one decade what would normally take 40 years to develop.
With automobiles now firmly one of its pillar industries, the capital of Sichuan Province is setting its sights even higher.
Chengdu will be transformed into a global automobile manufacturing center with the capacity to produce 1 million vehicles a year by 2015, Chengdu's authorities wrote in the city's 12th Five-Year Plan (2011-2015).
"We have sufficient facilities and a skilled labor force to support major investment in our automobile sector," said Chen Xiaoming, deputy director of the Automobile Investment Service Bureau.
Karl-Thomas Neuman, president and CEO of Volkswagen China, has predicted that the southwestern city will become a Chinese version of Germany's Wolfsburg, the home of the VW empire.
Great proficiency
Chengdu, a city of almost 15 million, was a latecomer to the industry, but it has made up ground by being a go-getter. City officials have shown great proficiency in identifying and exploiting Chengdu's assets.
One is market. Chengdu is a commercial center that has neatly dovetailed with the Chinese government's grand plan to turn underdeveloped inland areas into replicas of the bustling, rich cities along the East Coast. Even today, it's said that nearly 80 percent of vehicles produced in Chongqing are actually sold in Chengdu.
Another is the government support. Despite the city's reputation for a relaxed lifestyle, Chengdu government officials have exhibited a proactive "can do" spirit and a strong commitment to providing efficient services to businesses. That support often tips the balance when investors are scouting for places to put their money.
Chengdu also has strength in its amiable business culture, its flat terrain and grid system for easy logistics, its relatively lower labor costs and its healthy green environment.
The state-level Chengdu Economic and Technological Development Zone is located in Longquanyi District, a town famous for its peach flowers. It is mainly planned to be built as a production base for vehicles.
Longquanyi, covering 556 square kilometers, is 13 kilometers east of downtown Chengdu and 28 kilometers from Shuangliu International Airport.
The companies which have invested in Longquanyi have yielded good returns. In 2011, FAW-Volkswagen Automotive (Chengdu) Co produced 59,888 vehicles, generating 438.13 million yuan of revenue. The revenue is expected to reach 44 billion yuan in 2015. In October 2012, the company also set up a factory to make vehicle engines.
The arrival of FAW-Volkswagen was like a magnet for car-parts suppliers and later a drawing card for global rivals like Toyota and Volvo, who have set up operations in Chengdu.
Foreign investment
To date, Longquanyi District has attracted more than 500 major industrial projects involving nearly 140 companies from the United States, Germany, France, Canada, Japan and other countries. City fathers are proud to note that the investors include 41 Fortune Global 500 companies.
In 2011, the production value of automobile enterprises in Chengdu was around 50 billion yuan, and the figure is expected to top 275 billion yuan in 2015.
Being a latecomer has enabled Chengdu to leapfrog older technologies and learn from the successes and failures of earlier industrial development elsewhere.
In its master plan, the Longquanyi District is designated to become a comprehensive center for automaking, from research and development up the chain to manufacturing, parts supply, sales, services, trade, exhibitions and car-related entertainment systems.
Its proponents hope the tight integration will help shield the district from any industry downturns, such as those that befell the automaking city of Dongguan in Guangdong Province or even Detroit in the United States.
Chengdu officials happily note how competitors like Volkswagen and Toyota seem to settle harmoniously in the district, sharing suppliers and exploring the market together.
The auto industry is but one leg of a development strategy careful not to put all Chengdu's eggs in one basket. Alongside carmaking, the city is nurturing industries such as information technology, advanced industrial materials, biomedicine, aviation and aerospace, equipment manufacturing and petrochemicals.
Chengdu has a deep pool of talent to offer. Its more than 50 educational institutions - including top facilities such as Sichuan University, Southwest Jiaotong University and the University of Electronic Science and Technology of China - turn out more than 150,000 graduates and more than 100,000 skilled workers every year.
Attracted by this advantage, some global firms have chosen Chengdu as a center for research and development, including Harmon International, the world's largest car-stereo manufacturer.
Yang Jisong, senior manager of the Chengdu R&D unit of Harman Automotive China, said his company plans to recruit at least 300 professional specialists in car entertainment systems every year from the city.
Although Chengdu was too late to benefit much from the first wave of car sales that swept China, city's officials said they are well poised to ride a second wave expected as first-car buyers proliferate in inland areas and as existing motorists in coastal areas trade their cars in for more expensive models.
