Business is booming in the cities along the road and rail routes northwest of Shanghai, and investors worldwide want a piece of the action, writes Valerian Ho
Shanghai may be central China’s most prominent modern metropolis, but it’s only been that way for a relatively short time – before the second half of the 19th century it was virtually nonexistent. Prior to that, the inland region – a fertile flatland scattered with numerous lakes south of the Yangtze River’s lower reaches – was the greater cultural and commercial centre by far.
Today’s cities of Suzhou, Wuxi and Changzhou all boast histories dating back 2,000-3,000 years to the Western Zhou dynasty and the Wu culture. During the Han dynasty in the first century AD, Suzhou was one of the world’s largest cities, while all three were located on the Grand Canal built during the sixth-century Sui dynasty, which linked the Yellow and Yangtze rivers, from Peking to Hangzhou, and represented one of the world’s most impressive waterway trade routes. For many centuries this region – part of Jiangsu province – was a successful, strategically vital centre and hub of agriculture and commerce.
Shanghai’s rise to economic dominance put this hinterland in the shadows for quite some time, but today it is once again taking its place in the sun. In the last couple of decades the conurbations along the rail and road routes between Shanghai and Nanjing have been at the forefront of exponential industrial growth. Suzhou, Wuxi and Changzhou have benefited from being on the Shanghai-Nanjing-Beijing railway line, as well as the main road routes out of Shanghai towards Nanjing and the north, and Chengdu in the west.
This makes them easily accessible and has allowed industry and trade to boom – the result is huge development in a range of business sectors, and investment interest from a variety of countries worldwide. New trade development zones in and around these cities are spreading and increasing in size… to the point that in the future the entire route from Shanghai to Nanjing could conceivably become one long urban corridor.
Increasingly swift and efficient transport options for business travellers into – and around – these cities has helped development. Plans for new airports, upgrades to existing airports, better intra- and inter-city infrastructure, and a host of high-quality hotels – from midscale to upscale and luxury level – are all adding to the commercial boom.
Blending beauty and business
Suzhou is seen by outsiders mostly as a tourist destination, but while tourism is still of major importance here, the city’s industrial output now represents a higher overall percentage of GDP than the service sector.
Suzhou has evolved into three main districts: the Suzhou New District (SND), Suzhou Industrial Park (SIP) and the old city. The SND was opened to the west of the historical downtown district in 1992, after the central government took a “preserve the ancient city” stance. In order to protect the region’s environment and considerable cultural heritage, heavy industry is almost completely absent here. This is noticeable as you navigate the city, which does not suffer quite as much from air pollution as most Chinese metropolises. The old city area, dotted with gardens and laced with canals and bridges, is one of the country’s most popular tourist sites, but new districts like the SIP have been planned in an unusually – for China – sensitive way, with wide boulevards, plenty of contemporary park spaces and the backdrop of picturesque Jinji Lake. Clear road signs in both Chinese and English help business travellers to get around easily, while along the lakefront and in the Times Square area a vibrant entertainment scene has grown.
To the west of the downtown old city area, the SND has developed as a centre for high-tech firms, attracting foreign investors from Asia-Pacific countries and becoming a base for technology-related services and products from consumer electronics to information technology, as well as pharmaceuticals. The Suzhou New District Economic Development Group Corporation has invested more than RMB30 billion (US$4.5 billion) since 1990, and it has grown tenfold, from an initial 25 sq km to 258 sq km today. Major-brand companies with a presence here include Seiko, Canon, Siemens, Logitech, Philips and ASUS, as well as H&H, an environmental purification tech company, Pegatron Corporation (electronics and computers) and Baili Electron, which produces ventilation fans and motors for electronics.
The SIP, which spreads across 288 sq km of land to the east of the old city, is an international project between the Chinese and Singapore governments. In 1994, China’s vice premier Li Lanqing and Singapore’s prime minister Lee Kuan Yew signed an agreement to jointly develop the industrial park, which was given county-level administrative status. The main focus of development was, like the SND, high-tech businesses such as semi-conductors and computer chip production.
However, since 2010 there has been a transition towards service sectors like finance, banking and insurance. Banking and insurance companies such as the Bank of China, Agricultural Bank and AIA are all located in the commercial and financial area close to Jinji Lake. The MICE market is also growing fast; in March this year the huge, multifunctional Jinji Lake International Convention Centre was opened. The 40,000 sqm facility has 60 types of meeting and convention space, including an 8,000 sqm pillarless banquet and conference hall.
According to the Suzhou government, the city’s GDP was RMB1.45 trillion (US$218 billion) last year, a 7.1 per cent increase over 2014. More than 100 Fortune 500 companies have opened offices in Suzhou, including Samsung, Mitsubishi and Chevron. “These companies have invested a lot since the start of the industrial park,” says Anthony Ha, general manager of Hyatt Regency Suzhou, “so they can’t withdraw so easily. But we have good management and infrastructure here.”
