Identifier
Created
Classification
Origin
08CHENGDU122
2008-06-04 04:00:00
CONFIDENTIAL
Consulate Chengdu
Cable title:  

POST-QUAKE SICHUAN: A MANUFACTURER LEAVES FOR THE COAST?

Tags:  ECON EIND PGOV CH 
pdf how-to read a cable
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RUEHCN/AMCONSUL CHENGDU 3468
C O N F I D E N T I A L CHENGDU 000122 

SIPDIS

DEPT FOR EAP/CM AND EEB

E.O. 12958: DECL: 6/4/2018
TAGS: ECON EIND PGOV CH
SUBJECT: POST-QUAKE SICHUAN: A MANUFACTURER LEAVES FOR THE COAST?

REF: FBS20080602358625

CLASSIFIED BY: James A. Boughner, Consul General, U.S. Consulate
General, Chengdu.
REASON: 1.4 (d)

C O N F I D E N T I A L CHENGDU 000122

SIPDIS

DEPT FOR EAP/CM AND EEB

E.O. 12958: DECL: 6/4/2018
TAGS: ECON EIND PGOV CH
SUBJECT: POST-QUAKE SICHUAN: A MANUFACTURER LEAVES FOR THE COAST?

REF: FBS20080602358625

CLASSIFIED BY: James A. Boughner, Consul General, U.S. Consulate
General, Chengdu.
REASON: 1.4 (d)


1. (C) Summary: According to a well-connected local
businessman, the famed Dongfang Electric Machinery Company based
in Deyang, Sichuan Province, which sells billions of dollars in
power generation equipment worldwide including to Iran and
Pakistan, may move its hydroelectric power operations to either
Shandong or Guangdong Province. Although any such a move could
be the result of earthquake damage to facilities in Sichuan,
underlying economic realities might also be at work. End
Summary.

Headed East?
--------------


2. (C) A Chengdu businessman (protect),who used to be counsel
to the Deyang Dongfang Electrical Machinery Company (Dongfang
Dianqi),told us the company is considering a post-earthquake
transfer of its hydroelectric power manufacturing facilities
from Sichuan to the coast. The contact said that both Guangdong
and Shandong Provinces are very interested in hosting the new
plant.


3. (C) Although no final decision has been made, according to
the contact, Dongfang Dianqi has wanted for some time to begin
producing its very large and heavy hydroelectric power
generating equipment near the coast in order to reduce the costs
of exporting products abroad. (Note: Dongfang Dianqi
manufactures a full range of power generation products,
including wind, hydroelectric, and nuclear power generating
equipment. It built large turbines for the Three Gorges Dam and
exports to many countries including Iran and Pakistan).


4. (C) The contact remarked that a "dozen" of Dongfang Dianqi's
top hydroelectric power engineers were trapped when a building
in Deyang collapsed during the May 12 earthquake. The rescue of
the engineers was a high priority for search teams and all were
rescued unharmed.


5. (SBU) Local press reports have also speculated that Dongfang
Dianqi fossil fuel generating equipment plants, largely
destroyed at Mianzhu and Hanwang (just down the road from
Deyang),could be moved to either Tianjin or Guangzhou on the
east coast. Other press reports note, however, Dongfang Dianqi
is already in serious discussions with the Deyang City
government to rebuild on a 500-acre site in Deyang (ref).

Taking a Look
--------------


6. (C) On June 3, Congen officers drove past the mammoth
Dongfang Dianqi headquarters complex in downtown Deyang during a
visit to quake-affected areas. From outside the plant there was
very little visible damage. There appeared, however, to be
almost no activity inside and traffic in and out of the plant
was minimal. The plant was festooned with numerous slogans
exhorting workers and passersby to unite in earthquake relief
and reconstruction efforts. Security roadblocks prevented us
from traveling to Hanwang where damage to another Dongfang
Dianqi plant is said to be more extensive.

Comment: Politics vs. Business
--------------


7. (C) Deyang, like Mianyang and other Sichuan cities,
industrialized during the 1960s when Mao Zedong relocated
China's defense industries inland well away from the perceived
Soviet threat. As a result, many large Sichuan companies still
engage in the production of defense sector goods, or are
descended from defense sector companies -- a prominent example
being Mianyang television manufacturer Changhong. Like many
other Sichuan cities, Deyang is a company town, dominated by
Dongfang Dianqi. While a move to the coast might make good
business sense for a heavy equipment manufacturer in an
export-oriented economy, Deyang could ill afford the loss of
such an important economic pillar.

BOUGHNER