Business in China and the Guangdong PRD
In last time's article I introduced you to two of the heavyweights of the Greater Pearl River Delta region (GPRD), Guangzhou and Shenzhen. We took a look at the industries of each, the exhibitions that are hosted in them, the policies that have helped shape them and how their strategic location in the region helps them and businesses to thrive. Both of these cities contribute a stunning amount of money to the GDP of Guangdong, and are both excellent places for foreigners to start a business.
This time around we are moving on to another three cities that make up part of the GRPD region. In this blog we will be taking a look at Zhuhai, Zhongshan, and the one and only, Hong Kong.
If you're considering starting a business in China, then this is the blog for you. Let's get right to it!
1) Business in Zhuhai
Zhuhai is a city that proves that location is everything. Part of China’s four original Special Economic Zones (SEZs) established in 1980 in Guangdong, the city is in close proximity to both the economic giants of Shenzhen and Guangzhou, taking only one hour by car to reach either.
Being the only deep-water port on the Western side of the GPRD, the region has benefited from the policy of reform and opening up. Zhuhai also finds itself nestled very close to the Special Administrative regions of Hong Kong and Macau, which has helped drive strong economic growth over the past few years. Massive foreign investment, advanced technologies and outstanding management methods have helped Zhuhai to blossom, and its industries play a telling role.
Today, Zhuhai is a base for light industries such as electronics and textiles with the six major industries of the city including electronic information, bio-pharmaceuticals, petrochemicals, electrical appliances, precision machinery manufacturing and energy.
In an effort to strengthen its existing industrial base as well as to provide a better environment for the development of new high-tech industries, the local government has taken the initiative in developing five economic zones, namely:
- Zhuhai High-Tech Industrial Development Zone
- Zhuhai Free Trade Zone
- Harbour industrial zone
- Wanshan ocean development testing zone
- Hengqin economic development zone
In March last year China issued a “Preferential Corporate Income Tax Catalog” for Hengqin New Area. This catalog identified 5 industries and 72 business categories such as ocean-sourced pharmaceuticals and health care, for preferential tax treatment. This would bring eligible enterprises in the catalog into the same tax bracket as that of Hong Kong and Macau, reducing the standard 25% of corporate income tax in China to a reduced 15% rate in the New Area.
All of this is helping to set Zhuhai up as an economic force, and a great place for foreign businesses (especially those in high-tech industries) to earmark as a potential option for starting a business in China in the future.
2) Business in Zhongshan
Zhongshan is a prefecture-level city in the south of the Pearl River Delta in Guangdong province. Zhongshan, together with Dongguan, Nanhai and Shunde, are dubbed as Four Little Tigers in Guangdong, and despite being smaller in terms of total land area, population and GDP growth in comparison to just about all of the other 'BIG' cities in the GPRD, it is another city that benefits greatly due to its close proximity to them.
Zhongshan is comprised of various 'specialized manufacturing towns', each specializing in the manufacturing of a specific product. These towns have become so successful in their respective pillar industries that they have bestowed Zhongshan with the moniker, "One Industry in One Town".
The towns' pillar industries include:
- Dachong Town for mahogany furniture
- Dongfeng Town for electric household appliances
- Guzhen Town for lighting fixtures
- Huangpu Town for food processing
- Shaxi Town for casual wear manufacturing
- Xiaolan Town for locks and hardware, as well as for electronic acoustics products
Apart from these 'towns' within the city, there is also a nation-level new hi-tech industrial development zone lying to the west of the Pearl River Estuary, known as the Zhongshan Torch Zone. Zhongshan's Torch Zone is one of southern China's earliest high-tech zones, and is only about an hours drive away from Shenzhen's Bao'an International Airport.
The zone presents a solid platform for foreign businesses looking to set up shop in Zhongshan due to its prime location, the fact that it is cheaper to invest here than in Guangzhou and Shenzhen, and it has access to a strong information technology base.
3) Business in Hong Kong
The final 'BIG' city on our list is probably one of the most well-known in southern China, Hong Kong. Sharing its borders with Shenzhen to the North, Hong Kong is home to a population of around 7.2 million and is widely regarded as one of the easiest places to do business in the world.
Hong Kong, much like Singapore, is one of the busiest ports in South-East Asia in terms of shipping movements, cargo handled and passengers carried. The former British colony boasts one of the most advanced business infrastructures in the world, with an economy that is totally separate from that of Mainland China, in that it has its own currency, legal system and taxation policies (which are more favorable than all of the cities in the BIG 5).
The business hub's 4 economic sectors include tourism, financial service, trade and logistics and professional services. These sectors combined provide 57% of Hong Kong’s Gross Domestic Product (GDP). Most of Hong Kong's manufacturing has been moved over to the neighbouring PRD region over the past two decades, with ties between it and the Mainland becoming increasingly connected thanks to the CEPA free trade agreement, and the establishment of the QianHai Zone in neighbouring Shenzhen.
Hong Kong is a haven for foreigners and foreign businesses, most definitely due to the fact that it is relatively inexpensive to register a company in Hong Kong, the tax policies are very favorable, and there is no shortage of things to do and see in Hong Kong. It is also recognized as the perfect business vehicle for doing business on the Mainland. We have written quite a few articles on doing business in Hong Kong, so if you'd like to know more take a look here!
Starting A Business In China? Which City Suits You?
That rounds up Hongda Business Services BIG 5 cities for business in China's GRPD region!
Which of the 5 cities in these blog posts do your prefer?
If you have any questions or thoughts regarding business in the GPRD region or if there is any other business topic in China that you'd like us to cover, feel free to leave us a comment below...