Why Zhuhai is a Leading Investment Destination in South China
By Riccardo Ferri
Fixed-asset investments into Zhuhai have grown by an average of 18.9 percent per year between 2011 and 2016, moving from RMB 63.7 billion (about US$9 billion) to RMB 143.6 billion, according to the Zhuhai Municipal Bureau of commerce.
These investments, mainly attracted by infrastructural, industrial, and real estate development, have also boosted Zhuhai’s GDP, making it the main “emerging force” in South China. But why are investors are focusing their attention on Zhuhai? And what are the city’s leading industries?
Zhuhai’s competitive advantages
The advantages of investing in Zhuhai mainly derive from its position. The Pearl River Delta is the largest urban metropolis in the world, with an estimated population of 110 million people and an aggregate GDP of RMB 5 trillion (US$726 billion). Furthermore, Zhuhai is on the border with Macau, which is not far from Hong Kong and soon to be connected by bridge, and is within 150 km of Guangzhou, Foshan, Dongguan, and Shenzhen. This provides the possibility to exploit an enormous consumer population and easily reach suppliers and customers.
Zhuhai is part of a Special Economic Zone (SEZ), giving it a business-friendly environment. The SEZ consists of three state-level economic districts: the Hengqin Pilot Free Trade Zone, the Zhuhai National Hi-Tech Industrial Development Zone, and the Zhuhai Gaolan Port Economic Zone.
The local government has stimulated the development of the SEZ by offering incentives for advanced manufacturing, high-tech industries and services, and import-export activities. This has led to the development of a strong industrial base, since thousands of small and medium enterprises have set up their headquarters in Zhuhai. In recent years, more than 12,000 projects from 70 countries have combined for nearly US$13 billion in utilized foreign direct investment.
Zhuhai has also garnered attention for its beautiful natural environment and high quality of life. Good air quality, community parks, and environmental protection and ecology policies earned Zhuhai the award for “most livable city” in China, according to a report carried out by the Chinese Academy of Social Sciences. Because of its innovation and balanced development, in 2017 Zhuhai was included in the PwC and China Development Foundation Cities of Opportunities report for the first time.
Zhuhai hosts 10 universities and several technical colleges, such as the University of International Business and Economics, Fudan University, and Huazhong University of Science & Technology, which provide a ready stream of skilled labor and talents.
The Zhuhai municipal government actively supports the clean energy, high-technology, and high-end services sectors, offering incentives for investment in these industries.
The local government aims to promote energy-saving and environmentally-friendly industries by encouraging the production of electrical power systems, with the help of China Northern Locomotive Group (CNR), and by deepening recycling in printer product industrial chains, featuring Lenovo and Print-Rite. Furthermore, the development and production of electric automobiles and components, with the help of Yintong New Energy, a leading company in the field, is another important goal.
Zhuhai’s renewable energy industry is largely managed by the US chemical company DuPont. Yuhua Polyester Co. Ltd, a local Chinese manufacturer, has recently begun manufacturing DuPont Sorona polymer, a renewably sourced, fiber-grade high performance material used for carpeting and textile garments.
Moreover, in June 2016, as described by the Macau Daily Times, Zhuhai authorities announced that 30 percent of the vehicles bought by the local government in the coming years will be electric. Most of these vehicles will be for public usage, buses, taxis, and company cars.
Zhuhai’s government has been planning huge investments in R&D, and has set up several partnerships aimed at boosting the technological development of the area.
Kingsoft, Actions Semiconductors, and Allwinner Technology will support software and ICT development, United Laboratories and Livzon will promote the shift from pharmaceuticals to biomedicine manufacturing, and Xuji Electric, Changyuan Electric, and Unitech will boost smart power grid design and manufacturing. Meanwhile, the Zhuhai Aviation Industrial Park is researching how carry out aerospace materials development and manufacturing.
RELATED: Pre-Investment and Entry Strategy Advisory from Dezan Shira & Associates
The Zhuhai High-tech Industrial Development Zone has attracted more than US$140 billion in FDI, mainly from Philips, Panasonic, and Zhuhai Wanlinda in the information technology, machinery, and pharmaceutical sectors.
Zhuhai also hosts several international tourist attractions, such as the Ocean Spring Resort and the Chimelong Ocean Kingdom Park, and the government is promoting investments in other high-end services such as financial innovation and creative industries, mainly animation, television and movies, and sport.
In an article published by The Telegraph in November 2015, Long Guangyan, Zhuhai deputy mayor, stated that the goal is to “enhance the city soft power, on par with its economic strength”, by hosting sport events such as the Pan Delta Motor Racing Festival and the WTA Elite Tennis Trophy.
In a related effort, Zhuhai authorities are trying to leverage the city’s natural beauty and its proximity to the sea to promote eco-agriculture and marine tourism. The development of the Zhuhai Yacht Centre, the International Saltwater Fishing Resort, and the Wanshan Saltwater Fishing Village are key initiatives in this area.
China Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Asia, including ASEAN, India, Indonesia, Russia, the Silk Road, and Vietnam. For editorial matters please contact us here, and for a complimentary subscription to our products, please click here.
Dezan Shira & Associates is a full service practice in China, providing business intelligence, due diligence, legal, tax, IT, HR, payroll, and advisory services throughout the China and Asian region. For assistance with China business issues or investments into China, please contact us at email@example.com or visit us at www.dezshira.com
Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. This brochure provides an overview of the services and expertise Dezan Shira & Associates can provide.
Dezan Shira & Associates´ Silk Road and OBOR investment brochure offers an introduction to the region and an overview of the services provided by the firm. It is Dezan Shira´s mission to guide investors through the Silk Road´s complex regulatory environment and assist with all aspects of establishing, maintaining and growing business operations in the region.
In this edition of China Briefing, we guide readers through a range of topics, from the reasons behind foreign investors’ preference for the WFOE as an investment model, to managing China’s new regulations. We discuss how economic transformations have favored the WFOE, as well as the investment model’s utility, and detail key requirements that businesspeople need to examine before initiating the WFOE setup process. We then walk investors through the WFOE establishment process, and, finally, explain the new and idiosyncratic “Actual Controlling Person” regulation.