The creative industry is also finding inspiration in Hangzhou in the field of animation.

Last year, the city's animators produced 42 projects, adding up to more than 35,000 minutes of footage than that made in the previous year, official statistics show. Hangzhou also sold close to 50 original cartoons to 90 regions and countries last year, raking in $11.92 million in overseas sales or 86 percent more than that of the previous year.

At least 10 special zones covering more than 1 million sq m were also completed last year to help develop the creative and cultural sectors.

Animation company Zhejiang Zhongnan Cartoon Co Ltd was founded in 2004 and is located in the Hangzhou Binjiang District, a high-tech industrial park in the city.

Zhongnan has close to 300 employees and recorded 120 million yuan revenue last year, with up to 30 percent of the takings coming from overseas markets.

"We entered the overseas market at the end of 2008 by selling our copyrighted cartoon products to the American Nickelodeon children's channel," says Shen Yuliang, the company's general manager.

"We plan to increase our revenue by at least 30 percent this year and almost 80 percent of it will come from the overseas market," he says.

"Taking overseas market share means competing directly with the big animation companies such as Disney. This is tough for us, because they have a much longer history and are more experienced in the overseas market," Shen says.

"But we have also accumulated a lot of experience and our technologies have largely improved. We have developed our own 3D technology for producing cartoons," he says.

"We have also taken part in MIPTV, a market conference and networking event which has been taking place annually in Cannes, for six consecutive years. That broadens our horizons and our customer sources," Shen says.

"To better tap the overseas market, we have also hired some overseas employees. We now have almost 10 overseas employees in our company. Many of them worked in big Western cartoon companies such as Disney and that makes us more competitive in the overseas market."

Shen also attributes Zhongnan's success to the favorable conditions for the animation industry in Hangzhou.

"Hangzhou is the first Chinese city to roll out policies that support the animation industry. The government has organized national animation fairs to provide wide platforms for us to develop our business," Shen says.

Hangzhou C & L Digital Production Co Ltd is another major animation player that has made significant inroads in the industry. The studio's 85-minute film The Dreams of Jinsha became one of the 15 animation entries short-listed for the 2011 Oscar nominations for Best Animated Feature, along with this year's winner Toy Story 3 by Walt Disney Pictures and Shrek 4 by Dreamworks.

Jinsha depicts the story of teenager Xiao Long who travels back in time to the Jinsha civilization 3,000 years ago in Southwest China, where he meets the princess Flower. They save forests and towns from evil and celebrate Chinese values of courage and love in the process.

Su Xiaohong, who heads the studio of about 30 people, says Hangzhou's cultural heritage and history are a major draw for them to set up shop in the city.

"This is a great place to live and its attractions serve as a major source of inspiration for us," Su says.

"We will leverage our achievements. Winning awards and being recognized by others is a top priority in this field. We are now turning our attention to Europe, we want to make an impact there."

Apart from modern industries, traditional sectors in Hangzhou are also drawing on the city's cultural heritage to face the global economy.

Leading silk company Wensli Group is one such player finding new ways to build on the city's historic links with the material, which existed as far back as 5,000 years ago in the area.

Founded in 1975, Wensli Group recorded revenue of 2.53 billion yuan last year, an increase of nearly 30 percent from the previous year's figure.

"We plan to get 3 billion yuan this year," says Ma Tingfang, the general manager of Wensli Group.

Wensli has worked with a number of major Western brands such as British luxury fashion house Burberry and now aims to expand its business worldwide.

"We cooperate with these big brands by providing designs and products to them. Up to 30 percent of our exports go to Europe and 40 percent goes to the United States," Ma says.

"But only 60 percent of the exports are our own brands. That is not enough for us to build up our global image."

"We need a stronger image to face new challenges such as the rising cost of raw materials, instead of just 'business as usual' by manufacturing for Western companies."

To help promote its brand abroad, Wensli provided silk products like the qipao dresses worn by medal presenters and more than 3,000 medal straps for the 2008 Beijing Olympic Games. The company also provided silk products to the Shanghai World Expo 2010 and 2010 Guangzhou Asian Games.

It is now focusing on innovation to attract more young customers back to the traditional allure of silk attire.

"Wensli has designed silk products to sell the image of some animation characters. That is the perfect combination of traditional culture and modern creativity," Lu Zhengpin from the city's cultural and creative industry office says.

Alibaba's Jack Ma has also expressed the need for his company to grow on the global stage from the platform that Hangzhou has provided.

"We plan to get listed to reach a new high. All in all, we want to make every effort to make our brand famous across the world," Ma said.

Tom Chen, the president of Zhejiang Cybernaut Investment Management Co Ltd, an investment company, says Hangzhou's strengths in the IT sector and its reputation as a comfortable city that nurtures creativity are also compelling reasons for setting up shop and drawing talent from overseas.

Chen, 44, manages about 5 billion yuan and helps identify and grow start-ups, particularly in the technology sector. He has helped at least five companies to list on stock exchanges and is now helping about 10 other companies do so.

"We started off raising money overseas for our projects, but we have increasingly been turning our attention to the opportunities at home," he says.

Chen, whose Hangzhou operations are based in the city's lush Yuhuang mountain area where high-end industries are nurtured, says many of his projects involve Chinese entrepreneurs who have studied in elite institutions in the US and Europe but chose to return home to make their fortune.

"Many of these talented people now find it more attractive here," says Chen, who himself chose to return to the country after years at US-based telco software and services company WebEx.

"Hangzhou and Zhejiang are fitting examples of how entrepreneurial talent in these times are looking to tap the familiar, vibrant environment and growing opportunities at home."