Above: As an important pole of the Yangtze River Delta Economic Zone, Wuxi not only boasts the highest per capita GDP in Jiangsu province but also lays stress on greener industries such as electric vehicles, reformed agriculture and modern services. Below: Jiangsu Alfa Bus Co Ltd is building the country's largest electric bus manufacturing base. Provided to China Daily

A new future awaits the city of Wuxi

Like the phoenix in Greek mythology, the city of Wuxi in Jiangsu province has shown itself capable of regeneration, arising from the ashes of its predecessor.

Ever since its founding in the 11th century BC, Wuxi, with the fabled bird as its city emblem, has undergone vicissitudes from the Spring and Autumn Period and Warring States Period through various dynasties to emerge in the 20th century rich from the silk industry and from both land and aquatic farming. As the birthplace of China's national industry, Wuxi has been reputed as "Little Shanghai" for half a century due to its developed industries and flourishing economy.

But now it is the 21st century and new challenges lie ahead. In a period of relative economic stability and having experienced surging growth for 30 years, a new future awaits.

Having overtaken Japan last year to become the world's second-largest economy by gross domestic product, China's leaders are looking around at the environmental damage wrought and seeking a less harmful but nonetheless rewarding model for continued success. They have expressed a determination to put things right by opting for slower and "greener" growth. The central government, municipalities and provinces are developing high-tech industries, pumping more cash into research and development, inviting foreign direct investment on attractive terms, encouraging the use of new energy and seeing entertainment, tourism, a reformed agriculture and the service sector, including banking, insurance and healthcare, as the linchpins of the new China.

And there are few places where this can better be seen than in Wuxi.

Located half way between Shanghai and Nanjing, Wuxi boasts the highest per capita GDP among all the cities in the affluent Jiangsu province. Its per capita GDP reached $18,700 last year, while that of Beijing and Shanghai, the country's political and financial centers, stood at $14,133 and $13,795 respectively last year.

A huge emphasis has been put on landscaping and making use of the waterways that give Wuxi its nickname as the Venice of the East. Wide, tree-lined boulevards, presided over by tall, state-of-the-art buildings reliant on green energy and recycled water for their operations, characterize the area. Yet not too far away lie ancient villages barely changed for hundreds of years that are now exploiting their histories and traditions, one of the tallest Buddha statues in the world, and a glorious natural landscape that includes Lake Taihu, the third-largest freshwater lake in China.

But like its peers in the affluent coastal areas, Wuxi faces the same challenges when seeking another major growth breakthrough.

"We have already encountered bottlenecks in land and resources and relatively stable growth in investment," says Huang Lixin, Party secretary of Wuxi.

"We can no longer rely on the old, inefficient economic growth model by exploiting resources and pumping in investment. An innovation-led transformation is a must. We must transform the growth model by upgrading traditional manufacturing industries and encouraging services and emerging businesses."

The emerging industries encouraged by the local government include the Internet of Things, renewable energy and alternative-fuel vehicles, energy conservation and environment protection, microelectronics, software and service outsourcing.

"We hope these emerging industries will grow at 15 percent annually during the 12th Five-Year Plan (2011-2015) and high-tech industries will contribute 45 percent of the total industrial output value of Wuxi by 2015 (up from 39 percent last year)," Huang says.

Sales from emerging industries in Wuxi reached 604.37 billion yuan ($98.57 billion;74.34 billion euros) last year, nearly double the size in 2010, according to data from the local statistics bureau.

Typical of the companies is Jiangsu Alfa Bus Co Ltd, which makes electric buses. The company is building the country's largest electric bus manufacturing base. With total investment of 5 billion yuan, the factory will be able to produce 20,000 electric buses a year.

Liao Zhushan, president of Alfa, says: "The domestic market for electric buses will soon take off since 25 cities have been designated by the central government as pilot cities for promoting them, and that list will expand to include county-level cities next year."

Alfa buses have been used as demonstration vehicles in more than 10 cities and have entered commercial service in Chengdu and Haikou. The company has also exported 12 buses to Italy, Brazil and Taiwan. Alfa buses will serve the FIFA World Cup next year, the Milan World Expo in 2015 and the Olympic Games in Rio de Janeiro in 2016.

The biggest challenge for the wide use of electric buses is their high price, usually three to four times that of an ordinary bus, Liao says.

So the promotion of such buses, to a large extent, relies on government subsidies. But Alfa has found a more market-oriented model by cooperating with two domestic leasing companies and providing leased electric buses.

Like other major cities in the Yangtze River Delta region, Wuxi is upholding the service sector as a defining priority in its navigation of a new growth model.

Services accounted for 45.2 percent of Wuxi's economic output last year. Accounting for 40 percent of total employment, services contributed 60 percent of local taxes.

