Dongguan in China’s top 10

Dongguan has climbed into the Top 10 of China’s most competitive cities, as measured by the Chinese Academy of Social Sciences. The fastest-growing economy in the GBA joined Shenzhen (1st), Hong Kong (2nd), and Guangzhou (4th), on the list, ahead of leading cities like Wuxi, Foshan and Chengdu. Shanghai was 3rdand Beijing 5th.

Dongguan has been steadily climbing, from 14thin 2016 and 13thin 2017. 

Industrial upgrading explains the rise. High-end manufacturing and hi-tech manufacturing now account for 52.3% and 38.9%, respectively, of industrial output, which was RMB96.85 billion in Q1 this year, up 8.5% YoY. That was 2.3 percentage points faster than Q1 2018.

The city’s three leading companies – Huawei, OPPO and Vivo – saw their combined value added output rise 32% last year. 

R&D investment is an important factor in Dongguan’s ranking improvement as well, at 2.35% of overall GDP. Moreover, Dongguan’s “sustainable competitiveness” ranks No.7. 

In 2018, Dongguan added 2174 hi-tech enterprises, totaling 5790, equivalent to adding six a day. 

Read morein Chinese. 

Macau arrivals up 25% in May

Macau’s visitor arrivals continued to surge, rising 25.6% YoY to 3.39 million last month. According to official data, the increase was driven by day-trippers from the mainland traveling on the IVS permits, up nearly 30%. Moreover, visitors from the nine GBA cities inside Guangdong surged 45.8%, with Zhuhai (64.9%) and Guangzhou (39.8%) standing out. 

In the first five months of 2019, arrivals were 17.19 million, up 21%.

Visitors from Hong Kong increased 20%, mostly coming via the HZMB. South Koreans continued to be tops among foreign visitors, rising 1.2% to 65,763 in May. 

Read more.

Guangdong fair sees RMB350b contracts signed

The annual China (Guangzhou) International Financial Exchanges Expo was held over the weekend, with more than 100,000 visitors attending. No fewer than 48 projects were sealed at the fair, with contracts signed worth nearly RMB 350 billion. These included seven major projects related to infrastructure buildout in the Greater Bay Area.

While the headline figure may sound large, these projects are all related to plans that have been in the pipeline for some time. They are part of the province’s ongoing public spending program. Still, the fair was noteworthy for the fact that fintech projects were exhibiting for the first time.

Read more.

GBA Briefs: 24/6/2019

Foshan MTR Deal: Hong Kong’s MTR Corp has teamed up with Foshan-based property giant, Country Garden, and the local government to set up a smart MRT railway research and development center in the Shunde district. Read more.

Shenzhen Airbus Deal:Shenzhen Eastern General Aviation Company will debut the VIP version of Airbus’ H160 helicopter following an agreement signed at the Paris Air Show. Read more.

Shenzhen Car Quotas:Shenzhen’s new quotas for 40,000 car license plates will be auctioned between June and August, shorter than the originally announced June to December, in response to a central government call to boost vehicle sales in a sluggish market. Read more. 

Guangzhou Airport:Guangzhou’s airport has broken the 10 million annual passenger mark and is rated one of the top 3 in the country together Beijing and Shanghai.Readmore. 

Robots Raising: Shenzhen-based Leju Robotics has raised RMB250 million (US$36.21 million) in a Series B round led by Aplus Capital and an investment vehicle of media firm Shenzhen Press Group. Existing investor Tencent also participated. Read more.

Capital’s Capital Grows:Guangzhou’s balance of deposits and credits (including foreign currency) exceeded RMB10 trillion by the end of May, up 14.6% year-on-year and, ranking first ahead of Beijing, Shanghai, Shenzhen and Tianjin. Read more

Bullet Train Booms:The Hong Kong section of Guangzhou-Shenzhen-Hong Kong Express Rail Link has served over 14 million passengers between the HKSAR and cities in the Mainland since opening last year. Read more

Secure Investment:The security industry in Foshan’s Nanhai district exceeded RMB24 billion in 2018, up nearly 40%, thanks to the construction of science parks, cooperation with Shenzhen and policy support from the government. Foshan is a hub for security and safety equipment manufacturing. Read more

Art Haul: Around RMB 190 million of artwork changed hands over the weekend in Guangzhou, where the 24th Spring Guangzhou Art Fair was held in the Pazhou convention center. A total of 360 art institutions from 38 countries displayed 20,000 paintings, sculptures, installations, videos, new media and other arts. Read more.

Guangzhou grants self-driving test licenses

Self-driving licenses are a reality! No, dear reader, that doesn’t mean you can apply for one and start looking forward to boozy nights out on the town without needing to take a Didi ride home. But it’s a step toward that eventuality: Guangzhou today issued the first batch of licenses for self-driving – also known as autonomous driving – to six companies. They can now take their 24 licensed vehicles out onto the city’s streets to run further tests – in live traffic.

