A financial service centre booming with opportunity

Transcription

1 A financial service centre booming with opportunity - Invest Hangzhou: Financial Service Industry kpmg.com/cn

2 c Invest Hangzhou: Financial Service Industry

3 Invest Hangzhou: Financial Service Industry 1 Content Preface 3 Industrial overview 4 Potentiality 8 Case study 16 About Hangzhou 20

4 2 Section or Brochure name

5 Invest Hangzhou: Financial Service Industry 3 Preface This report aims to provide an overview of the investment climate in Hangzhou, Zhejiang province, for investors interested in China. Hangzhou, the capital city of Zhejiang province, was once regarded as the Best Zhou (an ancient Chinese administrative unit) in southeast China. As a pivotal city in the Yangtze River Delta, Hangzhou contributes towards the rapid growth of the economy. From 2005 to 2010, Hangzhou s gross domestic product ( GDP ) surged from RMB billion to RMB billion, representing a compound annual growth rate ( CAGR ) of 15.1%. The proportion of the tertiary industry also climbed from 44% to 49% over the period. Hangzhou has seen a fast-growing financial service industry over recent years. In 2010, the added value of the industry reached RMB 60.5 billion, up 13.9% year-on-year. Hangzhou has a leading position in terms of financial service capability nationwide and aspires to become the financial service centre of the southern wing of the Yangtze River Delta. Hangzhou has won the recognition of the government and investors with its remarkable achievements in economic development. For six straight years from 2005 to 2010, Hangzhou has been rated by Forbes magazine as the best mainland city for doing business. In 2009, Hangzhou was ranked first in the World Bank s survey of investment climates in 120 Chinese cities. In 2010, Hangzhou was rated first in the China Institute of City Competitiveness ranking of the Top 10 Chinese Cities with the Best Investment Environment. In a fast-changing market like China, various enterprises and industries may find themselves in different situations. It is recommended that investors who are operating or planning to operate in China should seek the latest information and specific advice from experienced professional consultants, and conduct due diligence when appropriate. This report aims to provide information about the investment climate in Hangzhou through our independent analysis of publicly available information. It should not be used as a substitute for adequate due diligence before any investment. Sources of information are indicated in the report. We would like to thank the Hangzhou Municipal Foreign Trade and Economic Cooperation Bureau for its kind assistance. This report adopts an exchange rate of USD 1 = RMB 6.57 (based on the Bank of China s benchmark rate on 14 March 2011), and includes data up to March Sources: Hangzhou National Economy Economic and Social Development Report 2010; Report on the Development of Financial Services in Hangzhou 2010, Hangzhou Municipal Finance Office ; Bank of China website; China Daily website ( dfpd/zhejiang/ /content_ html); Zhejiang Online ( chinacity.org.cn (

6 Industrial overview Scale Industrial structure Existing foreign investments

7 Invest Hangzhou: Financial Service Industry 5 Scale and positioning Hangzhou s financial service industry is growing to become the leading market in China The financial service industry in Hangzhou offers a wide variety of services including banking, insurance, securities, futures and other services such as trusts, financial leasing, asset management, and pawnbroking. In 2010, the financial service industry in Hangzhou recorded an added value of RMB 60.5 billion, up 13.9% year-on-year. Added value in the financial service industry accounted for 10.2% of Hangzhou s GDP, ranking it fifth nationwide In 2010, deposits in Hangzhou totaled RMB 1,708.4 billion, representing an annual increase of 19.6% and a CAGR of 20.4% over the last five years. Loans totaled RMB 1,507.9 billion, representing an annual increase of 15.0% and a CAGR of 22.2% over the last five years. As at the end of 2010, there were 275 financial institutions in Hangzhou, 33 more than the number in They include 42 banking institutions at provincial level or above, eight rural credit cooperatives, 63 insurance institutions at provincial level or above, three head offices of securities companies, and 116 offices of securities operators. According to the Financial Environment in China and its Evaluation released by the Institute of Finance and Banking of the Chinese Academy of Social Sciences in 2008 and 2009, Hangzhou was ranked first for two consecutive years among the large and medium-sized Chinese cities in terms of financial environment. RMB 100 million Others Major financial services Futures Banking Financial service industry Securities Insurance Added value of financial service industry in Hangzhou, CAGR: 25.0% Sources: Hangzhou National Economic and Social Development Report 2010; Reports on the Development of Financial Services in Hangzhou 2009 and 2010, Hangzhou Municipal Finance Office; Financial Operation Report of Hangzhou 2009, Hangzhou central sub-branches of the People s Bank of China

