Jiaxing, traditionally known as ‘the home of silk’, is a prefecture-level city of 5.4 million people located in East China’s Zhejiang province. With an area of 4,223 square kilometers, Jiaxing is surrounded by Suzhou to the north, Shanghai to the east, Hangzhou and Huzhou to the west, and 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 2021, a standing that reflects the significant improvement made over 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 Jiaxing. These industries, and several special development zones within the city, present investment opportunities for foreign firms who are looking to expand their operations in China.
EconomyIn 2021, the GDP of Jiaxing reached RMB 635.53 billion (US$100.35 billion), growing 8.5 percent year-on-year, higher than in previous years. Jiaxing also has a sizable consumer market with an average disposable income of RMB 69,839 (US$10,342), almost 50 percent higher than the national average. In addition, total retail sales of consumer goods in the city rose to reach RMB 227.504 billion (US$33.691 billion) in 2021.
Secondary industries make up a majority (54.34 percent) of Jiaxing’s GDP, followed by services (43.58 percent), and finally, primary industries, which only account for 2.08 percent of the city’s GDP.
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 so-called Jiaxing Science City (which includes the Jiaxing Nanhu Hi-Tech Industrial Park and the Zhejiang Nanhu Economic Development Zone), hosts several industries specializing in health and biomedicine (biological drugs, chemical drugs, medical equipment), microelectronics (semiconductors, intelligent terminals), and intelligent equipment manufacturing sectors.
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 growth driver in these industries is the Zhejiang Institute of Advanced Technology, which runs multiple RMB-100-million- research and development (R&D) projects focused on sustainable energy. In addition, a number of development zones have been set up in the city to attract companies that develop photovoltaic products, which turn solar energy into electricity. Thanks to all these combined factors, in 2021 Jiaxing's high-quality development index for the secondary industry scored 88.1, an increase of 4.8 points compared to the previous year, ranking fourth in the province overall.
Foreign trade and investmentJiaxing’s location as a port city and the presence of an export processing zone led to total foreign trade worth RMB 378.38 billion (US$56.03 billion) in 2021, a substantial increase of over 24 percent compared to the previous year. Among them, RMB 280 billion (US$41.24 billion) of exports left the city and RMB 98.30 billion (US$14.47 billion) of foreign goods entered. Major export products of Jiaxing include mechanical and electrical products, garments, garment accessories, computer and telecommunication technology, furniture, plastic products, solar cells, auto parts, and so on.
In the first quarter of 2022, 33 percent of the city's total exports–or RMB 49.48 billion (US$7.2 billion)– occurred with countries from the Belt and Road initiative, marking a year-on-year increase of 20.9 percent. At the same time, the European Union, the United States, ASEAN, Latin America, and Japan were also among the city's top export markets, with exports valued at RMB 31.39 billion (US$4.6), RMB 29.03 billion (US$4.2 billion), RMB 18.36 billion (US$2.6 billion), RMB 9.5 billion (US$1.3 billion), and RMB 8.06 billion (US$1.1 billion), respectively.
In addition, Jiaxing received a total of RMB 17.94 billion (US$2.69 billion) of foreign direct investment (FDI) in the same year.
As of 2021, there were 316 newly approved foreign-invested projects in Jiaxing, 73 of which exceeded US$100 million in investment. The city is home to several 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 as of January 2022. 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 parksJiaxing 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 facilitate export and processing activities. The full extent of the development zones can be seen on the map below.
Jiaxing Comprehensive Bonded Zone (B)Following an inspection in September 2016, the Jiaxing Comprehensive Bonded Zone (B) was upgraded and became the most open region in the city. According to the Jiaxing government, the zone has been integrated into a greater plan at the provincial level to connect more cities in China (Zhejiang) Pilot Free Trade Zone, under the title of 'bonded free trade zones. Hence, the zone’s preferential policies, and also the 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.
