New Chengdu Intel Plant Marks Breakthrough for
Go West Policy
Intel will invest US$200 million in a new microprocessor
testing and assembly center in Chengdu in Sichuan province
in western China. The move marks a major breakthrough
for China's Go West policy, announced in 2000, and aimed
at urging western companies to invest in China's interior.
China's Go West policy is aimed at developing China's
interior, and reducing the gap in wealth between the relatively
poorer western inland provinces, and the wealthier provinces
on China's eastern coast which have benefited the most
from China's economic development.
For wafer assembly and chip fabs, most companies (which
are Taiwan or Taiwan-invested firms) have chosen to site
their facilities in the Yangzi River delta and in Shanghai.
Many of the senior management in these companies are returnees
from the US and Taiwan, who have been affected by the
recent layoffs in the US market. Previously, most of the
Taiwanese management shuttled between working in Shanghai,
and visiting their families in Taiwan. Now, as the quality
of local schools and facilities has improved, more of
the Taiwanese have relocated their families to China.
Line workers are locally hired staff.
As a result of the intense hiring in the Yangzi River
delta, wages have gone up for experienced line workers.
Wages in the region are approximately three times higher
than in Sichuan. As a result, many university graduates
from inland universities head for Shanghai or Beijing
when they graduate. The result has been higher hiring
costs on the coast, and a lack of good jobs in the inland
regions. As a result, the wealth gap between the east
coast and China's inland's region has grown.
For this reason, the Chinese government announced the
Go West policy in 2000, promising to invest billions in
basic infrastructure development for the inland provinces.
But, until the Intel Chengdu deal was announced, there
were few results.
This deal will be an anchor investment deal, since resistance
to investing in western China will go away from many boardrooms
and senior management teams once they see that Intel has
made the commitment to invest in a major hi-tech facility
in Chengdu.
Before you go, did you like this article?
If so, you can receive a free email newsletter version
each weekday. Sign up using the China Business Express
form on this page.
