Leading computer maker Hewlett-Packard (HP) and major electronics maker Foxconn Technology Group have agreed to jointly invest US$3 billion in laptop manufacturing bases in Chongqing, the Hong Kong-based South China Morning Post reported Wednesday.

The two companies formally signed a deal with the local government on Tuesday.

When completed, the manufacturing hub will consist of two main facilities, which together can produce 20 million laptops for exports each year. The hub is expected to generate an annual output of 200 billion yuan (US$29.28 billion), about one third of the southwestern municipality's yearly industrial output, according to the Shanghai-based China Business News.

The hub is part of a broader investment by HP in Chongqing. The company is planning to build a Greater China Clearance Center, which will help mange all the company's financial transactions in the region. HP has either built or is building a China center for global delivery, a software testing center, a call center, and a desktop manufacturing base with a capacity of four million units in Chongqing as well.

HP and Foxconn chose Chongqing because of its low labor, land and logistical costs, as well as the city's attractive free trade zone, Huang Qifan, the city's vice mayor, said. In addition, the city also granted HP and Foxconn a discounted corporate income tax rate of just 15 percent, he said. The usual rate is 25 percent.

A separate official also said Chongqing will extend the second runway of the city's airport by 400 meters to better meet HP's logistical needs.

(China Daily August 6, 2009)