Jiaxing Customs, Jiaxing Entry-Exit Inspection and Quarantine Bureau, and the Foreign Exchange Management Bureau of the Jiashan branch of the People's Bank of China have all established offices in the zone, in order to service companies located in the area. Moreover, several businesses, notably Foxconn Technology Group, Futong Group, Huaneng Power Intl Inc., and Zhejiang Dongfang Kemai Technology Co Ltd., have also opened branches in the zone.
Jiaxing Economic Development ZoneOccupying a significant portion of the city, Jiaxing Economic Development Zone is a typical urban EDZ. It was first authorized as a Provincial level EDZ by the Zhejiang Province government and formed in August 1992 with a planned area of 70 square kilometers. In March 2010, the State Council elevated it to a state-level economic and technology development zone. In addition, the Jiaxing International Business Park was officially added in January 2010, stretching for 40 square kilometers, and connected to the urban area through a high-speed railway. The two areas cover about 110 square kilometers combined and operate under the same management.
Over the years, the area has developed four leading industries, including car parts, equipment manufacture, high-end food processing, and electronic information, via the joint growth of manufacturing, service, and high-tech sectors. According to the Ministry of Commerce's examination of the 219 national-level economic and technological development zones in 2018, Jiaxing EDZ ranked No. 8 for luring foreign investment throughout five separate evaluations.
Jiaxing EDZ is home to several hubs of interest for the international community:
- Jiaxing Advanced Manufacturing Industrial Base: Situated southwest of the Jiaxing EDZ, it has a planned area of 23.22 square kilometers. The base places a strong emphasis on the presence and growth of equipment manufacturing, healthy food, and associated industries. It also works to create a high-end foreign-invested manufacturing cluster in the Yangtze River Delta region. Jiaxing Advanced Manufacturing Industry Base has so far hosted many Fortune 500 firms and top businesses from across the globe, including Lego, Philips, ZF, Beiqi Foton, KraussMaffei, Hella, Oriental Lingri, Daming Metal, GST, Harding, Henghe, Lumileds, and Yongtai, among others. The area is also home to two other major economic clusters: Jiaxing Majiabang Healthy Foods Town and Zhejiang Sino-German Industrial Park.
- Jiaxing Majiabang Healthy Foods Town: Covering an area of 3.05 square kilometers, it is situated in Jiaxing's southwest district, 5 kilometers from the city center, not far from the bus station and the Majiabang exit of the G15W Highway. Majiabang Healthy Foods Town is home to Abbott, Mars, and Hormel, three major multinational corporations operating in the healthy foods industry and the cultural tourism sector. It has a strong industrial and infrastructure base for attracting relevant businesses in the healthy food sector. Mars Foods, Abbott Nutrition, Hormel, Monin, GELATO DI NATURA, BreadTalk, ISU, and Kapal are among the most reputed companies operating in the area to date.
- Zhejiang Sino-German Industrial Park: Located in the center of the EDZ, the Park has a special transportation advantage and full supporting infrastructure and is planned around a total surface of 4.04 square kilometers. The Park concentrates on the manufacture of equipment and car components; together with the service sector, the area boasts of a "3+1" industrial framework. Major industries include aviation logistics, medical equipment, automobile engine and transmission manufacture, vehicle transmission manufacturing, and R&D services. The Park has also established the Jiaxing International Advanced Manufacturing Innovation Project as a new platform to draw in foreign investment. Current businesses in the park include Sin-sino, Hella, Nidec GPM, RPC, Hennecke, Centrotec, BDR, Metso, B&W, Filtran, and Cibes, among others.
Jiaxing Xiuzhou High-tech Development ZoneJiaxing functions as a regional hub for innovation in Zhejiang Province. The city and all the counties that fall under its jurisdiction have been recognized as national role models for their achievements in the field of science and technology (S&T). Such success was made possible also with the creation of specific S&T-focused areas, such as the Jiaxing Xiuzhou High-tech Development Zone, which was first founded in 1997 and became a national-level high-tech zone in 2016. With nearly 200 enterprise-oriented R&D centers, two State-level mass production areas, and six provincial-level key research institutes spread across a planned area of 5.72 square kilometers, the zone has attracted over 500 enterprises since its creation.
