First SOE moves out of Beijing

With pressure growing to reduce pollution in the capital, a pharmaceutical company, Beijing Lingyun Building and Chemical Materials company, is relocating to Handan in North China's Hebei province from Beijing's Fengtai District, Beijing Times reports.

The company, which is affiliated to Xinxing Cathay International Group Co Ltd, is the first State-owned company to move out of Beijing.

The company's vice president said high-energy consumption was the main reason behind the move.

"Carbon dioxide gas is the company's main source to produce sodium bicarbonate, which is supplied by the emissions from lime production," Chen Hongzhi, vice president of the pharmaceuticals group, said.

"After the government cracked down upon industries causing pollution, including against lime production, we are only able to buy liquid carbon dioxide. Cost increases in materials, production and transportation are also hurting the company," said Chen.

Home to many heavy industries, the city of Handan in Hebei will benefit from the pharmaceutical company's arrival, according to Wu Shenfu, director of Fengtai Commission of Economy and Information Technology.

As the cluster of steel and metallurgical industry, the carbon dioxide emission can be used in the production of sodium bicarbonate, which will reduce emission by 16,000 tons in Hebei province per year, Wu said.

Chen added that after the relocation, the company can help reduce coal consumption in Beijing and Hebei by 52,900 tons through industrial upgrade.

More than 100 employees will also relocate to the new home. The designed capacity of the new plant will also be tripled.

Beijing's old industrial site, Fengtai District, is going through its own transformation too. City officials are planning to turn the area into a research and development base and new industrial zone for non-polluting industries, such as those that produce emergency rescue equipment.

Yi Peng, analyst with Pangoal, reckons that it's good for enterprises to locate out of Beijing since the cost of business is increasing. However, with Beijing, Tianjin and Hebei province co-developing, companies will benefit if they choose the location carefully, said Yi.

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