Business Environment

Updated: Dec 14, 2017 Print
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Situated at the southernmost part of Chinese mainland with the Tropic of Cancer passing it through, Guangdong connects Fujian province to the east, Jiangxi province and Hunan province to the north, and Guangxi Zhuang autonomous region to the west. It neighbors Hong Kong and Macao to the south and faces Hainan province to the southwest across the sea. The Pearl River, the third largest river in China, merges itself into the sea and forms the Pearl River Delta, which is the very center of the economic circle of South China and Southeast Asia.

The province covers an area of 180,000 square kilometers with a coastal line of 3,368 kilometers and a water area of 419,000 square kilometers.

II.Welcoming Destination for Business  

1.Complete infrastructure

Guangdong is the transportation hub in South China with widely connected marine, land and air transportation networks. It has established shipping routes with 1,100 ports in over 130 countries and regions. Expressways and rails have been rolled out to connect the neighboring provinces. Guangzhou Baiyun International Airport, one of the three largest aviation hubs in China, is the engine generating strong transportation capacity and convenient services together with the other seven civil airports located respectively in Shenzhen, Zhuhai, Foshan, Zhanjiang, Meizhou, Jieyang and Chaoshan.

Guangdong is speeding up the construction of the new generation IT infrastructures and has achieved the basic coverage of 3G network in urban and rural areas as well as coverage of 4G network in urban areas of local cities. By the end of 2016, 4G users had reached 90.853 million, accounting for 63.3 percent of the total telecom users. The number of landline broadband users had reached 28.51 million with an increase of the fiber optics access by 69 percent. EUHT pilots have been launched in various sectors. The "internet+" concept continues moving forward. Cloud computing and internet of things (IoT) industries keep expanding. Smart cities and smart transportation are scaling up to cover larger areas.

2.Efficient and convenient customs clearance

Guangdong enjoys well-developed infrastructure for air, land and marine transportation and for port customs services. Currently, there are 58 Category I ports in Guangdong. All ports in Guangdong adopt the customs clearance mode of "Territorial Declaration, Port Release", carry out the customs-inspection cooperation for the inspection and clearance of imported solid waste, implement the "Three Mutual" customs clearance mechanism (namely, mutual recognition by management and governance, mutual assistance for law enforcement, and mutual sharing of information), and provide "One-stop Window" service for international trade. The ports are also working on the process of linking the new mode of clearance of "Three One-offs" based on the cooperation between customs and inspection authorities (namely one-off declaration, one-off inspection and one-off clearance) with the "One-stop Window" service to improve the capacity and efficiency of port clearance services and to facilitate trade. GPS system has been adopted to support the quick clearance of small-size boats traveling from Hong Kong and Macao. The inspection mode of “One X-ray Scan for Two Checks” to assist the cooperation between customs clearance and quarantine is promoted. Fast clearance tracks are open to credible enterprises which can also benefit from special services such as clearance appointment, door-to-door inspection and guaranteed release. Technical innovations in supervision have also been adopted, and the one-stop electronic checking system and automatic passenger inspection system are promoted.

3.Sound investment service system  

Guangdong keeps reforming its commercial system to fully implement the "Five-in-one License" and "One Code and One License" for companies and carry out the registration reform for private-owned business through the "integration of two licenses". In 2016, there were in total 161,580 new entities (a year-on-year increase of 16.5 percent) in various sectors that were registered in Guangdong with a total registration capital reaching 7.19 trillion yuan (a year-on-year increase of 39.6 percent). With the public service reform of "One Offline Window Plus One Online Portal" fully launched, the proportion of online administrative approvals has climbed to 76.7 percent. The service network has been extended to reach local towns and neighborhoods. 

The investment and financing system is also improving. The policy reform of the negative list management for market access is trialed through pilot projects. The corporation investment project list management and online filing mechanism are in place to encourage and expand social investment.

