Located just an hour by train from Shanghai, the city of Wuxi in the province of Jiangsu is still relatively unknown despite its huge promise. But the city is looking to reposition itself as a modern business hub and is targeting an innovative range of developments from clean energy and tourism to hi-tech engineering and services.
Despite having a population of just under 5 million, Wuxi now has the ninth largest economy among China's cities. In 2012, its GDP stood at Rmb756.8bn ($123bn) with a GDP per capita of $17,048, the highest in the Jiangsu province according to figures reported by the Wuxi Investment Promotion Bureau.
As with many areas of Jiangsu, tourism plays a crucial part in Wuxi's economy, thanks to the picturesque Lake Tai that weaves through the city. However, it is from the sun rather than the water that Wuxi is deriving its reputation. Home to two of the world’s leading solar companies – Jetion Solar and Suntech Power – Wuxi is at the very heart of China’s efforts to invest in clean energy.
fDi Magazine's Asia-Pacific Cities of the Future 2013/14 rankings placed Wuxi in the top 10 for FDI strategy, having not previously been included in the 2011/2012 rankings. The city’s growth and its attractiveness to foreign firms can be seen in the rapid rise of services that accompany such growth, such as international schools.
Documentation from the Taihu International School in Wuxi, for example, says that “almost all students are from families working for foreign companies in and around Wuxi and the nationalities represented are a direct reflection of the proportion of foreign investment from the various countries”.
The need for further talent in hi-tech industries was confirmed during the Third China (Wuxi) Overseas High-Tech Talents and Projects Promotion Fair held in November 2013, as the local government continues its commitment to developing these industries.
Perhaps the best example of Wuxi’s development is the growth of Wuxi New District industrial park. With a reported 2012 GDP of Rmb19.3bn, the area includes 60 Fortune 500 companies, including engineering firms Siemens and Cummins and drug manufacturers AstraZeneca and Bristol-Myers Squibb.
Towards a green economy
Other firms are also investing heavily in Wuxi. Now twinned with the German city of Düsseldorf, the cities are working together to help Wuxi develop from a heavy manufacturing base to a 21st century green economy, just as Düsseldorf has done.
One of the first steps in the transition is investing in infrastructure. Two lines of the city’s new metro system are currently under construction with the first to be completed by the end of June 2014. And with many firms expanding their research facilities into Wuxi, the hi-tech revolution does look promising.
Vehicle brake manufacturer ITT recently announced plans for a $20m investment in braking technology research and development in Wuxi, pushing its total investment in the city to $30m in the past two years. "This investment reflects the next step in our strategy to further support our global and local original equipment manufacturers and brake manufacturers with innovative and high-quality products that meet the expectations of an increasingly sophisticated customer base," says Luca Savi, president of ITT Motion Technologies.
Consumer products manufacturer Amway is also helping to establish the growing research and development hub in the region, investing $25m to study the possibilities of combining Western biotechnology with traditional Chinese medicinal herbs.
Painting over the cracks
However, there is a feeling that some of these good news stories are painting over significant cracks in this much-trumped technology dream. Take the solar industry, for example. Suntech Power has been haemorrhaging money in an industry that is oversupplied in the region and was recently bought out by Shunfeng Photovoltaic International. Suntech’s liabilities were estimated in 2013 to be about Rmb10bn, but with less than one-quarter of this in assets.
It is unsurprising, then, that Jiangsu as a whole is now seen as the home of bad debts in China. An unnamed central bank official was quoted in the Chinese media as saying that Jiangsu accounted for 40% of the increase in China's bad debt in the first five months of 2013.
Despite the potential problems of such debts, Wuxi seems to be more protected than some cities because of its diversified economy. While investment in hi-tech products continues, culture, property and tourism are still showing good signs of growth in investment.
The property market may have shown signs of slowing down across China, but the liberalisation of housing rules in Wuxi is keeping sales strong. This means that investment in development has also remained strong.
UK architect Benoy has already begun work on the Lan Kwai Fong Wuxi Lifestyle and Entertainment Hub, due to be completed in 2015. This mixed-use development will combine art, culture, restaurants, bars, tourism and retail shopping with a multiplex cinema, performance stages, three outdoor plazas, an entertainment zone and a riverside boardwalk. “This concept will create a new lifestyle and entertainment hub for Wuxi,” says Simon Blore, global managing director of Benoy.
Real estate demand
Singapore real-estate firm CapitaLand is also getting involved, with two developments of its Ascott subsidiary – Ascott Central Wuxi and Somerset Wuxi – due to open in 2015.
In a recent interview on the Lifestyle Asia website, Lee Chee Koon, Ascott’s deputy chief executive and managing director for north Asia, said: “As Wuxi continues to transform itself into a thriving regional hub, with a growing number of multinational corporations, large local enterprises and trade exhibitions, we expect strong demand for our international-class serviced residences [from] expatriates and local business travellers.”
This will all tie in with strong local investment – billionaire property entrepreneur Wang Jianlin plans to invest Rmb40bn in the Wuxi Wanda Cultural Tourism City project in a bid to rival the soon-to-be-completed Shanghai Disneyland. And international sport is also showing signs of growth in the city with the Wuxi Classic World Snooker championship to be held in the city in late June.
There are still doubts about how Wuxi’s hi-tech firms will fare as the fruits of their investments play out in the coming years, but a real commitment to hi-tech innovation and a diversity that is uncommon in other developing Chinese cities means that there is a good chance Wuxi will become a jewel in China’s future economy.