Trends
and Opportunities
The growth, development, and interactions within the Greater Pearl
River Delta region are resulting in a number of positive trends. In
financial services, an increasingly integrated Greater Pearl River
Delta region is likely to become one of the best-served areas in China.
With the liberalisation of China's
economy, listings of Chinese companies on international bourses should
proliferate, expanding Hong Kong's
financial sector in the process. In 2005, Hong Kong continued to be the
leading destination for firms from the Chinese Mainland to raise
capital, with the top five listings on the Hong Kong Stock Exchange
from the Chinese Mainland raising a total of US$16.48 billion. Hong
Kong banks and overseas banks already set up in Hong Kong have been
expanding incrementally out into the Pearl River Delta region in
activities including RMB banking and back-office operations, especially
to Shenzhen which is making efforts to stay at the forefront of China's
opening. Movement into Shenzhen and other Pearl River Delta cities will
be facilitated by the opening of China's financial sector, which under
China's WTO commitments is due by year-end 2006.
In business services, we should see in the Greater Pearl River Delta
region a dramatic opening of the services sector, new market
opportunities for foreign companies, and the development of local
service firms. For the Pearl River Delta region, the greater opening
should allow places like Guangzhou
and Shenzhen to attract service activities from multinational and Hong Kong companies that have
not been feasible before. As in other sectors, this will help stimulate
improvement in the quantity and quality of locally provided services.
For Hong Kong, the greater openness will provide a much greater scope
for Hong Kong to expand its position as a service centre for China,
enormously improve its ability to be a high-end service centre for the
Greater Pearl River Delta region, and in the process also expand its
role as an Asia-Pacific centre.
The Greater Pearl River Delta region is also poised to expand its
position in light manufacturing. The region will continue to benefit
from relatively low assembly manufacturing wages, high quality
infrastructure, improving capabilities, access to international markets
through Hong Kong,
and the presence of a wide range of supplier and supporting industries.
China's
accession to WTO and CEPA will further enhance the Pearl River Delta's
position. The region has access to labour from all over China.
The eastern part of the Pearl River Delta region and Hong Kong have
infrastructure that is better than elsewhere in China.
Planned investments in the region, including the Hong Kong-Zhuhai-Macao Bridge,
should make transportation around the Pearl River Delta region far
better than is the case today. Construction of the Hong
Kong-Zhuhai-Macao Bridge is expected to begin by 2007 and to finish by
2015. This US$4 billion, 35 kilometre highway bridge will reduce
driving time between Hong Kong
Island
and Macao
to around 45 minutes.
In Shenzhen and Hong Kong, the Greater Pearl River Delta region has
ports that are more efficient than elsewhere in China and less subject
to silting and other difficulties than new ports in Shanghai and elsewhere in China.
New investments in the region's ports are likely to continue to enhance
the Greater Pearl River Delta region's relative position. The Greater
Pearl River Delta region has more international air cargo and air
transport capacity than anywhere else in China.
The combination of Hong Kong's international routes and the domestic
networks at Guangzhou and Shenzhen is likely to continue to be an
advantage well into the future. The DHL Central Asia SuperHub at the
Hong Kong International Airport to be completed by year-end 2007 and
the Federal Express Asia-Pacific Hub in Guangzhou New Baiyun
International Airport to be completed by 2008 should further enhance
the region's position.
The development of heavy industry in South China is also gathering
speed, as shown by recent investments in the auto and auto parts,
steel, and petrochemical sectors. The Pearl River Delta region is the
first region in China
to be chosen for what is essentially the export processing of
automobiles. Honda, whose second auto plant in Guangzhou
will be geared towards export markets, obviously believes that China in general and Guangzhou
in particular, will be able to build to world quality and cost
standards. In January 2004, JFE Steel Corp., a Japanese steel group,
entered into a Nansha-based joint venture to produce steel for the auto
and appliance industries. The chemicals sector is seeing very
substantial development in Guangzhou (where a US$5 billion oil refinery
and petrochemical complex is planned by Sinopec and Kuwait Petroleum
Corporation at Nansha), Huizhou (where CNOOC and Shell have invested in
a US$4.3 billion petrochemical complex), and Zhuhai (where BP has made
major investments in world-scale purified terephthalic acid (PTA)
facilities).
These developments are being facilitated and amplified by massive
infrastructure and urbanisation initiatives in the Greater Pearl River
Delta region. Highway, rail, and subway systems are being dramatically
expanded. Substantial urban development projects are reshaping Guangzhou,
Shenzhen, Dongguan, and Foshan, among others. Macao is
seeing major investments in infrastructure and leisure facilities.
Connectivity around the region is being enhanced by projects that will
substantially increase the capacity for Hong Kong-Shenzhen boundary
crossings, such as the Hong Kong-Shenzhen Western Corridor, as well as
the Hong Kong-Zhuhai-Macao Bridge project. All of these are likely to
supercharge the region's development.
This is an extract from "The Greater Pearl River Delta" report
commissioned by InvestHK and written by Michael J Enright, Edith E
Scott and Enright, Scott & Associates. You may download the
entire book from the "Related Links" below.
