Shenzhen office vacancies at 10-year high

Vacancies in the office market in Shenzhen hit a decade-high in the first half of 2019, burdened by a flood of new space entering the market and lingering fallout from a recent cleanup in the financial technology sector, reports Caixin Global. 

The vacancy rate for class-A space in the city now stands at 23.3%, according to Colliers International. Much of the new space is being built in Qianhai and the nearby Nanshan district. Qianhai’s vacancy rate is 65.7%. Which might explain our recent news item about Qianhai offering big rental subsidiesto Hong Kong companies registered there who have not yet settled in an office building. 

It would appear that the demand side of the market is not doing so well, either. The government’s crackdown last year on peer-to-peer lending platforms apparently led to 300,000 square meters of temporary vacancies for grade-A office space in Nanshan alone. Colliers is positive, however, that the challenge will be short-lived, as banks and other financial organizations will step into the gap. 

Read more. 

Dongguan has high hopes for new zones

As recent trade data has shown, Dongguan’s relative resilience in the midst of the US-China trade war has been intriguing. One key reason for it has emerged: the creation of special new zones for duty-free trade processing, known as bonded-logistics and cross-border e-commerce zones.

Last year, bonded-logistic zones handled RMB217.5 billion in trade, up 17.7% compared with 2017. The rising star, however, was cross-border e-commerce, which saw RMB37 billion of trade processed, up 133%, ranking it first in the country. Dongguan now has 10 cross-border e-commerce parks, offering a range of services to companies that set up there, including logistics support. They also have a number of incubators for start-up companies.

These are not zones with barbed-wire fences. A prime example is the Humen Port Integrated Bonded Zone. Although only officially upgraded from a “bonded logistics center” last October, the zone handled 241,000 imported packages during the first four months of this year, reaching 83% of the total recorded the whole of last year. 

Dongguan has consistently ranked in the country’s top 10 trading municipalities. Today it is fifth for overall trade volumes, fourth in exports and third in “foreign trade competitiveness”, according to local media. The government is also setting up funds and issuing policies to develop an industrial cluster of e-commerce, including building a well-rounded supply chain, establishing a B2B supervision system and providing funds for enterprises to set up overseas storage bases. 

Read morein Chinese.

HKEx ranks 3rd in global IPOs

The Hong Kong stock market slipped to third place in global initial public offerings in the first half, losing its crown to New York. But analysts expect the imminent Alibaba mega-listing to bring back some excitement, reports Caixin Global. 

Hong Kong Exchanges and Clearing embraced 76 new listing as of June 19, a drop from last year’s 101 offerings at that point. However, funds raised jumped 38% YoY to HK$69.5 billion yuan ($8.9 billion), thanks to some big deals including brokerage firm Shenwan Hongyuan’s $1.16 billion offering in April. It was the highest for the same period since 2015, according to accounting firm Deloitte.

Deloitte expects 200 IPOs to be completed in Hong Kong this year, raising between HK$180 billion and HK$250 billion.The consultancy said trade frictions may drive some U.S.-listed Chinese companies to consider a Hong Kong listing. The expansion of full convertibility, which allows mainland companies listed in Hong Kong to freely convert their nonlisted shares into H-shares, will attract more business, too.

Read more. 

Brits in HK band together for GBA

British business associations have formed a network with other international groups to maximize opportunities arising from the Greater Bay Area’s development plan, reports the South China Morning Post. 

The chamber said in a statement that they, together with the chambers in Guangdong and Macau, the China-Britain Business Council, and the Confederation of British Industry Beijing Office, agreed to form an inter-organisation working group on the GBA initiative.

The platform, which appeared to be the first among major Western countries in the development zone, would work to identify opportunities in fields including construction, engineering, financial services, transport and health care for British companies. It will also work together to develop policy recommendations to governments and regulators across the region. 


