Number of foreign-funded enterprises continue to rise in Guangzhou

Foreign-invested enterprises have grown in number in Guangzhou, capital of the southern Guangdong Province.

The number of new foreign-funded enterprises in Guangzhou was 959 in 2007, nearly triple the number of foreign companies that closed or left the city, according to the latest report released on Tuesday from the municipal foreign trade and economic cooperation bureau.

The bureau said that 675 foreign companies increased their investment in Guangzhou last year, which demonstrated the confidence that some foreign investors have in the southern business hub.

The report said that 347 foreign firms closed, most of which were in the labor-intensive textile, clothing, shoe and plastics industries.

Relocation of foreign enterprises to the inland provinces was a normal part of industrial transition, the report said.

An earlier report from The Wall Street Journal said more than 1,000 shoe factories and related suppliers were closed in Guangdong province last year and 10 percent of the 60,000 to 70,000 Hong Kong-owned factories in the delta region would close this year.

The report from the bureau said the foreign reports over-exaggerated the influences of normal factory shutdown and relocation.

The trade department of Guangdong said only 244 overseas-invested enterprises had moved out of the province in 2007. The total number of registered foreign enterprises in the province was 66,789, 6.62 percent more than the previous year.

New labor laws, the rising yuan valuation and raw material costs and the shrinking European and U.S. markets hit by the sub-prime credit crisis are forcing labor-intensive companies to close down their factories or move to lower-cost inland provinces, the report said.

Guangzhou intends to create an environment to keep research and development, designing and marketing departments of the labor-intensive firms in the city when steering the low-end sections of the firms to move out, the report said.