Huawei's relocation rumor highlights home price woes

By Guo Yiming
0 Comment(s)Print E-mail China.org.cn, May 26, 2016
Adjust font size:

Huawei's relocation rumor highlights home price woes [File photo]

Although tech giant Huawei denied a rumor that it may possibly be moving its headquarters out of Shenzhen due to runaway property prices, there are still large concerns whether this southern coastal city is losing luster as an investment destination.

A media report, entitled "Don't let Huawei leave," was widely circulated online over the past weekend and has been rattling the nerves of local government officials in Shenzhen, China's first Special Economic Zone, which is faced with a possible exodus of firms in the wake of its rental cost surge.

In response to the rumors, the world's third-largest smart phone maker said that it has no plan to move its headquarters out of the city, according to a statement on its official website.

"Huawei has been setting up all kinds of branches and research institutions across China and even in overseas markets for the past few years to better support the company's global expansion," said the statement.

In 2012, Huawei set up a device manufacturing company in Dongguan, Guangdong Province, only a one-hour drive away from Shenzhen. And it has also reportedly been moving most of its mobile device production and export operations to a division registered in Dongguan since 2014.

Rumors about a possible relocation of its headquarters have been boiling for years.

However, Ren Zhengfei, helmsman of the telecom conglomerate, openly expressed in June of 2014 that Huawei's headquarters will not leave Shenzhen and they haven't even thought of this scenario.

However, many more manufacturing firms have felt increasing pressure due to rising costs both in terms of human resources and property rental.

The southern coastal city, which is adjacent to Hong Kong, topped the global property league in 2015 and ranked among the top 5 fastest-growing property markets in the world, along with Shanghai, China's biggest city.

According to figures from the National Bureau of Statistics (NBS), the price for newly built commodity apartment grew by 63.4% year-on-year in April, topping 70 big and medium-sized cities in China.

Faced with mounting rent prices accompanied by a housing boom, more companies are ditching the city. Figures from a statistical agency from Longgang District, in which Huawei is headquartered, shows that a total of 66 industrial firms relocated to other neighboring cities or shut down their businesses in Shenzhen as of Q3 in 2015 and only 15 newcomers have set up offices there.

The local government, which is expressing a sense of anxiety, is trying hard to encourage them to stay. An analysis report about economic fundamentals issued by the district-level government has mentioned Huawei multiple times and urged the need to serve the company more efficiently.

"Manufacturing is the pillar industry in the district," said Yuan Yiming, a professor at the China Center for Special Economic Zone Research at Shenzhen University. "We need to warn against the problems caused by sluggish growth and waning investment."

Observers say that the city's appeal for Huawei, and many other tech firms, should depend not only on low costs but also a fair and free market environment.

Lower costs, the rule of law, and non-intervention are the cornerstone of the software environment, offering what it takes to encourage brick-and-mortar businesses to stay, says Ren Zhengfei.

Follow China.org.cn on Twitter and Facebook to join the conversation.
Print E-mail Bookmark and Share

Go to Forum >>0 Comment(s)

No comments.

Add your comments...

  • User Name Required
  • Your Comment
  • Enter the words you see:   
    Racist, abusive and off-topic comments may be removed by the moderator.
Send your storiesGet more from China.org.cnMobileRSSNewsletter