City of big ideas and big busi­ness

Hangzhou is ideal place for lead­ers look­ing to the fu­ture

China Daily (USA) - - G20 2016 CHINA - By MENGJING in Hangzhou mengjing@chi­

When­lead­ers of the world’s 20 lead­ing large economies gather for their an­nual sum­mit this week­end, they will be in a city many peo­ple out­side China will not have heard of, but which is one of the most pros­per­ous, go-ahead cities in the coun­try.

And of those out­side China who know of Hangzhou, cap­i­tal of Zhe­jiang prov­ince, many­may have heard of it in con­nec­tion with one of the coun­try’s most go-ahead com­pa­nies, Alibaba Group.

Hangzhou, with a pop­u­la­tion of 9 mil­lion, lacks the sur­round­ing farm­land that could pro­vide it with food but is en­dowed with moun­tains, lakes and rivers that have helped it trade on its rep­u­ta­tion as a tourist at­trac­tion.

Lo­cal peo­ple have al­ways been painfully aware that if they could not grow it they were prob­a­bly go­ing to have to trade it, so the ground has been fer­tile for the busi­ness ideas of en­trepreneurs such as Alibaba’s founder, Jack Ma.

It was in Hangzhou 17 years ago that Ma planted the seeds for the world’s largest on­line re­tail em­pire, even as the broad av­enues of Bei­jing hosted a large amount of China’s mighty State-owned en­ter­prises and as the sky­scrapers of Shang­hai hosted a plethora of big-name multi­na­tional com­pa­nies.

Ma, a former English teacher, founded Alibaba in a mod­est apart­ment in Hangzhou, start­ing out with 500,000 yuan (about $75,000 to­day) put to­gether by 18 friends.

But those sim­ple and hum­ble be­gin­nings seem to have taught Alibaba an in­valu­able les­son in stick­ing to the nuts and bolts of busi­ness, and it has be­come a dom­i­nant force in China’s e-com­merce in­dus­try. In the fis­cal year ended March it served more than 400 mil­lion shop­pers and sold more than 3 tril­lion yuan worth of goods.

Ma, 51, the ex­ec­u­tive chair­man, said re­cently that he chose Hangzhou as the head­quar­ters of the com­pany not be­cause he was born

“The place is full of en­trepreneur­ship, and peo­ple here are very open to new things.” Jin Jian­hang, pres­i­dent of Alibaba Group

Han Jie, chief ex­ec­u­tive of­fi­cer of Xorder, which was launched in Jan­uary 2015

and bred there, but be­cause it ap­pre­ci­ates en­trepreneur­ship by peo­ple who start with noth­ing and build an en­ter­prise.

Yao Jian­rong, a pro­fes­sor at Zhe­jiang Univer­sity of Fi­nance and Eco­nomics, de­fined the eco­nomic de­vel­op­ment model in Zhe­jiang as “grass­roots econ­omy”.

“Zhe­jiang doesn’t have big State-owned en­ter­prises. Its growth sel­dom de­pends on big for­eign in­vest­ment.”

Rather than us­ing big in­vest­ment to spur growth in a top-down way, the small busi­nesses set up by in­di­vid­u­als drive the eco­nomic de­vel­op­ment in the re­gion via the bot­tom-up model, Yao said.

That busi­ness en­vi­ron­ment seems to suit Alibaba to a tee. After start­ing as a busi­ness-to-busi­ness on­line plat­form to bridge the in­for­ma­tion gap be­tween Chi­nese sup­pli­ers and international buy­ers, it gave it­self a mis­sion from day one to “make it easy for small and medium en­ter­prises to do busi­ness any­where”.

Be­ing based in Hangzhou helps Alibaba get closer to its cus­tomers, said Jin Jian­hang, one of the com­pany’s 18 founders.

Jin, now the pres­i­dent of Alibaba Group, said Hangzhou may have seemed like a strange choice for an en­tre­pre­neur in the in­ter­net in­dus­try in the late 1990s be­cause of the lack of solid in­ter­net in­fra­struc­ture.

“The place is full of en­trepreneur­ship, and peo­ple here are very open to new things,” said Jin, born and bred in Hangzhou.

Jin used to be a re­porter but de­cided to join Ma’s e-com­merce ad­ven­ture after be­ing im­pressed in an in­ter­view by his vi­sion. En­trepreneur­ship is “a spirit of never re­sign­ing one­self to fate”, Jin said.

Many peo­ple in Zhe­jiang have the “same gene”, said Zhang Xuguang, a pro­fes­sor at Zhe­jiang Univer­sity. That is why the east­ern prov­ince has such a boom­ing pri­vate sec­tor and a large num­ber of self-made bil­lion­aires, he said.

Apart from Alibaba’s Ma, many self-made bil­lion­aires have built busi­ness em­pires in Zhe­jiang. They in­clude the bev­er­ages mag­nate Zong Qinghou of the soft drinks mak­erWa­haha and Lu Guan­qiu, founder of the au­to­mo­tive parts maker Wanx­i­ang Group.

Al­though Zhe­jiang’s pop­u­la­tion ac­counts for just four per­cent of the na­tional pop­u­la­tion, 15 per­cent of the en­trepreneurs ranked on the Hu­run China rich list are from the prov­ince, Ru­pert Hoogew­erf, the chair­man of the board and prin­ci­ple re­searcher of Hu­run re­port, said last year.

“Zhe­jiang en­trepreneurs never fear dif­fi­cul­ties, and they are ab­so­lutely de­ter­mined to build some­thing from noth­ing de­spite the odds,” Zhang said.

Zhe­jiang en­trepreneurs’ deter­mi­na­tion to fight for their busi­nesses com­bined with govern­ment sup­port cre­ates a thriv­ing pri­vate econ­omy in the prov­ince, said Li Yanyi, deputy-di­rec­tor of Zhe­jiang Provin­cial De­vel­op­ment and Re­form Com­mis­sion, in an ear­lier in­ter­view.

The pri­vate sec­tor con­trib­utes about 60 per­cent of Zhe­jiang’s tax in­come and 70 per­cent of its GDP, and pri­vate com­pa­nies cre­ate 90 per­cent of jobs in the prov­ince, the com­mis­sion said.

Dai Li, who founded West­lake Maker Space, an in­cu­ba­tor to pro­mote the growth of star­tups, said it is rel­a­tively sim­ple for en­trepreneurs to set up meet­ings with high­level govern­ment of­fi­cials in Zhe­jiang.

“Rather than short-term re­turns, the govern­ment here cares more about com­pa­nies’ po­ten­tial and the value they can bring so­ci­ety.”

No rent is charged for his com­pany, which is lo­cated in a govern­ment-fund en­tre­pre­neur park in Bin­jiang district of Hangzhou, where Alibaba’s head­quar­ters is also lo­cated.


Pres­i­dent of the New York Stock Ex­change Tom Far­ley (far left) stands be­side Jack Ma, Alibaba’s ex­ec­u­tive chair­man, as the bell is rung to start Sin­gles Day, a ma­jor on­line shop­ping fes­ti­val, at Bei­jing’s Na­tional Aquatic Cen­ter on Oct 11.

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