Continue reading Guangzhou grants self-driving test licenses

Qingyuan to launch first maglev line – but at gentle speed

The province will get its first glimpse of magnetic-levitation railway lines in October next year, when a medium-speed line will open in Zhaoqing’s city center of Qingyuan.

Construction began on the line, which will run trains at 160km/h, in late 2017. Much faster lines using the maglev technology are being planned for the Guangzhou-Shenzhen-Hong Kong route, as was reported last week. But they have not yet been tested. Moreover, the technology is apparently capable of running at close to the speed of sound, 1,000 km/h, but only in underground “tubes”.

Read more.

Shenzhen in the grip of drone fever

Here is a data point that will likely surprise no one: Wang Lixin, vice mayor of Shenzhen, said today that the city is world No. 1 in production of drones. By the end of last year, there were more than 360 drone firms in the city generating more than CNY40 billion (US$5.8 billion) in sales, the Shenzhen Special Zone Daily reported. 

He said this at the opening of one of the city’s biggest and most exciting festivals, the 2019 World Drone Conference and the 4th Shenzhen International Drone Exhibition. More than 400 domestic and foreign drone companies brought more than 1,000 drones to debut at the festival. Events include a drone aerial photography competition, an innovation and entrepreneurship competition, and, the highlight, a drone racing competition. 

The festival this year is expected to highlight developments in artificial intelligence, design innovation and industrial applications. Categories include drone operations for police work, fire-fighting, aerial photography, agricultural protection, surveying and mapping, logistics, and electric power.

Read more.

GBA firms look to accelerate tech upgrades

As covered in yesterday’s news, the Guangdong government is pushing new credit toward SMEs in different sectors. One way of doing this is to make cheaper loans available to companies in need of “technological upgrading”. Such companies would be following a well-worn path. As we reported recently in another news item, Guangdong companies have spent xdxx over the past xx year on upgrading. In fact it could be said that the story of the GBA is the story of a region that is constantly engaged in the never-ending process of technological upgrading. 

Nevertheless, sometimes it takes the China Daily to make crystal clear what the government’s priorities are. And so we read today that: “As the shadow of escalating Sino-US trade tensions looms over China, tech companies in the Greater Bay Area have been accelerating their upgrades to innovation and technology.” 

“Onshoring” is a game two can play, the state-run media group seems to be saying, pointing out that Hong Kong robotics startup, Roborn Dynamics, has shifted its market focus from the US to the mainland. 

It’s not just in production, but research as well. Hong Kong-based unicorn SenseTime has been “adhering to independent R&D in artificial intelligence”, it says.

Shang Hailong, the company’s managing director, encapsulates the prevailing sentiment in suggesting the region should: “ Further deepen the collaboration of enterprises, universities and research institutions to drive the innovation and technology companies forward and turn the crisis into opportunities.”

George Leung Siu-kay, an adviser of the HSBC’s Asia-Pacific business, said on an HSBC forum that the US-China trade dispute could speed up the development of the Bay Area, as China will focus more on domestic consumption to drive the country’s economy and the region could be a strong momentum for the economic growth.

We couldn’t agree more.

Read more. 

Next US-China battle coming – in production?

News that Apple is looking for ways to move 15-30% of its production capacity outside China is worthy of attention, if only because the company is so big. Many others are doing the same. Whirlpool, Black and Decker, Intel, and Steve Madden are just a few of the names mentioned in a Fox News article as looking to move to Vietnam, Cambodia and elsewhere.

There are two ways to look at such headlines. One is that companies that move production out of China because they can’t afford not to are the kind of companies that China, and especially the Greater Bay Area, were inevitably going to have to wave goodbye to. These are sooner-or-later moves which are happening sooner than China, perhaps, would have liked.

The second way to consider such headlines is that there are other companies, such as Apple, that should know better. These are highly profitable companies that are, in the eyes of the Chinese government, prepared to sacrifice Chinese jobs for the sake of affluent American consumers after their own president put them between a rock and a hard place.

It makes reasonable business sense to not have all of one’s eggs in a single basket, as Apple realised it had. But as they teach at Harvard Business School as well as at Karl Marx University, everything in business, as in life, is about timing. Shuttering production lines in China at this moment in the US-China trade war would be highly likely to invite retaliation from Chinese authorities. And who could blame them?

Well, a lot of people could, unfortunately. This is bound to be an issue where the difference between the two civilizations’ views and values comes to the fore. Apple may feel justified to say the decision is “just business”. But that won’t likely come across well to cadres whose jobs are, No. 1, to maintain social stability and, No. 2, to maintain social stability. There is no No. 3.

While the world waits and hopes for an easing of the trade war when Presidents Trump and Xi meet in Japan at the end of the month, nervous investors in the meantime ought to prepare for the next big battle. We would not be surprised if that will be fought over how China treats US companies with production operations inside the country that also sell into the domestic market – the sales numbers for which are not included in the US-China trade balance. Stay tuned.