Since the “Go West” Policy was launched in 2000, Xi’an has attracted a number of high profile investment projects from foreign MNCs. In particular, Samsung Electronics decided to set up its largest overseas investment project in the city. The South Korean high-tech giant will reportedly invest total capital of USD 30 billion in the Xi’an High-Tech Zone to establish a memory chip plant and R&D facilities. The Xi’an government estimates that Samsung’s chip project will attract more than 160 supporting companies to Xi’an and that it will create 13,000 new jobs.
The project will be delivered in three phases. The construction work for the first phase commenced in September 2012 and is scheduled for completion in late 2013. This semiconductor plant is Samsung’s second overseas plant, following the building of its first overseas plant in Austin, Texas, in the USA.
Samsung forecasts that China will consume 55% of the world’s semiconductor product by 2015. The company is eyeing western China because the region is expected to enjoy faster economic growth than other regions within China in the future. Quality human resources, scientific prowess and low cost of production have helped Xi’an become the home of Samsung’s second semiconductor plant outside South Korea, beating rivals such as tier 1 cities like Beijing and Shanghai, and other leading cities in western China like Chengdu and Chongqing.
Education is one of the city’s key strengths. Xi’an is known as western China’s college town, and in 2012, more than 639,000 students were enrolled in higher education, ranking the city in top place among the major cities of the region. Around 8% of Xi’an inhabitants are college students. This ratio is the highest in western China; only 4.3% of Chengdu inhabitants are college students, and the figure for Chongqing is 2.1%. The city is also home to a number of universities that are at the top of China’s rankings, such as Xi’an Jiaotong University and Northwestern Polytechnical University. The higher education system provides the abundant skilled labour that enables Xi’an to develop high-value added production and consolidate its position as the regional R&D hub.
Before the Samsung deal, the city successfully attracted a number of global high-tech giants such as IBM, Intel, IR Semiconductor and NEC to set up large-scale manufacturing and R&D bases in the city. So far, more than 2,600 high-tech firms (both domestic and foreign) have set up in the city. Many high-tech firms have a partner relationship with local universities or research institutions. For example, Airbus partners with Northwestern Polytechnical University and IBM cooperates with Xidian University. The established high-tech environment of Xi’an further strengthened Samsung’s confidence to invest.
Looking ahead, the continuity of the “Go West” Policy will enable western China to undergo faster economic growth than elsewhere in China. Preferential policies will channel more resources from coastal cities to the region. With such a favourable business environment and other competitive advantages, we expect more companies to follow in Samsung’s example and invest in Xi’an.
