Dongguan and Foshan: contrasts and strengths

Dongguan and Foshan, the two cities most closely linked to Guangzhou, have been dueling for attention and prestige for decades. Both are “Tier 2”, behind Guangzhou and Shenzhen, yet with lofty ambitions. Trade data from the first half of the year paints an interesting picture of how each is doing. (We have City features, hyperlinked above, that are worth reading, in case you missed them.)

Foshan has the bigger economy, but in recent years Dongguan has been closing the gap thanks to large hi-tech investments by some of the country’s biggest manufacturers. It also has a bigger foreign trade sector, nearly three times the size of Foshan’s, which illustrates how Dongguan is more like Shenzhen and Foshan is more like Guangzhou.

In the first half, however, Foshan’s foreign trade grew faster, up 8.1%, compared to Dongguan’s 6.8% rise. 

Both cities are deeply wedded to private and foreign-invested companies. In Dongguan, private enterprises saw a 10.3% jump in foreign trade, to RMB226.8 billion, accounting for more than half of the total. Foshan’s grew faster, up 11.5%, at RMB128.1 billion. More than 40% of the private-sector’s value was contributed by foreign-invested companies, up 3.7% for both cities. 

For both cities, ASEAN, EU and Belt and Road Initiative countries are growing fastest. In the past six months:

  • ASEAN: Dongguan traded RMB83.7 billion of goods with ASEAN countries, up 22.8%. while Foshan traded RMB35.3 billion with them, up 6.5%.
  • EU: Up 19.7% in Foshan and 13.2% in Dongguan;
  • BRI: Up 20.8% in Dongguan (to RMB138.2 billion) and up 4% in Foshan (to RMB67.7 billion).

The two cities diverge in two important ways, however. Dongguan’s trade with the US rose 6.2%, despite pressure from the China-US trade war, while Foshan focused more on markets in South Africa and Japan, which rose 19.8% and 13.5%, respectively. 

Both cities are transforming into bases for smart manufacturing, and they now depend heavily on electronics. Exports in this category accounts for 76.2% of Dongguan’s total, up 12.4% in the first six months, while for Foshan, it accounts for more than half, or 56.8%, up 6.7% in the first half. 

In imports, too, the picture is similar: electronics accounts for more than 70% of Dongguan’s imports, and they grew just 0.3% in the first half. In Foshan the number dropped 1.1%. These were offset slightly by imports of agricultural produce in Dongguan, up 11.6% at RMB5.96 billion, while Foshan increased imports of vehicle parts, a 16.3% increase at RMB1.79 billion. 

What will distinguish the two cities going forward? That is a key question. Foshan seems to be more geared toward integration with Guangzhou, while Dongguan can pull from both Guangzhou and Shenzhen. 

It would seem that Dongguan is headed to the ascendancy. Last year its GDP grew more than 8%, and this year it is averaging 7%, while Foshan’s growth rate is slightly lower, at 6.7%. At this rate, however, it might take a few more years for Dongguan to take the province’s No. 3 spot behind Guangzhou and Shenzhen. Foshan’s economy is still nearly RMB150 billion bigger.

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