Interior of the Hualing market Photo: Liang Fei/GT

A Hualing market in Urumqi. Photo: Liang Fei/GT

As we took a taxi ride to the headquarters of the Xinjiang Hualing Industry and Trade (Group) Co in Urumqi last week, our taxi driver asked if we were about to have a job interview at the company.

"Well, Hualing is a big company. Many young people want to work there," the taxi driver reasoned after we told him no.

Our driver's statement came as no surprise as the privately-owned Hualing Group is one of the numerous companies in the Xinjiang Uyghur Autonomous Region that have benefited from the economic ties between the region and the countries along the ancient Silk Road.

Founded in 1988, the Hualing Group was originally a small company trading in daily necessities, but now Hualing markets have become important hubs in Xinjiang for bringing Chinese goods to other Eurasia countries.

The company currently operates four major wholesale markets in Xinjiang, selling a variety of goods ranging from home appliances, building materials, furniture to jewelry.

Geo-advantage

Located in Northwest China, Xinjiang shares borders with eight countries including Russia, Kazakhstan, Tajikistan, Pakistan and India. This geographical location has made it an important gateway connecting China, Central Asia and Eastern Europe.

Ma Jie, a professor at the Xinjiang University of Finance and Economics, noted that the economies of Central Asian countries are a great fit for China. "Central Asian countries rely on heavy industries especially in the energy sector, but China has the light industry goods they need."   

"Xinjiang's location may not be as favorable as that of east coast provinces, but we have a natural geographic advantage when it comes to the Central Asian and Eastern European market," Gao Jianmin, director of the Hualing Group, told the Global Times.

This natural advantage has motivated the private sector in Xinjiang to take the lead in promoting trade ties between China and other Eurasia countries.

In 2007, the Hualing Group started to move westward, investing in the lumber and mining sectors in the former Soviet Union country of Georgia. Driven by the country's business potential, two years later the company signed an agreement to build a Free Industrial Zone in Kutaisi, the second-largest city in Georgia, aiming to attract Chinese manufacturers.

In 2012, the group expanded its investment in the country and started to build the Hualing International Special Economic Zone in the capital city of Tbilisi, which it hopes will bring in more Chinese traders and manufacturers. 

That same year, the company acquired a local commercial bank to provide financial services to the growing number of Chinese merchants there. Now Hualing has become the largest Chinese investor in the country.

The company is quite upbeat about investment in Georgia, as it believes this will help Chinese companies reach further into the European market - with smaller logistics costs and less trade barriers.

"It won't be a problem for us to attract Chinese investors to our industrial zones in Georgia, especially after the government's initiative to push the development of the Silk Road Economic Belt," Gao said.

Construction of the group's industrial zone has already finished and it is expected to begin operations soon. Meanwhile a market within the International Special Economic Zone in Tbilisi was opened on June 21.

"The government's push to develop the Silk Road Economic Belt is in accordance with Hualing's own strategy, which will definitely help boost our development," said Zhang Jun, Hualing general manager.

In Kazakhstan, the privately owned Xinjiang Sanbao Industry Group is also building an industrial park for potential Chinese manufacturers. Looking to attract chemical and high-tech companies from China, construction is expected to start within the year.

Besides industrial goods, development of the economic belt may also help boost the export of Xinjiang's specialty products.

For example, Xinjiang Top Agricultural Public Ltd has been exporting fragrant pears, which only grow in the city of Korla in Xinjiang, to markets in the US, Canada and even some South American countries, but its ambitions go far beyond these markets.

"I hope that development of the Silk Road Economic Belt can also help us nudge into the European market," Chu Yunxin, the company's chairman, told the Global Times, adding that the company wants to set up offices in the land ports of Horgos and Alataw - two important gateways in Xinjiang leading into Kazakhstan.  

Dynamic private sector

Ma noted that private firms have shown greater vitality in trade and investment in Central Asia as well as Eastern Europe because they are more flexible in dealing with the complicated investment environment in the region, compared with larger State-owned enterprises.

In 2013, private firms in Xinjiang reported a total trade volume of $20.4 billion, up 11.4 percent year-on-year and accounting for 73.9 percent of the region's total trade volume. Meanwhile, private traders' contribution to total trade volume grew to 83.8 percent in the first five months of this year, according to data from the Xinjiang Uyghur Autonomous Region's Department of Commerce. 

Huang Pingchao, a director at Xinjiang's Department of Commerce, told the Global Times that among the 55 Xinjiang companies that reported trade volume higher than $100 million in 2013, 44 are privately owned.

Experts note that the private sector plays an important role in bringing vitality to the local economy and that a flourishing private sector is sure to help bring stability as it contributes to job creation.

By the end of 2013, the private sector in Xinjiang accounted for 80 percent of jobs in the region, the Xinjiang Daily reported in April.

Chu said that his company cooperates with some 3,500 local families, mostly Uyghur families, to produce pears for the company.

"One mu (0.067 hectare) of fragrant pear orchards can provide more than 10,000 yuan ($1,601) of annual income per family," said Chu, adding that this income is significant for families in Xinjiang, especially those living in the less-developed southern region.

However, experts note that although private companies have shown great vitality in trading with bordering countries, they are still weak in manufacturing.

Huang noted that currently some 80 percent of the goods exported from Xinjiang are produced in other provinces and that only around 50 percent of imported goods are processed in Xinjiang.

However, the manufacturing sector in Xinjiang should see a boost after the economic belt is established, Huang said, adding that multiple industrial parks are also being built to lure manufacturers to the region.