China Twisting Arms to Invest in Dam Area
1/4/97
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Headline: China Twisting Arms to Invest in Dam Area
Source: Reuters
Date: 11/4/97
Author: Scott Hillis
FULING, China, Nov 4 (Reuters) - This Yangtze River city has no rail links
or modern highways, its factories are decaying and its grimy downtown will
soon be under water.
So, why has a Chinese corporate success story like Wahaha invested in three
factories in Fuling?
China is hoping Wahaha, and dozens of other companies like it, can prop up
the Yangtze economy by creating jobs for some of the 1.2 million workers and
farmers who will be uprooted by the gargantuan Three Gorges dam project.
More than 5,000 Fuling residents have already been evicted from homes and
factories that will be flooded when the Yangtze is blocked this Saturday so
work can start on the dam walls.
Between the dam site and the city of Chongqing, more than 1,000 factories
will have to close or move to higher ground to make way for a 600-km (366
mile) long reservoir.
Officials say the world's mightiest dam, with 18,200 megawatts of generating
capacity, will power China's economic boom into the 21st century and bring
prosperity to the country's backward heartland.
POLITICAL DUTY
The dam will take 12 years to complete, but Beijing is now using
arm-twisting and policy sweeteners to draw the country's best companies to
places like Fuling in the southwestern province of Sichuan.
Based far away in eastern Zhejiang province, Wahaha is one of many
successful companies that have responded, albeit reluctantly, to Beijing's
call for investment in the economic backwaters of the Yangtze.
``Without the Three Gorges, we would not have come to Fuling,'' said Wang
Zhijian, general manager of the Fuling Co Ltd Hangzhou Wahaha Group Corp.
Wahaha is one of corporate China's brightest stars, selling a variety of
beverages from children's fruit milk to fiery sorghum liquor.
``It is our political duty as well as our economic duty,'' said Wang. ``The
factory should give something back to society.''
Wahaha's gift to Fuling amounts to 40 million yuan ($4.8 million) investment
in three factories that have hired 1,200 workers from doomed factories.
The Fuling government pitched in another 40 million yuan, and officials say
the city is already reaping dividends. The average income of Wahaha workers
will reach 10,000 yuan this year, more than double the local average for
city residents.
Wang said more than 20 companies from Zhejiang province had invested around
the Three Gorges reservoir. Firms have come from as far afield as the
capital, Beijing.
BACKWARD MINDSETS
Fuling is 90 km (55 miles) from the nearest metropolis, Chongqing, and goods
headed to regional markets must be carried there by trucks bouncing along
dilapidated highways or on boats fighting the Yangtze's powerful currents.
``The main problem is transportation,'' said Wang.
Wahaha, relying on tax breaks and its namebrand status, has kept its head
above the water, earning nearly 27 million yuan in profits in January to
September this year, on sales of more than 170 million yuan.
Companies investing in the region must also grapple with a workforce
unfamiliar with the ways of China's new generation of highrolling,
profit-hungry businesses.
In Wanxian, 170 km northeast of Fuling, diesel engine maker Changchai Co Ltd
has opened a spacious new workshop that has absorbed about 300 workers from
the soon-to-be inundated Three Gorges Diesel Engine Factory.
Without government pressure ``we definitely would not have come here,'' said
Wan Taikun, vice-general manager of Changwan Diesel Motor Co Ltd.
Retraining workers had proved difficult, said Wan. ``There are problems with
people's thinking here.''
Other problems boil down to plain old bad planning.
For instance, one of Wahaha's investments in Fuling was to overhaul an
ageing and bankrupt candy factory to produce a sweet milk drink popular
among Chinese children.
The catch is the factory is well below the highwater mark of the dam's
reservoir.
``The whole thing will be submerged,'' Wang said, adding that Wahaha will
eventually move the equipment and workers to higher ground.