The move by Intel in 2003 to establish a manufacturing plant in Chengdu’s High-Tech Zone brought widespread attention to the local government’s push to develop Chengdu’s technological hubs. Since then, an increasing number of high-tech-related companies, including US-based Hewlett-Packard and Dell and Taiwanese firm Foxconn have established plants in the city, attracted by the growth of Chengdu’s information and communications technology industry.

“Intel was one of the largest multinational corporations that came to Chengdu,” says Bian Cheng Gang, general manager of Intel’s branch in Chengdu. “About 10 years ago, there was no [ICT] eco-system in place, and we took a risk in moving to Chengdu. The [national] government was moving big time on the ‘go west’ policy, and we saw opportunities there. We were driven by our own vision to bring technology to the people that need it, and we saw Chengdu as the gateway to the west. We believed Chengdu would bring Intel closer to our consumers and the people that need technology in the west of China.”

Innovation effort

With the local government’s stated aim of raising its investment in R&D to 3% of GDP by 2015, the provincial authorities have focused their efforts on strengthening Chengdu’s innovation capacity. Highlighting electronic information, energy-saving technology, cloud computing and biomedicine as the high-end sectors chosen for support, the local government has worked to create industrial clusters to support their growth. In the area of cloud computing alone, the Economist Intelligence Unit reports that the government has established three industrial clusters, namely cloud services, software and hardware equipment production, and cloud terminal product manufacturing. Should Chengdu realise its goal of becoming the world’s largest cloud service and terminal product manufacturing base, the industry is expected to reach $47.6bn in value.

Accordingly, FDI has figured chiefly in the government’s strategy. Striving to create a dynamic investment environment for foreign companies, the provincial authorities have invested heavily in developing Chengdu’s high-tech industry through its technology parks.

Zoning in

Spanning an area of 130 square kilometres, Chengdu’s High-Tech Zone has grown at an annual rate of 35% since its creation in 1991, according to official estimates. Divided into the south and west industrial parks, the zone has developed into a strategically important place for enterprises looking to benefit from the park’s advanced software capacities and investment incentives offered by the city’s Investment Promotion Commission.

“The high-tech zone is playing an important role in attracting foreign companies to invest in China and further opening it up to the world,” says Tang JiQiang, the press spokesperson of Chengdu High-Tech Zone and the director of the zone’s Bureau of Strategic Development Planning. “We have plenty of talent and a skilled labour pool, the transportation is convenient, and the internet is readily available. The government offers good services to all foreign companies and we also help local companies develop their operations here as well.”

With nearly 30,000 companies already registered in the High-Tech Zone, including 100 Fortune 500 companies, Chengdu’s industrial parks have been ranked as fourth among China’s national high-tech zones.

Split into two sections, the High-Tech Zone comprises of the west and south industrial parks. The west industrial park was developed with a specific focus on electronic information, bio-pharmaceuticals and precision machinery manufacturing. Conversely, the south industrial park, commonly referred to as the 'New Tianfu City', was developed as an international technology and business city focusing on technological innovation and software R&D.

Successful examples 

Based in the west industrial park, Intel is one of the high-profile international companies that has a presence in Chengdu’s High-Tech Zone. “We have so far invested $600m in creating [our] entire facility,” says Mr Bian. As Intel’s mobile central processing unit (CPU) factory in Chengdu produces CPUs used in 50% of all laptops produced globally by the company, Intel’s operations in Chengdu play a significant role in the firm’s global business.

“We are currently the lead site for chipsets and mobile CPUs produced across Intel’s global network,” says Mr Bian. “All [of Intel’s] new products were first introduced here. We handle a big volume of all the transactions going on. Last year, our total export and import volume was worth $9.6bn. Half of that, about $4.8bn, was in imports such as goods and machines, and the other half was finished goods shipped domestically to China and the rest of the world.”

“One of the reasons why I think Chengdu has been developing very rapidly is down to the manufacturing industry and technological resources that have been offered in Chengdu’s high-tech parks,” says Kevin Zhang, president of Z&Z Optoelectronics Technology. Established in Chengdu’s High-Tech Zone in 1998, Z&Z Optoelectronics has become one of the city’s leading manufacturers of high-precision infrared and laser optical components. “Chengdu has developed a good foundation, especially with regards to its manufacturing industry, its R&D and the advanced talent that is available here. The [high-tech zones] are quite internationalised as there are several hundred foreign companies already set up in Chengdu, some of [which] have set up their manufacturing and research centres [here].”

Additionally, according to Mr Zhang, Chengdu’s High-Tech Zone has experienced rapid growth as it has focused on attracting large as well as small and medium-sized businesses. In his view, the preferential policies offered to a medium-sized company such as his was one of the factors that aided the growth of Z&Z Optoelectronics. “The local authorities are not just about all the big companies,” says Mr Zhang. “They are very active in attracting middle and small-sized local and international companies.”

“I would score Chengdu 10 out of 10,” says Intel’s Mr Bian. “The talent base for employees is very attractive. The government’s supportive attitude really makes a difference and helps high-tech companies such as ours. We already have big strategic expansion plans as our factory is currently running at full scale. Intel’s CEO said we picked the right place 10 years ago when nobody else was looking at Chengdu, and we are very committed to staying here for a long time.”