4.1 Key investing fields

4.1.1 Large power generating equipment

Sichuan Province has great capabilities in researching & developing and manufacturing three types of large complete-set generating equipment: thermal power, hydroelectricity and nuclear power generating equipment. Speaking of the eight types of equipment required in thermal power projects, more than 40% can be provided by scores of supporting enterprises in the province. Manufacturers are also capable of designing and producing the core of hydropower generating, water-turbine generator set. In terms of nuclear power generating, manufacturers have the capability of producing mega kilowatt nuclear power generator set, forming a complete manufacturing system of nuclear power products with supportive design and fuel production. Sales volume of such equipment in Sichuan constitutes 30% ~ 40% of the whole market of the country, and some are being exported for years. The products always fall short of demand. From a long-term point of view, demands for large power generating equipment will rise sharply due to the steady growth of global electric power market, especially regarding the rapid expansion of that in China. Therefore the market prospect is quite optimistic. Foreign investment are encouraged to flow into this field, which covers equipment manufacture, related research & development and design of products, raw materials production, critical equipment manufacture & critical parts and components processing, large-scale technology and equipment involving supercritical & air cooling, combined cycle, circulating fluidized bed, integrated gasification combined cycle, clean coal combustion technology, manufacture of environment-friendly thermal power equipment and large hydropower equipment, development of nuclear power equipment with super large installed capacity, manufacture of wind power generating equipment, production of pump storage set, new-type ultra-high voltage transmission & transformation equipment, auto-control instrument & meter and new-type raw materials.

Now the machinery industry in Sichuan is capable of manufacturing 2,450 ~ 5,000 mm heavy & medium plate mill, hot strip rolling mill, cold strip rolling mill, pickling equipment, large & medium H-type steel rolling mill, heavy-duty forging & stamping equipment, cement equipment and their complete and partial auxiliary equipment. Its key technology takes the lead in domestic market and few rivals can be found in the international market for some products. The production range of complete set of large metallurgical equipment in the province is aiming at 5,000 mm heavy & medium plate mill, universal continuous casting machine for section steel & beam blank, 2,000 mm (or above) large hot & cold strip rolling mill, process control technology development and such equipment manufacture, high efficient continuous casting development, heavy-duty continuous casting & rolling machine for thin slab & thin strip, complete set (complete production line) of equipment for hot die forging, recasting, high-speed forging & warm forging equipment, die forging & coining equipment, large complete set of equipment for 20 million-tonnage (or above) open pit mine, research & development of serialized full-face tunnel boring machine, research & development of production line for large-diameter and longitudinal submerged-arc welding pipe, and new type cement production equipment of drying clinker with 4000-ton (or above) daily output, etc..

For this reason, foreign investors can pay special attention to manufacturing automatic, continuous and large-scale complete set of advanced & high efficient metallurgical equipment. Besides it is also suggested to introduce investment to heavy & medium wide plate and auxiliary manufacturing, technology development, new materials and parts & components manufacturing for hot/cold strip rolling and continuous casting & rolling, large castings & forgings and clean steel & die steel products manufacturing, coal liquefaction device manufacturing, stereo garage and core rail for heavy-duty high-speed railway. Since products described above have a big market demand, and the basic production and ability to provide auxiliary items in Sichuan are superior, enterprises will have favorable opportunities in capital use and technological advantages to bring out products of a higher technological level.

The communication and transportation machinery industry in Sichuan is taking shape now. However, the overall strength is still lagging behind counterparts both at home and abroad. Competitive products only concentrated in fields like railway locomotive and rolling stock, automobile, military aircraft and related parts & components, which leaves plenty of room calling for foreign investment.

Railway locomotive & rolling stock and automobile manufacturing in the province has a solid foundation and good ability to provide auxiliary items. This field is abundant in capable technicians and workers, while the laborage is below the State’s average. Moreover, with policy supports from local governments and investment climate improved, investment in this field must have a profitable prospect. Recommended investment considerations include: high-speed & heavy-duty AC-drive freight diesel and electric locomotive manufacturing, vehicles manufacturing for intercity expressway and semi-expressway passenger vehicle units, manufacturing of urban light rail and metro, sedans, large & medium passenger cars, trucks and special vehicles; manufacturing of key parts and components, product extensions and materials of high quality that based on railway locomotive, passenger & freight vehicles and automobile manufacturing; helicopters, regional jets, small-sized commercial & business aircrafts or other types and related parts & components; manufacturing of advanced optical-mechanical-electrical integration products; R & D of vehicles, airplanes, related key parts & components and materials.