Hyatt Regency is one of a number of international hotels to have opened in Suzhou – the newest being Novotel and Doubletree by Hilton. This increases the appeal for big businesses – as does an efficient high-speed train service and subway system. Suzhou does not have an airport, but you can reach the city from Shanghai’s Hongqiao Airport within 30 minutes on the bullet train.
“Transportation between Suzhou and Shanghai is very convenient,” says Ha. “I once landed at Hongqiao with my friend. I reached home in Suzhou just one hour after I got off the plane, and my friend was still in a traffic jam on the way home in Shanghai!”
That said, Ha adds that the city is now planning its own airport. “According to the tourism board, an airport will be constructed in the Wujiang district just south of Suzhou. Hopefully this will be confirmed by the end of the year.”
Catch the train 42km north and within 15 minutes you arrive in Wuxi, a city of more than 6.5 million whose commercial strength lies in heavy industries like machinery and petrochemicals, as well as the service industries related to its main tourist attraction, the enormous Taihu Lake.
Wuxi has its own airport, Sunan Shuofang International Airport, with international connections including Korea, Taiwan, Hong Kong, Thailand and Singapore. From there into the city centre you pass through the Wuxi National Advanced Technology and Development Zone – here, or downtown, will be the majority of business visitors’ home from home.
Wuxi feels more industrial than Suzhou, but go to the top of the 328-metre Suning Plaza North Tower in the city centre and you’ll see there’s also a mix of heritage-style gardens among the high-rises, while the lakefront area boasts historic parks and picturesque walking trails. Unsurprisingly for a second-tier Chinese city, construction is rampant – though perhaps a little too fast in places, where abandoned tower blocks and half-finished structures stand idle.
Business development is still blossoming, though; the city is home to both heavy and light industries – Caterpillar and Panasonic are two big-name investors here – and there are many electronics factories. The city of Changshu, bordering the Yangtze to the east, has benefited from growth in both Wuxi and Suzhou, with a number of factories and high-tech investors moving there.
Wuxi’s GDP reached RMB851 billion (US$128 billion) in 2015, according to the Economic Performance of Wuxi 2015, a report by its Danish sister city Bycirklen. Other cities around the world are also keen to make partnerships in this region of China: Wuxi’s mayor, Wang Quan, met Robert Doyle, the mayor of Melbourne in March, exchanging views on strengthening economic ties and signing a “Memorandum of Understanding on Establishment of Economic Partnership between Wuxi and Melbourne”.
In the same month, a delegation led by the Sihanoukville Provincial Governor and politicians of the Cambodia People’s Party visited Wuxi, and discussed a partnership in developing a Sihanoukville Special Economy Zone in Cambodia. Opportunities for international business abound, with 6,172 foreign-invested enterprises recorded in Wuxi last year, among which 4,392 corporate enterprises represented an aggregate investment of US$94 billion.
According to the Wuxi Year Book 2015, 76 million travellers visited the city in 2014 (an 8.3 per cent increase on the previous year), of which 400,000 were international travellers. As visitor numbers rise, the hospitality sector has come to life: in December last year a 358-room Hyatt Regency opened in Wuxi, and Ascott opened a new 134-unit property in April.
“In the last five years, more and more international five-star hotel brands have opened in Wuxi,” says Terry Zhang, Ascott Central Wuxi’s Guest Service Manager. “Roughly 65 per cent of our guests are business people, and just over half are domestic travellers, with Europeans making up 22 per cent of the rest. However, heavy competition has led to a decrease in average room rates, and service standards are dropping in five-star hotels because of the fast expansion, even while labour costs increase. More high-end serviced apartments will open in the near future, so we need to pay close attention to our service and products.”
Change is in the air
Changzhou, located 66km northwest of Wuxi in the Shanghai-Nanjing corridor, is undergoing huge change. Bordering the Yangzte in the north and Taihu Lake in the south, traditionally its industries included textiles, food processing and metallurgy, but a Conference for the Promotion of Intelligent CNC (computer numeric control) and Robotics Industry, held in
June this year, illustrates the desire for a transformation from traditional manufacturing to smart technology production.
Local enterprises are taking a leading role in the city, and development is focused in the Wujin and Xinbei districts. In May this year the China-Russia Science and Technology Industrial Park was inaugurated in Wujin, the result of a strategic cooperation agreement between various Russian and Ukrainian academies and Changzhou officials. The 35,000 sqm park is home to workshops, business service centres and technology transfer services, and focuses on introducing talent from Russia, Belarus and Ukraine, leveraging the transfer of technical knowledge and promoting overseas projects.
The Changzhou authorities have also commenced construction of 24 key industrial projects in Wujin, ranging from advanced tech manufacturing to the health industry. Sixteen of these involve investment of more than RMB100 million (US$15 million), and four have put up RMB500 million (US$75 million) each, including a waterproofing and insulation factory by French company Soprema, and Bori Electric Power Automation Equipment’s smart grid R&D and assembly base.
By the time you reach Nanjing, the capital of Jiangsu province (and the national capital on more than one occasion), you will have seen how China’s economy is driving a changing landscape, turning farmland into an urban corridor with immense economic appeal to investors from countries around