Chamber members who hadn’t visited Dongguan for a few years were amazed at the transformation the city has gone through during a recent business mission, with many of them reporting that they could barely recognize the former industrial belt. Neighbouring Zhuhai is also transforming its industry base, which will get a further boost when the bridge linking the city with Hong Kong and Macao opens.
These two cities provide tangible on-the-ground evidence of the improvements that are being fuelled by the Greater Bay Area initiative.
“I was deeply impressed by the ever-changing development,” said PC Yu, the Chamber’s China Committee Chairman, who led the 32-member delegation to Dongguan on 22-23 March. Noting its long-standing reputation as the “world’s factory,” his recollection from previous visits was of a traditional industrial city with a pollution problem. Those days have gone.
“The city has undergone a face-lift in recent years thanks to its ongoing efforts to transform itself – not just by upgrading manufacturing, but also by improving its ecology and quality of life.”
These improvements have been given a further boost by the GBA initiative, which aims to better connect 11 cities, including Hong Kong and Macao, through infrastructure upgrading, coordinated development and industrial transformation. The impact can be already seen in action in Dongguan and Zhuhai in their new and upgraded industrial parks and increasingly good living environment.
Growing GBA Connections
Some of the biggest and most visible GBA projects are in transportation. Major intercity rail links are being built that will connect all of the cities in the GBA, and many more expressways are also under construction. A Cushman and Wakefield survey published last year reported that the operating mileage in the GBA will grow from approximately 5,600 km in 2016 to 8,800 km in 2020, an increase of 57%. And further road-building projects are planned until at least 2025.
The point of this is to create one- and two-hour living circles, to enable everyone within the GBA to travel much more easily around the region. It will also support the development of other GBA projects, such as the industrial zones that are driving Dongguan’s transformation.
The GBA developments have not been without controversy, however. The co-location issue has at times overshadowed discussion about the benefits of the new high-speed line between Hong Kong and Guangzhou. Meanwhile, some have questioned the cost of the bridge to Zhuhai and Macao.
But these projects should not be looked at in isolation. The new train line and bridge are only part of the much larger project to link the whole GBA region.
And it seems that the critics are in the minority. A survey of business executives in Hong Kong and other GBA cities commissioned by the Chamber and KPMG last year found overwhelming support for wider regional development.
“The idea of Hong Kong, Macao and Guangdong working together to create the GBA resonated with the survey respondents, with 80% indicating their support for integrated development across the region,” the report said. Only 2% of respondents opposed the development.
A New Era
Once a hugely successful exporter of low-end manufactured goods, Dongguan was hit by the 2008 financial crisis, when global demand slumped. This could have spelled devastation, but the city seized the opportunity to develop into a hub for innovative industry and also an attractive tourist destination.
Today, of the city’s 5,000 trading enterprises, 36% have developed their own brands while 32% have R&D facilities, showing how it is successfully moving upstream in the value chain.
“Dongguan is the only prefecture-level city in Guangdong Province to be included in the Guangzhou-Shenzhen Science and Technology Innovation Corridor,” Yu noted. Key to this pivot towards technology is the Binhaiwan New District, which was established last October and has links to free trade zones in Guangzhou and Shenzhen.
And Binhaiwan is not the only new district helping to revolutionize Dongguan. “The Water District Economic Zone and Songshan Lake industrial park are just some of the striking and innovative developments we saw on the business mission,” Yu said.
Environmental management is a key focus at the Water Village area. Rich in water resources, the area is also home to a picturesque Lingnan-style water village, where clusters of industries, such as e-commerce and logistics, have emerged in recent years. During the visit, members also got an insight into some of the tourist attractions that are now available with a cruise around the Huayang Lake Wetland Park.
The Songshan Lake Science and Technology Industrial Park, meanwhile, switched to innovation-driven development in 2014. With a focus on high-end electronic information, biotechnology, robotics and new energy industries, it has been at the forefront of Dongguan’s change in direction, and has successfully attracted major players like Huawei Machine and Huawei Terminal. Again, there is a green element. In addition to a national 4A-grade ecological park, the park also includes 300 kilometres of roads and ecological greenways, helping to integrate the natural and built environments.
