Swift response

Due to their strength in research and development, the approximately 150 companies scattered in the Songshan Lake hi-tech park have responded swiftly to shrinking demand overseas.

"As far as I know, no factory inside the park has decided to close," said Zeng Li, a senior official with the park's administrative committee. "Instead, some have decided to expand production."

She forecasted that tax revenue in the park could reach 15 billion yuan in 2008; it stood at 12 billion yuan for the first 10 months of the year.

Though some enterprises don't feel so optimistic, many managers have started to feel the signs of recovery brought by the government's 4-trillion-yuan stimulus plans approved one month ago.

Among them were Sun Bangbin, factory director of Honny Power, which produces diesel generators mainly used in highway construction and real estate development.

"Magically, about 10 tentative orders are put on my desk these days after several months of sluggishness," said Sun, 38, who is also responsible for assessing contract risk for the company's sales team.

In the first half of this year, Sun had to preview risks of an average of 70 orders a day. "But from July, our overseas orders started to decline sharply and on some days, I saw no orders," said Sun, whose company started in 1992 and has three production bases nationwide.

But his instincts tell him that business can gradually return to normal, as more investors of construction and infrastructure projects at home have started to buy small-scale generators from his company.

Like many factories and enterprises in Dongguan, Sun's company mainly relied on overseas sales in the past. At the beginning of 2008, when the US subprime crisis was unfolding, his company sensed the risk and started to explore the domestic market.

"We shifted 70 percent of our sales team to focus on business at home and this is a wise change of marketing strategy," said Sun. "If not next year, the year after the next can see robust business across China."

Sun's confidence resulted from the technological strength of his company, which owns many patents for fuel-saving and noise-proof technologies.

To save costs, Sun and others on the management team voluntarily offered to cut their pay by 20 percent but the factory owners didn't agree. "We were also encouraged by the optimistic signals given by our boss," Sun said.

Dongguan's progression from a site for low-end factories to a hi-tech economic powerhouse with an advanced services sector is one that Japanese companies went through from the 1950s to the 1970s. It was also seen in South Korean companies during the 1970s and 1980s.

And confronted with resource and energy constraints, the entire Chinese economy is being faced with the transitional pains that Dongguan must tackle today.

But compared with Shenzhen and Guangzhou, Dongguan is not entirely confident that it can leap from assembling basic products with low-paid, unskilled labor to nurturing lavishly paid talent.

Some in the city fear that problems may appear as low-end factories disappear while the hi-tech investment is still far away.

A new highway network to the coast is making it possible to move factories inland, where officials are eager for the investment. And most of the low-wage laborers who fill the Pearl River Delta's factories are migrants from rural areas inland. These workers are mobile, quickly moving on if the basic jobs they do disappear.

"Dongguan is at an important strategic turning point," said deputy mayor Leng Xiaoming. "We should waste no time to turn Dongguan into an innovative city and upgrade its manufacturing strength."

(China Daily December 18, 2008)