IV. HONG KONG AND TAIWAN INVESTMENTS AND PROSPECTS FOR FURTHER COOPERATION

While carrying out the strategy of export-oriented economy, we pay special attention to Hong Kong and Taiwan as our trade partners.

Hong Kong has been playing an important role in Dongguan's economy. In early years£¬Dongguan started up by accepting transferred capital and production from Hong Kong. In 1978, Taiping Handbag Factory, the first manufacturing factory with imported raw materials, was established by Dongguan-Hong Kong cooperation. Hong Kong is the biggest source of overseas investment for Dongguan. By the end of 2001, the investments from Hong Kong totaled USD 9 billion, accounting for 60% of the total actual overseas investments, ranking the first. More than 7,800 Hong Kong invested manufacturing enterprises have been established in Dongguan, taking up 58.2% of the total overseas-invested corporations. Dongguan's exports to Hong Kong totaled USD 5.53 billion, taking up 29.2% of the total export volume, ranking the second place, just next    to that to the United States. Hong Kong is also the main source of Dongguan's industrial technology, managerial expertise and market updates. Hong Kong is the pilot that Dongguan followed so that such industries as garments, wool and textile, plastics and toys were started and growing. Hong Kong is also a bridge for Dongguan's access to the rest of the world. The export volume directly to Hongkong and that indirectly transferred from Hong Kong to other countries take up 90% of the total export volume of Dongguan. As an international manufacturing base, Hong Kong is the major port of logistics, personnel exchange, information and capital for with the rest of the world. The Hongkong-invested factories in Dongguan can sufficiently reduce the cost of production so as to promote their competitiveness and accelerate their expansion. There are at least 130 Hongkong invested enterprises inDongguan are listed in Hong Kong stock market. As a manufacturing base, Dongguan cooperates with Hong Kong in the form of "shops at the front andfactories at the back yard", which facilitates the development of Hong Kong's service industry like R&D, design, and marketing, and also optimizes me industrial structure of Hong Kong and accelerates the upgrading of Hong Kong economy. We believe, Dongguan-Hong Kong cooperation will enter a new phase where the cooperation format of "shops at the front and factories at the back yard" will be changed into that of "the Combination of Shops and Factories from completely market-oriented cooperation into a cooperation format mainly market-oriented, but combined with market driving and government collaboration.

Taiwanese businessmen have played a significant role in Dongguan's economy. Since 1985, we began to have Taiwanese investment, by the end of last year, the total overseas investments had accumulated to USD 15.2 billions, among which USD 4.4 billion was from Taiwanese, taking up 29% of the total and ranking the second place. Among all the overseas-invested enterprises, one third are by Taiwanese-invested, Taiwan has become a main force of Dongguan's IT industry. More than 1000 Taiwanese-invested enterprises produce IT products, accounting for two thirds of the total of IT enterprises in Dongguan. In China, Dongguan has become one of the places with the most intensive investment from Taiwanese. The big enterprises which investments surpass one hundred million, like Baocheng, Liteon, Delta, Zhishen, are specialized in producing computer and peripheral parts. These enterprises have brought many related support factories. Some of them have even moved their R&D to Dongguan and produce the hi-tech and cutting-edge computer and communications products here. The large clusters of Taiwan enterprises makes Dongguan a city possessing a complete industrial chain of IT products and computer parts. Taiwanese-invested enterprises are intensively distributed in such towns like Chang'an, Houjie, Qingxi, Humen, and Tongxia, with more than 300 Taiwanese-invested factories in each of these towns. Taiwanese- invested enterprises in Dongguan, usually large-scaled, produce a wide range of products like electrical and electronic products, and with detailed categories, forming an advanced collaborative¡¡ network which are linked to each other, which is good for enterprises to reduce costs and explore their market. Take Delta Electronic Corporation in Shijie Town, it has 30 matching enterprises in the same town, 100 in the whole city, which creates the clustering effect on the investing and trade, which not only vigorously promote the investment introduction, but also create a strong advantage of matching products. In the future, we will go on to take Taiwanese enterprises as our partner of Dongguan to take up larger domestic and international market, so as to build into a powerful IT city.

We hope further cooperation with all the foreign investors including Hong Kong and Taiwan in various fields like manufacture, the tertiary industry and urban construction, which will bring win-win for all participants.

(to be continue)

Editor: James