8 6 Invest Hangzhou: Financial Service Industry Industrial structure Banking and insurance are the pillars of Hangzhou s financial service industry, while securities and futures industries are growing fast There are 55 banking institutions which achieved profit of RMB billion in 2010, surging by 39.6% over the last year. The nonperforming loan ratio was only 0.9%. There are 63 insurance institutions which reaped premium revenue of RMB billion in 2010, representing an increase of 27.1% over the last year, and a CAGR of 22.8% over the last five years. There are 119 securities operators, which achieved revenue of RMB 3.16 billion and managed assets valued at RMB billion in 2010, a rise of 28.4% over There are 39 futures operators, which recorded fee revenue of RMB 970 million in 2010, increasing by 16.8% over Emerging financial industries are also thriving in Hangzhou, such as venture capital investments, guarantees and small loans There are 297 venture capital institutions in Hangzhou: 48 have filed their applications, which accounts for 9.2% of the total applications nationwide. As at the end of 2009, there were more than 200 guarantee institutions in Hangzhou. In 2010, another six small loan companies were established in Hangzhou. As at the end of the year, the registered capital of small loan companies in Hangzhou totaled RMB 4.63 billion. Loans granted in 2010 amounted to RMB billion. Revenue breakdown of the financial service industry in Hangzhou 1, 2010 Banking 银 行 Insurance 保 险 Securities 证 券 Futures 期 货 RMB Others 其 他 million Notes: 1.Figures of the banking industry represent profits while figures of other industries represent revenue. 2.Others include pawnbrokers, trusts and small loan companies. Sources: Hangzhou National Economic and Social Development Report 2010; Reports on the Development of Financial Services in Hangzhou 2009 and 2010, Hangzhou Municipal Finance Office; Financial Operation Report of Hangzhou 2009, Hangzhou central sub-branches of the People s Bank of China.

9 Invest Hangzhou: Financial Service Industry 7 Existing foreign investments The influx of foreign-invested financial institutions into the Hangzhou market As at the end of 2009, there were seven branches of foreign banks in Hangzhou, and their total asset value in RMB and foreign currencies rose to RMB billion, up 32.0% year-on-year. With the arrival of Société Générale and DBS Bank in Hangzhou in 2010, the number of foreign bank branches increased to nine. As at the end of 2010, 13 foreign insurance companies were present in Hangzhou, and they recorded premium revenue of RMB 1.5 billion. In December 2010, Morgan Stanley and the Hangzhou Government entered into an agreement to set up an RMB private equity fund worth RMB 1.5 billion, and to establish a head office in Hangzhou for the management of Morgan Stanley s RMB private equity fund in China. Foreign-invested financial institutions in Hangzhou, Bank: Sumitomo Mitsui Banking Corporation Bank: HSBC Bank Insurance companies: Allianz Cigna & CMC Banks: Standard Chartered PLC Nanyang Commercial Bank Insurance company: MetLife Bank: Bank of East Asia Insurance companies: Manulife- Sinochem Sun Life Everbright Life Banks: Citibank Hang Seng Bank Banks: DBS Bank Société Générale Insurance companies: Liberty Insurance AXA-Minmetals Assurance Private equity fund: Morgan Stanley Sources: Hangzhou National Economic and Social Development Report 2010; Reports on the Development of Financial Services in Hangzhou 2009 and 2010, Hangzhou Municipal Finance Office; Financial Operation Report of Hangzhou 2009, Hangzhou central sub-branches of the People s Bank of China

