VZCZCXRO6308
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #0061/01 0120547
ZNR UUUUU ZZH
R 120547Z JAN 07
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 5687
INFO RUEHC/DEPT OF LABOR WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
RUEHOO/CHINA POSTS COLLECTIVE
RUEHGV/USMISSION GENEVA 0440
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC
RHHMUNA/HQ USPACOM HONOLULU HI

UNCLAS SECTION 01 OF 02 GUANGZHOU 000061 
 
SIPDIS 
 
SIPDIS 
 
USPACOM FOR FPA 
STATE FOR EAP/CM, DRL/IL 
STATE PASS USTR FOR STRATFORD, WINTER 
TREASURY FOR OASIA/ISA-DOHNER AND KOEPKE 
USDOC FOR 4420/ITA/MAC/MCQUEEN, DAS LEVINE 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EINV CH
SUBJECT:  Going Mobile in Heyuan 
 
REF:  GUANGZHOU 13385 
 
The Making of a Mobile Manufacturing Base 
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¶1. (U) Summary:  The northeastern Guangdong city of Heyuan 
was recently named by provincial authorities as a "Mobile 
Phone Manufacturing Base" - the first in the province. 
Discussion at December 2006 conference held at the Heyuan 
Hi-Tech Development Zone centered on the city's plans to 
become a center for the manufacture, sales, and R&D of 
mobile phones and mobile phone components.  By 2010, Heyuan 
hopes to realize an annual capacity of 30 million units 
(from 4 million units currently) and an annual output of 
RMB 30 million (from RMB 4.5 billion).  Heyuan also plans 
to cooperate with local universities to attract qualified 
employees, provide incentives for investors and accelerate 
the construction of the Technology Supervision and Testing 
Center for Telecom Terminal Products.  In addition to 
Heyuan?s development as a mobile phone manufacturing base, 
the city is witnessing the growth of its development zone 
as well as the establishment of two new vocational colleges 
and five-star hotels.  End Summary. 
 
¶2. (U) Heyuan has emerged as a major player in the mobile 
phone manufacturing industry of China.  This northeastern 
Guangdong prefecture-level city, population 3.37 million, 
boasts one of the province's fastest-growing economies and 
a local government and people proud of their clean water, 
abundant resources and convenient transportation.  Post has 
reported separately on Heyuan's attempts to attract 
investment to the area by leveraging its relatively 
unspoiled environment and abundant resources (reftel). 
 
¶3. (U) In early December 2006 the Guangdong Province 
Department of Information Industry designated Heyuan as the 
"Mobile Phone Manufacturing Base of Guangdong" - the only 
one in the province - and has plans to establish a 
Technology Supervision and Testing Center for Telecom 
Terminal Products in the city.  As a result, Heyuan is now 
in a prime position to advance Guangdong's Information 
Technology (IT) industry as outlined in the 11th Five-Year 
Plan.  Currently, there are 11 mobile phone or mobile phone 
components manufacturers in the Heyuan Hi-Tech Zone, with a 
total investment of USD 165 million. 
 
Strengthening Heyuan's Mobile Manufacturing Capabilities 
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - 
 
¶4. (U) Heyuan Communist Party Secretary Liang Weifa 
announced the steps the city is taking to become a mobile 
phone manufacturing base during a 17-18 December 2006 
investment promotion conference held at the Heyuan Hi-Tech 
Development Zone,  The conference was sponsored by the 
Heyuan Municipal Government and was attended by several 
hundred local Chinese government officials and businessmen 
from China, Hong Kong and Macau, as well as representatives 
of the Indonesian, Finnish, Singaporean, Swedish, Thai, and 
Vietnamese consulates in Guangzhou. 
 
¶5. (U) According to Liang, Heyuan has more than 20 
manufacturers of mobile phones or mobile phone components, 
with an annual capacity reaching 4 million units and 
industrial output of RMB 4.5 billion.  Liang promised that 
the Heyuan city government would incorporate manufacturing, 
sales, service and R&D in the new minted Mobile Phone 
Manufacturing Base.  To achieve this goal, Heyuan would 
strive to realize an annual capacity of 30 million units 
and an annual output of RMB 30 billion from now until 2010. 
Liang also stated that the government would recruit 
graduates from the joint South China University of 
Technology (SCUT) and the Heyuan Vocational Technology 
College to improve technical support and provide a 
continuous supply of talent to mobile phone manufacturers. 
 
¶6. (U) In order to draw more investors, Heyuan will support 
and encourage innovation in land use and technological 
innovation, guarantee mobile phone manufacturers favorable 
prices for electricity, water and labor, and offer 
 
GUANGZHOU 00000061  002 OF 002 
 
 
convenient customs clearance policies.  Liang emphasized 
that the Heyuan authorities will speed up the construction 
of the Technology Supervision and Testing Center for 
Telecom Terminal Products, scheduled for completion in the 
first half of 2008.  Lastly, Heyuan will assist the 
development of the mobile phone manufacturing base by 
enlisting more support from the central government 
authorities and from industry regulators in terms of 
license applications and R&D. 
 
Looking to the Future 
- - - - - - - - - - - 
 
¶7. (U) During a brief bus tour of the area surrounding the 
Development Zone, Foreign and Overseas Chinese Affairs 
Bureau of Heyuan Municipality representative Zhang Chunhui 
told foreign consulate officials that a second phase 
development zone was in the middle of construction, with an 
estimated RMB 350 million total investment, and continued 
to emphasize Heyuan's commitment to creating an 
environmental friendly manufacturing base.  The tour also 
revealed Heyuan officials had already begun establishing 
two new vocational colleges, which will have a teaching 
staff of 400, and offer over 25 disciplines for up to 6,500 
students.  To accommodate the growing business population, 
mainly overseas Chinese companies and investors, Heyuan 
authorities are already in discussions to construct more 
five-star hotels.  Indeed, Heyuan's slogan "more money, 
less hassle, better health" seems to be more than just 
rhetoric. 
 
GOLDBERG