Trade and logistics, financial services and technology innovation set to benefit
A majority of business executives have indicated support for the Greater Bay Area (GBA) initiative, with potential benefits including a freer flow of talent and enhanced market access, finds a joint survey by KPMG and the Hong Kong General Chamber of Commerce (HKGCC).
The survey, titled The Greater Bay Area Initiative - Key drivers for success, was conducted in June and July 2017 and received responses from 614 business executives, including 410 from Hong Kong, 91 from Guangzhou, 82 from Shenzhen and 31 from other GBA cities. The respondents were from a variety of industries such as manufacturing, distribution, e-commerce, retail and logistics.
The concept of Hong Kong, Macau and Guangdong working together to form the GBA resonated with the survey respondents. Eighty percent of respondents highlighted their support for integrated development across the region, while 90 percent said the GBA is likely to have a positive impact on China’s economy.
Improved corporate synergies, a freer flow of talent and enhanced abilities to penetrate markets were identified as key benefits to arise from the initiative, according to the survey findings. Sixty eight percent of respondents indicated trade and logistics services are most likely to benefit from GBA, followed by financial services (62 percent) and R&D in innovative technologies (60 percent).
Ronald Sze, Senior Partner, Southern Region, KPMG China, says: “One of the GBA’s key objectives is to improve the level of cooperation within the region. This includes identifying the core competitive advantages of the cities within GBA and explore ways for them to complement one another.”
“For example, Hong Kong can build on its strengths in the financial and professional services sectors, Shenzhen can leverage its high-tech manufacturing and innovation expertise, while Guangzhou and Dongguan can utilise their manufacturing capabilities. The GBA therefore has the potential to become the most diversified city cluster in the world,” he adds.
Shirley Yuen, Chief Executive Officer, HKGCC, says: “Companies can take advantage of Hong Kong’s ‘one country, two systems’ status, which makes it a part of China but with its own legal and financial regimes. They can also tap into Hong Kong’s status as the gateway between China and the world and as an international financial centre for fundraising, asset and risk management, corporate treasury services, insurance and re-insurance, as well as offshore renminbi services.”
As GBA develops, its influence is likely to extend beyond geographical boundaries and serve as a key link connecting countries along the Belt and Road Initiative.
Over one-third (37 percent) of respondents believed the GBA will be able to rival the Greater Tokyo Metropolitan Area in terms of economic scale in a decade’s time, while relatively fewer see it rivalling the San Francisco Bay Area (32 percent) or Greater New York (28 percent).
The success of the GBA initiative depends on a number of factors. Sixty five percent of respondents indicated support from local governments is the most important factor for the GBA’s success.
Ayesha Lau, Managing Partner, Hong Kong, KPMG China, says: “While enhanced cross-border movements of capital, people, goods and services within the GBA are essential for the region’s successful development, the most pressing issue is for local governments within the region to collaborate on a broad range of topics. This includes economic policies, environmental and transport issues, and regulatory harmonisation.”
Key to this would be to enhance the level of coordination and cooperation among governments, as only 13 percent of respondents saw a clear division of roles among the various GBA cities. This suggests there is currently a level of overlap in terms of economic role among the GBA cities. One way forward would be the establishment of pilot programmes to facilitate better movement of people, goods, services and money within the region. CEPA and the Guangdong free-trade zone are examples of such initiatives.
In addition, the report highlighted the top challenges facing the development of the GBA: protectionism (60 percent) and silos between and within governments (53 percent).
Yuen says: “The Hong Kong government should set up a GBA Office to formulate proposals, strategies and policy directions. The GBA Office will be responsible for defining Hong Kong’s potential participatory role in the area’s development and economic growth, coordinating with relevant governments in the region, and disseminating official GBA information to the public.”
Lau concludes: “Hong Kong should develop an overall development strategy with the goal of drawing up a comprehensive region-wide plan aimed at strengthening cooperation with Shenzhen and other GBA cities.”
KPMG China operates in 16 cities across China, with around 10,000 partners and staff in Beijing, Beijing Zhongguancun, Chengdu, Chongqing, Foshan, Fuzhou, Guangzhou, Hangzhou, Nanjing, Qingdao, Shanghai, Shenyang, Shenzhen, Tianjin, Xiamen, 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 152 countries and regions, and have 189,000 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.
Established in 1861, the Hong Kong General Chamber of Commerce is the oldest and most represented and influential business organisation in Hong Kong. The Chamber is the Voice of Business with a strong corporate membership, covering more than half of the Hang Seng Index’s flagship corporations, about onefifth of Fortune Global 500 companies, hundreds of multinational corporations and numerous thriving SMEs. Together, Chamber members hire about one-third of the workforce (over one million) in Hong Kong.
For the past 156 years, the Chamber has grown together with Hong Kong and the business community. The Chamber’s mission is to promote, represent and safeguard the interests of the business community in Hong Kong. At the same time, the Chamber also provides support, networks, training and business services to help the business community grow.
Through the advocacy work, the Chamber lobbies governments, legislators, policy makers, public bodies and other organisations to make it easier for the business community to do business. The Chamber has representatives on over 40 Government and non-Government Advisory Boards, as well as the SAR’s Executive Council and Legislative Council, plus several of its members serve on the CPPCC Standing Committee of the PRC.
The Chamber organises some 300 events every year, 100+ policy meetings, and welcomes over 100 visiting delegations from Mainland China and around the world. It also provides a full range of services, from business document services, conference room rental, training programmes, event management, to advertising.
Despite being the oldest business organisation in Hong Kong, the Chamber remains the most dynamic and progressive with its sights fixed firmly on the horizon, constantly searching for new opportunities and ways to help its members.
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