Our guide provides international companies with an overview of business opportunities in the Greater Bay Area and highlights the advantages of locating your business in the four core cities.
Part of China’s 13th Five-Year Plan (2016-2020) and the Belt and Road Initiative, the Greater Bay Area (GBA) development plan is a national strategic decision. It connects the most prominent mainland cities in the Pearl River Delta with Hong Kong and Macao into an integrated economy cluster and a world-class business hub. By leveraging each city’s unique strengths, the GBA initiative aims to develop the region into a global leading bay area while promoting the flow of talent, goods, and capital, making cross-border commuting, working, and living easier.
As one of the most attractive regions to establish or invest in a business in China, the Greater Bay Area provides a wide range of business support programs and financial incentives to foster the region’s growth. In the Outline Development Plan released in 2019 by the Chinese government, Hong Kong, Macao, Guangzhou and Shenzhen were prioritised as core engine cities. Hong Kong is expected to further develop as a finance centre while simultaneously building its capabilities in technology and innovation. Macao will focus on tourism and leisure. Guangzhou holds the status of a national gateway in transportation, trade, and commerce. Shenzhen is expected to further cement its role as a global innovation hub. The four cities will facilitate the openness to foreign direct investment.
Advantages of locating your business in the Greater Bay Area
- Connectivity in Talent and Infrastructure
- The Global Hub for Technology and Innovation
- The Financial Power House
- Wealth Management Connect Programme
- End-to-end Supply Chain
- Free Trade Zones at Trade Gate
- Conclusion for your Business
Find out more about Doing business in the Greater Bay Area (GBA)
Business Opportunities in the Greater Bay Area
1. Connectivity in Talent and Infrastructure
Talent acquisition is vital for all types of businesses to succeed. As the Greater Bay Area aims to enhance the mobility aspects of people, trade, information, and capital, favourable policies are continuously being developed to encourage high-end talent and talent in short supply to settle down in the region. Despite current difficulties in traveling, the area is still flexible and able to adapt its measures to attract talents. Even though the investor might face challenges in setting up the business physically due to pandemic-related travel restrictions, Hawksford can assist and take away potential burdens with a wide range of services to get the business ready for the reopening stage of the global economy.
One of the key advantages is the low tax rates, encouraging higher mobility and easier connectivity of talents from all over the world. Usually, the income tax rate for an individual taxpayer can be up to 45%, but eligible individuals working in the Greater Bay Area can enjoy a preferential tax rate of 15%, which means the part above 15% can be subsidised by the government. Living allowances are also available for eligible high-level professionals and technical personnel, adding further value to the relocation of strong talents.
Hong Kong and the mainland cities are developing cross-boundary facilities and transportation networks to strengthen geographical connectivity and talent exchange. For example, the Liantang/Heung Yuen Wai Boundary Control Point (LT/HYW BCP), the seventh land boundary-crossing between Hong Kong and Shenzhen boundary with direct access facilities for both passengers and vehicles, is one of the key infrastructures to create “one-hour living circle” in the region.
2. Global Hub for Technology & Innovation
By issuing rules on its national innovative demonstration zones and rolling out projects to bolster innovation, Shenzhen has become a forerunner in innovation and technology. The main merits of establishing a tech company in Shenzhen include becoming neighbours with China tech giants, such as Tencent, Huawei, DJI, ZTE. It also means that you gain access to advanced equipment, best practices, and an extensive network with innovation leaders and local manufacturers and distributors.
Other initiatives to further boost the innovation and technology ecosystem set out in the plan include co-working spaces, entrepreneurship exchanges, innovation platforms, and R&D institutes. A collaboration between the industry, research institutes, and universities across the Greater Bay Area is also being promoted. Having a presence in the GBA can help access global markets as Hong Kong can pool together innovation resources from the Greater Bay Area and the world to promote R&D on I&T and boost the bay area’s competitiveness. Although there are differences in regulatory frameworks between mainland cities and two SAR, Shenzhen and Hong Kong could be seen as one ecosystem because they share the networks of entrepreneurs, suppliers, manufacturers, and investors.
3. Financial Powerhouse
The Greater Bay Area stands for more than 12% of China’s national economy (equivalent to US$ 1.4 trillion), generated by only 5% of the country's population. The demand for financing, asset management, banking, and insurance will further increase GDP growth in the region with an extended flow of capital and cross-border transactions. The Outline Development Plan has set out a range of initiatives to increase the scope for the cross-border use of Renminbi (RMB) in the Greater Bay Area, including cross-border RMB interbank lending, RMB foreign-exchange spot, forward business, and the creation of RMB derivative products.
