Introducing Foreign Investment by the People, Internal and External Linkage —— Hangzhou’s "Investment Code" under the Background of "Double Circulation"
Editor’s Note: 2020 is destined to be extraordinary. In the year when the "Thirteenth Five-Year Plan" ended, an epidemic suddenly occurred.
In the "defense war" of urban economic development, the core cities in the Yangtze River Delta, represented by Hangzhou, have shown sufficient economic resilience, industrial vitality and market potential, and become one of the important supporting forces for China’s economy to withstand the impact of the epidemic and rebound strongly.
The central city leads the development at the right time. Now in Hangzhou, the dual-drive path of digital economy and new manufacturing has accelerated the transformation of this "prosperous city since ancient times". The permanent population exceeds 10 million, the total economic output exceeds 1.5 trillion yuan, and the per capita GDP exceeds 20,000 US dollars, which has become an important milestone in the development history of this city in the south of the Yangtze River, interpreting the brand-new look and development opportunities of Hangzhou, which is going international.
Looking forward to the upcoming "14th Five-Year Plan", after the global economy is facing unprecedented changes and the value of "the first city of digital economy" in Hangzhou is re-evaluated, the strength and potential of urban development, like the Qiantang River rushing into the sea, has ushered in a broader stage.
"It seems inevitable that micro-medicine was born in Hangzhou."
In the afternoon of November, it was sunny in Hangzhou Bay Information Port Town, Xiaoshan. Peng Binbin, senior vice president of micro-medicine, told 21st century business herald that an open and inclusive environment and an efficient service-oriented government were the keys to the start of this unicorn enterprise that completed several rounds of overseas financing.

Hangzhou Bay Information Port Town in Xiaoshan (Photo/Xiaoshan Information Port Town official website)
"For example, as a new thing, in other parts of the country, the establishment review cycle of an offline medical institution is very long. In Hangzhou, we landed the first general practice center in the country. Under the premise of all procedures compliance, Hangzhou has demonstrated extremely high efficiency and given great support from obtaining certificates and compliance inspections to fully accessing Hangzhou medical insurance. "
Not far from here, ZF, the global auto parts giant, has just completed the installation and debugging of the new energy vehicle drive motor production line. Before it was put into production, ZF once again increased its investment in Hangzhou and began to build the second phase of the production base for key parts of new energy vehicles.

Figure/figure worm creativity
On the other side of the city, the Linde Project in Germany, one of the world’s top 500 companies, has just placed its Asia-Pacific total tribe next to the West Lake.
In the context of the sharp decline in global foreign direct investment, a large number of overseas capitals are choosing to invest in Hangzhou by "voting with their feet" and "real money and silver".
In addition to data and rankings, Hangzhou is also optimizing the investment structure, building a "dual engine" of digital economy and new manufacturing industry, promoting accurate investment promotion in the industrial chain and "attracting foreign investment by the people". Private enterprises have chosen to return to Hangzhou after overseas listing or overseas financing. Under the new situation, a "Hangzhou sample" of high-quality utilization of foreign capital is taking shape.
The government’s "door-to-door service" continues to improve the investment environment
Affected by the epidemic and economic recession, this year’s global foreign direct investment is experiencing unprecedented deep adjustment. According to the latest data released by UNCTAD, global foreign direct investment (FDI) decreased by 49% in the first half of 2020 compared with the same period of last year, and it is expected that the year-on-year decline will be as high as 40% or more.
Despite the severe external environment, Hangzhou still handed over a bright "report card".
According to the data released by Hangzhou Investment Promotion Bureau (hereinafter referred to as "Hangzhou Investment Promotion Bureau"), from January to October, 602 foreign-invested enterprises were newly introduced in Hangzhou, and the actually utilized foreign capital was US$ 5.83 billion, up 10.3% year-on-year and 10.8 percentage points higher than the average. Among the top 10 key cities in China (top 10 in GDP), Hangzhou ranks fourth in the total utilization of foreign capital and third in the year-on-year growth rate; Among the provincial capital cities, Hangzhou ranks first.
Structurally, from January to October, the actual utilization of foreign capital in high-tech industries was $2.04 billion, accounting for 35% of the city’s total. Among them, information transmission, software and information technology services accounted for a relatively high proportion, reaching 26.8%; The actual utilization of foreign capital in scientific research and technical services increased by 95.1%.
