Mayor Xu Qin of Shenzen refutes media reports that huge telecommunications companies such as ZTE Corp. and Huawei Technologies have plans to follow about 15,000 other firms that have already left the city due to the increasing property and labor costs.
Situated in the Guangdong Province of South China, Shenzhen has been renowned as one of the primary technology hubs in the country for years. However, the recent increases in operational costs forced many companies to depart and move to other cities.
During an interview on Sunday, Xu stated that Huawei has already submitted its company development plan to the city government, signifying that the telecom giant will not leave Shenzhen any time soon.
However, it is true that ZTE is on the works of transferring its assembly business and phone production to Heyuan.
Both telecom giants cooperate with Shenzhen in its counterpart assistance program, according to Xu, who implied that the companies and the city government have strong ties.
The Global Times reported that Shenzhen is gradually dropping its edge when it comes to costs and resources for these technology-oriented companies, despite the city being the birthplace of many high-tech firms.
"While ZTE enjoys the benefits of Heyuan government policies, the company also brings in a stream of tax revenues for the government," according to market analyst Song Ding of the China Development Institute.
Song also said that firms in Shenzhen have no option but to transfer their low-end business departments and chains such as customer service and manufacturing to cities that offer cheaper property rental and labor costs. However, they are likely to keep their main business departments in Shenzhen, a move that is being done by ZTE.
"The reason why those companies [in Shenzhen] have excelled is not only because they are hard-working--policy support for innovative businesses from the local government and stable public services have also played a key role," said Internet industry analyst Liu Dingding. He believes that Shenzhen remains attractive to many companies despite the recent loss of thousands of firms.