When you’re thinking about starting a business in China, it’s like picking your dream destination for a great adventure! But, before you pack your bags, let’s talk about choosing the perfect city to start your business journey. China has this cool classification system for its cities: Tier 1, Tier 2, and Tier 3. Think of it like ranking cities by how awesome they are businesses. The most recent ranking of Chinese cities for their commercial magnetism has just been released. There are more new first-tier cities now. Now, here’s the exciting part: Tier 1 cities are like the superheroes of business cities! They excel in so many ways, making them the top places on our list.
But wait, there’s more! These Tier 1 cities also have a bustling atmosphere of competition, which can be a great motivator. Plus, they’re often close to other businesses, making collaboration a piece of cake. Oh, and they’ve got that fancy image that can boost your brand’s reputation. Last but not least, their business policies are usually pretty friendly for entrepreneurs.
So, when you’re thinking about where to set up shop in China, it’s no surprise that the Tier 1 cities are the top contenders. They’re like the A-listers of the business world!
Wuhan
New Tier 1 | Population: 8 million | Metro system: 460 km | Traffic: Good | GDP: $258 | Hub for: Life Science and Manufacturing
Wuhan, the capital city of Hubei province in Central China, has received a notable upgrade, securing its position as a new first-tier city. Wuhan hit hard during the early days of the COVID-19 pandemic, saw a dip in its business district’s strength, sliding down seven places. Additionally, the daily average number of people moving around the city decreased by two positions. But, it still holds significant importance as a political, economic, financial, cultural, and educational center in the heart of China. Major industries thriving here include optical electronics, automobile manufacturing, and iron and steel production.
Additionally, the city is witnessing growth in sectors like pharmaceuticals, biotechnology, and environmental protection. Wuhan’s GDP is notably split between its industrial and service sectors, showcasing its diverse economic landscape.
Nanjing
New Tier 1 | Population: 9 million | Metro system: 499 km | Traffic: Good | GDP: $232 | Hub for: IT and Life Science
Nanjing isn’t just a city with a rich historical and cultural heritage; it’s also a powerhouse in terms of economic development and urban infrastructure. Situated in the heart of the Yangtze River Delta (YRD) region, Nanjing plays a multifaceted role as a central hub for politics, industry, culture, logistics, and technology within Jiangsu Province. In recognition of its historical significance, cultural vibrancy, and robust economic prowess, Nanjing was officially granted sub-provincial administrative status by the Central Government of China, joining a select group of 15 other cities in this prestigious category back in 1994.
Hangzhou:
New Tier 1 | Population: 8 million| Metro system: 516 km | Traffic: Good | GDP: $578 billion | Hub for: IT and Life Science
Hangzhou is the capital of Jiangsu, advantageously located 2 hours away(by rail) from Shanghai in the Yangtze River Delta. Hangzhou is best known for being the headquarters location of Alibaba and for West Lake. West Lake is a huge lake surrounded by ancient temples and gardens, a UNESCO world heritage site, located in the middle of the city.
Hangzhou (along with Chengdu) is considered an “Emerging 1st tier city” with characteristics resembling that of a first-tier city. The city attracts a lot of great domestic talents and is an IT and science research hub.
Chengdu:
New Tier 1 | Population: 9 million | Metro system: 518 km | Traffic: Bad | GDP: $308b | Hub for: IT, Electronics, Logistics, Manufacturing
Chengdu is the capital of Sichuan province and the gateway to western China, also renowned for its panda sanctuaries. It is located in the center of China, 2 hours away from Chongqing, the only other mega-city in the region making this two-city hub the uncontested business center in western and Inner China.
Chengdu is an “emerging 1st tier city” and is the most advanced 2nd tier city in China. It benefits greatly from being an almost tier 1 city in the emerging deep China regions of Sichuan and the surrounding provinces. Chengdu is the fastest (economically) growing city in China. In 2019 Bloomberg reported Chengdu had overtaken Shenzhen becoming the best performing city in China.