A number of foreign-funded enterprises in Hangzhou said that after the epidemic, the production capacity and sales of enterprises are recovering rapidly, and some enterprises have experienced contrarian growth. For example, Toshiba Carrier Air Conditioning expects sales to increase by more than 20% year-on-year; Sanofi plans to increase the production of new varieties of drugs; Bosch electric tools have also newly put into production the motor production line.
In the long run, what these enterprises choose to invest in Hangzhou is the investment environment that Hangzhou continues to improve.
"We are deeply impressed by Hangzhou’s attitude and efficiency in serving enterprises. The business handling involving the government is a one-stop service. Now Hangzhou is’ running at most once’. In fact, many times enterprises don’t even have to run once, and the government is’ on-site service’. For example, there is a party-mass service center in our park, and the departments of industry and commerce, taxation and so on are all working in the park. " Talking about the investment environment in Hangzhou, Peng Binbin repeatedly mentioned the "one-stop" government service in Hangzhou to 21st century business herald reporters.
Joe Buetzler, chief financial officer of Linde Project in Asia Pacific, shared the same feeling. In recent seven years, 20 employees’ families from overseas moved to Hangzhou, which involved furniture entry, children’s education and other issues. Under the coordination of Hangzhou government, all the processes were very smooth.
Panasonic Household Appliances Industrial Park in Xiasha recently welcomed its own hospital, and employees can directly use medical insurance to see a doctor on the second floor of the canteen. "Hangzhou Health and Health Commission and other aspects have given us great help. They promoted community hospitals to enter the park and sent doctors to the park to help us solve problems." Wu Liang, general manager of Panasonic Household Appliances (China) Co., Ltd. introduced.
He also said that Hangzhou Education Bureau and other departments are also discussing how to solve the problem of child care for employees. "It is expected that a nursery will move into the park this winter vacation, which may become the first one in the development zone and even Hangzhou."
Wu Liang said that these measures in Hangzhou are conducive to attracting and retaining talents, and talent gathering is also the main reason for Panasonic to invest in Hangzhou. He introduced that there are 14 colleges and universities in Xiasha Higher Education Park, which is just across the first bridge from Panasonic, and graduates nearly 200,000 college students every year, which provides enterprises with a steady stream of talents.
In recent years, Hangzhou has introduced a series of measures in terms of rent subsidies, talent apartments and children’s schooling, and has become one of the most attractive cities for young people. According to public data, the net inflow of talents in Hangzhou ranked second in the country in 2019. By the end of July 2020, the number of newly introduced college students under the age of 35 in Hangzhou this year was 234,072, exceeding the total in 2019.
Panasonic has set up six enterprises in Hangzhou alone. Besides Tokyo and Osaka, Panasonic has built the largest all-category flagship store in Hangzhou, which is known as the "No.1 overseas". Panasonic also plans to build another "No.2 Store" next to the West Lake, and make it a landmark online celebrity in Hangzhou.
Accurately attract investment in industrial chain and create a "double engine" for attracting investment.
It should be noted that the past "point investment promotion" is easy to cause fragmentation of industrial space and cannot form industrial competitiveness. In order to enhance the city’s industrial competitiveness, Hangzhou is drawing the next round of industrial blueprint for the city with the accurate investment model of industrial chain.
In May 2019, Hangzhou issued the "City-wide" One Chess "Industrial Chain Precision Investment Promotion System (Trial)", aiming to further deepen the industrial chain precision investment promotion, enhance industrial investment and promote competitiveness, and do a good job in "supplementing the chain", "strengthening the chain" and "expanding the chain".
The so-called "accurate investment promotion in industrial chain" refers to cultivating industrial clusters as the goal, attracting benchmark enterprises and engine projects as the core, introducing one, driving a batch and radiating one, developing from industrial chain to industrial cluster, and then forming industrial ecology, thus promoting the high-quality development of urban industries.

Figure/figure worm creativity
At present, Hangzhou is planning accurate investment promotion in the industrial chain around key industries such as biomedicine, aviation manufacturing, integrated circuits and artificial intelligence. Through "building chain", "supplementing chain" and "strengthening chain", the upper, middle and lower reaches will be opened up to form a cluster development of industrial chain.
