Technology companies ramping up investment in virus-hit province

A string of investment plans announced by technology and retail giants in Hubei province indicated the tremendous development potential and vitality of the area, as it plays a vital role as a main transportation hub in the nation, along with having abundant natural resources, favorable industrial foundations and well-educated labor forces, industry experts said.

Chinese e-commerce giant JD announced it will invest more than 6 billion yuan ($849 million) in Hubei, the hardest-hit region by the COVID-19 outbreak on the Chinese mainland, over the next three years. The investment is part of a bid to help boost the economic recovery and development of local small and medium-sized enterprises in the area.

The company will help Hubei build next generation infrastructure centered on intelligent supply chain and logistics. It will propel the upgrading of the logistics industry on the basis of its Asia No 1 logistics park in Wuhan and an efficient logistics network covering Hubei province.

It will support the construction of a series of smart city services, including Hubei's emergency material management platform and digital media information service platform. This will help local government improve its emergency response capability by leveraging JD's strength in cloud, artificial intelligence and big data.

"Hubei shows tremendous development potential, in view of its favorable geographical location, highly developed industries, plenty of natural resources and well-educated labor, which attract major technology giants to invest here," said Raymond Wang, a partner at consultancy Roland Berger China.

Wang noted a series of investments also showcase the social responsibility of those tech and retail powerhouses. There was a shortage of technology applications in governance and lack of modern retail supply during the epidemic so this represents huge business opportunities for the tech and retail giants.

JD said it will strengthen its backup for local brands and SMEs in Hubei and help sell local agricultural products to consumers across the nation.

On April 1, JD kicked off a special campaign called "Buy Hubei Goods" on its online and offline channels, partnering with the media to advertise local produce.

From April 1 to Tuesday, 1,400 metric tons of Hubei's agricultural produce have been sold at the online marketplace, with sales revenue surging 106 percent compared with the same period last year.

JD will likewise focus on facilitating the sale of agricultural products from poverty-stricken areas in Hubei, and help the impoverished areas by supporting the development of local industry, creating employment opportunities and offering financial support.

Shen Meng, director of boutique investment bank Chanson & Co, said Hubei is an ideal place for internet giants to invest. The biggest operating costs for IT companies lie in the R&D staff and internet infrastructure, but Hubei can provide them with high-quality resources in both areas.

"There are also more than 1 million university students in this area, especially those with a solid foundation in science and engineering, thus providing sufficient talents in the aspect of technological innovation," Shen said.

These investments will provide necessary funds for the adjustment of the province's economic structure, and support poverty alleviation and development of local industries, Shen added.

Tencent Holdings Ltd pledged to increase investments in the fields of digital government, intelligent education, smart transportation, artificial intelligence and security in Wuhan, with a goal of quadrupling the number of employees within the next three years.

The company will continue to promote the construction of the Tencent (Wuhan) Digital Industry Headquarters in the city, where it aims to embark on digital governance and smart city initiatives.

It will establish a smart education base to expand the scale of online education platform Penguin Counseling, set up a smart transportation base and an academy to jointly foster digital talents in the automotive industry with automaker Dongfeng Motor Group.

Separately, Walmart China also announced it will invest 3 billion yuan in Wuhan, and plans to open four Sam's Clubs, 15 shopping plazas and more community-based retail stores in the next five years. The move is set to enhance the layout of retail community services and bring more vitality to the retail market in Wuhan.