Volkswagen pioneers westward movement in China (2)

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Volkswagen pioneers westward movement in China (2)

( ) 08:51, August 30, 2013

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Experts say auto industry's westward movement is the epitome of a new round of Chinese manufacturing growth, with a transfer from east to central and west China.

Bordering on eight countries, resource-rich Xinjiang is especially alluring for manufacturing enterprises.

Chinese manufacturing giants, including SANY, Shaanxi Automobile Group, Dongfeng Motor and XCMG, have already set up their plants in the region, planning expansion into Central Asia and Europe.

According to the regional statistics bureau, growth of 12 of 31 sectors in the manufacturing industry exceeded 50 percent in 2012 in Xinjiang. Total industry investment increased by 36 percent year on year.

"Low costs, rich resources and favorable policies are the reasons why enterprises are going west in a steady flow," said Meng.

The National Development and Reform Commission, the country's top economic planner, encourages auto makers to build plants in central and western provinces and regions by offering favorable conditions, including tax breaks.

Land prices in central and western areas are half or one third of those in east China. In addition, "infrastructure in the area is better than some southeast Asian countries, including Cambodia and Vietnam, which also have a cheap labor force," said Zheng Yongnian, head of the East Asia Institute, National University of Singapore.

Enterprises also value the consumption potential of western cities.

Cities with a population of one to three million people are considered small, but they are big cites compared to those in Europe. In these "small cities," there are only 20 cars for every 1,000 residents, which means the consumer market will be huge for a long time into the future, said Heizmann.