10 Potentiality Factors driving the development of the financial service industry Abundant private capital Strong demand for loans Promising market for insurance companies Booming demands for investment banking Full support to the financial services outsourcing sector Hangzhou is situated in one of the wealthiest areas in China, the Yangtze River Delta, where the GDP has reached about RMB 7 trillion, accounting for 17.6% of the national total. As the capital city of Zhejiang province, Hangzhou can provide financial services to enterprises and individuals throughout Zhejiang province. Thanks to the abundant private capital and robust financial environment in Hangzhou and Zhejiang province, there is much potential for development in the financial service industry in Hangzhou. Sources: Zhejiang Economic and Information Technology Commission website; China Finance Net ( zgjrw.com/news/200992/ jrb/ shtml)

11 Invest Hangzhou: Financial Service Industry 9 Factors driving the development of the financial service industry Hangzhou and Zhejiang province respond to market demands and promote the financial service industry in an innovative way: In 2009, Hangzhou Bank set up its Science and Technology Branch that specializes in serving small and medium technology enterprises. The first financial warehousing company in China was set up in Hangzhou to monitor chattel mortgages as a third party. Zhejiang province is a pioneer in financial innovations, such as network combined with guarantee credit, small loans, virtual financial supermarkets and rural banks. A credit guarantee union, which is the first re-guarantee institution in China, was set up in Hangzhou. Vigorous growth of small and medium enterprises ( SMEs ) and private enterprises in Zhejiang province: As at the end of 2010, there were more than 2.9 million market entities and 780,000 enterprises in Zhejiang province, increasing by 7.6% and 8.9% respectively over the last year. More than 90% of the enterprises in Hangzhou are SMEs and 81% are private ones. In 2010, Zhejiang province achieved an export value of USD billion, rising by 35.7% over the last year, of which 57.7% was contributed by private enterprises. Financial institutions are encouraged to extend their services throughout Zhejiang province. Corporate demands Industrial innovation Driving factors Policy encouragement Individual demands The government has policies in place to encourage the entry of financial institutions into Hangzhou: One-off rewards Housing subsidies and tax incentives Real estate purchase discounts Talent incentives Encouraging the granting of loans to SMEs As one of the wealthiest areas in China, Zhejiang province is a land of opportunity for personal financial services: In 2010, the per capita disposable income for urban residents in Zhejiang province reached RMB 27,359, far above the national average (RMB 19,109). In 2010, the per capita deposits in Zhejiang province were RMB 28,916, higher than the national average of RMB 22,634. In 2010, the per capita consumption. expenditure of urban residents in Zhejiang province was RMB 17,858, exceeding the national average by 32.6%. Sources: State Administration for Industry and Commerce website, 2011; National Bureau of Statistics of China website, 2011; ezjsr.com ( website 01/10/ shtml); chinanews.com ( shtml); China Finance Net ( Zhejiang Provincial Bureau of Statistics website, 2011

12 10 Invest Hangzhou: Financial Service Industry Abundant private capital Located in one of the most prosperous provinces in China, Hangzhou has an abundant supply of capital There are 1.88 million residents in Hangzhou with a monthly household income of over RMB 3,500, representing more than 90% of the adult population in Hangzhou. As at the end of 2009, there were approximately 47,300 individuals in Hangzhou and 116,000 individuals in Zhejiang province with a net worth of more than RMB 10 million, which rates them second in the national rankings. As at the end of 2010, the per capita balance of savings deposits of Hangzhou residents was RMB 57,000, far above both the provincial average (RMB 29,000) and the national average (RMB 23,000). Soaring profits for enterprises in Zhejiang province and Hangzhou In 2010, industrial enterprises above the designated size in Hangzhou achieved profits of RMB billion, representing an increase of 51.6% over 2009 and a CAGR of 24.5% over the last five years. In 2010, industrial enterprises above the designated size in Zhejiang province reaped profits of RMB billion, soaring by 47.3% over the last year. In 2010, the total profits recorded by 62,793 enterprises in the non-public sector of Zhejiang province were RMB billion, up 47.2% year-on-year. Hangzhou versus provincial and national balance of per capita savings deposits, 2010 RMB 10 thousand Hangzhou Zhejiang China 杭 州 市 浙 江 省 全 国 province Profits recorded by industrial enterprises above the designated size in Hangzhou, RMB 100 million CAGR: 24.5% Sources: Zhejiang Provincial Bureau of Statistics, 2011; ywnews.cn ( Hurun Wealth Report 2010

