Dandong firms lack talent, funds; their progress hindered by inadequate R&D

Dandong in Northeast China’s Liaoning Province is a city characterized by a large number of small and medium-sized enterprises, but a lack of talent and capital is now hindering their growth.

Established four years ago, ZXRAY Technology Co, an X-ray instrument maker in Dandong, has grown into a company with more than 30 employees and sales revenue of 30 million yuan ($4.72 million) in 2017.

However, the company is still at the stage of imitating advanced products from developed countries and regions, with its core parts imported from the US and Switzerland, Guan Hongzhi, manager of the inspection technology department at ZXRAY Technology Co, told the Global Times on Sunday.

Dandong’s industrial X-ray sector plays a leading role in China, with widespread applications in detecting flaws in cores of automobiles, vessels and aircraft.

“We are developing high-end CT [computer tomography], but the project is advancing slowly due to a lack of research and development [R&D] talent,” Guan noted.

The talent drain from the city has inhibited Dandong companies’ competitiveness and restricted the city’s sustainable industrial development, a Dandong-based economic observer surnamed Xu told the Global Times on Sunday.

Huanghai Bus is one of the larger companies in Dandong, but its competitiveness has been declining due to low R&D investment and inadequate management, according to Xu.

Despite the country’s favorable policies for R&D, companies in Dandong can’t be revitalized without sufficient capital and the city’s industrial basis is weak, Xu said. “Suppose the country offers 100 yuan for corporations in eastern coastal areas; the firms may generate revenue of 200 yuan. But the same investment may be lost if it is put into companies in Northeast China.”

A businessman named Li Chongdong, who has been engaged in the precision parts processing industry for more than a decade, told the Global Times on Sunday that he once thought about upgrading and transforming, possibly by designing products and selling them online, but he encountered severe capital problems.

Some processing factories in Dandong have successfully developed into bigger companies making products like turbochargers and X-ray equipment, but it is challenging because of the small market in Dandong, said Li.

Li said his firm gets orders worth 2 million yuan from foreign-backed companies annually. But it’s hard to find workers now because of low salaries in the sector, which directly limits the growth of the factory, he said.

Promising signs

Fortunately, some positive changes have emerged. The Dandong city government has pledged to accelerate the development of the local advanced manufacturing industry, according to the local government’s 2018 work report released in January.

In 2018, substantial progress should be achieved in revitalizing Dandong as a famous light industry city, and improvements should be made in the construction of the automobile manufacturing base as well as the measurement and control base, the report said.

Dandong’s major corporations’ industrial value-added increased 5.1 percent year-on-year in 2017, with 20 out of 34 industries maintaining growth, data from the Dandong statistics department showed.

Source: Global Times