Sichuan province plans to authorize more than 50 local private companies to take part in military industry projects and transform five military units into civil-military integration companies this year, local officials said in February.
The integration will cover industries including aviation, aerospace, Internet Plus, advanced chip production and information security to launch more civil-military integration projects this year, said Xu Zhou, director of the National Defense, Science and Technology Industry Office of Southwest China's Sichuan province.
"We will promote more resource and technology exchanges between civil and military entities," Xu said.
Sichuan, along with seven other regions, has been approved by the central government to push forward comprehensive innovation and reform trials.
The province is focusing its reform on civil-military integration with its strength in human resources and scientific research in military-related industries, said Xu.
Sichuan Haite High-Tech, one of China's leading aircraft maintenance enterprises, is among the local private companies cooperating with military entities.
According to a People's Daily report, the company co-founded Chengdu HiWafer Technology with a local military research institute focused on electronic information research. They invested 2 billion yuan ($290 million) in the joint venture to develop advanced radio frequency (RF) chips. The venture became operational in October 2016.
Li Biao, chairman of Haite High-Tech, told People's Daily that the RF chip was previously imported from other countries. It is advantageous in large data transmissions over long distances, which could be applied to internet of things technology and the construction of intelligent cities.
"Why did a company repairing airplanes begin to produce chips? Because if something meets the need of the nation, the industry and the public, it must have strong market potential in the future," the report quoted Li as saying.
Duan Tao, vice-president of the Sichuan Civil-Military Integration Research Institute, said military enterprises can provide a broader platform in terms of resources and technology, while private companies have rich assets and are more flexible in the market, People's Daily reported.
"Mixed ownership of companies is an innovative way to promote civil-military integration," the report quoted Duan.
The Southwest Automation Institute of China South Industries Group Corp, located in Mianyang, Sichuan province, was one of the first entities to announce plans to transition from a military unit to a company, according a Sichuan Daily report.
Four other units are expected to follow suit as part of the province's civil-military integration initiative.
The institute is expected to become a listed company in the A-share market in 2019 through employee stock ownership and investment plans, said Liu Yong, general director of the institute.
"It's not easy to be the first to launch the transformation, but I think when it's done, others can learn from our experience," Sichuan Daily quoted Liu.
He told Sichuan Daily the institute, which has 40 years of history in automation and information, invented sensor technology in the late 1990s while developing military robots.
"We realized this technology has great potential in the market. But funding was a problem at the time," said Liu.
The institute founded Mianyang Weibo Electronics, a shareholding company, in 2000 to manufacture products used in railways, communications and petrochemical engineering industries, he said.
Weibo Electronics' per capita output value reached 800,000 yuan in 2016, he added.
Hao Yungang, the institute's head of development planning, said a company survey shows that employees were longing for the civil-military integration transformation because they expected it to result in better benefits.
"In addition to the rise of salaries, employees could also get profits from the dividends in the future. It's no surprise they look forward to the transformation," said Hao.
According to the Sichuan government, the province has established research institutes and technological trading centers for civil-military integration in the past year and will provide more financial support and continue to hold promotional events this year.
Tian Yulong, engineer-in-chief of the State Administration for Science, Technology and Industry for National Defense, said entities should follow up business related to services-providing and maintenance when pushing forward the integration.