Industrial processors across Guangdong province are being encouraged to follow the example of manufacturing hub Dongguan, and shift their focus toward building domestic demand, to counter the ongoing slump in international orders.

The message comes from Zhao Yufang, deputy governor of Guangdong province, who has promised to introduce policies, and offer financial support, to help the province's myriad of processing companies upgrade their industrial structures and products, to be better armed to target domestic growth.

Zhao has assured the province's thousands of processors that government departments will do what they can to help, highlighting the example of authorities in Dongguan and their program of assisting companies in the city to upgrade their organizations to allow a shift in attention toward domestic, rather than international, customers.

Dongguan, in the Pearl River Delta - bordering Hong Kong and Macao special administrative regions - now has around 11,200 registered industrial processing firms, 80 percent of which are funded by investors from Taiwan and Hong Kong.

The city, along with Suzhou in Jiangsu province, had been chosen by the central government as a model of how the processing industry could be upgraded to adapt to changing economic conditions.

Cai Kang, deputy director of Dongguan bureau of foreign trade and economic cooperation, told China Daily the city has spent more than 3 billion yuan ($472 billion) helping local firms enhance and expand domestic sales since 2008.

"The money has been used mainly to help upgrade their technology and equipment, to establish research and development centers, to further develop their own brands and to finance their participation in the international and domestic markets," Cai said.

With the help of government departments, Cai said the domestic sales volume of Dongguan processing companies reached 247.9 billion yuan last year, compared with 133.92 billion in 2007. At three local trade fairs alone over the past three years, organized by Cai's bureau, participating Dongguan companies managed to generate total sales volumes of 57.71 billion yuan, he added.

Local processing companies said they welcomed Dongguan city government's efforts to help boost domestic business.

Hoping Cao, deputy general manager of Dongguan Lite Array Co Ltd, said his company had received more than 20 million yuan in subsidies from the local government for technology upgrades, expanding its R&D capabilities, and to attend industry events at home and abroad.

He said his company had seen big increases in profits, as a result, from the domestic market. "We now buy our raw materials from overseas in US dollars, which is depreciation, while earning renminbi, which is appreciating, from selling our products at home," he added.

Arthur Song, executive vice-president of China Wonderland Nurserygoods Co Ltd, said the local government had provided financial support to help it grow its consumer base in China.

Official figures show that by the end of 2011, Dongguan's processing industry had attracted $47.2 billion in foreign investment, accounting for 92.8 percent of the city's total inward investment.

Xiao Zhenyu, director of Bureau of Foreign Trade and Economic Cooperation of Guangzhou Municipality, added that it was also on board with plans to expand investment and introduce a series of preferential policies to help local processing companies expand their domestic sales. He especially urged industrial processing companies to expand their R&D investment to develop own brands and upgrade production processes, to expand their domestic customer base.

According to official figures, Guangdong's processing industry recorded a foreign trade volume of more than $508 billion last year, up 13.8 percent year-on-year, which represented 38.9 percent of China's total processing import and export volumes, and 55.6 percent of Guangdong's total foreign trade volume.

The province's export volume from the processing industry was worth $311.52 billion in 2011, up 13 percent, while the processing industry's imports hit $196.23 billion, a year-on-year growth of 15 percent.

[email protected]

(China Daily 08/15/2012 page14)