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July 14, 2015

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Home » City specials » Hangzhou

Internet business zone begins to take shape

By Wu Huixin | July 14, 2015, Tuesday | Print Edition

HANGZHOU is making strides in laying the foundation for the new industrial zone catering to companies and trade in Internet-related businesses.

The central government in March approved the creation of the China (Hangzhou) Cross-Border Pilot Zone. Since then, it has approved 32 measures submitted by the Hangzhou municipal government to frame how the zone will operate. They cover customs clearance, supervision, taxation, financial services and credit.

The new zone is akin in many ways to the pioneer China (Shanghai) Pilot Free Trade Zone that opened last year. It’s no coincidence the Hangzhou zone will focus on e-commerce. The capital of Zhejiang Province is the birthplace and headquarters of Internet giant Alibaba Group and home to many online startups inspired by the company.

“One-third of China’s e-commerce companies are located in Hangzhou,” said Tong Guili, a member of the Standing Committee of the CPC Hangzhou Committee. “That gives us an edge compared with other cities. You might look at it as a World Trade Organization-style system for cyberspace.”

One highlight of the new zone is the establishment of a standard data base and online certification platform, where information can be shared across different government departments. That would end the time-consuming and costly need for companies to go to multiple departments for services that include customs, taxation and foreign exchange.

“This platform will deregulate and standardize cross-border e-commerce business within the zone,” Tong said.

The zone will also allow third-party online payments in business — a nod to the emergence of online payment companies — and facilitate use of foreign currencies.

“Foreign currency payment is an important part of settling accounts in cross-border e-commerce,” Tong said. “Four Zhejiang local third-party online payment organizations, including Alipay, Epay, Lianlianpay and Ebatong, have now been approved to use foreign exchange in trade settlements in the zone.”

Zone officials are also trying to tackle the issue of credit risk. They are now formulating a system that would provide ratings on the creditworthiness of companies.

Professional talent is considered crucial to the success of the zone. In conjunction with area educational institutions, officials are setting up a framework for attracting and cultivating expertise in e-commerce.

Zhejiang University is establishing a special research institute that will work in tandem with the zone.

The Qianjiang campus of Hangzhou Normal University opened a center this month dedicated to helping young entrepreneurs with innovative ideas in cyber development. The center is supported by the Hangzhou Growing Corporate Brand Alliance and local e-commerce companies.

“The demand for talented expertise exceeds supply,” said Wu Changhong, secretary-general of the alliance. “Talent is at the core competitiveness of a company’s future development. This program seeks to find and develop expertise for the pilot zone.”

Tong said China’s new “One Belt, One Road” initiative evoking the spirit of the ancient Silk Road will complement the aims of the new e-commerce zone.

“We want to develop it into the beginning of a cyber Silk Road,” he said.

The “One Belt, One Road” strategy, first proposed by President Xi Jinping in 2013, envisions building and strengthening trade across overland and maritime routes. It seeks to promote closer ties with Central Asia, Southeast Asia and Eastern Europe, among other destinations.

Already, businesses in Hangzhou are seizing the opportunities provided by the zone. The first online-to-offline cross-border e-commerce store has opened in Xiasha in the city’s Jianggan District. It is run by a group of e-commerce enterprises in tandem with the pilot zone.

The business allows consumers to scan QR codes on products in brick-and-mortar shops and enter them into an online shopping platform, where they can pay for items via third-party payment or online banking channels. The products are then shipped to the doorstep via express delivery.

In late June, a direct import goods store, jointly owned by the pilot zone and the Yintai Group, opened at the Intime Department Store in the Wulin area. It employs the same methodology as the Xiasha store. The new shops cover a wide range of products, including cosmetics, baby-care items, clothing, jewelry and digital electronics.

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