The service sector is expected to overtake the industrial sector to become Wuxi's biggest industry by 2015, Huang says.

Outsourcing services is one of the key sectors the city is looking at. Nine out of China's 10 largest outsourcing companies are based in Wuxi. Outsourcing companies in the city completed contracts worth $6.44 billion last year, up 43.5 percent year on year.

Pactera Technology International Ltd, one of the largest China-based IT service companies, set up a subsidiary in Wuxi in 2009 as its offshore delivery center for the US market. Pactera's clients include Microsoft, Intel, Huawei Technologies and China Telecom. Pactera now has 24,000 staff.

Stanley Duan, vice-president and regional manager of East and Central China for Pactera, says: "Back in 2008 we evaluated a number of cities and finally chose Wuxi because it best fitted our three criteria: good talent pool, great transportation links and relatively low cost of living (compared with nearby Shanghai)."

Duan left China, aged 19, two decades ago to study in Japan, majoring in civil engineering. When he was 26 he moved to the US "because it was bigger". He returned to China in 2006.

Duan is one of the so-called haigui who are finding Wuxi an appealing option, with its attractive environment, friendly policies and encouraging remuneration and, more importantly, are attracted by what is now on offer in the face of declining economies abroad.

Haigui, which has the same pronunciation as "sea turtle" in Chinese, is a pinyin name adopted by the Chinese to describe scholars who have returned to the homeland after studying and gaining work experience abroad.

Like any other creature, the sea turtle seeks out a good environment in which to procreate its next generation.

They have discovered Wuxi New District in the suburbs of the city, about 120 kilometers west of Shanghai. Well-developed and diversified transport systems make it easy to get access to both domestic and overseas markets. The new district was founded in 1992 as an industrial zone to attract large foreign companies and has now evolved to become one of the major industrial parks in China, featuring precision machinery and electronics. It has attracted a total of $14 billion overseas investment in the past two decades.

"The quantity of investment is an important criteria for our job when attracting investors," says Xu Gang, Party committee secretary of the new district. "But we now focus more on quality of investment."

The district is raising its threshold for attracting investment. It has pinpointed electronics, renewable energy, medical and healthcare, precision machinery and auto components manufacturing as its pillar industries, all considered highly attractive in today's economic environment.

It will foster emerging industries including solar, Internet of Things, biomedicine, energy conservation and new materials. It also encourages companies to set up regional headquarters and R&D centers in the district. A project, which is below $30 million investment and does not fall in those categories, will struggle to get approval in the district.

"Like many other regions in the country, Wuxi New District faces the same challenges, such as limited resources, weak overseas demand for exports and sluggish profit growth of companies," Xu says.

"But a number of strategic and emerging industries, such as the Internet of Things, biomedicine and new materials, have shown stronger momentum for growth. And a number of advanced manufacturing projects are also ready for take-off. High-tech and modern service industries are emerging as the new driver for the economic growth of the area. That is a good sign for the transition from speed to quality-oriented growth."

Typical of the companies attracted to Wuxi New District is Lanxess AG, a specialty chemicals group based in Germany. Lanxess established a wholly owned subsidiary in the new district in 1995 as a site for producing leather chemicals and engineering plastics for the Chinese market. The Wuxi site is now also a technology base, serving as home to the R&D center for leather treatment products in Asia-Pacific, R&D testing center for engineering plastics, and a microbiology test laboratory for material protection products.

Hu Dongqi, a haigui who is managing director of Lanxess (Wuxi) Chemicals Co Ltd, has seen an increase in fellow haigui returning to the area, and works with universities to develop their talent.

Hu, born in 1961, was one of the first 100 students sent by the Chinese government to Germany for undergraduate studies in 1980, shortly after Deng Xiaoping's opening-up policies came into effect. He later became a post-doctorate research fellow at Standard University in California. He joined Bayer in 1993 and returned to Wuxi in 1997.

"We have seen big development here," says the Fujian native. "There is an international community here. The city is obviously getting rich. And there is good infrastructure."

Lanxess is the fourth-largest chemicals group in Germany in terms of sales and had sales of 9.1 billion euros last year. The company has 50 production sites worldwide. China is a cornerstone of its global growth strategy, and it achieved sales of more than 1 billion euros on the Chinese mainland, Hong Kong, Taiwan and Macao last year.

And so Wuxi embarks on yet another new future, its city emblem flying high as era of new industry dawns, creating a benchmark by which others can measure themselves.

Contact the writers at sunshangwu@chinadaily.com.cn, luhaoting@chinadaily.com.cn and markhughes@chinadaily.com.cn

( China Daily European Weekly 06/14/2013 page16)