11.2007

Major Economic Indicators

General Background

Hangzhou is the capital of Zhejiang province. It lies 180 km on the southwest of Shanghai and covers a total area of 16,596 sq. km. As at end-2006, Hangzhou had a population of 7.7 million.

Hangzhou is the largest economy in terms of GDP in Zhejiang and ranked 8th among all cities in the country in 2006. From 2000 through 2006, its economy enjoy an average annual grow rate of 13.7%. Its GDP, retail sales and utilised FDI accounted for 22%, 21% and 25% of the province's total. Per capita GDP reached RMB 51,871, the highest among all cities in Zhejiang province. There were 100,590 private enterprises in the city in 2006, employing over 25% of the city's workforce.

In its 11th Five Year Programme (2006-2010), Hangzhou would like to see its economy grows by an average rate of 11% per annum, and targets its 2010 per capita GDP at RMB 68,500. While the share of services in GDP is going to increase to 47%, Hangzhou also has plan to develop its new and high technology industries such as telecommunications equipment, software, integrated circuit design, digital TV, Internet and information services and animation etc; and to further expand its heavy industries such as automobiles, equipment manufacturing and chemical and petrochemical industries. In light industries, the focus is on textiles, food processing and building materials.

Industries

Hangzhou has a strong manufacturing sector, but its services sector is also growing fast in recent years.

Composition of GDP (%)

Source: Statistical Yearbook of Hangzhou

Hangzhou is the largest industrial center in Zhejiang province. Its industrial output rose by 25.7% to RMB 684 billion in 2006. Well-known brands and products of Hangzhou include 21vita (health supplement produced by Minsheng Pharma), Nongfu Spring, Wahaha, Dandy, You Can, Paradise Umbrella etc.

Leading Industries and Services 2006

Sources: Statistical Yearbook of Hangzhou 2007

Boosted by its textile and silk industries, Hangzhou has developed a strong garment industry and is named the "city of women's wear". Hangzhou government has been putting a lot of effort to establish Hangzhou as a national design, manufacturing and trading center for women's wear.

In 2006, Hangzhou was the 4th largest software development centre in terms of sales revenue, after Beijing, Shenzhen and Shanghai. The city is also eager to develop into a "capital of animation", and Hong Kong's Jade Dynastys considering investing there.

Tourism

Being the "heaven on earth", Hangzhou attracts many tourists every year. In 2006, it received 37 million (+12.7%) domestic tourists with the tourism receipts of RMB47.1 billion (+16.8%) and 1.8 million (+20.3%) overseas tourists with foreign exchange income of US$909 million (+19.9%). Visitors from Hong Kong increased by 15.2% to 248 thousand in 2006.

Foreign Trade

Hangzhou's total exports and imports amounted to US$38.9 billion in 2006. Hangzhou has a relatively external oriented economy, the ratio of foreign trade to GDP reached 90% in 2006.

Major exports items included electronics, high-tech products, garment and clothing accessories, textiles, silk, etc. Major exports markets were the US, Japan, Germany, the UK, and Hong Kong etc.

Foreign Investment

FDI in Hangzhou

Sources: Statistical Yearbook of Hangzhou 2007

Although the majority of foreign investment goes to the manufacturing sector, foreign investment in Hangzhou has also entered into various service industries such as retail and wholesale, transport and infrastructure, real estate development and tourism etc. In 2006, contracted and utilised FDI grew by 34.3% and 31.7% respectively.

Major sources of foreign investment in Hangzhou include Hong Kong, the US, Taiwan and Japan etc. Fifty-three of the world's largest 500 enterprises have invested in Hangzhou. Famous multinational corporations in Hangzhou include the American General Motors, Merck, Motorola, UT Starcom etc; the European Nokia, Bosch, Siemens, Liquid-Air and Shell; and the Japanese Toyota, JAL, Panasonic, Mitsubishi and Toshiba, and Samsung from Korea etc.

Contracted FDI by Sources

Sources: Statistical Yearbook of Hangzhou 2007

Foreign-invested enterprises (FIEs) are playing an important role in Hangzhou's economy, accounting for 31.3% of Hangzhou's exports in 2006.

Consumer Market

Hangzhou has a robust retail market. In 2006, Hangzhou's total retail sales of consumer goods increased by 14% to RMB 111.2 billion, the largest among all cities in the Zhejiang province.

In light of the development of private and foreign enterprises, per capita urban disposable income reached RMB19,027 (+14.6%) in 2006. Consumer durables like air conditioners, colour TVs, fridges and cooking appliances, telephones and mobile phones are now very common among Hangzhou urban households.

Among various types of retail outlets, chain stores are developing at a fast pace in recent years. Major chain stores in Hangzhou include Lianhua, Hualian, Hymart, Carrefour, Metro, Lotus and Trustmart etc. The cluster of wealthy consumers in the city has given rise to modern department stores and malls like Intime Department Store, Hangzhou Department Store, Hangzhou Jiebai, Yuanhua Plaza, Season Square etc.

Hangzhou is also a key distribution center of consumer products in the region. By the end of 2006, there were 725 commodity markets or wholesale marts, trading different kinds of consumer products and industrial goods. Total transaction of all markets amounted to RMB 194 billion in 2006, an increase of 32.2% over the previous year.

Economic Cooperation between Hong Kong and Hangzhou

Hangzhou's exports to Hong Kong reached US$944 (+36.7%) million in 2006. Hong Kong is the largest investor in Hangzhou. Cumulative to 2006, there have been 3,320 Hong Kong-invested projects in Hangzhou. Hong Kong's investment in Hangzhou was mostly engaged in manufacturing industries such as textiles, garments, electronics, machinery, and chemical products, as well as in real estate development, tourism and infrastructure, etc.

Hong Kong companies that have invested in Hangzhou included Sun Hung Kai Properties, Kerry Group, China Resources, Shui On Group, and High Fashion International, etc. Hong Kong's brand name retailers like Chow Tai Fook, Chow Sang Sang, 3D-GOLD, Baleno, Giordano, Esprit etc. have established presence in the city. Hong Kong's Airport Authority has acquired a minority stake in the Hangzhou Airport --, China's 8th largest airport in terms of passenger and cargo throughput and 9th in terms of aircraft movements.

A number of Hangzhou enterprises are listed in Hong Kong. These include Zhejiang Expressway Co. Ltd., China Ting Group and Geely Holding Group (headquartered in Hangzhou), which are listed on the Hong Kong Stock Exchange as H-shares, as well as Zheda Lande Scitech and Sing Lee Software, which are listed in Hong Kong's Growth Enterprise Market.