SOEs flock to Straits economic zone

China National Petroleum Corporation, the country's largest oil and gas producer, broke ground on the nation's most advanced steel pipe production line in Fuzhou, capital city of Fujian province on May 10.

According to the company's projections, the facility will be built using investments totaling 958 million yuan, and it will generate more than 2 billion yuan in annual revenue once it is operational.

CNPC is among the growing number of State-owned enterprises that have relocated operations in recent years to take advantage of the opportunities created by the ongoing construction of the Western Taiwan Straits Economic Zone, a multi-city economic region geared toward cooperation across the Straits.

At the end of 2010, Fujian province held a meeting in Beijing to discuss prospects for cooperation with SOEs. Contracts for 123 cooperative projects were signed.

Such projects involve a total investment of 846.4 billion yuan, more than the total of all projects built by SOEs in Fujian since 1949 combined.

The Aviation Industry Corporation of China, the State Grid and the Export-Import Bank of China were among a number of SOEs that found investment prospects in Fujian in 2012. The three enterprises signed agreements with the provincial government for major projects in the zone in the fields of high-tech industry, energy and finance.

For a long time, Fujian received little investment from SOEs, and local companies have traditionally not been strong enough to drive sustainable development on their own, said Li Wenpu, a professor at Xiamen University.

The Fujian government announced that it plans to enhance the local industries by launching cooperative projects with SOEs.

SOEs, foreign companies and local businesses should complement each other, according to the government.

To date, agreements on 218 projects between SOEs and local enterprises have been signed.

So far, 86 of such projects have already begun construction and seven have been completed.

Local companies, the traditional pillars of the province's economy, are finding that SOEs bring abundant opportunities .

"Local businesses should focus on industries that can form a complete industrial chain to complement big SOE projects," said an official at the Fujian development and reform commission.

Actually, some local companies have already had fruitful cooperation with SOEs.

Desheng Nickel Corp, a private company that leads the country's nickel industry, has advanced processes for extracting and purifying nickel ore but has difficulties in dealing with pollution.

Baosteel Group, China's leading steel and iron producer, has advantages in efficiently using resources and protecting the environment. The two companies' complementary nature led them to collaborate to build a cleaner nickel production facility.

SOEs can boost the development of local companies, making them grow faster, the official said.

xuxiao@chinadaily.com.cn

(China Daily 11/14/2012 page17)