Developing China: The Remarkable Impact of Foreign Direct Investment by Michael J. Enright

Author:Michael J. Enright [Michael J. Enright]
Language: eng
Format: epub, pdf
Publisher: Taylor & Francis Ltd

Service and technology development

Chongqing took advantage of hosting the 2005 Asia Pacific Cities Summit to project itself to the outside world and to accelerate inward investment. In that year, the tertiary sector accounted for 69 percent of total FDI into Chongqing, and since then tertiary industries have continued to attract more FDI in Chongqing than secondary industries. In addition to real estate, the top service industries in terms of foreign investment have been Leasing and Business Services, Finance, and Wholesale and Retail. In May 2006, Ericsson established its fourth global purchasing centre in Chongqing. In December 2006, Honeywell invested USD 300 million in Chongqing to develop special software for Chinese and global industrial enterprises. In October 2005, Liberty Mutual Insurance decided to locate its China headquarters in Chongqing, the first China headquarters of a Fortune 500 company in the city. ABN Amro opened its Chongqing branch in January 2007 and Standard Chartered opened its Chongqing branch in June 2007. As of the end of 2014, there were 17 foreign banks operating branches in Chongqing (Cq People, 2015). Wal-Mart, B&Q, Metro, Carrefour, New World (Hong Kong), Maison Mode, Far Eastern Department Store (Taiwan), and other foreign retailers had also set up in the city.

Chongqing has become one of the world’s leading locations for personal computer manufacturing, a phenomenon driven almost entirely by foreign investment. In 2008, Hewlett-Packard decided to open a plant in Chongqing, its second in China, to focus on producing notebook and desktop computers for sale in China. The plant started operation in 2010, with an annual capacity of 24 million units. Since then, numerous foreign computer and electronics companies set up in Chongqing, including Inventec Corp. (Taiwan), Quanta (Taiwan), Acer (Taiwan), Foxconn (Taiwan), and numerous component suppliers (Want China Times, 2012). In 2015, AT&S announced that it would increase its investment in Chongqing from € 350 million (USD 388 million) to € 480 million by mid-2017, building one of the first high-end Integrated Circuit (IC) substrate factories in China (Ma, 2015). In 2013, the Chongqing produced 55 million laptop computers, 29.5 percent more than in 2012, with a value of RMB 157 billion. In that year, PCs accounted for 10 percent of the city’s industrial output, up from zero in 2008 (do Rosário, 2015). In 2014, Chongqing produced 64 million computers, the vast majority for export, including 40 percent of the world’s notebook computers and one-third of all computers produced worldwide (Chongqing News, 2015).6

This wave of foreign investment growth in Chongqing driven by PC manufactures has been the largest in Chongqing’s FDI history. Before 2006, the annual contracted FDI value had never exceeded USD 1,000 million. In 2007, the contracted FDI value in Chongqing was USD 4,405 million, and in 2011 it reached USD 6,246 million. Gross industrial output in Communication, Computers, and Other Electronic Equipment in 2013 was RMB 212,833 million, roughly 58 times the RMB 3,701 million value in 2006, and 88 percent of the output in 2013 was from foreign invested enterprises (Chongqing, 2014).

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