4.Influential international exhibitions  

Guangdong attaches great importance to developing its convention and exhibition industry with a special focus on establishing international platform, providing professional services and promoting trade. The China Import & Export Fair (also known as "Canton Fair") is a comprehensive international trade event with the longest history, the highest level, the largest scale, the most categories of goods, the most visitors and the best transaction outcomes in China. In addition, the China Hi-tech Fair, China International Small & Medium Enterprises Fair, the China International Aviation & Aerospace Exhibition, China International Cultural Industries Fair, China Processing Trade Products Fair, Guangdong 21st Century Maritime Silk Road International Expo and other large-scale exhibitions have also established their reputations in the international arena.

III.Guangdong: Leading Role in Innovation  

1.Strong education and R&D capability

Guangdong has a complete educational system with a wide connection with international education resources and in-depth international cooperation. This ensures a strong foundation to support the economic and social development with well-educated professionals.

Guangdong is pressing ahead with the provincial education program of developing high-level comprehensive universities, high-level science and engineering universities and key disciplines. Fifty disciplines of the universities involved in the program have been listed among the top 1 percent according to the global ESI, among which five disciplines have been listed among the top one percent. Local universities have absorbed 221 newly-entitled "national high-level talents", accounting for 22 percent of the provincial total. There are 718 R&D and innovation platforms above the city level open to the market and enterprises, equivalent to 69.2 percent of the total number of platforms in the higher education institutions.

Guangdong attaches great importance to the introduction of excellent education resources from outside Chinese mainland and has approved the establishment of 73 cooperation projects under joint operation by local and overseas organizations, including four jointly operated institutions with independent legal person identity, namely the United International College jointly set up by Beijing Normal University and Hong Kong Baptist University, the Chinese University of Hong Kong in Shenzhen, Shenzhen MSU-BIT University and Guangdong Technion-Isreal Institution of Technology. 

2.Excellent environment for innovation and entrepreneurship

Guangdong has further enhanced its capability in innovation. In 2016, the proportion of R&D expenditure in GDP of Guangdong was raised to 2.58 percent. The total number of patents for invention in force reached 168,500 and the received cases for PCT international patent application was 23,600, representing an increase of 21.3 percent and 55.2 percent respectively, which marked the qualification of Guangdong to be recognized as a region of innovation. There are in total 213 national key laboratories, engineering and technology research institutes, engineering laboratories, and company technology centers located in the province. Accumulatively, Guangdong has become the base for 204 industrial technology innovation alliances, 180 new-type research institutes and 75 national quality inspection centers. More than 260,000 start-ups are currently at the incubation phase in the 634 technology enterprise incubators in Guangdong.

3.High-level teams and high-end talents

Guangdong launched the "Pearl River Talent Project", "Sail-setting Program", "Special Support Plan for Developing High-level Professionals in Guangdong and other important programs to attract high-level professionals to Guangdong province. Up to date, 117 outstanding overseas teams have been introduced to Guangdong via the "Pearl River Talent Project". Thirty-two high-level teams have started their business and innovation journey in the eastern, western and northern parts of Guangdong via the "Sail-setting Program" with a total number of 10,000 professionals from all walks of life attracted to these areas. In addition, nearly 1,000 local high-level talents specialized in natural science, engineering technology, philosophy and sociology have been selected with special support granted via the "Special Support Plan for Developing High-level Professionals in Guangdong".

4.Innovative leading companies   

Guangdong actively participates in international economic cooperation and competition. By the end of 2016, nine local companies had been listed among the Fortune 500, adding to the existing national leading companies from Guangdong in their own respective sectors as well as local innovative advanced manufacturing enterprises with international influence.

