Major tech companies to 'stay based in Shenzhen', mayor says

Hostesses hold Ascend P7 smartphones, launched by Huawei Technologies during a presentation in Paris. [Photo/Agencies]

Shenzhen's top government official has challenged claims that a number of top technology firms were ready to move their headquarters out of the booming southern metropolis.

Xu Qin, mayor of Shenzhen, said that Huawei Technologies Co Ltd and ZTE Corp have assured him that their headquarters and research and development centers would stay in the city.

However, the firms do intend to transfer some of the manufacturing operations to nearby cities, including Dongguan.

"Huawei has told the government in an official letter that it would not move its headquarters and research and development center out of Shenzhen. So did ZTE," Xu said.

Xu's remarks were in a response to recent reports that Huawei would move to the neighboring city of Dongguan, citing high costs in Shenzhen.

And he explained that the shift of some manufacturing operations "was part of the company's strategic plans, which are in accordance with government policy to optimize the local industrial structure".

Xu made the remarks at an international forum in Guangzhou, Guangdong province, on sustainable urban development within the context of the Belt and Road Initiative.

The event was attended by a number of foreign presidents and prime ministers, as well as high-ranking officials from Chinese and international industrial organizations.

In an earlier statement, Huawei said it would be a normal business practice to adjust the responsibility of different entities by relocating part of its business to other cities.

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

Huawei, which realized 395 billion yuan ($60.8 billion) in revenue last year, set up a manufacturing company in Dongguan's Songshanhu Industrial Park in 2012 and it has since increased its investment in the city, which is about a one-hour drive from Shenzhen.

According to Xu, more than 17,000 manufacturers have been closed in the past five years in Shenzhen, due to the local authorities' plan to upgrade industries.

"The manufacturing businesses being closed were not of high quality, they were not competitive in the global market, and they consumed a great deal of energy," Xu said.

ZTE has planned to move its processing and manufacturing businesses for mobile devices to Heyuan, a city about 170 kilometers from Shenzhen.

Shenzhen will become a global innovative center in the years ahead by investing more in research and development in the technology sector to attract more high-end domestic and foreign businesses, Xu said.