13 Invest Hangzhou: Financial Service Industry 11 Strong demand for loans There is strong demand for capital from a large community of SMEs in Zhejiang province and Hangzhou In 2010, loans in RMB and foreign currencies in Hangzhou increased by RMB billion, of which 85.4% was contributed by SMEs, 7.0 percentage points higher than in In 2010, loans in RMB and foreign currencies in Zhejiang province rose by RMB billion, ranking them first nationwide in terms of newly granted loans. Balances of loans in RMB and foreign currencies increased by 19.7% over the last year, of which loans granted to SMEs accounted for 57.4%. As at the end of 2010, the proportion of SMEs in the total number of enterprises in Zhejiang province was 90%, and yet the balance of loans granted to SMEs accounted for 17% of the total balance of loans, indicating great potential for the business. As at the end of 2010, five financial warehousing companies were established in Hangzhou, granting a total of 203 enterprises credit facilities worth RMB billion. Manufacturing, wholesale and retail, leasing and commercial services are industries in Hangzhou with fast-growing demands for loans In 2010, 32.7% of new loans were granted to the manufacturing sector in Hangzhou, up 12.7 percentage points over the last year. Balances of loans granted to the manufacturing sector amounted to RMB billion, up 20.2% year-on-year. As at the end of 2010, balances of loans granted to wholesale and retail, as well as leasing and commercial services were RMB billion and RMB billion respectively, representing growth rates of 34.6% and 23.1% respectively. The percentage of SMEs versus the percentage of loans to SMEs in Zhejiang province, 2010 Number of SMEs 90% Balance of loans granted to SMEs 17% Number of other enterprises 10% Balance of loans granted to other enterprises 83% Sources: Development Plan of Hangzhou s Cultural and Creative Industry ( ); 2010 Hangzhou Statistical Yearbook; Hangzhou Statistical Yearbook; yhjy.net ( people258.com ( nb.people258.com/newsdetail html); Central People s Government website ( content_ htm)

14 12 Invest Hangzhou: Financial Service Industry Promising market for insurance companies Life insurance companies have promising market in Zhejiang province and Hangzhou In 2010, the insurance penetration rates of Hangzhou and Zhejiang province were 3.4% and 3.1% respectively, while that of developed economies is normally 10% or higher. In 2010, the percentage of premium revenue over the balance of savings deposits of residents in Zhejiang province was 3.9%, compared to about 15% recorded by developed economies and 7% in developing economies. Located in one of the wealthiest provinces in China, Hangzhou offers property insurance companies a market with great opportunity In 2010, the vehicle population in Hangzhou was million, and the figure rose by 250,000 in The number of private cars per hundred urban households is 23, far above the national average of 13. As at the end of 2010, the private vehicle population in Zhejiang province reached 4.34 million, accounting for 6.9% of the national total. A large number of vehicles are high-end cars, for example 20% of Audi car sales in China are from sales in Zhejiang province. 20% 16% 12% 8% 4% 0% Insurance penetration rates of Hangzhou and Zhejiang province versus those of developed economies, % 3.1% 13.6% 9.9% 11.0%12.9% 16.8% Hangzhou Zhejiang Japan HK UK Holland Taiwan 杭 州 province 浙 江 日 本 香 港 英 国 荷 兰 台 湾 The private vehicle population in Zhejiang province and its percentage over the national total, thousand % 6.9% 6.9% 6.7% % % 6.5% 6.0% Private vehicle population in Zhejiang 浙 江 民 province 用 汽 车 保 有 量 占 全 国 比 例 Percentage over national total Sources: National Bureau of Statistics of China, 2011; Zhejiang Provincial Bureau of Statistics, 2011; hzstats.gov.cn; auto.xinmin.cn ( xinmin.cn/rollnews/2010/11/24/ html); cisc.cn ( html)

15 Invest Hangzhou: Financial Service Industry 13 Vigorous demands for investment banking The markets of Zhejiang province and Hangzhou are booming with corporate equity and debenture transactions, and the influx of foreign investments In Hangzhou, 19 companies were newly listed in 2010, raising total capital of RMB billion. As at the end of 2010, there were a total of 83 listed companies in Hangzhou, and the capital raised through listings totaled RMB billion. As at the end of 2010, there were 242 listed foreign and domestic companies in Zhejiang province, and the capital raised through listings totaled RMB 231 billion. Equity transactions are booming in Zhejiang province. As at the end of 2010, the total value of transactions in the Hangzhou Equity Exchange amounted to RMB 9.98 billion, up 64.8% year-on-year. In 2009, the value of spot and repurchase transactions of debentures in Zhejiang province expanded by 107.1% and 19.3% respectively over the last year. Zhejiang province is also seeing a growing influx of foreign investments. The figure soared from USD 391 million in 2006 to USD 4.02 billion in In 2010, Zhejiang province ranked first in terms of the number of foreign invested enterprises and volume of foreign investments, and it also ranked first among all Chinese provinces and cities in terms of volume and scale of overseas mergers and acquisitions. Funds raised through listings by Zhejiang enterprises, RMB 100 million 2,500 2,000 1,500 1, , Sources: Development Plan of Hangzhou s Cultural and Creative Industry ( ); hangzhou.com.cn ( cn/ /ca htm); Ideas for the Development and Planning of Zhejiang Radio, Film and Television Industry in the Twelfth Five-Year Plan (Exposure Draft) ;Radio Film and Television Bureau of Zhejiang Province website

16 14 Invest Hangzhou: Financial Service Industry Full support to the financial services outsourcing sector The financial services outsourcing sector is one of Hangzhou s focal points of development In 2010, the contract value of services outsourcing in Hangzhou approximated RMB billion (USD 2.3 billion), of which offshore contract value amounted to RMB billion (USD 1.91 billion), increasing by 62% and 68% respectively over The total revenue generated by the financial services outsourcing sector accounted for about 20% of the total revenue generated by services outsourcing in Hangzhou as a whole. As at the end of 2010, the headcount of Hangzhou s services outsourcing sector was 172,000, rising by about 76% over 2009 and accounting for about 6.6% of the national total. Zhejiang province and Hangzhou have issued a number of policies to encourage the development of services outsourcing. Hangzhou aspires to become a World renowned delivery centre for financial services outsourcing. In 2008, Hangzhou was awarded the Best City in the Development of International Financial Services Outsourcing at the International Outsourcing Business Development Summit. In 2009, Hangzhou was awarded the Best City in the Development of the Delivery Centre for International Financial Services Outsourcing at the Second International Outsourcing Business Development Summit. Major policies issued by the Hangzhou Municipal Government in support of the development of services outsourcing Year Issuer Policies Key Content Hangzhou Municipal Government Hangzhou Municipal Government Hangzhou Municipal Government Hangzhou Municipal Government Administrative Measures on a Special Fund for Services Outsourcing Sector in Hangzhou Development Strategy and Industry Planning of the Services Outsourcing Sector in Hangzhou Administrative Measures on a Special Fund for the Services Outsourcing Sector in Hangzhou (Trial) Certain Opinions from the General Office of Hangzhou Municipal Government on the Promotion of the Development of Services Outsourcing in Hangzhou The Municipal Government budgets a special fund of RMB 60 million annually in support of the development of services outsourcing Development planning of the services outsourcing sector in Hangzhou in Financial support provided to enterprises and training institutions in the services outsourcing sector Incentives provided to services outsourcing enterprises in terms of business development, capital, talent and living conditions Sources: Hangzhou Economic and Trade Committee website ( Ministry of Commerce of China website; National Bureau of Statistics of China website; Department of Commerce of Zhejiang Province website; Hangzhou Municipal Government website

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18 16 Invest Hangzhou: Financial Service Industry Case Study HSBC Bank (China) Company Limited Standard Chartered Bank (China) Limited HSBC Bank (China) Company Limited and Standard Chartered Bank (China) Limited s operation in Hangzhou have achieved tremendous growth since the establishment of their branches in Hangzhou.

19 Invest Hangzhou: Financial Service Industry 17 Case study I HSBC Bank (China) Company Limited Typical Services of HSBC China Hangzhou Branch Syndicated Loan Others Typical Services Letters of credit Trading finance Letters of Forfaiting guarantee Accounts receivable financing Background Headquartered in London, the HSBC Group is one of the world s largest banking and financial services organisations. Its founding member, The Hongkong and Shanghai Banking Corporation Limited, was established in 1865 in Hong Kong and Shanghai. Based in Shanghai, HSBC Bank (China) Company Limited is a wholly foreign-owned bank solely owned by The Hongkong and Shanghai Banking Corporation Limited. Established in 2006 with a registered capital of RMB 100 million, HSBC China Hangzhou branch is one of the foreign banks that has been a pioneer in the Hangzhou market. Tremendous growth since establishment HSBC China Hangzhou branch already recorded profits in the first year of its establishment and has expanded its network from one branch at the beginning, to one branch and three sub-branches in It has become the most profitable foreign bank in Hangzhou today. Thanks to Hangzhou s booming commerce and industry, and export-orientated economy, HSBC China Hangzhou branch focuses on financial and trading services to commercial and industrial sectors, including letters of credit, trading finance, letters of guarantee, accounts receivable financing and forfaiting. Headcount of HSBC China Hangzhou branch increased from about 20 in 2006 to over 100 in Why Hangzhou? Strong demand -- Hangzhou is prosperous with a strong demand for corporate finance. Market vitality is the key to driving foreign banks here. - Management of HSBC China Hangzhou branch Sophisticated banking networks -- Hangzhou is one of the Chinese cities with the most effective banking networks. - Management of HSBC China Hangzhou branch Scenic environment -- Hangzhou is known for its picturesque West Lake and pleasant living environment. - Management of HSBC China Hangzhou branch Sources: Interview with Management of HSBC China Hangzhou branch and HSBC corporate website (

20 18 Invest Hangzhou: Financial Service Industry Case study II Standard Chartered Bank (China) Limited Background Standard Chartered Bank ( SCB ) is a leading international financial institution headquartered in London. Standard Chartered PLC, the parent company of SCB, is listed on the London and Hong Kong Stock Exchanges. In China, SCB set up its first branch in Shanghai in Established on 27 March 2008, the Hangzhou branch of Standard Chartered Bank (China) Limited had opened three sub-branches by the end of The Hangzhou branch is achieving rapid growth with its focused development As at 31 December 2010, the balance of loans granted by the Hangzhou branch and the balance of savings deposits increased by 310% and 64% respectively over the previous year. Operating profit increased over 300% in 2010 compared to that in 2009, achieving the branch s targeted profitability ahead of schedule. Consumer banking has achieved tremendous growth since the branch s establishment. In SCB s consumer banking ranking of sub-branches in China, the1st Branch on Qingchun Road and sub-branch in Wulin District performed excellent. The development of the Hangzhou branch will focus on three areas. First, it will provide holistic services to local enterprises in support of their globalization strategies; second, it will provide private banking services to high net worth local individuals; and third, it will serve small and medium enterprises, especially export-orientated and high-growth enterprises. Why Hangzhou? Government encouragement -- The local government is proactive, supportive and openminded. - Management of SCB Hangzhou branch Favorable market environment -- Zhejiang is always a leading province in GDP performance and growth, and there is a huge demand for financial products. - Management of SCB Hangzhou branch -- There is an active private market in Zhejiang province. With a reliable track record and rapid growth, Zhejiang enterprises are ready to embrace innovative financial products. - Management of SCB Hangzhou branch Sources: Interview with Management of SCB Hangzhou branch; SCB corporate website (

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22 20 Invest Hangzhou: Financial Service Industry About Hangzhou Overview Economic development Industrial structure Education and cultural environment Contact list

23 Invest Hangzhou: Financial Service Industry 21 Overview Hangzhou is advantageously located and has a rich historical and cultural heritage Hangzhou, the capital city of Zhejiang province, is located in the north of China s southeast coast. As the economic, transportation and cultural hub of the southern wing of the Yangtze River Delta (YRD), Hangzhou ranks second in terms of economic prosperity in the YRD. As one of the cradles of Chinese culture and one of China s seven ancient capitals, Hangzhou was once referred to by Marco Polo as the most beautiful and elegant city in the world. Hangzhou covers a total area of 16,596 square kilometres. Under the jurisdiction of Hangzhou are the eight districts of Shangcheng, Xiacheng, Jianggan, Gongshu, Xihu, Binjiang, Xiaoshan and Yuhang; the three county-level cities of Jiande, Fuyang and Lin an; and the two counties of Tonglu and Chun an. As at the end of 2010, the registered population in Hangzhou was about 6,891,200. As a transportation hub in southeast China, Hangzhou is equipped with a well-developed transportation infrastructure Hangzhou is conveniently connected with a network of railways and expressways. Major railway routes include the Shanghai-Hangzhou high-speed railway, Ningbo-Hangzhou high-speed railway, Xuancheng-Hangzhou railway, Hangzhou-Ningbo railway and Shanghai-Kunming railway. Major highway routes include the Shanghai-Hangzhou-Ningbo expressway, Hangzhou-Pudong expressway, Hangzhou-Jinhua-Quzhou expressway, Hangzhou-Huizhou expressway and Hangzhou-Nanjing expressway, and 11 national and provincial highways have their centres in Hangzhou. The Hangzhou Xiaoshan International Airport, 27 kilometres away from downtown Hangzhou, serves 160 routes, including 30 international flights to Tokyo, Osaka, Pusan, Singapore, Hong Kong, Macau and Taiwan. In 2010, the airport recorded 17,068,600 passenger departures and arrivals, representing a 14.2% growth over Hangzhou s location in China Beijing Shanghai Hangzhou Hong Kong Sources: Hangzhou Municipal Government website; Hangzhou Urban Planning Bureau website; Hangzhou National Economic and Social Development Report 2010; Hangzhou Statistical Yearbook 2010

24 22 Invest Hangzhou: Financial Service Industry Economic development Hangzhou is highly competitive and has rapid economic development In 2010, Hangzhou s GDP amounted to RMB billion, up 17% year-on-year. The CAGR of Hangzhou s GDP from 2005 to 2010 was 15.1%. In 2010, Hangzhou s annual value of imports and exports totalled RMB billion (USD billion), growing by 30% over 2009, of which imports amounted to RMB billion and exports to RMB billion. Hangzhou offers a consumer market with huge potential Disposable income for residents is growing steadily. In 2010, Hangzhou s per capita disposable income for urban residents reached RMB 30,035, up 12% year-on-year, and exceeded the national average by 57.2%.In 2010, the consumer market continued to grow. Hangzhou s total retail sales of consumer goods increased year-on-year by 19% to RMB billion. GDP of Hangzhou, CAGR: 15.1% Hangzhou versus national per capita disposable income, Hangzhou CAGR: 12.6% RMB 100 million 8,000 6,000 4,000 2, ,946 4,789 5,088 4,104 3,444 2, RMB 40,000 30,000 20,000 10, Hangzhou China

25 Invest Hangzhou: Financial Service Industry 23 Industrial structure Evolution of Hangzhou s industrial structure Hangzhou has focused on the secondary and tertiary industries while developing the economy. These two industries have accounted for more than 95% of Hangzhou s GDP for the last five years. The tertiary industry has recently been gaining pace in Hangzhou. In 2010, the output value of the tertiary industry totalled approximately RMB billion, and the CAGR of the tertiary industry s output value from 2005 to 2010 was 17.4%. Breakdown of Hangzhou s GDP in 2010 Tertiary Tertiary industry industry 49% 49% Primary Primary industry industry 3% 3% Secondary Secondary industry 48% industry 48% Foreign direct investment (FDI) as the driving force of Hangzhou s economic growth In 2010, FDI in Hangzhou jumped by 8.5% yearon-year to RMB billion (USD 4.36 billion) in total. The CAGR of FDI from 2005 to 2010 was 20.5%. As at the end of 2010, the number of enterprises in Hangzhou with FDI over USD 10 million grew to 2,203, of which 82 are Global 500 companies, including GE, IBM, Siemens and Ericsson. During the 11th Five-year Plan period, Hangzhou attracted 91 investments each valued at over USD 50 million, 429 investments valued at over USD 30 million each and 1,538 investments valued at over USD 10 million each. RMB 100 million RMB 100 million Foreign direct investment, CAGR: 20.5% CAGR: 20.5% Sources: Hangzhou Municipal Foreign Trade and Economic Cooperation Bureau; Hangzhou National Economic and Social Development Report 2010; Hangzhou Statistical Yearbook 2010; Hangzhou Gaining Momentum for Economic Transformation, Zhejiang Daily, January 2011

26 24 Invest Hangzhou: Financial Service Industry Education and cultural environment High standard of education and wide range of financial schools There are 38 general colleges and universities, 317 senior and junior secondary schools, as well as 37 vocational training schools in Hangzhou. In 2010, there were approximately 116,000 new graduates from colleges and universities in Hangzhou, up by 8% year-on-year. There is a wide range of financial schools in Hangzhou, including the Zhejiang University of Finance and Economics, the Zhejiang Gongshang University, the Zhejiang Financial College and the Zhejiang Technology Institute of Economy. Faculties and schools in universities are also offering professional financial and accounting training, for example the School of Economics at the Zhejiang University, the College of Business Administration at the Zhejiang University of Technology, and the College of Economics at the Hangzhou Dianzi University. Hangzhou International School is the first school in Zhejiang province that caters to the children of foreign nationals, including those from Hong Kong, Taiwan and Macau. It is an American-style school with English as the medium of instruction, and offers a curriculum from pre-school to twelfth grade. Pleasant weather with four distinct seasons Hangzhou has a subtropical monsoon climate with an average annual temperature of 16.2 and annual rainfall of 1,469 millimeters. As at the end of 2010, Hangzhou had a greenery coverage rate of 40% and urban per capita green space of square metres. In 2009, Hangzhou was voted the Happiest City in China. Hangzhou has also received awards for National Advanced City Landscaping, National Garden City, National Excellent City in Comprehensive Improvement of Urban Environment, China Habitat Environment Prize, National Model City of Environmental Protection and China Outstanding Tourist City. Sources: Hangzhou Municipal Government website; Hangzhou National Economic and Social Development Report 2010; Development of Service Industries in Hangzhou 2009 and Ideas and Keys of the Development of Service Industries in Hangzhou 2010 ; hzstats.gov.cn; China Academy of Art website; Zhejiang University of Media and Communications website

27 Invest Hangzhou: Financial Service Industry 25 Contact List Hangzhou Municipal Foreign Trade and Economic Cooperation Bureau 457 Yan an Road, Hangzhou Telephone: +86 (571) Fax: +86 (571) Website: Hangzhou Municipal Centre of International Investment Promotion Telephone: +86 (571) Fax: +86 (571) Hangzhou Municipal Development and Reform Commission 318 North Huancheng Road, Hangzhou Telephone: +86 (571) Website: Hangzhou Municipal Construction Commission 9 Changsheng Road, Hangzhou Telephone: +86 (571) Website: Hangzhou Municipal Government Office of the Leading Group for Financial Affairs 318 North Huancheng Road, Hangzhou Telephone: +86 (571) jrb@hz.gov.cn Hangzhou Municipal Administration of Industry and Commerce 109 Fengqi East Road, Hangzhou Telephone: +86 (571) Website: Hangzhou Municipal Land and Resources Bureau 359 Wensan Road, Hangzhou Telephone: +86 (571) Website: Hangzhou Municipal State Taxation Bureau 276 South Jianguo Road, Hangzhou Telephone: +86 (571) Website: Hangzhou Local Taxation Bureau 152 Zhonghe Middle Road, Hangzhou Telephone: +86 (571) Website: Hangzhou Municipal Bureau of Labor and Social Security 242 Zhonghe Middle Road, Hangzhou Telephone: +86 (571) Website:

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