Elevator maker Otis is setting up a new factory in the southwestern city of Chongqing to capitalize on the burgeoning growth in the industrial region.

"We want to be closer to our customers and market," Didier Michaud Daniel, president of Otis Elevator Company, told China Daily after announcing plans to set up the company's fourth production base. Otis already has three elevator factories in the coastal regions of the country.

Daniel said the high growth of the construction industry in the western region has spurred demand for elevators and escalators.

Construction is mushrooming in Chongqing whose double-digit growth in gross domestic product is dwarfing that of eastern regions during the economic downturn. The city's property market is estimated to grow 30 percent year-on-year.

Otis has managed to secure large orders from China despite the global economic downturn thanks to the massive infrastructure construction deals financed by the 4-trillion-yuan stimulus package. Some of the new orders include a contract for 334 elevator units at Longtan Headquarter City in Chengdu, the capital of Sichuan province, 198 units for two metro lines in Beijing, 85 units for Xi'an airport and 151 units for the Shanghai 2010 Expo.

Growing market

China's elevator market as a whole is slated to clock a 20-percent growth from 2008 to 2010, while annual sales are expected to reach $50 billion.

Otis, along with other players in the industry, is also accelerating its investment in the country. Hitachi Elevator opened its third factory in Shanghai earlier this year.

The Chongqing factory, with an annual capacity of 10,000 units, is only the first phase in the company's blueprint for China. Daniel said Otis was exploring the possibility of another investment plan, but refused to elaborate on this.

The concentration of installed elevators is higher in the Western countries, with about 50 percent of the world's elevators installed in Europe. But emerging economies in Asia, and particularly China, have taken a clear lead in new installations, according to research by Koncept Analytics.

"One-third of our new equipment bookings comes from China which could be even greater this year considering the depressing situation in the Europe and the US," said Daniel.

Freedonia Group, an industry research firm, said per-capita elevator use in China remains less than 10 percent of that in western Europe, signaling the large market potential.

Otis, with 25-percent market share globally, considers western China as virgin territory where demand for low-end residential elevators is huge, Daniel said.

Otis had launched its much-vaunted ReGen Drive technology, which could save as much as 70 percent of energy, in China in 2007. The company is now devoting more time and research to develop more energy-efficient technologies.