Growth of Pak-China Special Economic Zones
“We are not relying on importing mobile phones from China but our focus is the transfer of technology in the country so that we could manufacture our own product here. We have already started an assembly line for the laptops in Pakistan”, Afridi said in an interview with More magazine.
Haier Pakistan is currently producing refrigerators, deep freezers, washing machines, home air conditioners, commercial air conditioners, television sets, microwave ovens and other small appliances in a special economic zone (SEZ) on the outskirts of Lahore.
“Pakistan is one of eight countries around the world where the Chinese government plans to help its investors set up and operate SEZs, to use the country as a major base for manufacturing and exporting goods to the rest of the world. These zones have to be privately owned and operated,” said Afridi, who also heads the Haier-Ruba SEZ Company, according to Pakistan's Dawn newspaper.
Haier entered the Pakistan market in February 2001 by jointly establishing a facility with Pakistan-based Panapak Electronic Company to produce Haier air conditioners. The Group opened Haier (Pakistan) Industrial Park in Lahore in April 2001. In 2004, Haier was the first foreign brand home appliance manufacturer in Pakistan to obtain the ISO9001:2000 Certification, according to Andrew Delios, the author of "International Business: An Asia Pacific Perspective".
After 13 years in Pakistan, Haier has become the second most popular home appliance brand in the country. Haier Pakistan has maintained the highest market share for air-conditioners and washing machines for several years while Haier refrigerators curently enjoy the second highest market share. According to a Millward Brown survey in 2013, Haier has achieved 94% brand awareness, the second highest in the country.
Under the agreement signed by Chinese and Pakistani leaders at a Beijing summit recently, $15.5 billion worth of coal, wind, solar and hydro energy projects will come online by 2017 and add 10,400 megawatts of energy to the national grid. An additional 6,120 megawatts will be added to the national grid at a cost of $18.2 billion by 2021.
|Pak-China Industrial Corridor Source: Wall Street Journal|
The transport and communication infrastructure—roads, railways, cable, and oil and gas pipelines—will stretch 2,700 kilometers from Gwadar on the Arabian Sea to the Khunjerab Pass at the China-Pakistan border in the Karakorams.
Starting in 2015, the Chinese companies will invest an average of over $7 billion a year until 2021, a figure exceeding the previous record of $5.5 billion foreign direct investment in 2007 in Pakistan.
Beyond the initial phase, there are plans to establish special economic zones in the Corridor where Chinese companies will locate factories. Extensive manufacturing collaboration between the two neighbors will include a wide range of products from cheap toys and textiles to consumer electronics and supersonic fighter planes.
The basic idea of an industrial corridor is to develop a sound industrial base, served by competitive infrastructure as a prerequisite for attracting investments into export oriented industries and manufacturing. Such industries have helped a succession of countries like Indonesia, Japan, Hong Kong, Malaysia, South Korea, Taiwan, China and now even Vietnam rise from low-cost manufacturing base to more advanced, high-end exports. As a country's labour gets too expensive to be used to produce low-value products, some poorer country takes over and starts the climb to prosperity.
Once completed, the Pak-China industrial corridor with a sound industrial base and competitive infrastructure combined with low labor costs is expected to draw growing FDI from manufacturers in many other countries looking for a low-cost location to build products for exports to rich OECD nations.
The CPEC will not be just an economic or industrial corridor; it'll also be a strategic corridor for both China and Pakistan in countering the growing US-India alliance and Obama's Asia Pivot both of which are seen as a threat to the regional stability of South Asia.
Clearly, China-Pakistan ties have now become much more strategic than the US-Pakistan ties, particularly since 2011 because, as American Journalist Mark Mazzetti of New York Times put it, the Obama administration's heavy handed policies "turned Pakistan against the United States". A similar view is offered by a former State Department official Vali Nasr in his book "The Dispensable Nation".
Here's a video about Haier laptop assembly in Pakistan:
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