The leading companies in the manufacturing industry include Huawei, ZTE, AMER, GAC, Midea, TCL, Gree, BYD, Guangzhou Pharmaceutical Holdings, Great Wall, Kuang-chi, DJI and Royole. The leading players in the service industry include Ping An, China Southern Power Grid, China Merchants Bank of China (CMBC), Tencent, Country Garden, China Southern Airline, Silique, Guangzhou Light Industry Group, Vipshop, Yuexiu Group and GF Securities. These companies have become the hard core for the development of advanced manufacturing industry and service industry in Guangdong.

IV.Guangdong: Pioneer in Opening up

1.Well-developed open economy

Strong comprehensive economic strength

Since 1978 when Guangdong took the lead to embark on the journey of reform and opening up, the comprehensive economic strength of the province has leapt to the top rank in the country, and its economic scale has successively exceeded Singapore, Hong Kong and Taiwan, three of the “Four Asian Tigers”. In 2016, the total GDP of Guangdong reached 7.95 trillion yuan (10.7 percent of the national total), which increased by 7.5 percent compared to that in 2015, ranking first for the 28th year in a row. The per capita GDP was 72,787 yuan, which was 1.3 times higher than the national average. Guangdong also topped the country with its excellent performance in key economic indicators such as tax revenue, fiscal revenue, and total retail sales of consumer goods, industrial added value and household savings.

Upgrade and optimization of industrial structure

Guangdong is driving its development of modern industries through innovation and continuously optimizing its industrial structure. In 2016, the ratio of the primary, secondary and tertiary industries was adjusted to 4.6: 43.3: 52.1. Producer services such as technology service, industrial design, supply chain management and information technology service have witnessed rapid growth. The proportion of the added value of modern service industry increased to 61.7 percent. There were 219 projects in advanced manufacturing industry along the west bank of the Pearl River with a total foreign investment amounting to 187.62 billion yuan, and the added value of equipment manufacturing was up by 12 percent.

Guangdong grants great support to the development of intelligent manufacturing. Fifteen backbone enterprises specialized in robotics were incubated with an annual output value over 100 million yuan. Twenty-two thousand new robots were put in use, expanding the total number of robots in operation to over 60,000 in Guangdong. The proportion of the added value of advanced manufacturing and that of the high-tech manufacturing increased to 49.3 percent and 27.6 percent respectively in the total added value created by industrial enterprises above designated scale.

Guangdong is also pushing forward pilot projects in developing clusters of emerging industries with strategic significance. The production of new energy vehicles in the province increased by 76.3 percent in 2016, with sectors including bio-pharmaceuticals, new energy and new materials booming fast.

Increasing domestic consumption 

Guangdong has a strong market consumption capacity. The disposable per capita income of the local residents exceeded 30,000 yuan in 2016, representing a year-on-year increase of 8.7 percent. The local market showed a booming trend with a fast development of the circulation sector.

In 2016, the total sales of consumer goods reached 3.47 trillion yuan with a year-on-year increase of 10.2 percent, ranking first in China for the 34th consecutive year. The consumption of vehicles, information and tourism has been increasing rapidly. The total online sales volume grew by 27.6 percent, and the express delivery service witnessed an increase in revenue by 42.8 percent.

Top province of trade in goods 

The total import and export volume of Guangdong in 2016 amounted to 6.3 trillion yuan, topping the country for 31 years in a row. The export was 3.95 trillion yuan, taking up 28.5 percent of the national total with an increase rate of 0.2 percentage point. The innovation and development of processing trade has been accelerated. The export of "ODM + OBM" took up 71 percent of the total export. The proportion of general trade exceeded that of OEM to 45.3 percent. Comprehensive foreign trade services, export of goods purchased by cross-border tourists, cross-border e-commerce and other new types of business showed a record of rapid growth.

Hong Kong, United States, ASEAN, EU, South Korea and Japan are the major trading partners of Guangdong, whose total export and import trade volume took up 67.5 percent of the total volume of Guangdong. Recently, there has been an increase in the export and import trade with the emerging market countries and regions, including India, Mexico and Chile, which maps out a diversified market structure.

