City Report: Wuhan

City Report: Wuhan

Tuesday, December 19, 2006 22:12

Located in the middle of Hubei province, Wuhan lies at the intersection of the Yangtze and Hanshui rivers. As a city with a long history of trade, Wuhan’s 8 million people reside 3 distinct districts (Hankou, Huyang, and Wuchang) which are commonly known as Wuhan’s three towns. Located within a 1000km radius of Xi’An, Chengdu, and Guangzhou, Wuhan has undergone significant growth in population, economy, and FDI investment.
While Wuhan has been growing, it has not grown as fast as many thought it would, and has actually lower growth rates than other second tier Chinese cities. While once considered a critical transportation hub between North and South China, the move to invest in the West has taken what would have been investment earmarked for Wuhan to other locations. As a result, the economies of Chengdu, Chongqing, and Kunming have all grown at faster rates and even Shanghai’s satellite towns of Suzhou and Ningbo have larger GDPs.
Considered one of China’s four furnaces, its primary industry strengths lie in steel, iron, and auto parts. Wuhan’s importance will continue to rise as China’s interior provinces continue their economic growth. Following the economic growth has been the rising incomes of Wuhan’s residents, who are now attracting the attention of high end developers, auto manufacturers, and foreign branded consumer goods companies.
Economic Overview:
Wuhan is situated in the middle of Hubei Province of China, the east of Jianghan Plain, and the intersection of the middle reaches of the Yangtze River and Hanshui River. Guangzhou, Chengdu, and Xi’an are all within a circle with a center – Wuhan and radius – 1000km.
More than 30,000 industrial enterprises inhabit in this city. Wuhan maintains five industrial poles of photoelectron, automobile, steel and iron, bio-medical and environmental protection. Also one of the biggest iron and steel industry bases in China; Wuhan Iron and Steel Group is the third iron and steel consortium in China with an annual productive capacity of 10,000,000 tons of iron and 10,000,000 tons of steel. In recent years, Wuhan focuses on the development of hi-tech industries and has become the biggest photo-electronic information industry base in China; Wuhan’s China Optics Valley has become one of the places gathering China’s hi-tech industries.

While located between the east coast of Shanghai and the western front of Chengdu and Chongqing, Wuhan has yet to become the hub of business it thought it would. While building the infrastructure necessary, the link has yet to prove important as earlier believed. The majority of the reason for this is that the West is just beginning to develop and the infrastructure was not needed. In addition, while it was thought the rise of the west would lead to more shipments of goods from the west to the coast, it is being shown that a lot of what is produced in the west is either intangible or is consumed in the west.
Foreign Presence:
Wuhan has established itself as a city where large amounts of money from foreign companies can be invested. While few foreigners actually enjoy going to this city, Wuhan has a lot of heavy industrial complexes for steel, auto, and coal that require large amounts of investment. With the rapid growth of each of these industries, foreign investment has been put into Wuhan.
However, due to the heavy pollution and muggy summers, few foreigners actually stay in Wuhan full time, but instead choose to reside in either Shanghai or Beijing and fly in when needed. It is only a matter of time though before foreign managers do begin residing in Wuhan on a permanent basis as Wuhan’s location will allow for foreign managers to manage sites in Wuhan and the west while visiting customers located in Shanghai.

While other cities that are seeing a reduction in the number of contracts with and increase in contracted capital though, the number of contracts appears to be steadily increasing, which is a strong sign for Wuhan’s future. As many of the industries that were once restricted (automotive, logistics, and others) become open to wholly owned foreign enterprises, the level of investment will continue to increase.
Areas where the Government of Wuhan is encouraging investment include:
Automotive
Bioengineering and Pharmaceutical
Electronics
Agriculture
Wrap up:
Wuhan was once a city that had great potential. It was on the Yangtze, it had industry, and it has a history of foreign investment. Unfortunately for Wuhan, it wasn’t close enough to the coast, and cities like Nanjing, Ningbo, Suzhou, and Xiamen shot past the established Wuhan.
Most recently, the drive west has highlighted Wuhan’s efforts. Unfortunately, with many rushing to Chengdu and chongqing, Wuhan has yet to gain the full attention of industry or investors, but in the next few years that will change.
With its roots in steel and heavy industry,Wuhan is a city that has been and will continue to be very interesting to those looking for a place to manufacture automobiles, auto part, and other heavy industrial goods. For those investing in their distribution networks, Wuhan is also going to be a place that should be considered with the east/ west and north/ south highway tracks running through the city.