Looking internationally to build locally
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TELEVISION reports by US-based networks NBC and CNBC have compared Hangzhou to Silicon Valley.
It’s easy to see why.
The city is home to a thriving e-commerce industry, led by Alibaba, is at the heart of China’s information technology sector and is attracting numerous multinational companies to locate their China or Asia headquarters within its jurisdiction.
One NBC report notes that Hangzhou is at the southern tip of the Grand Canal of China, which is believed by many to be the place where trading of commodities first began.
“It makes perfect sense this is Alibaba’s home base — connecting the world is just part of its DNA,” the NBC report concludes.
And it’s the multinational companies that really put Hangzhou on the “international” map. As of the end of last year, the city had attracted 102 Fortune 500 enterprises, including Cisco, GE and Morgan Stanley. Together they have invested in 167 projects in Hangzhou, the provincial capital of Zhejiang.
Alibaba, which raised US$21.8 billion with its New York Stock Exchange listing last month, is headquartered in Hangzhou. Cisco set its China headquarters in the city. GE set up a joint venture in the city as early as a decade ago and Morgan Stanley founded its first yuan-denominated private equity fund in China in Hangzhou.
Linda Kozlowski, Alibaba’s director of global marketing and customer experience, says her job is fun because “when you look at the campus (the Alibaba company), you see everything is modern and 10,000 employees who are really able to balance their work and life, and bring passion to everything that they do.
“Putting Alibaba in Hangzhou, where trade began, is really a fun way to put together the history of Hangzhou as well as the new entrepreneurial spirit of China,” she adds.
The city government continues to take a progressive approach in promoting the benefits Hangzhou offers. It recently helped create a series of short films to promote the city’s investment environment.
Carlos Oyarbide, China chief operating officer of Morgan Stanley, Owen Chan, chairman and CEO of Cisco China, Fabrice Baschiera, general manager of the commercial operations for Sanofi China, Olivier Fontan, GE China’s vice president of global supply chain, and John Lawler, chairman and CEO of Ford China are about to introduce the city to people around the world.
“I believe Hangzhou is writing the future of China’s ICT industry,” Chan says in the video.
One of the municipal government’s key priorities in recent years has been to build Hangzhou into a “smart city,” which means using smart technologies to serve people.
Wangjiang New Town Smart Industry Park, where Cisco is headquartered, contains new media, e-commerce and smart technology enterprises. Hangzhou Cloud Valley is an industrial belt that specializes in companies in either the big data or cloud computing sectors.
Meanwhile, Dream Town in Yuhang District is expected to attract 10,000 college-graduate entrepreneurs and more than 300 fund management companies within three years.
These are just a few of the 37 projects the government has set out to do.
Hangzhou has also hosted the China Sourcing Summit the past four years. IT outsourcing and smart technologies are always key components of the summit.
The government’s goal to be the “most valuable services outsourcing city” in the country is gradually taking shape, due in part to the summit. Last year, outsourcing contracts in the city totaled more than US$5 billion, and the city inked outsourcing contracts worth about US$4.5 billion.
Of course, being recognized internationally means creating an economy conducive to attracting companies and investment from around the world.
Last year 415 contracted projects with more than US$9 billion in direct foreign investment were approved by local authorities. As of December 31, the city boasted more than 12,000 foreign-funded enterprises.
At the same time, local companies are beginning to spread their wings and gaze further afield. Nearly 1,000 outbound investment firms were established in the city last year and Hangzhou invested US$2.7 billion abroad, of which US$2.5 billion was non-trade investment.
Hangzhou’s total contracted projects, including labor cooperation, in other countries reached US$800 million last year, up 45.7 percent from 2012.
Hangzhou’s imports and exports totaled US$65 billion last year, a 5.5-percent rise from 2012. Exports of mechanical and electronics continued to lead the way at US$17.04 billion, increasing 6.9 percent from the previous year. High-tech products worth US$5.02 billion, increasing 6.3 percent year on year, were exported in 2013.
While government statistics help companies make strategic decisions about headquarters or R&D centers, reports from professional agencies also help business executives gain a deeper understanding of a city.
By cooperating since 2011 with KMPG and Deloitte, two renowned accounting firms, the government has started industry studies so as to “use private capital to attract foreign capital.”
Together they have compiled Chinese and English reports regarding the city’s 10 key industries including financial services, tourism, environmental protection, pharmaceutical, and renewable energy. The reports have been read more than 10,000 times every year.
A CEO of an Indian multinational business once told KMPG that “we are considering a partnership with Hangzhou because its finance report indicates the city has a promising future.”
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