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The Market Distribution of Foreign Trade of Guangdong 2016

Rapid increase of trade in services

The trade in service in Guangdong has shown a steady increase in recent years. The total import and export volume of trade in services from Guangdong reached 965.12 billion yuan (an increase of 17.6 percent) in 2016, ranking first in the country for the first time. The increase rate was 3.4 percentage points higher than the national average. The proportion of trade in services from Guangdong in the national total remained the same as that in 2015. It took up 13.3 percent in foreign trade of Guangdong as a whole, 1.9 percentage points higher than that in 2015. In 2016, the contract value of outsourced services (both offshore and onshore) undertaken by companies in Guangdong was registered as $23.178 billion, up by 39.89 percent. The executed amount was $13.947 billion, representing a year-on-year increase of 22.73 percent.

Booming e-commerce

Guangdong has been leading the development of e-commerce in the country. In 2016, the total transaction volume of e-commerce of Guangdong gained 4.35 trillion yuan and the cross-border e-commerce trade volume stood at 22.8 billion yuan, both of which were the largest in China, representing a year-on-year increase of 25.2 percent and 53.8percent respectively. The B2B e-commerce transaction and the online retail transaction volume increased by 23.8 percent and 29.3percent; which is equivalent to 72.7 percent and 27.3 percent of the entire e-commerce transactions in the province.

A number of influential e-commerce platforms have been established in industries such as steel, petrochemicals, plastics, grain, automobile and electronic products. Vipshop, GMC, Just One Touch, Lightinthebox and other local e-commerce champions are growing at a high speed.

Growing foreign investment

Guangdong has been encouraging foreign investors to seek business opportunities in the province. By the end of 2016, Guangdong had accumulatively attracted 194,000 projects under direct foreign investment, with a total contractual foreign capital of $686.12 billion and an actually absorbed foreign investment of $400.83 billion, equivalent to one fourth of the national total. In 2016 alone, there were 8,078 projects under FDI established in Guangdong with a contractual value of $86.7 billion and an actual absorption of foreign capital of $23.3 billion. The actual foreign investment absorbed from the United States and Europe increased by 22.3 percent and 12.3 percent to $230 million and $940 million respectively. A total of 1,500 enterprises invested by the Fortune 500 companies have set their foot in Guangdong.

Robust and orderly development of overseas investment

Guangdong has been rigorously implementing the strategy of "going global" and actively participating in the construction of the "Belt and Road Initiative" to optimize the global distribution of investment and cooperation. By the end of 2016, enterprises from Guangdong had established 8,603 non-financial enterprises in over 100 countries and regions. The total contractual value of the Chinese investment reached $90.53 billion, with a major focus on markets in Hong Kong, Macao, ASEAN countries and North America. In 2016, Guangdong approved 1,429 companies set up by domestic enterprises outside Chinese mainland with a new investment volume amounting to $28.28 billion. The accomplished turnover of foreign contracted projects was $18.16 billion, and the actual income of the contract workers was $892 million.

2.New pattern of opening up

Guangdong has been strengthening its direct exchanges and cooperation with developed countries such as North American and European countries. Sisterhood relationship has been established between Guangdong and six provinces and 30 cities in North America. Guangdong has also joined three China-US provincial-level trade and investment cooperation joint working groups. Such bond has also been bridged with 19 provinces and 41 cities in Europe. 

Continuously optimizing the pattern of opening up

Economic and trade communication agencies have been established to further promote the cooperation between Guangdong and countries in North America and Europe. Guangdong Economic Development and Trade Promotion Offices to Europe, North America and Southeast Asia have been erected in Munich, Los Angeles and Kuala Lumpur respectively. The Association of German Chambers of Commerce and Industry (DIHK), the European Union Chamber of Commerce, the Japan External Trade Organization, the Korea Trade-investment Promotion Agency (KOTRA) and other foreign commercial agencies have also set up their representative offices in Guangdong.

