Innovation helps transform Dongguan's economy

Workers at an export-oriented mobile phone parts enterprise in Dongguan, Guangdong province. [Photo/China Daily]

Increase in exports of products developed locally through innovation has helped upgrade the trade and industrial structure of Dongguan, a Pearl River Delta city in Guaongdong province, a senior local official said.

The city is known for its strong manufacturing and trade. "General trade, which is marked by export of products made locally, will become a major force and drive the city's foreign trade development," said Yuan Baocheng, mayor of Dongguan.

General trade refers to trading in goods by domestic companies with licenses to import and export. It is expected to surpass trade involving goods or commodities processed in Dongguan within five years, according to Yuan.

The city's total trade increased 4.1 percent year-on-year to 939 billion yuan ($142 billion) in the first 11 months of 2015, according to Huangpu Customs, which governs and monitors the trade performance of Dongguan.

While trade in processed goods fell 5.3 percent year-on-year to 645.3 billion yuan from January to November last year, general trade increased by 24.2 percent year-on-year to 293.7 billion yuan during the period, according to the customs.

"Companies, especially those traditional processing ones, have been encouraged to transform their business models by focusing on technology and innovation, which will highly increase trade value," Yuan told the Nanfang Daily, a local newspaper in Guangdong.

Since the 1990s, a growing number of companies with foreign investment, particularly in manufacturing, have set up processing businesses in Dongguan, helping develop the small town into one of the world's important manufacturing and trade base.

However, manufacturing has been greatly affected since 2008 when global demand for Chinese goods began slowing, according to Yuan.

"We have introduced a series of measures encouraging local companies to upgrade their manufacturing, which is still a backbone industry for Dongguan," said Yuan.

Increased investment in technology and innovation has helped local manufacturers to shift from simple processors to enterprises capable of developing products, said Yuan.

Investment over several years has paid off, with the city's general trade surpassing $40 billion in 2014, accounting for 26.5 percent of the total trade.

According to the local government, Dongguan's overall investment in technology research and development increased by 87.8 percent from 6.12 billion yuan in 2011 to 11.5 billion yuan in 2014.

Local companies have also been urged to introduce artificially intelligent processing equipment to increase value and reduce production costs, Yuan said.

As of September, there have been 22,000 smart facilities in the city's processing lines, according to the local government. "Following the increase in exports of local products and wider use of smart facilities, the city's economy is now driven by technology and innovation rather than processing," said Yuan.

Chen Yanping, chairman of Dongguan Topic Photoelectric Technology Co, said investment in technology and innovation had helped greatly increase business profits over the years.

The Hong Kong-based company, which is mainly engaged in processing electronic parts for international television makers, has plans to invest more than 10 million yuan in 2016 in technology research and upgradation of its processing lines.

"It is not enough to simply upgrade manufacturing facilities if the company is determined to transform its business. It needs to develop a strong technology, and a research and development team, to increase value in the long term," Chen said.