Taiwan-based companies, that have mainly invested in the mainland's coastal region, are showing greater interest in western cities, according to a survey report from a leading Taiwan industry association Monday.

According to a survey of 2,795 companies from all sectors made by Taiwan Electrical and Electronic Manufacturers' Association, Chengdu, capital of southwestern Sichuan Province, and Chongqing Municipality rank second and third of cities most likely to attract investment in the future.

All the companies surveyed have invested in the mainland, the report said, and the association has issued the report on the investment environment and risks in the mainland annually since 2000.

In the list of the comprehensive quality of 104 mainland cities based on competitiveness, investment environment, investment risk and Taiwan investors' favorability, Chongqing and Chengdu are among the top ten, according to the report.

Chongqing has moved up fast over the past three years, said Prof. Horng-Der Leu, from Chung Yuan Christian University, who led the survey.

The city ranked 42nd in 2009, rose to eighth in 2010 and was sixth this year, he said.

"In the mainland, the attitude of the local government plays an important part in the investment environment, and the Chongqing government has been proactive in attracting Taiwan investors," he said.

In addition, the city has been a logistic center in west China with good transport facilities, while local consumption has increased rapidly, Leu said.

Chengdu moved from 12th in 2010 to the eighth this year, while Xi'an, capital of northwestern Shaanxi Province, rose from 79th in 2010 to 30th this year.

In the next five years, the mainland will prioritize the development of the western region, and the "western triangle" of Chongqing, Chengdu and Xi'an will lead the regional economic growth that has made Taiwan investors recognize their potential, Leu said.

However, the most popular investment area for Taiwan companies is the Yangtze River Delta.

Kunshan of eastern Jiangsu Province has topped the list in the category of comprehensive quality for the third year, the report indicated.

Among the top 20 cities listed, 12 are in the Yangtze River Delta.

Shanghai, the biggest city in the delta, has topped the list of cities Taiwan companies are most likely to invest in the future.

The cities in the northeast and southwest have ranked low, while the Pearl River Delta has received negative feedback from Taiwan investors in terms of investment risk and environment, though many Taiwan companies operate there, according to the report.

The survey also found that an increasing number of Taiwan-based companies operating in the mainland have shifted from traditional manufacturing to high-tech industries due to the economic restructuring in the mainland and rising labor costs.

In addition, those companies are increasingly changing their consumer targets from traditional developed markets to the mainland market, the report said.

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