Outside of the industrial zones, the green theme can be seen in other enterprises, including the Tao Heung Food Culture Centre, a former factory which has been renovated into a complex with food, leisure and shopping attractions.
“I was particularly impressed by the Tao Heung Food Culture Centre,” Yu said. “It has been living up to the green concepts it has championed since it was established.”
During the mission, the Chamber delegation met with Luo Zhaoqun, a member of the Standing Committee of Dongguan.
“Ongoing efforts to transform and upgrade our traditional industries have enabled Dongguan to maintain stable growth in recent years,” Luo said. “In particular, the city has now become an R&D base for the smartphone and robotics industries.”
To boost its ambitions to become an international technology and innovation hub, Dongguan has rolled out support policies to help companies attract talent, Luo added.
Building Bridges
Zhuhai is also transforming into an innovation-driven city with high-end manufacturing. And it will become an increasingly important link in the GBA when the Hong Kong-Zhuhai-Macao Bridge opens later this year, reducing travel time from Hong Kong to only 40 minutes.
The city has long been a key driver of economic reform, and was one of the first zones to implement the Mainland’s opening-up policy. Today, it is encouraging tourism and marine economy sectors such as ship and oceanic engineering, and also developing high-end manufacturing including aviation and aerospace, rail transport and electric vehicles.
Members got an insight into the latest developments during a Chamber roundtable on 20 April.
Lu Xiaofeng, Deputy Mayor of Zhuhai, said so far, 2,337 Hong Kong enterprises had invested a total of US$33.73 billion in the city. Also, the city had introduced policies to make it easier for Hong Kong people and companies to work and invest in the city.
For example, in the Hengqin Free Trade Zone, Hong Kong and Macao residents enjoy the same individual income tax policy as at home, and tax gaps arising from different policies are fully subsidized. Also, a 15% enterprise income tax rate is available for eligible enterprises.
“We hope that these preferential policies will encourage more talent to come to Zhuhai to develop their careers,” Lu said.
Cushman and Wakefield’s report also highlighted Zhuhai as one of the “booming tier-2 cities” where the retail market is expected to increase as a result of GBA development. “Transformation of industries and improvement in infrastructure will change the demand of retail consumption in the region, especially in tier-2 cities,” it said.
The report also noted the benefits to Zhuhai of the new transport infrastructure, including the bridge to Hong Kong, suggesting this will lead to “stronger interaction with Hong Kong and Shenzhen, especially among talent.”
The benefits of better links between Hong Kong and the wider GBA was also highlighted by Wilson Chan, Associate Director of the MBA programme at City University of Hong Kong, speaking at the Chamber’s Zhuhai roundtable.
“The GBA is a great opportunity for Hong Kong enterprises,” Chan said, “especially given the current unexpected global economic environment.”
Emil Yu, Chairman of the Chamber’s Industry and Technology Committee, is an example of Hong Kong companies that have invested in the region.
“The Greater Bay Area has had close ties with Hong Kong manufacturers over the past 30 years. In fact, my company set up a manufacturing facility in the area over 20 years ago,” he said.
His long experience in the region means he has seen first-hand the changes that the GBA initiative has brought, and continues to bring, to enterprises in the region.
“It has progressed quite a lot both on the ease of doing business as well as the living environment,” he said. “Companies like ours continue to benefit from the government incentives to innovate and expand.”
The changes happening right now in Dongguan and Zhuhai show that this optimism is well founded. Through the Chamber’s visits to GBA cities and roundtables with key officials and other experts, our members are gaining crucial information about how to make the most of these huge opportunities that are opening up on our doorstep.
GBA Working Group
Recognising the importance of the GBA, the Chamber has set up a Greater Bay Area Working Group to help the Hong Kong business community explore the opportunities arising as a result of the initiative. If members have views or suggestions on the future development of the GBA, please share with the Chamber Secretariat and we can relay your thoughts to the relevant authorities if appropriate.