Wuxi: The Birthplace of China’s Modern Industry

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One of the birthplaces of modern industry in China and cultural center of the south Yangtze, Wuxi is known as “the pearl of Lake Tai.” Historically, the city has been famous as an important rice and silk market in South China since the Ming Dynasty. In this article, Rainy Yao from Dezan Shira & Associates takes a look at how today this city is transforming itself from a textile manufacturing center into a high-tech industrial hub.

Economic Overview

In 2013, Wuxi’s GDP exceeded RMB 807 billion and grew at an annual rate of nine percent. Of this figure, the city’s primary industry contributed RMB 14.85 billion and its secondary industry RMB 420.74 billion. The remaining RMB 371.42 billion came from the service sector, which notably accounted for nearly 50 percent of the city’s GDP in 2013 thanks to industry restructuring. Tourism, which brought in RMB 113.24 billion (12.3 percent growth) in 2013, accounted for a major portion of service sector revenue, with close to 70 million foreign and domestic tourists visiting the city last year alone.

For the first time in its history, Wuxi’s GDP per capita in 2013 exceeded RMB 124,600 (US$20,400)—ranking first in Jiangsu three years in a row. In a span of only five years, the city’s GDP per capita increased from US$10,000 in 2008 to US$20,000 in 2013.

New Industries such as cloud computing and high-end equipment manufacturing also played a vital role in Wuxi’s economic development, with an industrial output of RMB 807.4 billion (14.1 percent growth). Among these, software and services outsourcing made great advances and grew at an amazing rate of 32 percent annually.

Development Zones

Wuxi’s main development zones include:

Wuxi New District (WND)

Originally approved in 1992, the WND was upgraded to a national development zone in 1995 and consists of six small development areas including the Wuxi High-tech Development Zone and the Lake Tai International Technology Park. Pillar industries in the zone include precision machinery, electronics, bio-pharmaceuticals, fine chemicals and new materials. Besides manufacturing, the software and out-sourcing industries are also rapidly emerging in the WND.

Yixing Industrial Park for Environmental Science & Technology (ES&TP)

Often referred to as the “environmental capital of China,” the ES&TP was established in 1992 as the only zone in China dedicated to the environmental protection industry. During the past two decades, the ES&TP has cooperated in environmental protection and R&D with more than 20 countries and regions including the U.S., Germany and the Netherlands.

Wuxi Huishan Economic Development Zone (HEDZ)

Approved in July 2001 by the Jiangsu provincial government, the HEDZ is an important part of the Shanghai Economic Area with a planned area of 76 square kilometers. Major industries include automobiles and key components, new energy, service outsourcing and science and technology.

Jiangsu Jiangyin Economic Development Zone (JEDZ)

Established in 1992, the JEDZ was approved as a national-level development zone in 2011. The zone mainly focuses on new materials (metals), textiles, IT and machinery manufacturing. To date, 292 foreign companies such as Bakaert and HannStar have set up operations in the JEDZ, 16 of which are among the Fortune 500.

Jiangyin Harbor Economic Development District (HED)

The development and construction of the HED was officially launched in September 2006. Located in the center of the Yangtze River Delta, the HED is expected to be an important transport hub connecting the areas to the south and north of the Yangtze River. Major industries include high-tech equipment and engineering services, precision machinery, logistics and new materials.

Yixing Economic & Technology Development Zone (YETDZ)

Newly established in 2013 by the State Council as a national-level development zone, the YETDZ was honored as “the most valuable zone in the YRD region” and features industrial sectors in new energy, optoelectronics, new materials and high-end equipment manufacturing. More than 800 enterprises have been established in the zone in its single year of operations.

Investment Opportunities

The output and export value of the city’s high-tech products ranks 6th among all the cities in China, with close to 1000 high-tech enterprises established in the city. The city has built a diverse manufacturing system based on five pillar industries:

  • Digital information
  • Automobile manufacturing
  • Textiles and clothes
  • New energy and materials
  • Bio-pharmaceuticals

Wuxi is also the cradle of China’s micro-electronics industry. Since 1980, Wuxi has been one of two micro-electronics industrial bases in China. In 2013, the municipal government released the “Development Plan for the Micro-electronics Industry (2013-2020).” According to the plan, the micro-electronics technology is expected to be among the world first-class level by 2020. The city has established a foreign-invested enterprises (FIEs) service center website in a bid to provide better service for FIEs.

In addition, the municipal government provides the following preferential policies to foreign investors:

Financial Support and Subsidies

Eligible scientific talent will be provided with free offices and apartments (each with an area of over 100 square kilometers) for three years. Supporting funds ranging from RMB 1 million to RMB 5 million will be granted to eligible scientific projects according to the project’s total investment.

Tax Incentives

High-tech enterprises will pay corporate income tax (CIT) at a reduced rate of 15 percent. Newly-established regional headquarters with a tax revenue of over 10 million will be eligible for a 100 percent local tax refund for the first three years, and a 60 percent refund for the following three years.

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email china@dezshira.com or visit www.dezshira.com.

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