The city where ideas and businesses bloom
Hangzhou is an ideal setting for world leaders as they look at the shape of things to come, Meng Jing reports.
When leaders of the world’s 20 biggest economies gather for their annual summit this month 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, many may 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 farming land 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 number 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 in today’s terms) 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 to locate the headquarters of the company not because he was born and bred there but because “our city” appreciates entrepreneurship by people who start with nothing and build up their enterprise.
Yao Jianrong, a professor at Zhejiang University of Finance and Economics, defined the economic development model in Zhejiang as “grassroots economy”. “Zhejiang does not 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 a president of Alibaba, acknowledged that Hangzhou may have seemed like a strange choice for any entrepreneur in the internet industry in the late 1990s because of the lack of solid internet infrastructure.
“But the place is full of entrepreneurship, and people here are very open to try new things to improve life,” said Jin, who like Ma is Hangzhou born and bred.
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, another 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 selfmade billionaires have built business empires in Zhejiang. They include the beverages magnate Zong Qinghou of the soft drinks maker Wahaha and Lu Guanqiu, founder of the automotive parts maker Wanxiang Group.
“Zhejiang entrepreneurs never fear difficulties, and they are absolutely determined to build something from nothing despite the odds,” Zhang said.