Guangzhou and Shenzhen aside, Dongguan and Zhuhai most favored by foreign investments in the GBA
Updated: Apr 27
Nandu Big Data Institute, a think tank under the government-backed Nanfang Daily Media Group, released its latest research on the business environment of the nine mainland cities in the Greater Bay Area.
The research showed that business environment goes hand in hand with investment potential, which was hardly an earth shattering revelation. However, it also linked the business environment with number of newly registered entities in a given city. The logic dictated that the better the business environment, the more investment potential and the more registered entities a city has.
In China, registered entities are normally categorized into domestic enterprises (non-private), private enterprises, foreign-invested enterprises, individual entities or specialized farm operatives.
As of October, 2019, the Guangdong province had a total of 12.30 million registered entities, a year on year increase of 9.62 percent. Among them, 5.28 million were categorized as enterprises, accounting for 42.96 percent of the total.
A favorable business environment
Shenzhen took the crown with 67,452 foreign-invested entities, double Guangzhou’s 33,328. Dongguan was ranked third with 14,795 foreign enterprises, followed by Zhuhai’s 13,217.
Dongguan has benefitted from Shenzhen’s spill over effect, while Zhuhai, being in Macau’s backyard, offers investment convenience for Macau as well as Portuguese speaking countries.
The research found that Dongguan’s newly registered entities were concentrated in towns which were in close proximity to Shenzhen, such as Chang’an and Humen. The team also pointed out that the Shenzhen-Dongguan-Huizhou cluster or the Guangzhou-Foshan-Zhaoqing cluster could achieve greater overall growth by increasing cooperation among the industry sectors.
The 60-page outline development plan of the Greater Bay Area, published in February 2019, has emphasized the development of market connectivity and an efficient flow of factors of production. Currently that effort has been mainly geared towards the physical connectivity among cities which are building infrastructure projects, Nandu said. To achieve the kind of connectivity in services or markets will require cities to take a step further.
Building connectivity in services
The team pointed to the Guangdong government as a prime example, as it's been taking the lead in China to launch its “digital government” reform. The various online government service platforms such as Yueshengshi (粤省事) and Guangdong Business Connect (粤商通) have allowed, for example, enterprises in Guangzhou to more easily apply for business approvals in Foshan. Although such tools have increased efficiency and optimized the business environment, the government networks and data platforms among different cities remain separate.
The research found that many Greater Bay Area cities have been working to improve market integration as part of the process to reform their business environment.
Guangzhou’s Nansha economic zone, for example, is one of the first to integrate with Hong Kong’s business rules. In April, Nansha simplified its market entry by following the Hong Kong company registration system and reducing administrative licensing procedures required to administrative approval for setting up a business enterprise. Applicants, on the premise of real identity verified and with credit guarantee, are only required to submit basic information of the company for commercial registration and receive a system-approved “smart” confirmation.
These services were further expanded in October to Macau. Furthermore, the “Cross-border Express” (跨境通) was also launched, allowing Macau-based enterprises or individuals to apply and obtain a Nansha business license directly through terminals installed in the city.
Market integration for easier registration
Dongguan was selected as the pilot city for Guangdong’s Yinzhengtong (银政通) cross-border business registration system. The system allows Hong Kong investors to apply for Dongguan commercial registration at the Bank of China Hong Kong branch. The service was even expanded into Europe in September, with an applicant successfully filing and obtaining a Dongguan business license from Paris.
Hengqin, the new area of Zhuhai, has offered a host of preferential policies including office discounts and startup funding to attract Macau’s insurance, finance and consulting sectors, as well as emerging new industries such as fintech, medicare, technology and innovation. So far, these efforts have yielded good progress.
In December, PWC’s Macau office opened a service base at the Zhuhai Shizimen Central Business District. A PWC spokesman told the local media that the new base, with a team of 60-100 staff at the beginning, will utilize PWC’s resources and advantages in the two cities and serve the Macau enterprises in Zhuhai, Jiangmen and Zhongshan.
Hengqin has also established a cross-border video-cam litigation mechanism with Macau to solve cross-border consumer disputes while building a credit system in consumption domains. The island is looking to extend the mechanism into Portuguese speaking countries as well now.
The development of the Greater Bay Area may take decades to complete, but we believe integration nonetheless remains an irreversible force. It is those cites with a vision for the future and a willingness to take new steps that will welcome the best investments opportunities.