The cooperation between Guangdong and emerging market countries has been developing with great momentum, and that can be demonstrated by Guangdong's in-depth involvement in the China-ASEAN Free Trade Zone, its active participation in the China-Africa "Ten Major Cooperation Plans", and its closer cooperation with South Asian countries, South Pacific Island countries, Latin American countries and Middle Asian Countries.

Foreign countries have also established consulate generals in Guangzhou, including 18 G20 member states, 23 OECD countries, eight ASEAN countries, eight African Union countries, six Middle East countries and four South Asian and Central Asian countries.

Pilot Free Trade Zone looking up to high standards 

The China (Guangdong) Pilot Free Trade Zone (Guangdong PFTZ) was officially established in April, 2015, covering an area of 116.2 square kilometers, including Nansha New Area of Guangzhou, Qianhai and Shekou districts of Shenzhen and Hengqin New Area of Zhuhai. Guangdong PFTZ has been pushing forward various missions steadily and achieved steady results. In 2016, there were 77,000 newly established companies who set their sail for businesses here with a total utilization of contractual foreign investment of $54.62 billion, up by 160 percent. Guangdong PFTZ is expected to be built into a high-level gateway hub for opening up to accommodate the international trade center, international shipping center, international financial center and global metropolis.

Active participation in the development of the "Belt and Road Initiative"

Guangdong is taking the initiative in building the exchange platforms for the "Belt and Road" countries and successfully staged the 21st Century Maritime Silk Road International Expo & International Forum and the Second Investing in Africa Forum.

The province is also furthering its cooperation with these countries and regions in international productivity and equipment manufacturing and facilitating the establishment of overseas cooperation parks including the Guangdong Photoelectric Industrial Park in the China-Belarus Industrial Park, the Saudi (Jizan)-China Industry Cluster and the Ethiopia-Guangdong Industrial Park along the "Belt and Road" route.

Guangdong will speed up to build the Guangdong (Shilong) Railway International Logistics Center into an important node connecting the "Belt and Road" and accelerate the development of the China-Russia Trade Industrial Park.

Meanwhile, Guangdong is also expanding its trade and cooperation with the countries along the route. Recently, the province has witnessed a booming momentum of cooperation with these countries and regions, in particular those along the "Maritime Silk Road".

High-level Guangdong-Hong Kong-Macao Greater Bay Area

Guangdong will benchmark itself against the world-class bay areas and global metropolitan clusters to build the Guangdong-Hong Kong-Macao Greater Bay Area into the highland for global innovation, a place with the most vibrant economic development and the best quality of life in the world, the upland for international cultural exchanges, and the pioneering area for China's further reform and opening up. Centering on the development of a world-class metropolitan cluster at the Pan-Pearl River Delta, Guangdong will spare no effort to realize the overall interconnection of the cross-border infrastructure linking Guangdong, Hong Kong and Macao, to strengthen the cooperation in innovation and entrepreneurship, and to create an excellent environment for living and working.

Guangzhou's influence and driving forces as the capital of Guangdong will be fully utilized to lead the development. The cooperation between Shenzhen and Hong Kong will be strengthened to develop the global financial center, logistics center, trade center, innovation center and the international cultural and creative industry center. Zhuhai and Macao will join hands to create the world-class tourism and entertainment center. Priorities will be given to the cooperation between Jiangmen Daguang Bay Area, Zhongshan Cuiheng New District and Hong Kong and Macao to build the Guangdong-Hong Kong-Macao area into a tourist destination with global influence.

The projects of Guangdong-Hong Kong Scientific and Technological Innovation Corridor, Shenzhen-Hong Kong Innovation Circle and Guangdong-Hong Kong-Macao Pilot Cooperation Park for Innovation and Entrepreneurship will be further implemented to transform the Guangdong-Hong Kong-Macao region into an important innovation center and research achievement transformation base in the Asia-Pacific region.

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