China's giant PC manufacturer Lenovo Group announced that its southwest China industrial base in Chengdu, Sichuan Province began production of desktops and notebooks yesterday, and the annual output is expected to reach 10 million units in five years.

According to the company, Lenovo and the Chengdu municipal government have jointly invested more than $100 million to build the base, which will also manufacture other Lenovo products in the future, and strengthen the company's research and development there.

"Products produced in the base can help Lenovo cover a broader Chinese PC market," said Lenovo's CEO Yang Yuanqing.

Ge Honglin, mayor of Chengdu said the city is aiming to become a major global base for computer manufacturing.

"The Chengdu municipal government has apparently given substantial preferential treatment to Lenovo, which can help contribute a lot in terms of the area's growth," Li Yi, secretary-general of the Mobile Internet Industry Alliance, told the Global Times yesterday,

Li noted that Chongqing, another southwestern city, is competing with Chengdu to lure PC manufacturers.

The rising rent cost and labor shortage have forced many manufacturers to move their production to western China. Hewlett-Packard (HP), Acer and Asustek Computer have chosen Chongqing for their production base while Lenovo, Foxconn and Dell have set up facilities in Chengdu.

"Moving to western China can help lower the production cost," Li said. 

According to Lenovo's financial report released last month, the company's global PC shipments grew 35.8 percent between July and September compared to a year earlier, seven times the worldwide PC industry average growth for the same period. 

The world's second-largest PC vender also posted record sales of $7.8 billion between July and September, an increase of 35.2 percent year-on-year.

Meanwhile, Legend Holdings Ltd, the parent of Lenovo, announced last month that it is planning to acquire a Chinese liquor company to further diversify the scope of its business, after stepping into the field of car rental, real estate, and agribusiness.  Fang Xingdong, an analyst and founder of Blog China and Internet Laboratory, told the Global Times that he thinks the company is moving its main focus away from PC which is "less profitable" compared with other businesses.