THE CHANGING FACE OF CHENGDU Sichuan’s capital attracts both tourists and tech giants
Best known as the home of pandas, the business scene in the Sichuan capital is anything but black and white
First inhabited more than 4,000 years ago in the 18th to tenth centuries BC, Chengdu is an ancient city with modern means. The capital of China’s southwestern Sichuan province, its glass-fronted skyscrapers loom large beyond the sweeping eaves of a regenerated old town, while multi-lane highways stretch long and straight in contrast to the milky-green, meandering Jin River. Surrounded by the fertile lands of the Sichuan Plain and overlooked by the Tibetan Plateau, Chengdu has long been dubbed the “Land of Abundance” thanks to the bountiful vegetables, meat and fish produced here. Now, as one of the most important economic hubs in China, it is business opportunities that are growing fast and sustaining this city of around 16 million people.
In recent years, Chengdu has benefited from a flurry of domestic and international investment thanks to President Xi Jinping’s signature One Belt One Road initiative, which seeks to reopen trade routes along the ancient Silk Road and spread economic growth towards the “wild west” of China. City officials found that this plan dovetailed nicely with already established policies of the Yangtze River Delta Economic Zone, ultimately resulting in speedy development, local innovation and international interest.
Today, the business landscape is typified by the IT back offices and R&D centres of global giants such as Siemens, Nokia, SAP, IBM, Volkswagen and Apple alongside smaller boutique tech firms and start-ups. Some 41,000 new companies were registered in 2018 as Chengdu’s GDP reached a whopping 1.5 trillion yuan (£167 billion), rising
by 8 per cent year-on-year, 1.4 per cent higher than the national average. Newer foreign start-ups are snapping at the heels of homegrown success stories such as Chengdu gaming firm Tap4Fun, beautifying phone app Camera360, and Huochebang, known as the Uber of trucking.
INTERNATIONAL OUTLOOK
With a strategic position at the start of the so-called Southern Silk Road, which connected Sichuan province to South Asia more than 2,000 years ago, Chengdu has a long legacy of trade with the wider world. As China seeks to attract overseas talent in the realms of technology, science, healthcare and innovation, local policies have focused on drawing in foreign business and expertise. Despite still having a relatively small expat population (about 17,000 people compared with 100,000 in Beijing and 200,000 in Shanghai), some 285 Fortune 500 companies had a presence in the city by the end of 2018, with foreign trade volume increasing by more than 26 per cent from a year earlier to 498 billion yuan (£55.5 billion). Chengdu is now ranked 71st in the world in terms of international outlook (up 27 places since 2017), according to the Globalisation and World Cities Research Network.
Silicon Valley-style facilities abound in the Tianfu New Area, which opened its green gates to innovative businesses in 2011 as part of the Chengdu Pilot Free Trade Zone. Dotted around a patchwork of lakes, cycling tracks and open spaces are dozens of HQs, incubators and co-working spaces adorned with entrepreneurial statements like “Imagine” and “Accelerate” alongside Steve Jobs and
Einstein quotes. Benefits for companies working here and in the adjacent Chengdu Hi-Tech Zone include huge tax cuts, free or heavily subsidised rent, and even multimilliondollar grants for “extremely outstanding” projects. There are specialist buildings staffed by foreigners to help new-intown professionals to untangle the web of available perks.
Hoping to help budding business owners get, and stay, ahead of the game is Allen Sanchez, who founded the Chengdu branch of Le Wagon – a global bootcamp franchise aimed at fostering skills in the technology and start-up scene – in the Chengdu Hi-Tech Zone in 2017. Sanchez registered Le Wagon Chengdu as a Wholly Foreign Owned Enterprise in less than three months, taking advantage of a virtual address and a policy that did away with the need for liquid capital.
Since then, the programme has seen 64 students graduate from its nine-week courses, and two companies, both providing WeChat development services to foreign businesses, founded thereafter. At least half of those signing up for the courses – which cost 36,000 yuan (£4,000) in Chengdu as opposed to 44,000 yuan (£4,900) in Le Wagon’s Shenzhen and Shanghai locations – come from outside the city. “Generally these people are interested in seeing a different side of China and not just the big eastcoast cities,” Sanchez says. “Chengdu is exciting and growing fast and they want a more authentic China experience.”
