Investors sink almost $5b into Shanxi city

Workers assemble new energy vehicles at Geely's plant in Jinzhong. [Photo by Liu Yong for China Daily]

Jinzhong aiming to become a northern Chinese hub of enterprises and manufacturing expertise by appealing to entrepreneurs across nation

The Shanxi city of Jinzhong secured 39 investment projects with funding totaling 35.67 billion yuan ($4.98 billion) in the first quarter of this year, bringing it closer to the goal of becoming a manufacturing powerhouse in this North China province.

According to Chang Shuming, Party secretary of Jinzhong, the central city is an important manufacturing base in Shanxi province with competitive strengths in eight emerging industries that include advanced manufacturing, automobiles, new energy and new materials.

"Our medium-term target is to cultivate a great number of competitive companies in these sectors," Chang said. "And on our industrial map will be at least 10 superlarge enterprises each with an annual output value of more than 10 billion yuan, 100 large enterprises with an annual output worth more than 1 billion yuan and 1,000 medium-sized enterprises with an annual output value surpassing 100 million yuan."

To reach this target, the official said the city needs to strengthen enterprises and step up efforts to attract projects from the rest of the country and the world.

The city secured the largest number and investment of projects at a promotional fair held in Taiyuan, the provincial capital city of Shanxi, on Feb 3. At the event, agreements were signed on 15 large projects, with funding totaling 34.68 billion yuan.

Local officials said such projects will mean direct additions to the list of large or even superlarge enterprises according to the city's categorization, upon their completion.

Recognizing the importance of investment in boosting the size of the local economy, governments at various levels in Jinzhong have strengthened their efforts in investment promotion.

The county of Shouyang, for instance, recently hosted an investment fair. A total of 19 enterprises from the rest of the country have expressed their intentions to invest.

At another recent investment fair hosted by the district of Taigu, which focused on the malleable iron industry, local businesses signed 20 agreements to invest with partners, with funding totaling 3 billion yuan.

Statistics show that the county-level cities, counties and districts in Jinzhong have held a total of 81 investment promotion events to date. In addition, the governments have arranged 57 trips for local businesses to identify investment partners throughout the country.

Locally leading companies, especially those in the manufacturing industries, have played an important role in investment attraction.

Local industry insiders and experts said the expansion of leading manufacturing enterprises can have a remarkable spillover effect on entrepreneurship. This is because their growth means greater demands for upstream suppliers and the gathering of more downstream players.

This is exactly the case of Geely Jinzhong, a branch company of one of the leading domestic automakers in China.

The Jinzhong production facility of Geely began operations in September 2016. To date, it has produced more than 478,000 vehicles, an output worth about 71.2 billion yuan.

A company executive said the automaking facility of Geely has led to the forming of an automotive industrial park in its vicinity.

"We have attracted 60 suppliers and 27 downstream enterprises to settle in this industrial park," the executive said. "And the scale of the park will continue to expand along with our growth in the future."

Over the past seven years, Geely Jinzhong's annual production capacity has increased from 105,000 units to 200,000 units. "Now we account for 95 percent of the total vehicle output in Shanxi," said the executive.

He added that the company saw an exponential increase in its output value over the past three years: 4 billion yuan in 2020, 10 billion yuan in 2021 and 23.3 billion yuan in 2022.

The executive said that the growth momentum is expected to continue as the company began to produce methanol-fueled vehicles in 2022.

"Last year we launched the country's first methanol vehicle production plant with an annual capacity of 10,000 units," he said. "That will lead to the establishment of a brand-new industry chain in Jinzhong."

The city's officials predicted that Jinzhong will have the capacity to produce 1 million metric tons of methanol annually within three years. They added that there will be 100,000 methanol-fueled passenger vehicles on the road and 100 methanol fueling stations throughout the city.

"The methanol industry chain could result in a cluster of more than 100 billion yuan in annual output value in a couple of years," said an official of the city's industry and information technology bureau.

Another appeal to investors is that Jinzhong is stepping up the development of characteristic towns and counties for specialty industries.

In September 2022, the provincial government of Shanxi released a list of its first batch of characteristic towns and counties. Three locales in Jinzhong – Taigu for its malleable iron, Qixian for its glassware and Pingyao for its beef and lacquerware – were on the list.

Developing towns with characteristic industries is a new strategy in Shanxi, which aims to create economic engines that accelerate high-quality industrial growth locally.

Local authorities in Jinzhong recognized that the development of characteristic towns is a great opportunity for investment promotion.

One key move to promote characteristic town-related opportunities was that the county of Qixian staged a trade and investment show at the 133rd China Import and Export Fair held over April and May in Guangzhou, Guangdong province. More than 40 local producers exhibited products and investment opportunities.

"Through participating in such events, we are expecting to attract resources from home and abroad to our characteristic towns' development," said Li Jun, Party secretary of Qixian. "We are planning to grow into a role model for the development of characteristic towns in Shanxi that features complete industry chains, from upstream to downstream, and allows the involvement of more investors."

Miao Wujun and Bai Xuhong contributed to this story.