Three sculptures in the square of Alibaba Group headquarters in Hangzhou in May. Photo: Liu Xin/ GT

Sun Mei, a resident in Hangzhou, East China's Zhejiang Province, finds it more inconvenient if her phone runs out of battery than if she runs out of money in the city.

Sun could use her electronic wallet on the phone to pay most of her bills and even to buy a snack on the street stall by scanning the payment code hung on the stall.

"I think no cities in China have such a wide use of Alipay as Hangzhou. I know a granny who is 65 and knows how to use the online payment application," Sun told the Global Times.

The extensive use of Alipay in the city underscores the close connection between Alibaba Group and Hangzhou and their deep interdependence, experts said.

Growing hub

After being rejected in Beijing, Jack Ma went back to his hometown Hangzhou, a well-known tourist city, in 1999 and established Alibaba Group together with 18 people.

The Hangzhou-based group has grown from an unknown entity into one of the leading online and mobile commerce conglomerates with an annual gross merchandise volume of 3.1 trillion yuan ($485 billion), according to the company's latest fiscal report.

According to the Hangzhou Daily, Alibaba contributed 17.8 billion yuan in tax income to the Hangzhou government in 2015.

"Alibaba paid around 30 million yuan in taxes per day … it is the only Internet enterprise that pays taxes of over 10 billion yuan in China and it has made great contributions to the society," Li Qiang, governor of Zhejiang, was quoted by news site zjol.com in April 2014.

Aside from the financial contribution, Alibaba helped shape the Internet industries in Hangzhou and boost the development of e-commerce in the region.

Wang Chong, deputy director of China (Hangzhou) Cross-Border E-commerce Comprehensive Pilot Area Office, told the Global Times that the success of Alibaba has turned Hangzhou into an e-commerce hub. 

More than one-third of China's e-commerce websites are based in Hangzhou, and the value of exports under cross-border e-commerce in the first quarter of 2015 reached $1.11 billion, according to the Hangzhou Daily.

Hangzou has topped other second-tier cities in terms of newly established companies and financing, shows a report on the enthusiasm of entrepreneurship in 2014.

According to statistics sent to the Global Times by the publicity department of the Hangzhou government, the Internet industries in the city have become mature and there is a boom in a range of fields, including electronic payment, cloud computing, express delivery, online sales and information technology.

"Instead of choosing Beijing or Shanghai, excellent graduates from the Hangzhou-based Zhejiang University are willing to stay in the city. Some former employees from Alibaba also chose to start up their own businesses, which pushed the e-commerce and cross-border e-commerce industries to a leading position across China," Wang said.

The government has implemented policies to attract talents, tax benefits and financing to encourage the e-commerce and information service industry to update and complete the industrial chain in Hangzhou, Zhang Hongming, mayor of Hangzhou, said in response to a question by the Global Times at a press briefing on May 25.

The information industry has become a pillar in Hangzhou, accounting for 231 billion yuan or 23 percent of the city's gross domestic product in 2015, according to statistics from the Hangzhou government publicity department.

Supportive setting

E-commerce enterprises, represented by Alibaba can achieve success in Hangzhou due to the favorable environment, said Wang, adding that the development of private finance and credit system in the region offers great support to e-business.

Hangzhou also enjoys a convenient transportation network and vibrant express delivery industry, said Wang.

Tonglu county, which is under the administration of Hangzhou, was officially identified as the hometown of the express industry in China in 2010, and according to statistics from the commercial bureau, more than 2,500 express companies are managed or started by people from Tonglu, accounting for 60 percent of the whole express market in China.

A wide express network could also help e-commerce companies expand their business to rural areas in the region, Shen Shihua, deputy director of the Party and government office of Jiangnan township in Tonglu, told the Global Times.

"The rural market is big. Villages could not only buy goods and get them delivered to their homes, but also can sell agricultural products via the e-commerce platforms," said Shen.

The Alibaba Group has put efforts into developing the market, Tang Zhongqiang, a departmental manager of Alibaba, told the Global Times, adding that it has built a logistics center and 183 service stations in Tonglu.

With all the advantages, Hangzhou is not only attractive to Alibaba but also draws attention of its competitors.

Another leading e-commerce player, JD.com Inc has spent 1.3 billion yuan to launch an industrial park in Fuyang district, 32 kilometers away from downtown Hangzhou, Jiang Jun, secretary of the Party Committee of Fuyang, confirmed to the Global Times.

Internet enterprises, including Baidu and Tencent have also set up branches in Hangzhou.

As competitors try to edge in the city, Alibaba seems to do the opposite.

Although Jack Ma was quoted by media several times that Alibaba would never move its headquarter out of Hangzhou, the company announced to set up a second headquarter in Beijing in September 2015 in a bid to manage the northern China market, according to news site 21Jingji.com.

Alipay has moved its headquarter from Hangzhou to Shanghai and announced to operate its business under a dual-headquarter system, jiemian.com reported in April 2015.

The decision would help Alibaba implement its global strategy, zjol.com reported.

"Shanghai and Hangzhou have different advantages and they are not rivals … Hangzhou would never be a secondary center for Alibaba," said Wang while answering a question on how a potential move by Alibaba will influence the city.

The Hangzhou government and Alibaba held a joint conference in January 2016, where Jack Ma said that Alibaba will remain in the city to strengthen the win-win cooperation and make further contributions to it.