City Spotlight: High-Tech Developments in Jiaxing

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By Harry Handley

China Jiaxing South Lake parks and pagoda landscape.Jiaxing, traditionally known as ‘the home of silk’, is a prefecture-level city of 4.59 million people located in East China’s Zhejiang province. With an area of 3,915 square kilometers, Jiaxing is surrounded by Suzhou to the north, Shanghai to the east, Hangzhou and Huzhou to the west and the Hangzhou Bay to the south. In terms of infrastructure, Jiaxing is well developed with a deep-water port, high speed rail links, and six expressways linking to the wider Yangtze River Delta region.

The Chinese Academy of Social Science ranked Jiaxing the 37th most competitive city in China in 2016, a standing that has significantly increased in recent years. A push by the local government to shift away from traditional resource-heavy manufacturing and towards a more high-tech and environmentally friendly economy has led to a range of diverse industries in the city. These industries, and several special development zones within the city, present significant opportunities for foreign firms who are looking to expand their operations in China.

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Economy

In 2016, the GDP of Jiaxing reached RMB 376.01 billion, growing seven percent year-on-year, a growth rate that was consistent with the previous year. Jiaxing also has a sizable consumer market with an average disposable income of RMB 46,000, almost 50 percent higher than the national average. In addition, total retail sales of consumer goods in the city rose by 11 percent in 2016 to reach RMB 163.85 billion.

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Secondary industries make up a majority (51 percent) of Jiaxing’s GDP, followed by services (45 percent), and finally primary industries (4 percent). Traditional industries in Jiaxing include the production of textiles and clothing, leather products, and chemical fibers. In recent years, these have been overtaken by high-tech industries such as electronics manufacturing and software development. For example, the Yangtze Delta Region Institute of Tsinghua University is based in the city, which according to its website, is “actively involved in technology innovation and services, training and hi-tech commercialization”.

Further, the Jiaxing Municipal government has highlighted “new energy”, “new materials”, and “energy efficiency and environment protection” as emerging strategic industries with the objective of “creating a more eco-friendly, innovative and intelligent” city. A key driver in these industries is the Zhejiang Institute of Advanced Technology, which runs multiple RMB 100 million research and development projects focused on sustainable energy. In addition, a number of development zones (see below) have been set up in the city to attract companies who develop photovoltaic products which turn solar energy into electricity.

Foreign trade and investment

Jiaxing’s location as a port city and the presence of an export processing zone led to total foreign trade worth RMB 207 billion in 2016. RMB 155 billion of exports left the city and RMB 52 billion of foreign goods entered. In addition, Jiaxing received a total of RMB 17.94 billion (US$2.69 billion) of foreign direct investment in 2016. There was little growth from the previous year; however, the 2016 total did exceed the Department of Commerce’s target of US$2.5 billion (RMB 16.66 billion).

As of 2016, there were 7,149 foreign-invested enterprises in Jiaxing from 98 countries, including Fortune 500 companies such as Abbott, Philips, Mars, Heineken, and Wal-Mart. The most recent high profile addition to these was Lego, the Danish toy manufacturer, which opened a 160,000 square meter factory in the city that employs over 1,200 workers. The factory is expected to produce 80 percent of all Lego to be sold in Asian markets and the total investment, which has yet to be disclosed, is stated by the company website to be a “three-digit million Euro” figure.

Development zones and industrial parks

Jiaxing is home to a number of development zones and industrial parks. These include national-level zones, such as the Jiaxing Economic Development Zone (EDZ), Jiashan Economic and Technological Development Zone, the Pinghu EDZ, and the Jiaxing Port EDZ. Jiaxing also boasts a ‘Comprehensive Bonded Zone’, with two areas, which facilitates export and processing activities. The full extent of the development zones can be seen on the map below.

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Opportunities

High-tech industries have developed rapidly in Jiaxing in recent years. The presence of a range of advanced technology specific development zones has attracted leading research institutions, such as Tsinghua University, to the city. In addition to the agglomeration of hi-tech companies, 10 universities in the city provide a rich pool of talent for firms to hire from. Municipal government promotions may also lead to support and preferential policies for potential entrants that fit their criteria.

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Another example of clustering in Jiaxing is the Nanhu Fund Town – an area of Nanhu District that claims to be home to over 2,500 investment funds and fund management companies. Between them, these companies manage over RMB 300 billion (US$45 billion) of funds which are earmarked for investment in firms at all levels of development, from seed funding to private equity. Hence, for firms wishing to enter China and also attract local investment, Jiaxing’s Nanhu Fund Town offers a large number of potential investors.

Finally, following an inspection in September 2016, the Jiaxing Comprehensive Bonded Zone was upgraded and became the most open region in the city. According to the Jiaxing government, the zone now shares similar policies with the China (Shanghai) Pilot Free Trade Zone; in fact, there are plans in place to fully integrate Area B into the free trade zone. Hence, the zone’s preferential policies, and also prime location of Area A in proximity to Jiaxing port, make the Bonded Zone a strong location choice for export-oriented manufacturing and processing companies.


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