Recent analysis by AustCham Hong Kong and KPMG identified a number of key opportunities for Australian businesses in the GBA. These range from innovation and technology to data management, infrastructure and construction, manufacturing, financial services and arbitration.
Education – along with research and institutional links - may be another significant opportunity that Australian providers cannot ignore.
To attract world-class talent, the GBA will need internationally recognised secondary qualifications for children of expatriates such as the Victorian Certificate of Education; a program which has been completed by more than 4000 students in China since 2002.
One country, two systems
So, what hurdles could this ambitious vision face?
Infrastructure and physical connections between cities are not a problem - the key obstacle city clusters face all over the world is fragmentation.
City clusters often suffer due to the complexity and difficulty of meeting the needs of different administrative stakeholders - each with independent authority over tax and budget systems, land use planning, transport infrastructure and traffic management, industrial park developments, open space planning and environmental protection, and even labour markets. In the case of the GBA, there are also different traffic laws, dual legal systems and three separate tax regimes.
While the complexity arising from the GBA’s one country, two systems environment does increase administrative complexity, it also creates significant opportunities for foreign investors.
For example, companies can use Hong Kong as the gateway into the GBA by taking advantage of its international financial centre for fundraising and its IP protection laws; in the 2018 International Property Rights Index, Hong Kong SAR ranked 17th globally with a score of 7.849, compared to China’s rank of 52nd with a score of 5.904.
The next Silicon Valley?
The ambition behind the GBA reflects what has been achieved in Silicon Valley over the past 40 years. In the 1970s, Silicon Valley was still in its infancy and was yet to become the internationally recognised epicentre of the computer industry.
Companies like Atari and Apple were just starting, others were still ideas in basements dotted around Silicon Valley. Today it is almost a $US3 trillion economy.
While the GBA’s complexity and scale are beyond that of Silicon Valley, there are similar lessons for Australian companies looking to Asia for opportunities. Just as few businesses were alive to the potential of Silicon Valley in the initial years, those that moved early like Apple (founded in 1976) and Oracle (founded in 1977) found, as first movers, they had significant opportunities.
To move early on opportunities in the GBA, Australian businesses need to be on the ground. The knowledge, relationships and ability to adapt that come with being on the ground (whether or not the business opportunity succeeds or fails) is what will determine whether Australian business win overseas in the long run.
Philomena Leung is Professor of Accounting and Governance and Associate Dean International Engagement at Macquarie University. Luke Hurst is the Director of Research and Information at Asialink Business, the National Centre for Asia Capability.
This article draws on insights from a recent business forum on the GBA, curated by Asialink Business in collaboration with Macquarie University.