FOREIGN INTEREST
While the cost of starting up, salaries and living are much lower than in cities along the east coast, it’s not always plain sailing for new companies looking to get off the ground. Ronnie Kuppens, managing partner of Maxxelli Consulting, which helps businesses relocate to Chengdu, says he has seen many smaller ventures fail because local competition is fierce and incentives are largely focused on global players in high-tech and innovation industries.
“The majority of normal companies don’t get any benefits, and even for those that do, the margins are small and the market changes quickly,” he says. “It’s hard to compete with multinational and Chinese companies that have more access to cheap capital and can do things a lot faster and cheaper than you. To really succeed here, foreign companies need to focus on the Chinese middle class and have a unique selling point that can’t be copied.”
Sanchez admits that a dearth of local talent means it’s still easier for foreign firms to set up in the first-tier cities of Beijing, Shanghai and Shenzhen, but says that the local government is working hard to attract overseas-educated Chinese with targeted policies and a low cost of living. According to a Linkedin report in June 2018, Beijing and Shanghai are rapidly losing their dominant position in attracting overseas returnees in the face of growth in second-tier cities, Chengdu and Hangzhou in particular. “The government is doing a lot and it’s working. I’m seeing more and more people coming back [who are] from Chengdu,” Sanchez says.
Anita Lai is testament to this trend. Having pursued further education in the US and Europe, she moved back home and last year established She Leads, a mentorship programme for both local and foreign women. For only 799 yuan (£89) per person to cover basic materials, new mothers, middle managers and fellow overseas returnees are matched with female mentors with decades of experience in a range of sectors. Lai has witnessed mentees make huge professional strides during the three-month programme, but says that the city as a whole still has a way to go before it reaches the Western standard of professionalism that she is trying to nurture.
While attractive to many, Chengdu’s famous work-life balance – it is consistently voted the happiest city in China – often manifests itself in bad punctuality and poor efficiency, Lai admits, creating headaches for ambitious start-ups. “Chengdu is developing fast, but coming from abroad I see it’s not quite there yet,” she says. “There are a lot of entrepreneurs here and that doesn’t always chime well with the city’s laid-back lifestyle.”
TOURIST DRAW
This easygoing reputation has, however, served it well in other sectors, proving a big draw for tourists. With its panda breeding base, UNESCO recognition as a city of gastronomy and reputation as a party hub, Chengdu welcomes an estimated 100 million tourists a year, making it one of the most visited cities in the country. Chengdu Shuangliu International airport leads its counterparts in central and western China by serving more than 355 cities, 118 of which are international (Air China flies nonstop to Heathrow). Having become the first city in western China to introduce a 144-hour visa-free scheme and with the opening of a second airport slated for 2021, this sector is only expected to grow further.
Niccolo Chengdu hotel in Chun Xi Road business district has seen its proportion of leisure guests rise from 57 to 65 per cent since it opened in 2015, with the W, the Hilton Chengdu Chenghua and Canopy by Hilton all opening in 2019. “Chengdu continues to aggressively promote the city both domestically and internationally and it remains a popular choice driven by the food, pandas and relaxed nature of the Chengdunese people,” says Michael Ganster, general manager of Niccolo Chengdu.
Canadian Jordan Porter founded Chengdu Food Tours in 2015 after falling in love with the city on a study programme. While his English-language tours have grown in popularity thanks to the increase in foreign tourists, the restaurant scene has evolved from one characterised by family-run “fly eateries” (because the patrons buzz in and out like flies) to one of rapid gentrification.
Along the city’s hippest streets, Shamao Jie and Tangba Jie, nostalgia reigns supreme. Hole-in-the-wall restaurants serving up jia chang cai (homestyle cooking) have been pushed out by novelty hotpot joints designed to look like old-school Chengdu in a clean, bright, Instagram-friendly way. But while some traditional eateries may be literally losing ground in terms of high-value real estate, Porter doesn’t see much local resistance. “Chengdu is benefiting from all the attention,” he says. “Busy is good for the economy and people are happy. I never hear locals complaining.”
As far as Lai is concerned, such rapid development is the main reason people are drawn to Chengdu. Companies – both local and foreign – that can adapt and thrive in a fast-changing, highly competitive market may just find themselves perfectly placed. “You can see changes every day,” she says. “Those who seize the opportunities as the city is developing can really make things happen.”
‘Busy is good for the economy and people are happy. I never hear locals complaining’