Zhuhai: An Emerging Force in South China
By Rainy Yao
Located in the center of the Pearl River Delta (PRD), Zhuhai is one of China’s four original Special Economic Zones (SEZs) established in 1980. The city borders Macau to the south and is about one hour away from Guangzhou and Shenzhen by car. In the past three decades, Zhuhai has experienced strong economic growth due to its geographical proximity to Hong Kong and Macau, and is the only deep-water port on the western side of the Pearl River. In this article, we take a closer look at this emerging force in South China.
In 2013, Zhuhai’s GDP reached RMB 166.2 billion, up 10.5 percent from the year previous. Zhuhai was originally planned as a high-tech research area, and was prohibited for the establishment of heavy industry. Nonetheless, Zhuhai’s economy is largely based on light industries, such as textiles and electronics. In 2013, the city’s primary industry contributed RMB 4.3 billion of its total GDP, and its secondary industry RMB 84.9 billion, accounting for more than 51 per cent of the economy. The remaining RMB 77 billion came from the service sector, among which, the modern service sector brought in RMB 44.2 billion (10.3 per cent growth).
Now a major manufacturing base for electronics, Zhuhai is making an effort to promote the growth of a wide range of hi-tech and high value-added industries, such as its software, petrochemical and ocean-based industries. The six major industries of the city include electronic information, bio-pharmaceuticals, petrochemicals, electrical appliances, precision machinery manufacturing and energy.
Zhuhai’s transport network has greatly improved in recent years. In particular, the Hong Kong-Zhuhai-Macau Bridge, currently under construction, is expected to be completed in 2015. Improved connectivity between the three cities will undoubtedly give a boost to Zhuhai’s economic presence in the region. The bridge will connect the west of Hong Kong with Macau and Zhuhai. The city is already connected to major metropolitan centers in the Pearl River Delta through the Guangzhou-Shenzhen-Zhuhai superhighway. Zhuhai Airport services more than 30 flights a day to major cities in China.
Zhuhai’s main development zones include:
Zhuhai Economic and Technological Development Zone (Gaolan Port EDZ)
The Zhuhai ETDZ, previously known as the Gaolan Port Economic Development Zone, was promoted to become the first national economic and technology development zone west of the Pearl River Delta in 2012. It is one of the most important large-scale comprehensive harbor industry zones of South China, with a focus on equipment manufacturing, petrochemicals and energy.
Hengqin New Area
Hengqin New Area, located in the Zhuhai Special Economic Zone, is only a stone’s throw away from Macau. As part of the One Country, Two Systems policy, the central government is trying to integrate the economies of Hong Kong, Macau and Mainland China. Hengqin is directly across the water from Macau, and as such is a pilot zone for integration. It has already attracted over RMB 226.3 billion (US$36.4 billion) in total investment. With professional zone management, as well as the most preferential investment policies in South China, Hengqin New Area offers appealing incentives to investors.
Zhuhai National Hi-tech Industrial Development Zone
Established in 1992, the zone mainly features industrial clusters such as food processing, pharmaceutics and electronics. It is home to several R&D centers and focuses on the commercialization of newly developed technology. The zone houses branch offices of major government bureaus to facilitate administrative processes. It has been rapidly expanding and now encompasses the industry parks of Nanping, Sanzao, Xinqing and Baijiao.
Zhuhai-Macau Cross-border Industrial Park
The Zhuhai-Macau Cross-border Zone spans the jurisdictions of Macau and Zhuhai, with each government managing its own section. It is a bonded zone, with reduced export duties and 24-hour port clearance.
In 2014, the Zhuhai government released a slew of administrative measures to promote the development of its bio-pharmaceutical, “ocean-related” and high-tech industries. For example, enterprises regarded as national high-tech enterprises can benefit from a reduced corporate income tax (CIT) rate of 15 per cent. Companies investing in research and development are eligible for financial support and subsidies of up to RMB 2 million per company. The city is home to over 50 financial institutions including Morgan Stanley, Bank of East Asia and Standard Chartered. Compared with other coastal cities, labor costs are lower in Zhuhai with a monthly minimum wage of RMB 1,380.
In March 2014, China issued a “Preferential Corporate Income Tax Catalog” for Hengqin New Area, which identified five industries and 72 business categories, such as ocean-sourced pharmaceuticals and health care, for preferential tax treatment. While China’s standard rate of corporate income tax is 25 percent, eligible enterprises listed in the Catalog will be taxed at a reduced 15 percent rate closer to corporate income tax levels in Hong Kong and Macau.
The Chinese government has recently announced plans to soon establish a free trade zone (FTZ) in Guangdong province, following the model of the Shanghai FTZ. The new FTZ will cover three development zones in Guangdong province including the Hengqin New Area in Zhuhai, making it one of the city’s most attractive destinations for foreign investment.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email email@example.com or visit www.dezshira.com.
Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.
Employing Foreign Nationals in China
In this issue of China Briefing, we have set out to produce a guide to employing foreign nationals in China, from the initial step of applying for work visas, to more advanced subjects such as determining IIT liability and optimizing employee income packages for tax efficiency. Lastly, recognizing that few foreigners immigrate to China on a permanent basis, we provide an overview of methods for remitting RMB abroad.
Revisiting the Shanghai Free Trade Zone: A Year of Reforms
In this issue of China Briefing, we revisit the Shanghai FTZ and its preferential environment for foreign investment. In the first three articles, we highlight the many changes that have been introduced in the Zone’s first year of operations, including the 2014 Revised Negative List, as well as new measures relating to alternative dispute resolution, cash pooling, and logistics. Lastly, we include a case study of a foreign company successfully utilizing the Shanghai FTZ to access the Outbound Tourism Industry.
Doing Business in China
The China Briefing Business Guide to Doing Business in China is the definitive guide to one of the fastest growing economies in the world, providing a thorough and in-depth analysis of China, its history, key demographics and overviews of the major cities, provinces and autonomous regions highlighting business opportunities and infrastructure in place in each region. A comprehensive guide to investing in China is also included with information on FDI trends, business establishment procedures, economic zone information and labor and tax considerations.