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Hangzhou

hangzhou

Located less than an hour south of Shanghai, Hangzhou is the capital city of Zhejiang province and hosts one of the country’s economic and technological development zones.

In 2014, Hangzhou’s GDP exceeded RMB 920 billion, up 8.2 percent compared to the previous year. The city’s primary industry contributed RMB 27.4 billion and its secondary industry RMB 385.9 billion (8.1 percent growth). The remaining RMB 506.8 billion came from the services sector, which grew 8.5 percent year-on-year, accounting for over 55 percent of the city’s GDP in 2014.

The city’s import and export volume totaled RMB 300 billion (US$45.9 billion) during the first 10 months of 2015. Hangzhou exported RMB 46.2 billion of goods to the U.S., an increase of 10.4 percent compared to 2014. The growth of cross-border e-commerce has become a bright spot for the city; in the first three quarters of 2015, exports via cross-border e-commerce grew 247 times to RMB 1.15 billion. During the same period, Hangzhou imported RMB 6.38 billion of pharmaceutical and medicinal products- a growth rate of 30.2 percent.

Industry Opportunities

Retail

Driven by the fast-developing e-commerce industry, Hangzhou’s retail sector is experiencing strong growth. In 2014, the total volume of retail sales in Hangzhou was RMB 383.87 billion, an increase of 8.7 percent- higher than the city’s overall GDP growth. Food sales reached RMB 26.14 billion, up 14.6 percent from the previous year.

Given recent food scandals and resulting wide-scale distrust towards domestic food products, many middle class Chinese consumers are willing to pay a premium for foreign imports in order to quell anxieties about domestic food safety. This has opened up a huge market for the U.S., the largest exporter of food products worldwide.

Processing

Processing trade is one of the biggest industries in Hangzhou. Under China’s bonded system of processing trade, the amount of materials and components imported for the purpose of processing trade is exempt from tariffs. Currently, Hangzhou’s processing industry still largely relies on imported parts and components from abroad. Most domestic companies are only involved in the manufacturing process, with foreign companies providing design and engineering services.

Development Zones

Major development zones in Hangzhou include the Hangzhou Economic & Technological Development Zone, Xiaoshan Economic & Technological Development Zone and its newly established e-commerce zone.

Hangzhou’s E-Commerce Zone

Hangzhou’s e-commerce industrial park was established in July 2013 as China’s first experimental test point for the export of packaged goods. Hangzhou’s e-commerce zone currently follows a “one zone, three parks” model, consisting of the following three areas:

Oriental E-Commerce Park

Hangzhou E-Commerce Industrial Park

China (Hangzhou) Cross-Border Trade E-Commerce Industrial Park

According to the proposal, the government plans to integrate these e-commerce zones and to spread e-commerce business to other areas in Hangzhou and Zhejiang province. Foreign exporters that are filed with the committee of the e-commerce zone are allowed to sell goods directly to Chinese consumers. Such imported goods are subject to lower import duties and may go through a “paperless customs clearance” system, which exempts exporters from submitting hardcopy documents. Enterprises, as well as individuals, are permitted to open an overseas account for settling payment and will no longer be subjected to a US$50,000 yearly limitation.

Today, domestic e-commerce giants such as Tmall Global and Xian life and a number of large importers have established operations in the zone. Backed by state policies, exporters cooperating with distributors and e-commerce enterprises located in Hangzhou may enjoy lower tax rates and sell to China’s lucrative market directly, without a physical presence.

Sister City of Boston and Indianapolis

Both popular tourism destinations, Boston and Hangzhou share a lot in common. The two cities first established their relationship in 1982, and have been involved in a number of joint-initiatives in the field of manufacturing, education, arts, and the silk industry. In 2008, Hangzhou became Indianapolis’ fifth sister city. As both Indianapolis and Hangzhou share a reputation for tourism, education, and high-technology, special attention should be paid to exchanging expertise and knowledge in these fields.

Contact Information

U.S. Commercial Service - Shanghai

Shanghai Center, Suite 631, 1376 Nanjing West Road

Shanghai 200040, China

Tel: (86-21) 6279-7630

Fax: (86-21) 6279-7639

Email: office.shanghai@trade.gov


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