Question

Why is there such dense clustering of industries in South China today?

Answer 1

Several cities constitutes South China. Out of that,some cities are developed to top end to attract more companies. They are well organized in their urbanization programs. And among these cities in south China, Guangzhou comes to the top. Let's see how they are attracting industries into their cities.

Guangzhou, the capital city of Guangdong province, is an important political, economic, industrial, and cultural center in the South China region.

North of Hong Kong, Macau, and the South China Sea, Guangzhou’s location in the Pearl River Delta has long secured the city’s position as the southern gate of mainland China. As the origin of the ancient Chinese Maritime Silk Road, it was the oldest foreign trading port in mainland China and the only one that has never been closed.

Now, as one of the prominent cities included in the Guangdong-Hong Kong-Macau Greater Bay Area (GBA) plan and a key location on the Belt and Road Initiative (BRI), Guangzhou is growing into a global transport hub, trade center, and a science and technology innovation center.

Guangzhou boasts of advanced infrastructure, including the third-busiest airport (Guangzhou Baiyun International Airport) in terms of passenger throughput, the fourth-largest port (Guangzhou Port) in terms of cargo throughput, and the most well-connected railway network in mainland China.

Guangzhou’s Comprehensive Urban Plan: 2017-2035 (Draft) aims to build Guangzhou into a “livable flower and dynamic global city” by 2035.

Businesses should note that China has set a mandate for its cities to focus on smart resource consumption and environmental protection, which will be a part of Guangzhou’s urban growth strategy as well.

In addition, Guangzhou will have to coordinate with the Greater Bay Area’s development objectives, such as strengthening the city’s connections with Hong Kong and Macau.

Guangzhou’s Nansha New Area sub-zone of the China (Guangdong) Pilot Free Trade Zone, for example, was launched in 2015 and is designed to promote free trade between Guangdong, Hong Kong, and Macau. Other important economic zones are Guangzhou Development District , Guangzhou Nansha Development Zone, the Airport Economic Zone, Zengcheng Economic and Technology Development Zone, and Sino-Singapore Guangzhou Knowledge City.

These development zones and other smaller industrial parks produce about 70 percent of the city’s total industrial output and accommodates more than 9,000 enterprises and more than one million employees, according to the Chamber of Commerce of Guangzhou.

Moreover, Guangzhou is also developing into an international hub of shipping, aviation, and sci-tech innovation.

The regional government has labeled high-tech industries – new generation information technology, artificial intelligence, and the biopharmaceutical industry (“IAB” industries) and new energy and new materials industries (“NEM” industries) as future competitive industries.

Guangzhou hopes to attract foreign investment in these industries and to set up in its development zones, offering streamlined business processes and financial subsidies.

On June 2019, the Guangzhou government released 59 measures to boost its manufacturing sector. The measures reduce the examination and approval time of establishing enterprises to four working days and relaxes the tax and social insurance burden, land cost, and transportation costs on enterprises.

Guangzhou is among the most pro-growth and investment-friendly destinations in China, yet, setting up a foreign-invested enterprise (FIE) or a factory here may still be challenging for foreign investors with limited or no experience of doing business in China.

Determining the right corporate structure, making use of Guangzhou’s preferential policies and subsidies, and building relationships with key authorities will require local expertise on the ground.

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