Why Foxconn and Samsung are moving west

June 01, 2012 | BY

clpstaff &clp articles

Chongqing attracted more foreign direct investment than Beijing last year. Impressive tax incentives are only part of the reason why businesses are moving to China's interior

A report by the Economic Intelligence Unit released last week calculated FDI in Chongqing at $10.8 billion in 2011. The municipality overtook Beijing for the first time, with analysts predicting it will surpass Tianjin and Shanghai by 2014.

SamsungMany believe cheaper land and labour are causing this shift, but Sam Feng of Llinks in Shanghai says the move to the Western regions is being caused by possible tax savings.

“Investors heading to the West can enjoy a reduced enterprise income tax rate of 15% instead of 25%, subject to investments in the encouraged category under several catalogues of industries promulgated by the Central Government for guiding investment,” said Feng.

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