In addition, the policies aim to strengthen financial services for technological innovation. Local banks in the Greater Bay Area will be supported by enhancing their cooperation with external venture capital institutions under the premise of legal compliance and risk control, actively exploring supportive and diversified financial business models. This will improve the cross-border capital flow of venture capital funds and facilitate the exchange of income. The reforms laid out a blueprint for the structural transformation of deeper collaboration within the regional financial industry and will strengthen the cooperation of financial management among industry organisations. It may even contribute to establishing multi-level financial dispute resolution mechanisms in line with international standards in the long term.
4. Wealth Management Connect Program
According to a joint announcement released in June 2020 by the People's Bank of China, the Hong Kong Monetary Authority, and the Monetary Authority of Macao, residents of Hong Kong and Macao will be able to invest in wealth management products sold by Chinese banks in the Greater Bay Area. Those in Guangdong's cities may also be able to include financial products sold by financial institutions in Hong Kong and Macao. The program supports cross-boundary investment by individual residents in the GBA and promotes the opening of the financial markets on the mainland.
Furthermore, it extends the reach, and the functionality of previous stock connect schemes targeted to link equity markets, such as the Shanghai-Hong Kong Stock Connect in 2014 and the Shenzhen-Hong Kong Stock Connect in 2016. The proposed program results in a significant increase in investment opportunities for individual investors from the active model regions.
5. End-to-end supply Chain
The focus on new technologies and process management automation will increase industrial supply chain management efficiency for businesses in the region. Efforts to help manufacturers move up the value chain are expected to increase imports and exports both in and outbound significantly. This will boost the so-called GBA "maker culture" with flexible facilities for quick prototyping and product optimisation. Assembling of a prototype can often be done within less than 2 hours. In contrast, the price advantage often favours a factor of ten or twenty compared to other global manufacturing hubs, which results in a significant competitive advantage.
Surrounding cities such as Dongguan have also evolved into hi-tech manufacturing centres, enabling cost-effective production supported by AI-powered equipment and devices. In terms of trade infrastructure, Shenzhen, Hong Kong, and Guangzhou are already ranking within the world’s top 10 container ports, ensuring convenient global distribution after series manufacturing. This makes the Greater Bay Area an ideal end-to-end supply chain for innovation, combining research, design, production, and global distribution all at once.
6. Free Trade Zones as Entry Gate
Business owners can enjoy notable benefits when selling across borders via Free Trade Zones (FTZ). Incorporating within one of these zones comes with faster customs clearance, which means that goods can be moved between FTZs and overseas countries without paying taxes and duties in China. It will also be easier to manage cross-border currency exchanges with banks.
One of the most well-known FTZ areas in the Greater Bay Area is Qianhai Free Trade Zone in Shenzhen which spans over 28 square kilometres and focuses on logistics, finance, and IT sectors. Business owners can enjoy more benefits when establishing a Business in an FTZ, for example, lower taxes, more streamlined and efficient processes, and the option to hire Chinese employees.
Subsidies can reach up to CNY 1 million (USD154,000) if conditions are met. Entrepreneurs who have been verified to launch a startup (at least six months) are eligible for a subsidy of CNY 10,000 (USD1,532). The total grant for a partnership is capped at CNY 100,000 (USD15,400). Companies set up in Qianhai can also apply for a one-off fund equal to CNY 50,000 (USD7,700).
Conclusions for your Businesses
Time will tell whether the GBA initiative delivers on what it promises to be. However, it is important to understand that the initiative is a long-term strategic project. Success will not happen overnight, but the region can provide the right environment for entrepreneurs to develop their businesses. Business owners can expect the upcoming regional and local measures will continue to facilitate innovation.
To take full advantage of the opportunities, enterprises should carefully review the potential impacts of a GBA expansion and develop comprehensive business plans to fully take advantage of connectivity, talent resources, and the existing supply chain. In the long run, it may also develop into a catalyst for China's broader Belt & Road Initiative due to its global connectivity cluster.
How can we help?
Hawksford has extensive expertise in local markets, robust structures, and experience with international clients, which allows us to assist you in starting and running a business in the Greater Bay Area. Clients can benefit from our specialised sector experience across many industries, including but not limited to tech and innovation, logistic and new services, manufacturing and trade, finance, consumer and retail, and luxury fashion. At Hawksford, our business incorporation and company formation experts will take you through the eligibility criteria, help you prepare the necessary documents, and liaise with the government bodies so you can save time and focus on growing your business.
Hawksford has supported thousands of international clients in Hong Kong SAR and mainland China in corporate administration, compliance, tax and accounting, HR & payroll. We help you understand the regulatory and tax environment, determine the right structure for your company, ensure that it meets the legal requirements even after it is founded, and help you make the best business decisions. If you wish to incorporate your business benefiting from our valuable on-the-ground presence in the Greater Bay Area with offices in Guangzhou, Shenzhen, and Hong Kong, please do not hesitate to approach our professionals via the contact details below.
