77 percent of business executives said economic growth in the GBA will exceed the rest of China while 70 percent said they expect the GBA will help their business expansion plans
The Greater Bay Area’s (GBA) economy will grow faster than the rest of China over the next three years, and boost corporate expansion plans, according to the majority of business executives in a joint survey by KPMG, HSBC and the Hong Kong General Chamber of Commerce (HKGCC).
The survey, titled Navigating the Greater Bay Area – Second annual survey on key drivers for success, was conducted in June and July 2018 and received responses from 714 business executives in mainland China, Hong Kong and Macau.
The respondents highlighted a number of benefits of the GBA; 68 percent indicated the area’s potential for allowing access to more business opportunities, while 53 percent flagged options for greater synergy achieved by pooling resources. While the GBA is expected to create business opportunities across all sectors, the survey respondents identified technology and innovation (53 percent), trade and logistics (45 percent) and financial services (44 percent) as the three key sectors to benefit the most.
Ayesha Lau, Managing Partner, Hong Kong, KPMG China, says: “The GBA is well-positioned to become a major economy and mega metropolis, which will create significant opportunities for businesses across all sectors. Closer partnerships between the GBA’s cities can help foster the development of the GBA’s new economy in particular. Within China, the GBA has the potential to extend its reach beyond the Pearl River Delta to the nearby provinces of Fujian, Jiangxi, Hunan, Guangxi, Hainan, Guizhou and Yunnan. The development of the Area should also act as a catalyst for China’s Belt and Road Initiative.”
The survey finds that the GBA’s greatest area of potential lies in technology and innovation – with opportunities for businesses of all sizes – as well as the possibilities offered by the initiative to create a global technology and innovation hub by leveraging on the strengths of Shenzhen’s high-tech manufacturing capabilities and Hong Kong’s financial acumen.
Helen Wong, Chief Executive, Greater China, HSBC, says: “The Greater Bay Area is already internationally renowned as China’s innovation hub, but policies to enhance the movement of talent, capital and trade across the Area can accelerate its development. The whole Area’s economy stands to benefit as Hong Kong’s strengths in applied research and its sophisticated capital market become even better connected with Guangdong’s advanced manufacturing sector and well-established supply chains. HSBC has set up dedicated teams to support the business ambitions of technology companies in Hong Kong and Guangdong, and we look forward to working with our clients to capture the opportunities created by the GBA initiative.”
Around 81 percent of technology and innovation industry respondents said they believe their business would grow as a result of the GBA’s development over the next three years, with 23 percent expecting growth of more than 10 percent.
Meanwhile, trade and logistics respondents said the development of the GBA offers access to more business opportunities (66 percent), creates greater synergies arising from the pooling of resources (48 percent) and facilitates the free movement of capital and goods (44 percent).
Of the financial services executives surveyed, 82 percent expect their business to grow as a result of the GBA’s development over the next three years, with 34 percent expecting more than 10 percent growth. The respondents are also optimistic about the prospects of their own industry, with about 73 percent naming financial services as among the industries most likely to benefit from the development of the GBA.
Around 57 percent said their companies either have a GBA strategic plan in place or are in the process of formulating such a plan. In terms of sectors, 72 percent of financial services executives said their company has or is formulating a plan, followed by healthcare/life sciences (67 percent) and technology and innovation (66 percent).
While the surveyed executives are overall optimistic about the development of the GBA, a majority of them indicated they would like to see greater regulatory clarity, and how the various governments in the region can reconcile the different tax, healthcare and visa regimes – among other things – to facilitate the movement of people, capital, information and goods.
“The free movement of people and potential reduction in transaction costs will underpin the GBA’s economic activity. With proper policy support and cooperation in the GBA, under the principles of complementarity and mutual benefit, we think the optimism of the survey respondents is understandable,” concludes Shirley Yuen, Chief Executive Officer, HKGCC.
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For this report, KPMG China, HSBC and HKGCC commissioned YouGov to conduct a survey of 714 business executives in mainland China, Hong Kong and Macau, using both online and pen and paper questionnaires.
The survey was conducted in June and July 2018. Some 433 (61 percent) of respondents are from companies whose principal base of operation is in Hong Kong; 89 (12 percent) are from Shenzhen, 58 (8 percent) from Guangzhou, 54 (8 percent) from other cities in the GBA, and 80 (11 percent) from outside the GBA.
The business executives are from a wide range of industries, including trade and logistics (151 respondents), professional services (104), manufacturing (103), financial services (92) and technology and innovation (47).
Among the respondents who disclosed the turnover of their companies, 189 work for companies with annual revenues of more than US$100 million. The rest work for companies with revenues of US$10 million to US$100 million (140 respondents), US$2 million to US$10 million (111), and US$2 million or less (122).
Technology and Innovation:
Trade and Logistics:
KPMG China operates in 19 cities across China, with around 12,000 partners and staff in Beijing, Beijing Zhongguancun, Changsha, Chengdu, Chongqing, Foshan, Fuzhou, Guangzhou, Hangzhou, Nanjing, Qingdao, Shanghai, Shenyang, Shenzhen, Tianjin, Wuhan, Xiamen, Xi’an, Hong Kong SAR and Macau SAR. With a single management structure across all these offices, KPMG China can deploy experienced professionals efficiently, wherever our client is located.
KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 154 countries and territories and have 200,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
In 1992, KPMG became the first international accounting network to be granted a joint venture licence in mainland China. KPMG China was also the first among the Big Four in mainland China to convert from a joint venture to a special general partnership, as of 1 August 2012. Additionally, the Hong Kong office can trace its origins to 1945. This early commitment to the China market, together with an unwavering focus on quality, has been the foundation for accumulated industry experience, and is reflected in the Chinese member firm’s appointment by some of China’s most prestigious companies.
The Hongkong and Shanghai Banking Corporation Limited is the founding member of the HSBC Group, which serves our customers through four global businesses: Retail Banking and Wealth Management, Commercial Banking, Global Banking and Markets, and Global Private Banking. The Group serves customers worldwide from around 3,800 offices in 66 countries and territories in Europe, Asia, North and Latin America, and the Middle East and North Africa. With assets of US$2,607bn at 30 June 2018, HSBC is one of the world’s largest banking and financial services organisations.
Established in 1861, the Hong Kong General Chamber of Commerce is the oldest and most broadly representative business organization in the city. The Chamber is the voice of business in Hong Kong with a strong corporate membership, covering more than half of the Hang Seng Index’s flagship corporations and about one-fifth of Fortune Global 500 companies. Together, Chamber members employ about one-third of the workforce in Hong Kong.
For the past 157 years, the Chamber has grown together with Hong Kong. Its mission is to promote, represent and safeguard the interests of the business community in the city. At the same time, the Chamber also provides support, networks, training and business services to help companies grow and prosper.
Through its advocacy work, the Chamber lobbies governments, legislators, policymakers, public bodies and other organizations to make it easier for the business community to do business. The Chamber has representatives on more than 40 Government and non-Government advisory boards, as well as the SAR’s Executive Council and Legislative Council, plus the CPPCC Standing Committee of the PRC.
Every year, the Chamber organizes more than 500 events. These range from networking cocktails, seminars, training programmes and policy discussion sessions to meetings with delegations from around the world. It arranges visits to companies and Government facilities in Hong Kong, as well as missions to the Mainland and overseas. The Chamber also provides a wide range of services, from business document services and conference room rental to events management and advertising.’
The Chamber is not just the oldest business organization in Hong Kong, but also the most dynamic and progressive. Its sights are fixed firmly on the horizon, constantly searching for new opportunities and ways to help its members.
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