City target of German giants

Shenyang's rapid development and transformation into a modern production base has made it increasingly attractive for foreign investors.

A number of German companies have set up shop, including industrial giant Siemens, chemical company BASF, crane maker Demag and W?rth, which produces assembly and fastening material. The most famous German investment in Shenyang is the BMW-Brilliance joint venture which set up its first production line in 2004. BMW's 3 and 5 series have been made in Shenyang since then. The venture is constructing a second factory which will produce the X1 sports utility vehicle from next year. The two factories will have a combined annual capacity of 300,000 vehicles per year. The local government is very supportive, says BMW-Brilliance spokesman Alan Meng. 'Their target to become a first-tier city in China speeds up development,' he says.

BMW and the other large industrial firms operating in Shenyang will lure more suppliers to the city, says Alexandra Voss, executive director of the German Chamber of Commerce in Beijing.

For example, the supply chain for the automotive industry has been well-established for years and is still growing.

In October, German car supplier Fehrer opened a new factory which will produce seat upholstery and foam side panels for BMW-Brilliance, as well as other interior parts for Daimler joint ventures in Beijing and Fujian province.

'The reason we are locating in Shenyang now is the geographical proximity to BMW, which is one of our main customers,' says Fehrer spokeswoman Ursula Theiss.

Other suppliers producing in Shenyang include ZF and Draexlmeier. The latter was one of the first suppliers to follow BMW to the city. They have been active there since 2003 and produce cabling, centre consoles and electric sunshields for the BMW sedans made in Shenyang, explains Thomas Rager, managing director of Draexlmeier's plant in Shenyang.

Fehrer has chosen the brand new Shenyang-European Union Economic Development Zone to build its factory. The zone is located inside Shenyang's Northeastern Automobile Industrial Area and was launched in order to attract investors from Europe - and particularly those from the automotive sector.

'The state of infrastructure is improving at a fast pace,' says Voss. 'In addition to more highways and a new subway line, international health and education institutions have been set up.'

International rail connections are growing, too. BMW sent 40 containers of car parts from its factory in Leipzig by train to the BMW-Brilliance factory for the first time. It took them 23 days to arrive, faster than being carried by sea.