Despite rich resources for natural gas, salt and sulfur & phosphor chemical industries and the embryo formed for complete set of chemical equipment manufacturing that mainly deals with raw materials development, the overall manufacturing capacity is still far from adequacy. Few enterprises can hold a considerable market share. The orientation of this field is to foster six product chains of complete equipment set on the basis of dedicatedly supported chemical industries of natural gas, salt, sulfur & phosphor and petroleum. That can be interpreted as: to promote complete set of chemical fertilizer equipment depending on energy-efficient and technical renovation projects of large & medium chemical fertilizer devices; to promote manufacturing of complete set of petrochemical equipment depending on new and expansion projects of large ethylene units; to promote manufacturing of complete set of methanol equipment centering on methanol products made of natural gas; to develop manufacturing of complete set of equipment focusing on melamine plant; to revamp and set up complete set of “alkali” and PVC equipment; to develop drilling, transmission and exploration equipment based on natural gas exploitation.

Recommended fields for foreign investors include: integration and matching of large & medium chemical equipment; construction of key plant such as ion membrane caustic soda plant, above-medium melamine plant, grease production plant; large ethylene cracking furnace, hydrogenation reactor, large polymerization reactor; supporting products for petroleum and natural gas drilling machines like ground equipment series, large drilling machines, drilling pumps, equipment for digital control system, hi-tech & energy-efficient oil pumping units, oil pump, water filling pump; autocontrol instrument & meter and systems for chemical equipment.

The overall engineering machinery industry in Sichuan is at a relative low level, and there is always a wide gap between it and renowned firms home and abroad, for instance, CAT, Panasonic, Nissan, Shinko, Hyundai. But chances befall when the West China Development and good-sized hydropower stations and infrastructure construction in West China start. The industry is moving toward development of wheel loader series, fully hydraulic excavator, grader of leading technology, vibratory roller, construction tower crane, full-face tunnel boring machine, speed-changer for engineering machinery, large autocrane, etc.. We propose foreign investment in manufacturing large hydraulic excavator, large-tonnage autocrane, construction tower crane, full-face tunnel boring machine, etc.. It is worth mentioning that China's complete technology and manufacturing capability of large rock tunnel boring machines are both inferior, which entirely depends on imports in such field. However, the advent of a new round of growth of the country’s machinery industry expands the market demand (around 100 sets). So it is right there for foreign investors’ consideration.

Environmental protection equipment manufacturing in Sichuan holds a small market share due to a very late start. The present goal in this field for Sichuan is: to improve the production technological equipment and the products’ technological contents, which results in a leading role in the country in localization and market application of complete set of small & medium urban sewage and industrial organic wastewater treatment equipment, complete set of desulfuration and denitration equipment, and complete set of comprehensive & integrated refuse disposal equipment; to set up and foster 2~3 large environmental protection equipment manufacturers with sales over 1 billion yuan, taking advantage of superiorities of the province’s machinery manufacturing and the “expert, sophisticated, special, innovative” features of small & medium-sized counterparts, so that a cluster of such enterprise with large ones as the core can be created.

Since this industry is at the preliminary stage, the Sichuan Province and its surrounding provinces and municipalities are confronting environmental challenges, which leads to large demands of flue-gas desulfuration equipment, industrial & domestic wastewater treatment and resource reuse equipment, complete set of refuse disposal & resource utilization equipment. These all provides a wider market and growth space for environmental protection products, not to speak of opportunities for investment. Investment is recommended for: urban sewage treatment equipment, complete set of high-concentrated industrial wastewater treatment and reuse equipment, complete set of coal flue-gas desulfuration equipment, complete set of urban refuse disposal equipment for realizing “harmless, minimization and resource reuse”, clean production technology and equipment, ecological environmental conservation technology and equipment.

Generally there are three modes of foreign investment in China – wholly foreign-owned enterprises, Sino-foreign joint ventures and cooperative businesses with further subdivided investment styles. With the market open wide, investors can select their most appropriate way.

Considering factors like fully utilizing the current resources and market in Sichuan, shortening the investment return period, investors are recommended to pay special attention to the following: