East Zhengzhou rises

The Henan Art Center in Zhengdong New District's business area. Zhang Li / For China Daily

 

Editor's note: With strategic impetus from the nation's top leaders, China's urbanization process has never been so fast and so widespread.

How many cities it is building? How many new companies are growing up with these cities? No one knows - because things change all the time.

But what we do know, through China Daily journalists' daily reporting trips, is that each city is trying to build a new zone, and each is trying to differentiate itself from its past by carving a new business niche.

Beginning today, we will run a weekly column featuring the various cities, large and small, that are learning new lessons, coming up with new designs, building new global business ties and shaping new business models.

In today's edition of "New city, new business", we feature two ambitious plans of Zhengzhou, the capital city of Henan province, as reported by our business reporters Ed Zhang and Zheng Yangpeng.

Zhengzhou has two new zones. One is the Zhengdong New District. As a completely new wing of the city, it now features clusters of financial services and education facilities along with new residential estates.

The other new zone is the Zhengzhou Comprehensive Experimental Zone for the Airport-Based Economy, approved by the central government only recently, as a much larger business area to tap the potential of the city's air transportation hub.

Looking around the newly developed area of Zhengzhou, the capital of Henan province, from the top of the 280-meter tall Millennium Plaza, a modern office and hotel tower styled after a classical Chinese pagoda, is almost a surreal experience.

The tower is one of the landmarks of the Zhengdong New District, known as ZND, looking over the 3.45-square kilometer central business district area.

Next to Millennium Plaza is an arts complex, styled after ancient musical instruments from Henan province, and a massive exhibition center that resembles an open umbrella.

An artificial canal links the CBD area to a vast lakefront and to a new cluster of skyscrapers, which will form a sub-CBD area.

What do these ultra-modern buildings stand for beside the 160 billion yuan ($25.8 billion) investment that was used to build them? In what way are they different from, for instance, the college-packed and research-heavy Zhongguancun area of Beijing, or the financial hub in Shanghai's Lujiazui, or all the export-oriented industrial towns along the coast?

These facilities are already being put to good use, said Zhao Xinmin, deputy managing director of the ZND administrative committee.

Of the 7.6 billion yuan in tax revenue generated by the ZND last year, 4 billion yuan was collected from the CBD area, which only accounts for about 3 percent of the district's area.

"You would never have a harvest worth this much if you kept running farms here," the official said.

The tax revenue generated by the ZND was 4.5 billion yuan in the first four months of the year - as the CBD became home to about 160 banks, insurance companies, securities firms and other financial institutions.

The 15 major banks based in the CBD accounted for 70 percent of all the deposits and 60 percent of all the loans in Henan province.

Forward-looking plan

Zhengdong's development is the fruit of a forward-looking plan that the province formulated a decade ago. Premier Li Keqiang, then the top official of Henan, was the mastermind of the province's overall development plan.

In 2000, Li said that Zhengzhou was not living up to the role it could achieve as a main growth engine for the province, let alone Central China. Zhengzhou should build its eastern side into a new growth engine, Li added.

The original vision was much smaller. As an old military airport was going to be relocated, the city planned to build an industrial park to attract OEM deals from Hong Kong and Taiwan in the empty area.

But this was a game that many Chinese cities were playing at that time. Chances would be slim for Zhengzhou - had it joined the game - to come out a winner because it hardly had an advantage in it, with neither a seaport nor rich mineral resources. This is also why many hinterland cities, including all the other provincial capital cities in Central China, have difficulty distinguishing themselves from one another.

So what the then Henan governor Li wanted was to make Zhengzhou dream a bigger dream. He insisted on a forward-looking plan that would catapult the city into the limelight for a longer span of time.

The new district should build itself into a strategic pivot for not just Zhengzhou, and not just Henan province, but also Central China - and it should have not only some manufacturing and technology companies, but also the kind of industries that the more development there is, the more of it is needed.

It should have a forward-looking design, too. In 2001, Zhengzhou chose, from six bidders at top global design companies, a blueprint by acclaimed Japanese architect Kisho Kurokawa.

Zhou Dingjun, a former student of Kurokawa who was then working with him on the Zhengdong project, told China Daily that the architect's ideas for the area were deeply influenced by Eastern philosophy, especially the harmonious co-existence of a modern city's multiple functions.

"The ZND's multi-polar design is Mr Kurokawa's last masterpiece," Zhou said.

Kurokawa died in 2007. Zhou joined the city planning authority and was promoted to deputy director of the ZND administrative committee.

Highlighting services

Having opted to drop out from the game that all others were playing, Zhengzhou decided that its new positioning should bet on the growth of the high-end service industries.

Zhao Xinmin, the deputy managing director of the ZND administrative committee, said that some local officials didn't believe that Zhengdong could bypass the common development model of "agriculture first, industries second and then services industries", and leapfrog directly to services.

But since the original idea of signing up a lot of manufacturing investors had hardly worked, and Chinese banks began a new round of expansion after their market-oriented restructuring, officials were happy to welcome them as ZND's first tenants.

In 2007, Agricultural Bank of China became the first bank to base its provincial branch in ZND. Prior to that, ABC already had an office there.

Zhao Tianmin, general manager of corporate banking for ABC's Henan branch, recalled that when the bank began to work with ZND in 2003, it helped the latter arrange compensation for local farmers for land purchases.

And after being familiar with ZND's prospects, they also allowed ZND to use undeveloped land as collateral for loans to finance construction projects.

Now, as the main part of ZND's construction is finished, the arrival of large corporations has generated new clients for ABC's operations there.

Following ABC, many major Chinese banks began to move to ZND, and after that, securities companies and foreign banks. "HSBC is already here," Zhao said. "Standard Chartered may move in soon."

And managing high-end service industries requires advanced skills. So, the ZND administrative committee has been recruiting college graduates from overseas.

Fang Bin, a 25-year-old with a master's degree from the United Kingdom's University of Stirling, was recruited last year along with 10 other people with similar credentials. Fang majored in investment analysis. "I felt that I may contribute more in here," he said.

Other companies, especially the publicly listed ones and the ones seeking to be listed, like to be where the money is.

Baixiang Food Group, a Chinese maker of instant noodles and soft drinks, is one of the companies waiting to go public from here.

Feng Zhenwei, administrative director of Baixiang, said that in 2006, when the company started drawing up plans to relocate its headquarters from a small city in Henan, there were many other proposals.

"Some said Beijing. Others wanted Shanghai," Feng said.

But, in the end, the company moved to ZND. Feng said ZND's location allows the company to manage its sales in both northern and southern parts of the country. "It's a better place than either Beijing or Shanghai," Feng added.

Indeed, as Henan's distance with the rest of China has been shortened, ZND may have to take on more service functions for the whole country.

Contact the writers at edzhang@chinadaily.com.cn and zhengyangpeng@chinadaily.com.cn