13 Jun 2019
And indeed with the Greater Bay Area (GBA) the opportunity is broadening.
" The GBA’s emerging consumer classes want access to better health care, better education and better wealth management products.” - Bernard Charnwut ChanAccording to Bernard Charnwut Chan, Convenor of the Hong Kong Executive Council, while the authorities “needed to find ways to listen more, especially with the young people,” Hong Kong continued to be an ideal place to do business.
Outlining Hong Kong’s unique position as an integrated common law and market economy, and a gateway to the greater China market and beyond, Chan underlined the Special Administrative Region’s (SAR) role at the heart of the dynamic Greater Bay Area initiative.
In February, the Chinese government formally approved the Greater Bay Area Outline Development Plan, an ambitious plan to enhance connectivity and stimulate ongoing economic growth in the Pearl River Delta region.
Encompassing 71 million people, with a combined GDP of $US1.6 trillion, the GBA is rapidly becoming one of the most open and economically vibrant regions within Greater China.
The area links 11 cities and SARs across the east and west of the Pearl River Delta - namely, Hong Kong, Macau, Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Huizhou, Jiangmen and Zhaoqing - to form an integrated economic and business hub and mega “city cluster”.
The Greater Bay Area Outline Development Plan explains the GBA plays a significant strategic role in the overall development of the country.
“The development of the Greater Bay Area is not only a new attempt to break new ground in pursuing opening-up on all fronts in a new era but also a further step in taking forward the practice of “one country, two systems,” Chan says.
The scale and pace of the transformation underway in the GBA makes understanding the initiative essential for any Australian business seeking to navigate contemporary China’s economic landscape.
Chan says there is huge demand coming out of the Greater Bay Area. With its 70 million people and rising middle class, the emerging consumer classes “want access to better health care, better education and better wealth management products”.
Enhanced connectivity is at the core of the GBA initiative.
Chan explains the GBA aims to promote a coordinated approach to high-quality regional development while supporting the ongoing opening-up of China’s economy and providing a new impetus to development in Hong Kong and Macao.
“It’s about coordinating better,” he says. “Coordination is so important. The GBA is not just an economic opportunity - there is also a lot of mobility of people and it’s about connecting into the rest of the world.”
The 7 key elements of the plan
2. Enhancing infrastructure connectivity
3. Building a globally competitive advanced manufacturing industry
4. Strengthening environment protection and conservation (green development)
5. Developing a “quality living circle” by increasing access to education and training, health and leisure, cultural institutions and social security
6. Strengthening cooperation and participating in the Belt and Road Initiative
7. Jointly developing cooperation across Guangdong, Hong Kong, and Macao
Under the GBA Outline Development Plan, each of the 11 cities should seek to leverage their key strengths and advantages, rather than ‘compete’ to be the region’s innovation, fintech or advanced manufacturing hub.
“Hong Kong is a gateway to China and the world,” Chan says, as he explains the Special Administrative Region’s unique role in the GBA. “It is the most international city, home to an established financial centre and has existing strengths in technology and innovation.”
Hong Kong’s world-class international aviation hub and role as an aviation training centre are making it a “world class airport cluster in the Greater Bay Area,” he says.
Similarly, Hong Kong is a technology hub within the GBA, supported by initiatives such as the Hong-Kong Shenzhen Technology Park, new pro-innovation government procurement policies, increased investment in local tech start-ups (the Innovation and Technology Venture Fund) and tax deductions for research and development expenditure.
Within the GBA, Hong Kong is also an established centre for international arbitration and dispute resolution, having a common law legal system and sizeable legal services industry. Hong Kong arbitral awards are enforceable in over 150 contracting international states.
Chan says these attributes mean it is easy for international investors to use Hong Kong as a base within the GBA.
Building business bridges
Hong Kong was Australia's 12th largest trading partner overall in 2018, with total two-way trade in goods and services worth $A17.8 billion. Exports of Australian goods and services to Hong Kong accounted for more than $A13 billion of this trade in 2018.
Australia and Hong Kong signed a new free trade agreement earlier this year, marking a significant step-up in this already substantial relationship.
Chan encourages Australian businesses and investors to consider and assess the diverse opportunities in the GBA and suggests financial services companies may be well placed to seize opportunities, with the GBA’s 70 million strong consumer classes actively seeking access to wealth management, superannuation and other financial services.
Similarly, given the GBA’s focus on innovation and technology, there is a need for reputable international education providers to partner on training and skills building in fintech, artificial intelligence, medical technology, robotics and other related areas.
The arts and cultural industries also offer great potential. Chan notes Australia’s cultural industries are globally regarded and there is a surging appetite from consumers in the GBA to access galleries, museums, theatre and other cultural activities.
And why is this soft power so important?
Ultimately, the GBA initiative is not just about Hong Kong into China, it’s about Hong Kong and China to the world.
Nick Henderson is the Director of Asialink Business’ China Practice, a leading Australian centre of excellence for practical business engagement with China. Drew Waters is the Head of Partnerships and Development for Asialink Business, and the former CEO of AustCham Hong Kong & Macau.
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
13 Jun 2019
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