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Stephen Wong

HANGZHOU, billed by its tourist literature as ''a paradise on earth'', is determined to become a paradise for investors, too.

  The city first came to wider notice in the time of Marco Polo, but it has also long been an industrial centre.

  Hangzhou re-opened to foreign business in 1988 with government officials endeavouring to put its considerable resources back on the map.

  ''The value of our industrial output is higher than that of Shenyang, Wuhan, Chongqing, Xian and other major industrial centres,'' said Jin Shengshan, director of Hangzhou's Foreign Economic Relations and Trade Commission.

  ''We have a lot to offer, but it is only now that foreign investors are beginning to realise this.'' Industrial output in 1992 stood at 60 billion yuan (about HK$80.9 billion).

   Last year was an exceptional one for foreign investment, with Hangzhou contracting US$610 million (about HK$4.72 billion) worth - more than was obtained from all sources in the previous nine years.

  Hangzhou is the trading centre for China's silk production and an important manufacturer of chemicals, foodstuffs, electronics and machinery.

  The city's location provides unique advantages. Although ports on the Qiantang River are too shallow for international shipping, Hangzhou is less than 200 kilometres from the major port facilities of Ningbo and Shanghai.

  Hangzhou is the end-point of the Grand Canal, giving ready access to China's domestic markets.

  Rail connections are also excellent as Hangzhou is at the intersection of four lines - to Beijing, Ningbo, Shanghai and the southwesterly route through Jiangxi.

  ''The natural advantages of our location are excellent,'' said Mr Jin. ''We're close enough to benefit from the development of Pudong in Shanghai, but also have the ability to woo big investors of our own.''   Among recent catches for the city are Japanese electronics conglomerates Panasonic and Toshiba.

  Hangzhou's Xiasha development area, part of the scattered Qianjiang Investment Zone, is attracting major foreign ventures.

  Basic infrastructure - water, electricity, telephones and a new road link to the downtown area - are in place and contracted investment is expected to surpass US$500 million this year.

  The biggest investor is a Hongkong company which is putting US$200 million into a synthetic fibre plant, the largest single investment in Zhejiang province.

  Hongkong-listed China Strategic is building a rubber factory in the Xiasha area where other committed investors are involved in chemicals, machine tools and electronics.

  ''We've done a lot of work to improve government efficiency and reduce investment procedures and now it is paying off,'' Mr Jin said.

  A further boost is on the horizon with the improvement of road links. It takes up to five hours to drive along an indirect 196 km route to Ningbo, but a shorter and speedier expressway is due for completion late next year.

  Travelling time will be cut to two hours encouraging businesses to make use of China's deepest operational port at Beilun.

  An expressway link to Shanghai is still in the preparatory stages.

  While prospects for business look good in Hangzhou, the government believes tourism will grow even faster.

  ''The tourist industry will be the quickest area of growth in the 1990s,'' Mr Jin said.

  Apart from regular tourists (489,000 in 1992), Hangzhou is becoming a favourite weekend retreat for the well-heeled of Shanghai.

  Restaurants, department stores and private shops have proliferated while Hangzhou boasts some excellent hotels, including the Shangri-La and the Dragon Hotel.

  Efforts to further develop tourism will concentrate on resort facilities and holiday homes in suburban areas.

  The government is keen to back service industries that will keep the environment clean and make the city an attractive place to live for foreign businessmen.

  One area officials are still fighting to develop is financial services. Beijing has denied Hangzhou the right to licence foreign banks, giving the privilege instead to Ningbo.

  ''We are making efforts to get the policy changed,'' Mr Jin said.

   Hangzhou had a better educated workforce than its eastern neighbour, he said, and could provide the personnel to develop banking and related services.

  Hangzhou is home to Zhejiang University - one of the best in China with a strong tradition in science - and Hangzhou University. There are also numerous government research institutes.

  ''Hangzhou's traditional wealth is based on the intelligence of its people,'' Mr Jin said. ''They are the ones who have always made it flourish.''   Local businesses account for more than 75 per cent of Hangzhou's exports, which last year hit US$1.2 billion.

  The proportion of exports from foreign invested enterprises is expected to increase rapidly as newly established ventures begin production.

  There were 801 foreign-funded enterprises approved by the end of 1992, 583 contracted in the previous 12 months.

  Hongkong companies account for about half the investment, followed by Taiwan with a quarter. Chief among lesser investors are US and Japanese firms.

  The average investment per project in 1992 was low compared to many big Chinese cities at US$1.05 million, but this is likely to change with the approval this year of bigger projects like the Xiasha synthetic fibre plant.

  Hangzhou is already attracting investors who have shied away from Shanghai because of escalating land and labour costs.

  The challenge is to offer better opportunities than Shanghai's other, competing satellite cities.

  ''It is true that Suzhou and Wuxi have been growing faster than us,'' Mr Jin said. ''But that is mainly because they are nearer Shanghai and were less developed to begin with.

  ''Compared with Nanjing and Ningbo [bigger satellite cities] we are on a par, although each has its own advantages. Our attractions stem from having the biggest industrial output and GNP among the group.''   Statistical profile  Size: 430 sq km (urban); 16,600 sq km (dependent counties). Population: 1.31 million (urban); 5.8 million (dependent counties).

Foreign-funded enterprises approved to end 1992: 881. Total investment: US$1.76 billion. Foreign investment: US$825 million. Foreign-funded enterprises approved in 1992: 583. Total investment: US$1.25 billion.

Foreign investment: US$610 million. Average foreign investment per project: US$1.05 million.



On the path of Marco Polo