The area has also housed several innovation platforms, such as the Shanghai Jiaotong University (Jiaxing) Science & Technology Park, the Yangtze River Delta Academy of Nanotechnology and Industry Development Research, and the Zhongguancun Yangtze River Delta Innovation Park.
In addition, the Xiuzhou High-Tech Zone has also performed well in terms of attracting foreign investment. In addition to talking with investors from Germany, Spain, Italy, and the United States on more than 20 projects, by January 2022 the area had already signed its first partnership deal of the year with UFI Filter Group (an Italian company). In July 2022, YTO Aviation Group unveiled its plan to build a headquarters in Xiuzhou, for a total investment of RMB 3.3 billion (US$488.01 million). The plan features the construction of a YTO Aviation Group business platform, YTO Commerce and Trade headquarters, a talent center, a management administrative center, and a strategic decision-making center.
Tongxiang Economic Development ZoneThe Tongxiang Economic Development Zone was established in Jiaxing in 1992 and became among the first development zones upgraded to the provincial level the following year.
The provincial-level EDZ has been under construction for over 20 years and is projected to stretch across an area of 85 square kilometers, and it has already developed into a key hub for attracting foreign capital to the area. More than 380 businesses call the Tongxiang EDZ home, including 164 businesses with annual industrial production values above RMB 20 million (US$2.9 million) and 47 businesses over RMB 100 million (US$14.72 million). The area has formed an industrial cluster incorporating new energy, new materials, electronic information, and mechanical industry, boosted by the presence of several top firms such as Tongkun Group, Jushi Group, Huayou Cobalt, NAMAG, and Hozon Auto.
Nanhu Fund TownAnother 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 marked 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.
As of January 2022, Nanhu Fund Town—which is also China's first private equity fund town—had attracted 9,303 investment firms, more than RMB 609.6 billion (US$89.55 billion) in paid-in capital, more than RMB 8.9 billion (US$1.3 billion) in tax revenue, and RMB 28.89 (US$4.2 billion) invested in more than 500 publicly traded companies.
In an effort to improve the business climate and draw in additional money and high-profile personnel, the fund town also offers professional services, including an online registration platform for new companies and a professional service team comprising of 70 individuals. The investment horizon in the area has expanded to include microelectronics, automotive, automation, and bio-medicine.
Favorable policies for foreign investors
COVID-19 relief measuresIn 2021 Jiaxing established special financial and fiscal measures to assist businesses in overcoming challenges brought on by the COVID-19 pandemic.
The city set aside RMB 270 million (US$42.34 million) to encourage those businesses with a focus on innovative and sustainable projects. Additionally, it worked to ease the financial burden on market players by more than RMB 30 billion (US$4.41 billion) over the course of the same year.
The city's finance department has also taken further action by lowering the charge criteria for water usage by 20 percent and cutting charges associated with access to urban infrastructure by 30 percent.
Additionally, the percentage of government procurement projects set aside for small and medium-sized enterprises has increased by 10 points to 40 percent. The fees for bids on government contracts and the associated paperwork were also eliminated.
Finally, the Jiaxing tax department has introduced a new tax exemption and refund policy to lessen the tax burden on businesses and lower capital turnover costs to support the continued development of firms.
Qualified Foreign Limited Partner programAccording to the finance office of the Jiaxing municipal government, the city of Jiaxing, together with Huzhou and Wenzhou, has received clearance from the provincial government to pilot the qualified foreign limited partner (QLFP) program.
The QFLP program gives international institutional investors and private equity fund managers better treatment and more access to China's domestic private equity market. Under the pilot program, a wholly foreign-owned enterprise or a Sino-foreign joint venture created by a foreign private equity fund manager is eligible to raise money through a partnership and make domestic investments.
Being a center of high-quality foreign investment in Zhejiang, Jiaxing is anticipated to optimize the capital market environment and promote industry transformation and upgrading by piloting the QFLP.
The city has planned to test the program in Jiashan county and take advantage of Nanhu Fund Town (China’s first private equity fund town) to promote foreign investment in the local capital market and encourage more businesses to go public through equity investment.