Guided by this idea, a number of major industrial projects such as Deyi Hi-Tech Aerospace Composite Materials R&D and Manufacturing Project, AstraZeneca East Headquarters in China, Life Science Innovation Park Project and Firefly Artificial Intelligence Project have successively landed this year.
In September this year, ZF once again invested nearly 1 billion yuan in Hangzhou to carry out the construction of the second phase of the key parts production base for new energy vehicles, which is only two years after the last investment.

Figure/Zhejiang News
A person in charge of ZF Transmission Technology (Hangzhou) Co., Ltd. said that the previous production base paid more attention to assembly, while the newly-built project was a full chain production base, with full coverage from gear processing to finished products of electric drive parts.
He pointed out that the reason why he chose to invest in Hangzhou stems from the fact that several well-known brand car companies and parts manufacturers at home and abroad, such as Geely, are located in Hangzhou. Hangzhou has a huge and solid automobile industry foundation, and information giants can contribute more to smart travel.
"The products of ZF production base are mainly supplied to domestic automobile manufacturers. I believe that the participation of key automobile parts suppliers such as ZF will definitely form a higher cluster effect." He said.
Similar leading enterprises and large projects play an important role in reshaping Hangzhou’s industrial chain. According to the data of Hangzhou Investment Promotion Bureau, in the first ten months of this year, Hangzhou introduced 75 large projects with a total investment of more than 30 million US dollars (including 34 newly approved projects and 41 capital increase projects), with a total investment of 31.75 billion US dollars and contractual foreign investment of 6.80 billion US dollars, accounting for 95.8% and 71.4% respectively.
Among them, there are 18 manufacturing projects, 14 information transmission and software projects, 12 leasing and commercial services projects and 10 scientific research and technical services projects. We introduced 55 large projects with a total investment of more than US$ 50 million and 29 large projects with a total investment of more than US$ 100 million.
It is worth noting that the digital economy and the new manufacturing industry are becoming the "double engines" for attracting high-quality investment in Hangzhou.
In some key areas of high-end manufacturing, Hangzhou pays more attention to attracting some hard-core R&D enterprises with certain potential, especially some "stuck neck" projects. Hangzhou’s special classes for attracting big industries and attracting strong industries are taking the leading enterprises in the industry as the breakthrough point, and actively building industrial ecology with points and areas.
Since the beginning of this year, four special classes in biomedicine, integrated circuits, aviation industry, Hong Kong and Macao have attracted more than 70 key industrial projects, which have led to the signing and landing of more than 60 projects with a total investment of about 150 billion yuan.
The digital economy represented by Alibaba is the most shining business card in Hangzhou. At present, the development of digital economy represented by information software and e-commerce in Hangzhou leads the whole country. Since 2014, the core industry of Hangzhou digital economy has maintained double-digit growth for 21 consecutive quarters, contributing more than 50% to economic growth. In 2019, the core industry of digital economy in Hangzhou achieved an operating income of 1,129.6 billion yuan, a year-on-year increase of 19.4%, accounting for 24.7% of GDP.
Since the beginning of this year, under the epidemic situation, emerging industries such as "health code", "live stream economy" and "home economy" initiated by Hangzhou have spread rapidly to the whole country and even the whole world, and the digital economy has grown substantially against the trend during the epidemic period. In the first half of the year, the core industries of Hangzhou digital economy realized an added value of 183.3 billion yuan, an increase of 10.5%.
Peng Binbin pointed out that Hangzhou has always been in the first echelon of digital economy, and now it is making efforts to build "the first city of national digital economy". This aspect is because a group of Internet companies such as Ali and a large number of digital economic talents gather here; On the other hand, Hangzhou has given more tolerance, support and guidance to the innovation of digital economy, and China’s digital economy, represented by Hangzhou, is also favored by overseas capital.
Promote enterprises to invest in Hangzhou by attracting foreign investment from the people.
For Hangzhou, it is also a bright spot for overseas financing to invest in local projects such as "attracting foreign investment by the people".
The so-called "attracting foreign investment by people" refers to the establishment of a company by local private enterprises (or natural persons) in Hangzhou and overseas investors, and the return of local private enterprises in Hangzhou as overseas investors after going overseas to raise funds.
According to the preliminary statistics of Hangzhou Investment Promotion Bureau, from 2016 to now, there are 202 newly approved projects with a total investment of more than 10 million US dollars in Hangzhou, with a total investment of 21 billion US dollars.

