The Jiuhua Economic Development Zone is now home to more than 130 industrial projects, including major plants for some of the world's largest companies, such as Siemens, GE, United Electronics and Samsung.

With the global economy still teetering between a slight recovery and the possibility of a further downturn, entrepreneurs from across the Straits are increasingly looking to the Chinese mainland for financial salvation. The moves come as China has been widely perceived as bucking international trends by maintaining strong domestic consumer demand.

The robust nature of the Chinese economy has seen the Taiwanese business community dramatically upping its investment in a number of mainland development zones and industrial parks. One of the beneficiaries of this new initiative by the island province is the Taiwanese Industrial Park, based in Xiangtan in Hunan and part of the Jiuhua Economic Development Zone.

One of the most tangible examples of the investment boom has been the establishment of Quanchuang Technologies (Xiangtan) Co Ltd, a high-tech company jointly funded by three Taiwanese businesses. Backed by an investment of $380 million, the new venture will focus on the production of printed circuit boards and is expected to come on-line this month.

Shi Zhizhong, deputy general manager of Quanchuang, said the Xiangtan plant marked the opening of the company's first facility in central China, following previous launches in southern and eastern China.

Shi said: "The advantages of Jiuhua's geographic location, its well-developed infrastructure and the quality and efficiency of its local government services, all combined to prove an irresistible incentive for us to open here.

"As one of the first businesses to invest in this newly established industrial park, we are fully aware of the risks and opportunities involved. We have already experienced for ourselves the real determination of the local authorities to establish this park as the premier investment destination for Taiwanese investors in the region.

"We are also determined to ensure the success of our operations here. We hope that the company will prove a good role model for other Taiwanese businesses looking to launching operations in the area.

Traditional links

From left: Inscriptions written by the chairman of the Association for Relations Across the Taiwan Straits, Chen Yunlin, and the Taiwanese politician Soong Chu-yu, at the Taiwanese Industrial Park

In addition to the low operational costs and the high level of government services, the traditional links between Xiangtan and Taiwan have proved another factor in the willingness of Taiwanese businessmen to invest in the area - with local statistics showing that Xiangtan is the ancestral hometown of more than 50,000 Taiwanese residents.

Xiangtan, one of the key industrial cities in central China's Hunan province, is also the hometown of late Chinese leader Mao Zedong, as well as the birthplace of Soong Chu-yu, a famous Taiwanese politician and the founder of the People First Party.

In May 2005, Soong paid a visit to Xiangtan and the tombs of his ancestors. During the visit, Soong committed himself to promoting closer business links between Xiangtan and Taiwan. He also conferred with local authorities over the need to create a business environment geared to attracting Taiwanese investors.

Following his visit, a number of business and political leaders from Taiwan have also traveled to the city. The success of their visits and the enthusiasm shown by them, particularly for the city's excellent infrastructure resource, was the direct motivation for the local government to launch its "Taiwan-friendly" industrial park.

The management of the Jiuhua Economic Development Zone had long been aware of the opportunities opened up through Xiangtan-Taiwan business cooperation. Their enthusiasm for the Taiwanese Industrial Park saw it officially established in the zone on November 16 last year.

IT industry

Following a detailed period of research and study, the park's management opted for prioritizing the development of an IT industrial base as part of Taiwan sector of the zone.

According to Yang Qinpeng, director of the administration committee of the Jiuhua Economic Development Zone, Hunan province has now launched a far-reaching program aimed at integrating Xiangtan and its neighboring cities of Zhuzhou and Changsha, the provincial capital, into one linked city group. With its wealth of shared resources and efficient transport and communication links, the city group is expected to become one of the most significant economic and industrial hubs in central China.

This development will inevitably lead to greater demand for IT products and services throughout the region, a demand that Hunan, at present, would struggle to meet. However, the local government believes Taiwanese know-how and investment will enable them to rapidly bridge this gap.

Taiwan is internationally renowned for its success in the hi-tech sector. At present, IT is the largest export-oriented industry in Taiwan, with an export value accounting for more than 30 percent of the province's annual total. Computers manufactured by Taiwanese companies now account for between 70 and 80 percent of the global total.

Han Qide (left), vice-chairman of the Standing Committee of the National People's Congress, visits Jiuhua to see for himself the rapid expansion of the zone's 'Taiwan-friendly' site.

A number of Fortune 500 companies, including Foxconn and United Microelectronics, are also based in Taiwan and have fostered the growth of a comprehensive ancillary industry chain, featuring a number of large, medium and small-scale businesses.

Yang said: "The IT industry is the cornerstone of Taiwan's economy. By capitalizing on the strengths of Taiwan's business community, we aim to establish Jiuhua as the leading IT industrial center in Hunan."

The focus of Taiwan Industrial Park is on attracting IT businesses not just from Taiwan, but also from the Pearl and Yangtze delta regions. However, much of its initial success has come from business across the Straits, with 18 Taiwanese-funded enterprises opening in the park in recent months. These have included an optical-electronic project solely backed by United Microelectronics with a total investment of $720 million.

Additionally, more locally based companies have committed to more than 200 projects in the park, including a 1 billion yuan software development initiative by the Guangzhou-based Tongtai Technologies Co Ltd.

With the on-going normalization of political and business ties between Taiwan and the mainland, Yang predicts substantial growth for the industrial park. He envisages the park as being a significant IT industrial base in China by 2015, with an annual output in the region of 40 billion yuan.