With automobiles now firmly one of its pillar industries, the capital of Sichuan Province is setting its sights even higher.
Chengdu will be transformed into a global automobile manufacturing center with the capacity to produce 1 million vehicles a year by 2015, Chengdu's authorities wrote in the city's 12th Five-Year Plan (2011-2015).
"We have sufficient facilities and a skilled labor force to support major investment in our automobile sector," said Chen Xiaoming, deputy director of the Automobile Investment Service Bureau.
Karl-Thomas Neuman, president and CEO of Volkswagen China, has predicted that the southwestern city will become a Chinese version of Germany's Wolfsburg, the home of the VW empire.
Great proficiency
Chengdu, a city of almost 15 million, was a latecomer to the industry, but it has made up ground by being a go-getter. City officials have shown great proficiency in identifying and exploiting Chengdu's assets.
One is market. Chengdu is a commercial center that has neatly dovetailed with the Chinese government's grand plan to turn underdeveloped inland areas into replicas of the bustling, rich cities along the East Coast. Even today, it's said that nearly 80 percent of vehicles produced in Chongqing are actually sold in Chengdu.
Another is the government support. Despite the city's reputation for a relaxed lifestyle, Chengdu government officials have exhibited a proactive "can do" spirit and a strong commitment to providing efficient services to businesses. That support often tips the balance when investors are scouting for places to put their money.
Chengdu also has strength in its amiable business culture, its flat terrain and grid system for easy logistics, its relatively lower labor costs and its healthy green environment.
The state-level Chengdu Economic and Technological Development Zone is located in Longquanyi District, a town famous for its peach flowers. It is mainly planned to be built as a production base for vehicles.
Longquanyi, covering 556 square kilometers, is 13 kilometers east of downtown Chengdu and 28 kilometers from Shuangliu International Airport.
The companies which have invested in Longquanyi have yielded good returns. In 2011, FAW-Volkswagen Automotive (Chengdu) Co produced 59,888 vehicles, generating 438.13 million yuan of revenue. The revenue is expected to reach 44 billion yuan in 2015. In October 2012, the company also set up a factory to make vehicle engines.
The arrival of FAW-Volkswagen was like a magnet for car-parts suppliers and later a drawing card for global rivals like Toyota and Volvo, who have set up operations in Chengdu.
Foreign investment
To date, Longquanyi District has attracted more than 500 major industrial projects involving nearly 140 companies from the United States, Germany, France, Canada, Japan and other countries. City fathers are proud to note that the investors include 41 Fortune Global 500 companies.
In 2011, the production value of automobile enterprises in Chengdu was around 50 billion yuan, and the figure is expected to top 275 billion yuan in 2015.
Being a latecomer has enabled Chengdu to leapfrog older technologies and learn from the successes and failures of earlier industrial development elsewhere.
In its master plan, the Longquanyi District is designated to become a comprehensive center for automaking, from research and development up the chain to manufacturing, parts supply, sales, services, trade, exhibitions and car-related entertainment systems.
Its proponents hope the tight integration will help shield the district from any industry downturns, such as those that befell the automaking city of Dongguan in Guangdong Province or even Detroit in the United States.
Chengdu officials happily note how competitors like Volkswagen and Toyota seem to settle harmoniously in the district, sharing suppliers and exploring the market together.
The auto industry is but one leg of a development strategy careful not to put all Chengdu's eggs in one basket. Alongside carmaking, the city is nurturing industries such as information technology, advanced industrial materials, biomedicine, aviation and aerospace, equipment manufacturing and petrochemicals.
Chengdu has a deep pool of talent to offer. Its more than 50 educational institutions - including top facilities such as Sichuan University, Southwest Jiaotong University and the University of Electronic Science and Technology of China - turn out more than 150,000 graduates and more than 100,000 skilled workers every year.
Attracted by this advantage, some global firms have chosen Chengdu as a center for research and development, including Harmon International, the world's largest car-stereo manufacturer.
Yang Jisong, senior manager of the Chengdu R&D unit of Harman Automotive China, said his company plans to recruit at least 300 professional specialists in car entertainment systems every year from the city.
Although Chengdu was too late to benefit much from the first wave of car sales that swept China, city's officials said they are well poised to ride a second wave expected as first-car buyers proliferate in inland areas and as existing motorists in coastal areas trade their cars in for more expensive models.
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