Development momentum gathers

The mega metropolis' role as an international innovation hub is further consolidating as global investors understand more about its potential. Zhang Tianyuan reports from Hong Kong.

Global investors' growing understanding of the development potential of the Guangdong-Hong Kong-Macao Greater Bay Area - along with the municipal-level and the special administrative region governments' policies to attract talent - will further consolidate the mega metropolis' role as an international innovation hub.

Wilson Pang, a senior partner and head of advisory, Southern Region at international accounting firm KPMG in China, made the prediction in an interview with China Daily.

Pang said that over the past three years, international firms have strengthened their awareness of the growth prospects of the Greater Bay Area and learned "what opportunities the GBA will bring", enabling these firms to integrate and collaborate in the next stage.

Research released in November by HSBC said 76 percent international businesses surveyed have plans to expand in the Greater Bay Area. And more than half of international firms believe the area is set to experience higher growth than the rest of China, according to HSBC's 2021 Navigator survey.

The Greater Bay Area, with over 86 million residents, had a GDP of 12.6 trillion yuan ($1.87 trillion) last year, a growth of 2.4 trillion yuan from 2017, according to the Guangdong provincial government.

Understanding governments' preferential policies is key to multinational corporations' growing investment in the area, said Pang, who is also a senior member of the Chinese People's Political Consultative Conference Dongguan Committee.

Using KPMG as an example, last year the company opened the second Digital Ignition Center in the Qianhai cooperation zone to help drive innovation and digital transformation in the Greater Bay Area. In December, KPMG established an office in Dongguan that performs audit, tax, and advisory services, making KPMG the first of the "Big Four" accounting firms to establish an office in the city.

Pang said KPMG China is also considering expanding to other cities in the Greater Bay Area in the near future. "This expansion reflects our vision and expectations, as well as our confidence in the GBA's future," Pang said.

The Shenzhen government has injected several rounds of financial incentives, amounting to tens of billions of yuan, to individuals and technology and financial companies in the Qianhai cooperation zone as part of the effort to accelerate the reform, opening-up and innovation.

The strategy of the Qianhai cooperation zone as unveiled by the authorities specified formulating investor protection regulations, improving the mechanism for protecting the rights and interests of foreign capital and private enterprises.

In 2020, foreign direct investment in the Greater Bay Area reached $103.74 billion across all 11 cities, of which Hong Kong topped the list with $74.46 billion, and Shenzhen ranked second with $8.68 billion, according to the data from Statista, an online statistics provider.

The central government's "dual circulation" economic model, allowing foreign companies in China to broaden their business operations, positions the Greater Bay Area in a crucial role, acting as the bridge to overseas markets. KPMG earlier said the strategy offers growth for entrepreneurs worldwide.

However, Pang said obstacles still exist for international firms trying to get a good grasp on how the Greater Bay Area operates, as "each city in the area has distinctive policies and initiatives to support the Greater Bay Area development".

"Not every foreign investor truly knows the timetable for the region," Pang said. "Various policies released by different cities at different times require investors to make an effort to understand and digest these policies before drafting their business strategies. As such, more two-way communication is urgently required between investors and individual local governments."

"For instance, the State Council disclosed the Hengqin plan on Sept 5 and the Qianhai plan on Sept 6, which was followed by the announcement of the Northern Metropolis Development Strategy by the Hong Kong government on Oct 6."

Both the Hengqin plan and the Qianhai plan provide advantageous conditions to incubate the innovative and financial sectors, while the Northern Metropolis program involves the development of an innovation and technology hub in Hong Kong's northern New Territories near the Chinese mainland.

Apart from awareness, foreign companies that want to enter the Greater Bay Area should also address concerns about the cost evaluation of each government's fiscal incentives, as well as talent recruitment and retention, in Pang's opinion.

Many people prefer working in Shenzhen or Hong Kong because of convenient living facilities. "Do they want to live and work in other cities in the Greater Bay Area? It is not easy to recruit an eligible labor force in all cities of the region," he said.

"Companies should have a mobility policy in place to encourage skilled personnel to move and work in different cities. Subsidies may need to be offered to staff, including housing and transportation allowances, or even school fees for children."

The central authority released the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area in 2019, depicting a blueprint for the area to be a global technology and innovation hub, international financial center as well as a quality circle for living, working and traveling.

A KPMG report in April said the willingness of Hong Kong executives among respondents to relocate to other Greater Bay Area cities amounts to 72 percent this year, representing a 20 percent increase compared with the data in 2019. Career and industry prospects are the main motivation for the talent relocation.