Global computer maker Hewlett Packard (HP) and contract manufacturer of electronic products, Foxconn International Holdings plan to jointly invest US$3 billion to build a manufacturing plant for laptops in Chongqing, the fifth major investment of HP's in this southwestern Chinese city in the past three years.

According to the plan, the plant will be able to produce 20 million laptops a year when the project is operational in 2012. Most of the output would be exported to the European market.

The municipal government of Chongqing estimates the output value of the project to exceed 200 billion yuan, which equals one-third of the total industrial output value of the city at present. Meanwhile, the investment is likely to expand Chongqing's trade by four times, to US$40 billion in future.

In 2012, the electronics and information industry will replace the automobile sector to become the biggest industry of the city.

The investment consists of two combined projects, a laptop computer export base of HP's and a manufacturing base of Foxconn's. Foxconn will carry out production by receiving orders from the former. Besides, Foxconn will also set up sales centers for its own electronics products in Chongqing.

According to Vice-Mayor Huang Qifan, the two projects would provide at least 50,000 jobs when it goes on stream in 2012.

HP has transferred its settlement center in the Asia-Pacific region from Singapore to Chongqing. The city is now building itself into a financial center for central China.

According to Huang, HP has reached an agreement with Chongqing to allocate the majority of its new computer manufacturing plants in the city in future. At present, HP's manufacturing plants are mainly located in Shanghai and Jiangsu, with combined annual capacity of 24 million computers.

During the past three years, HP has invested in a software procurement base, a software-testing center, a call center and a manufacturing plant with an annual capacity of 4 million desktop computers in Chongqing. The export base this time is the fifth major investment of the company's in Chongqing.

During the signing ceremony, HP's Executive Vice-President Todd Bradley said China was an important part of the company's future plans and said it would continue to invest in the country.

Huang said low-cost labor, cheap raw materials and favorable tax policies were the major attractions for international companies like HP and Foxconn to house big projects in the city. The city has granted the two companies a discounted corporate income tax rate of 15 percent, 10 percent lower than the usual rate.

Huang said senior executives of several other international companies including Cisco Systems Inc are now contacting Chongqing for investment.

(China Daily August 6, 2009)