Going Mobile in Heyuan

UNCLAS SECTION 01 OF 02 GUANGZHOU 000061 SIPDIS SIPDIS USPACOM FOR FPA STATE FOR EAP/CM, DRL/IL STATE PASS USTR FOR STRATFORD, WINTER TREASURY FOR OASIA/ISA-DOHNER AND KOEPKE USDOC FOR 4420/ITA/MAC/MCQUEEN, DAS LEVINE E.O. 12958: N/A TAGS: ECON ETRD EINV CH SUBJECT: Going Mobile in Heyuan REF: GUANGZHOU 13385 The Making of a Mobile Manufacturing Base - - - - - - - - - - - - - - - - - - - - - ¶1. (U) Summary: The northeastern Guangdong city of Heyuan was recently named by provincial authorities as a "Mobile Phone Manufacturing Base" - the first in the province. Discussion at December 2006 conference held at the Heyuan Hi-Tech Development Zone centered on the city's plans to become a center for the manufacture, sales, and R&D of mobile phones and mobile phone components. By 2010, Heyuan hopes to realize an annual capacity of 30 million units (from 4 million units currently) and an annual output of RMB 30 million (from RMB 4.5 billion). Heyuan also plans to cooperate with local universities to attract qualified employees, provide incentives for investors and accelerate the construction of the Technology Supervision and Testing Center for Telecom Terminal Products. In addition to Heyuan?s development as a mobile phone manufacturing base, the city is witnessing the growth of its development zone as well as the establishment of two new vocational colleges and five-star hotels. End Summary. ¶2. (U) Heyuan has emerged as a major player in the mobile phone manufacturing industry of China. This northeastern Guangdong prefecture-level city, population 3.37 million, boasts one of the province's fastest-growing economies and a local government and people proud of their clean water, abundant resources and convenient transportation. Post has reported separately on Heyuan's attempts to attract investment to the area by leveraging its relatively unspoiled environment and abundant resources (reftel). ¶3. (U) In early December 2006 the Guangdong Province Department of Information Industry designated Heyuan as the "Mobile Phone Manufacturing Base of Guangdong" - the only one in the province - and has plans to establish a Technology Supervision and Testing Center for Telecom Terminal Products in the city. As a result, Heyuan is now in a prime position to advance Guangdong's Information Technology (IT) industry as outlined in the 11th Five-Year Plan. Currently, there are 11 mobile phone or mobile phone components manufacturers in the Heyuan Hi-Tech Zone, with a total investment of USD 165 million. Strengthening Heyuan's Mobile Manufacturing Capabilities - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ¶4. (U) Heyuan Communist Party Secretary Liang Weifa announced the steps the city is taking to become a mobile phone manufacturing base during a 17-18 December 2006 investment promotion conference held at the Heyuan Hi-Tech Development Zone, The conference was sponsored by the Heyuan Municipal Government and was attended by several hundred local Chinese government officials and businessmen from China, Hong Kong and Macau, as well as representatives of the Indonesian, Finnish, Singaporean, Swedish, Thai, and Vietnamese consulates in Guangzhou. ¶5. (U) According to Liang, Heyuan has more than 20 manufacturers of mobile phones or mobile phone components, with an annual capacity reaching 4 million units and industrial output of RMB 4.5 billion. Liang promised that the Heyuan city government would incorporate manufacturing, sales, service and R&D in the new minted Mobile Phone Manufacturing Base. To achieve this goal, Heyuan would strive to realize an annual capacity of 30 million units and an annual output of RMB 30 billion from now until 2010. Liang also stated that the government would recruit graduates from the joint South China University of Technology (SCUT) and the Heyuan Vocational Technology College to improve technical support and provide a continuous supply of talent to mobile phone manufacturers. ¶6. (U) In order to draw more investors, Heyuan will support and encourage innovation in land use and technological innovation, guarantee mobile phone manufacturers favorable prices for electricity, water and labor, and offer GUANGZHOU 00000061 002 OF 002 convenient customs clearance policies. Liang emphasized that the Heyuan authorities will speed up the construction of the Technology Supervision and Testing Center for Telecom Terminal Products, scheduled for completion in the first half of 2008. Lastly, Heyuan will assist the development of the mobile phone manufacturing base by enlisting more support from the central government authorities and from industry regulators in terms of license applications and R&D. Looking to the Future - - - - - - - - - - - ¶7. (U) During a brief bus tour of the area surrounding the Development Zone, Foreign and Overseas Chinese Affairs Bureau of Heyuan Municipality representative Zhang Chunhui told foreign consulate officials that a second phase development zone was in the middle of construction, with an estimated RMB 350 million total investment, and continued to emphasize Heyuan's commitment to creating an environmental friendly manufacturing base. The tour also revealed Heyuan officials had already begun establishing two new vocational colleges, which will have a teaching staff of 400, and offer over 25 disciplines for up to 6,500 students. To accommodate the growing business population, mainly overseas Chinese companies and investors, Heyuan authorities are already in discussions to construct more five-star hotels. Indeed, Heyuan's slogan "more money, less hassle, better health" seems to be more than just rhetoric. GOLDBERG