Anhui leverages new philosophy to succeed

Updated:Jul 26,2022 10:09 AM CHINA DAILY

An aerial view of the Hefei National High-Tech Industry Development Zone. CHEN RENLEI/FOR CHINA DAILY

Province sheds agricultural image to become national manufacturing powerhouse

From a once largely agricultural province, Anhui has risen in the recent decade to become a manufacturing powerhouse, according to provincial leaders and entrepreneurs.

Ranked 11th among the 31 provincial-level regions on the Chinese mainland, Anhui's annual gross domestic product last year climbed to nearly 4.3 trillion yuan ($636.8 billion)-higher than that of Sweden-from 1.83 trillion yuan in 2012.

Over the course of the decade, Anhui has reversed the old stereotype that it is an agricultural region or inland hinterland, Zheng Shanjie, Anhui's Party chief, said at a news conference on July 20 in the provincial capital, Hefei.

Wang Qingxian, the provincial governor, has witnessed the change firsthand.

Starting out as a journalist, he remained in media until 2004, when he entered politics. He became Anhui governor early last year.

"I used to come to Anhui to cover agriculture as a reporter, but when I came back 20 years later, I discovered that the province had become a powerhouse of industrial development," Wang recently said during a program on China Central Television.

In recent years, provincial authorities have emphasized the manufacturing sector more than ever.

Wang cited three factors to explain the sector's success: technological strength, the rapid growth of the gross volume of leading high-tech companies and the consolidation of the scientific base.

Part of the Baohe Creative Culture Industry Park in Hefei. CHEN DENGYU/FOR CHINA DAILY

In the past, local governments nationwide pursued somewhat similar policies to attract investors, offering land use incentives and tax cuts. Anhui seemingly shaped a philosophy of its own.

The province listed 10 main sectors as strategic emerging industries, among them new-generation information technology, new-energy vehicles (NEV) and intelligent and connected vehicles (ICV), artificial intelligence and new materials.

"The provincial government has created a team of officials specifically for each of the sectors, and each is headed by a provincial leader who is known as the 'chain head'," Wang said during the CCTV program.

The governor himself is the chain head of the new-generation information technology sector, which now includes major semiconductor makers like ChangXin Memory Technologies and Nexchip Semiconductors, as well as some 300 upstream and downstream firms.

"The chain is actually four-in-one, namely combining the industrial development, science and technology innovation, financial and talent chains," he said.

The main plants of BOE Technology Group Co Ltd and Visionox Technology Inc-both leading domestic Chinese display panel suppliers-are in Hefei.

"We have located our flexible and foldable screen plant here primarily because of market regulations," said Zhang Deqiang, president of Visionox.

"With the support of successive chain heads over the years, Anhui has built up a cluster of display panel and semiconductor companies. For example, we can easily get materials like glass, chips and organic materials locally, which helps us save up to 15 percent on logistics costs," he said.

Technicians work on a production line at an NEV-power battery firm in Hefei, Anhui province, in July. XIE CHEN/FOR CHINA DAILY

Li Bin, president and CEO of Nio, a major NEV maker whose China headquarters are in Hefei, echoed the Visionox president's comments.

With an intact supply chain in Anhui and the Yangtze River Delta Region, which also includes Jiangsu and Zhejiang provinces and Shanghai, manufacturing vehicles in Hefei helps save the firm as much as 5,000 yuan per car, Li said.

The Anhui and Hefei governments have made plentiful governmental funds available to support firms through investment, rather than subsidies.

When Nio, a publicly-traded company, was facing financial difficulties in 2020, the Anhui government invested billions of yuan in the company via its funds, which Li considered vital to the firm's continued development.

Later, Nio's share price surged. "So we bought back part of the government stake in 2020 and 2021. Its original value was 1.5 billion yuan, and we paid 7.5 billion yuan to buy it back," said Li, adding that the Anhui government then used the gains to establish another fund to further support the entire NEV and ICV industry.

"Governmental departments must familiarize themselves with market laws and learn to respect and use them, and also take advantage of macro regulation tools when they fail. Doing these things will allow governments to better play their role," Wang said.

Realizing that many companies did not have enough knowledge of financing and relied too heavily on banks, the provincial government launched a plan last year to comprehensively train their senior executives.

"So far, about 16,000 entrepreneurs have participated in the training program," said Wang, adding that 23 Anhui companies became publicly traded last year, the highest single figure ever.

An aerial view of the Xin'an River in Huangshan, Anhui province. PAN CHENG/FOR CHINA DAILY

"A region's business climate is best examined during hard times, just as fuel delivered when it snows moves more hearts," Zheng told the news conference, using a traditional Chinese proverb.

The Chinese Government Transparency Index Report (2021) recently released by the Chinese Academy of Social Sciences shows Anhui ranked third among provincial-level administrative regions, behind Beijing and Shanghai.

With a plethora of scientific institutes, among them the Hefei-based University of Science and Technology of China, Anhui got central authority approval in 2017 to create the Hefei Comprehensive National Science Center, one of four in the country.

"Training well-rounded talent familiar with science and technology, industrialization, finance, marketing and management is crucial to promoting the integration of sci-tech and industrialization, but we still don't have enough of these people," Wang said.

To that end, the CPC Anhui Provincial Committee and the provincial government plan to create a top-notch science and technology business school at USTC, which will be part of the province's more ambitious plan to create the university's version of Silicon Valley.