Figure/Zhejiang News
In recent years, the pace of international cooperation of private enterprises in Hangzhou has been accelerated. For example, in 2019, Xizi Group and the world-renowned aviation component supplier, the United States, established two joint ventures to produce aircraft components, with an investment of US$ 1 billion and US$ 70.88 million respectively. Connectivity (Hangzhou) Technology Service Co., Ltd., a joint venture between American Express and Lianlian Technology, has been approved to start business, with a total investment of 150 million US dollars. It is the first Sino-foreign joint venture payment and clearing institution in China.
Peng Binbin pointed out that there have always been two intertwined atmospheres among Zhejiang businessmen. One is to "go out" and enter the world. "Most Zhejiang businessmen have an international vision. They have traveled all over the world and made their business global. If the GDP created by Zhejiang businessmen in the world is added up, it may be much more than that created locally." The other is that Zhejiang businessmen have a strong sense of local identity. After going out, they are often keen to feed back their hometown and land projects in Zhejiang.
More importantly, Zhejiang has a highly developed private enterprise cluster.
In the list of "Top 500 Private Enterprises in China in 2020" recently published by the All-China Federation of Industry and Commerce, there are 39 enterprises in Hangzhou alone, an increase of 3 compared with last year, and the number of enterprises in Hangzhou has been ranked first in the national cities for 18 consecutive times.
In 2019, the added value of Hangzhou’s private economy reached 937.8 billion yuan, accounting for 61.0% of GDP, an increase of 0.5 percentage points over the previous year. At the end of last year, there were 632,000 private enterprises in the city, an increase of 14.0% over the end of last year.
It is worth noting that since the beginning of this year, the phenomenon of private enterprises in Hangzhou returning to the local market after listing or overseas financing has continued to heat up. During the year, seven companies including Netease, Nongfu Spring and Tiger Medicine (300347, shares bar) were listed on the Hong Kong Stock Exchange, raising nearly 40.5 billion yuan. After raising funds overseas, these private enterprises mainly invest in information technology, internet plus, biomedicine and other industries. According to preliminary statistics, 22 enterprises in Hangzhou have been listed overseas in the past three years, and all of them are private enterprises.
What is more worth looking forward to is that the unicorn enterprises in Hangzhou have led the country for many years. In the TOP100 list of 2020 unicorn enterprises in China released by Ai Media Consulting, Hangzhou is the only new first-tier city to enter the top five. There are 8 TOP100 unicorn enterprises in Hangzhou, and the valuation of the listed enterprises is even stronger than that of the four first-tier cities, ranking first in the country with an average valuation of 186.25 billion yuan.
Not long ago, Hangzhou Venture Capital Association and micro chain released the List of Unicorn-Quasi-Unicorn Enterprises in Hangzhou in 2020. As of June 12, 2020, there were 31 unicorn enterprises and 142 quasi-unicorn enterprises in Hangzhou, and the total valuation of all enterprises exceeded $310 billion. Among the new unicorns, medical health, artificial intelligence, data and education are the most outstanding.
Micro-medicine is one of the representatives. Peng Binbin said that some enterprises in emerging fields such as digital economy choose to go public overseas, on the one hand, in order to shape their international competitive advantage, promote technological development, connect with high-level and high-standard international business, and accelerate the goal of high-quality development.
On the other hand, due to the rapid development of domestic digital economy and endless innovations, foreign investors have a high recognition of such enterprises. The field of digital economy is becoming a main battlefield for overseas financing of China enterprises.
And enterprises’ overseas financing or returning to China after listing has also become a new mode of utilizing foreign capital through market mechanism under the background of "double cycle".
"In this process, enterprises not only introduced overseas funds, but also introduced overseas strategic investors, who will bring more advanced technology and management experience to domestic companies, and some investors even sent people to help enterprises with management transformation." Peng Binbin said.
He pointed out that in Hangzhou, "going public and technology coming back" has become a common phenomenon, which is not only of great significance to the upgrading and high-quality development of domestic enterprises, but also produces diffusion and spillover effects, which will drive the overall upgrading of the whole industry.
(Author: Xia Xutian Editor: Li Bo)


























