In recent years, electronic and IT industries have been developing amazingly fast. There are 2 800 electronic enterprises and their production value mounted to 77 billion yuan in 2000.
The annual China Electronic Fair. Dongguan attracts a lot of businessmen from the different parts of the world. Over 90% of computer manufacturers and related industries in this country will be in trouble if the transport from Guangzhou to Dongguan and Shenzhen ever seizes up, said a joke popular about Dongguan.
Dongguan, located between Shenzhen and Guangzhou, is a city with a unique economic background. After China's reform and opening, its first foreign-funded enterprise came into being in Dongguan's Humen Township. This was a Hong Kong-invested handbag factory that operated according to orders and designs provided by the investors, who also purchased all its products.
This form of cooperation played an important role in the initial takeoff of Dongguan's foreign economy. By 1995, the city had seen a double growth rate and contributed 38% to the country's annual foreign exchange increase.
China's reform and opening policy prepared the way for Dongguan to be an early contender in the market economy, cooperating with foreign countries, and playing by international rules and regulations.
Many participants in the early stages of the city's processing and compensation trade were farmers. They thus improved their business and management skills, and a substantial number of them have since become owners of large companies. Today foreign-funded enterprises in Dongguan have moved from clothing and small commodities into IT-related fields. A study conducted in Taiwan indicates that one out of three computers in the world is produced and processed in Dongguan. If Dongguan were to stop supplying computer accessories for just one day, the world's computer market would be paralyzed.
In 2000, Dongguan's export value of computer and IT products reached US $7.6 billion. Its computer parts occupy a considerable share on the international market: 40% of computer magnetic heads and cases and their half-finished products; 30% of copper clad panels and drives; 20% of scanners and micro-motors; and 16% of keyboards. Dongguan produces 95% of the parts comprising a computer. Sixty-two percent of its computer products are of high international quality.
Dongguan has taken only 20 years to grow from a rural county into an international industrial city, a rate of change that would be incredible even in the world's more developed countries and regions.
Because of its geographic location, its transportation costs are pretty low, giving it easy access to information, and also making it the immediate target for keen investors from Hong Kong and Macao, as well as overseas Chinese investors from around the world.
Apart from its geographical advantages, the key to Dongguan's success lies in its having firmly grasped the opportunity afforded by the opening policy, and by the processing and compensation trade.
In order to develop its small-scale agriculture economic structure into one of modern industries, the city actively introduced investment projects, even when the scale was much smaller, and cooperated reliably and successfully with outside investors, despite limited profits.
The common belief was that many small rivers and streams would finally converge into a sea. As a result, the city attracted a large number of overseas investors and housed numerous small and medium-sized enterprises. In the process, Dongguan quickly completed primary accumulation of capital, human resources, technology and markets.
Dongguan was not, however, content with its handsome income from the processing and compensation trade. A decade ago, it set out to upgrade its industrial structure and decided on computer, IT, mechanical-electrical integration, bio-pharmaceuticals and new materials as its development targets.
In the meantime the government provided supporting policies, such as stock recommendation preferences and favorable taxation terms. In recent years, a number of the world's top 100 companies, such as Nokia, General Electric, Hitachi and Philips, have settled in Dongguan.
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