Overseas-funded firms in Guangzhou, Shenzhen, Foshan and Dongguan in Guangdong province have to undergo restructuring to raise their level of efficiency.

The Dongguan city government will offer 1 billion yuan ($140 million) annually to Taiwan-funded firms from this year to encourage their scientific and technological development, a city information office statement said yesterday.

The move is aimed at helping labor-intensive Taiwan-funded firms undergo technological and industrial revamp to enable them to meet the demands of the recent State policy changes, Dongguan Vice-Mayor Jiang Ling said.

About 40 overseas-funded firms shifted base from the city last year, according to official figures. The figure for the entire province was 244. Another 28 are planning to shift soon, Guangdong Foreign Trade and Economic Cooperation Department director Liang Yaowen said.

But most of the firms were small, labor-intensive units in the Pearl River Delta (PRD) region, with more than 90 percent of them being funded by Taiwan or Hong Kong businesspeople. Cumulatively, they employed 13,000 people, Guangzhou-based Nanfang Daily said.

On the other hand, Liang said, 66,789 overseas-funded firms were registered in the province last year against 61,999 in 2006 and 58,762 in 2005.

Multinationals in the world's top-500 bracket set up or increased investments in 179 projects 2007, with most of their units being in Guangzhou, Shenzhen, Foshan and Dongguan.

Liang's remark was in response to some recent reports, including one in The Wall Street Journal, which said overseas-funded firms have shifted from the PRD region on an unprecedented scale.

Jiang said the city government has been canceling the "unreasonable charges" imposed on such firms to help them adapt to the policy changes. The firms can even forward their requirements to the provincial or State policymakers to prevent shifting base or premature closure.

Factors such as higher minimum salary, enhanced State requirements for environmental protection, shortage of energy and workers, rise in raw material prices, yuan revaluation and the new labor contract law have made it difficult for them to continue operating.

Editor: Yan