Beijing
T1 city | Population: 22 million | Metro system: 807 km | Traffic: Bad | GDP: $624.5 b | Hub for: Services, Manufacturing & Construction
China’s capital and the 2nd most populous city in China. Beijing is the political and cultural center of China and has long been a major international business hub. It is home to the highest number of billionaires and fortune 500 companies in the world. The city is home to the second highest number of foreign talents in China, after Shanghai.
However, most of the fortune 500 companies in Beijing are state-owned and the city has a general reputation of having stricter policies in regards to foreigners and foreign business operations which is why we decided to rank Beijing last out of the 4 tier 1 cities on our list.
Guangzhou
T1 city | Population: 14 million | Metro system: 621 km | Traffic: Medium | GDP: $428.3 | Hub for: Manufacturing
Also known as Canton, Guangzhou is over 2200 years old serving as the terminus of the ancient Silk Road. It is worth noting that the locals’s first language is Cantonese, although many speak Mandarin as a second language. The city is the capital of Guangdong province, the most populous and urbanized province in China. Guangzhou is home to a large number of foreigners from Africa, Southeast Asia, the Middle East, and Eastern Europe.
The Canton Fair, the largest trade fair in the world, happens twice a year in Guangzhou. In 2019 the fair attracted 200,000 visitors and generated over $30 billion in trade. For this, Guangzhou is an ideal location for trading and commerce.
Shenzhen
T1 city | Population: 13 million | Metro system: 547 km | Traffic: Good | GDP: $475.8| Hub for: Tech, Finance & Logistic
Shenzhen is located in Guangdong province in the Pearl River Delta, less than an hour away from Hong Kong. Shenzhen is China’s most hi-tech city, richest city (per capita income), and youngest city. The average Shenzhen resident is 28 years old. Deemed the hardware capital of the world, the area around Shenzhen produces 90% of the world’s electronics. Arguably the best location in the world to prototype and produce consumer electronics due to the abundance and proximity of custom-made and retail suppliers.
The city is a tech and financial hub, with some of the largest tech and banking companies in the world being headquartered there such as Tencent, Huawei, DJI, BYD, China Merchants Bank, and Ping’An Bank. Shenzhen is the 4th city in the world with the most billionaires (after Beijing, Shanghai, and New York).
Before 1980, Shenzhen was a tiny village bordering Hong Kong. In 1980, the CPC designated the area as China’s first free trade zone and the influx of population and direct investment quickly followed. Because it is a new city, roads and infrastructures are modern and transportation is not a concern.
Shanghai
T1 city | Population:28 million | Metro system: 831km | Traffic: Medium | GDP: $612b | Hub for: Finance, Manufacturing, Wholesale and Retail
Shanghai always ranks among the best cities for business in China. It is the most populous city in China, has the largest and busiest metro system in the world, and has the busiest container port in the world. Shanghai has long been a favorite in China among expats, it has the highest population of foreigners in China. It is an international hub where top talents from all over China and the rest of the world settle in to find work opportunities. In 2020, during the Covid-19 pandemic, large numbers of college educated Chinese who had studied and lived overseas, migrated (or moved back) to Shanghai, further adding to the talent pool.
Shanghai is advantageously located at the mouth of the Yangtze River Delta, halfway between the capital Beijing in the north and the Pearl River Delta (Guangzhou, Shenzhen, and Hong Kong) in the south. The city’s location in combination with China’s expansive railway and multiple airports make it an ideal well-rounded place to travel to and from in China, East Asia, and Southeast
All in all
In conclusion, choosing the right city to start your business in China is like laying a strong foundation for your business. Starting a business in a first-tier city in China offers a multitude of advantages. These cities, such as Shanghai, Beijing, and Shenzhen, provide access to vast and diverse consumer markets, a highly skilled workforce, and numerous networking opportunities. They are hubs for finance and investment, making it easier to secure funding and establish global connections.
Additionally, first-tier cities often offer favorable policies and incentives for businesses, fostering a supportive environment for startups and growth. Being in such a competitive environment can stimulate innovation and enhance your business’s visibility. Moreover, the rich cultural and lifestyle amenities of these cities can attract and retain top talent, ensuring your business’s long-term success.
