Hefei mounts quest for a high-end industrial future

The Anhui capital of Hefei may be 500 kilometres inland from the country's financial heart of Shanghai but the provincial city has ambitions to become a player in the business world.

Over the past year, it has defied the national decline in foreign direct investment, and already attracted multinationals such as Unilever, Coca-Cola and Hitachi Construction Machinery to set up shop, thanks to lower wage and land costs, according to city mayor Zhang Qingjun.

Now it plans to build on those gains by rolling out an infrastructure programme of road, water, power and rail networks to lure more business from the coast. "The trend of businesses moving inland from coastal regions is becoming very clear," the 49-year-old mayor said. "Our priority is to establish high-end manufacturing as well as research and development facilities."

Those ambitions were aided last year with Beijing's approval of a joint venture between Anhui Jianghuai Automobile and the US truck company Navistar to make diesel engines in the city. Taiwan's Uni-President food giant and Hitachi were also planning to expand their facilities in Hefei, Zhang said.

The migration of funds to Hefei is reflected in the 43.9 billion yuan (HK$54.9 billion) in direct investment in the city in the first two months of the year. That amounted to a 20 per cent year-on-year increase, with 94 per cent of the total coming from other provinces, he said.

Over the same period, Hefei's exports more than tripled year on year while the mainland's exports rose by less than a quarter.

In terms of infrastructure, the city had already spent 40 billion yuan building its first two subways, and more were planned, Zhang said. Overseas and private investors, including Hong Kong's MTR Corporation, had expressed interest in the subway projects, as well as rail schemes throughout the province, Zhang said.