OnTime to launch in Guangzhou

OnTime, a ride-hailing platform backed by Tencent Holdings and Guangzhou Automobile Group, will become the latest player to enter China’s mobility market, the world’s biggest, when it rolls out services later this month, reports the South China Morning Post. 

The Guangzhou-based start-up, positioning itself as a new challenger to the market leader Didi Chuxing, will begin services in the city before expanding in the Greater Bay Area. To kick start the service, OnTime announced that users would be able to hail a ride for a mere RMB0.01 amid soft operations in Guangzhou this Thursday and Friday, before the full launch.Readmore.

More HK, Macau university places for mainland students

Fifteen tertiary institutions in Hong Kong and six in Macau are eligible to enroll Guangdong high school graduates who sit this year’s college entrance examination, known as gaokao, according to the Education Examinations Authority of Guangdong.

The 21 institutions include publicly funded universities such as the University of Hong Kong, the Hong Kong University of Science and Technology and the University of Macau, and private ones like the Hang Seng University of Hong Kong and Tung Wah College.

The development of the GBA isalso bringing more Hong Kong high school graduates to mainland universities: 10,433 this year, up 9%, marking an eight-year high, according to China Education Exchange Center (HK).

Read more.

Flight-simulator center for Guangzhou airport

Canadian company CAE, which is engaged in training for the civil aviation, defense and security, and healthcare sectors, will invest in a flight training and simulator components center near Guangzhou’s airport, reports China Daily. 

With an investment of RMB2 billion ($288.75 million) and floor space of 80,000 square meters in the Guangzhou Baiyun Air Hub Bonded Area, the project is expected to have 20 simulators, providing training courses for A320 and B737 aircraft pilots.

Targeting the Asia-Pacific market, the training center is expected to go into operation in about two years. Read more.

Huawei will lose US$30bn of sales growth, says Ren

Huawei Technologies, Shenzhen’s biggest industrial enterprise, needs two years to resume growth and it will most certainly not die, says its pugnacious founder, Ren Zhengfei.  This is despite suffering an attack at the hands of the US government that Ren says he had not expected to be as vicious as it turned out to be, resulting in around US$30 billion of lost sales opportunities.

As reported by SCMP, which has a video clip of Ren that is highly watchable, Huawei  did US$107 billion of sales last year. Ren said the US attack will wipe out US$30 billion of growth over the next two years, and it had already resulted in a 40% plunge in smartphone sales. Do the math, dear reader: Either Ren doesn’t know his own income statement, or Huawei would have been, prior to the attack, about to launch itself into the stratosphere with new products that were due to come online in 2019-2020. We can only assume he had been thinking about 5G.

Huawei is a private company, even though it accounts for 10% of the entire Shenzhen economy, so there is no pressure on Ren to live up to these claims. Let’s see how he does.

Read more on SCMP.

GBA Briefs: 19/6/2019

Zhaoqing Park: Zhaoqing’s Deqing district has allocated a 100-acre site for its first industrial park. The park will see a total investment of RMB800 million to build an industrial cluster focusing on electronics and electrical appliances. Read more. 

Qianhai incentives: Shenzhen’s Qianhai is offering rental rebates of up to 50%, capped at RMB5 million annually, to attract those companies that have registered in Qianhai but are not yet operating in the area. Read more. 

Healthy Gaming: Macau’s gaming industry is a pillar of the local economy and local taxation, but the sector should be kept in a state of “healthy development”, said Ho Iat Seng who made a formal announcement yesterday to run for Macau’s chief executive. Read more. 

Superman Gift: Hong Kong tycoon Li Ka-shing is donating RMB100 million to his hometown Shantou University to fund tuition for all undergraduate students for the class of 2022 up until 2027, making it China’s first university to waive tuition fees for its entire student body. Read more. 

PBOC HK Issue: The People’s Bank of China will issue central bank bills worth RMB30 billion in Hong Kong on June 26, with the aim to improve the yuan yield curve in the city. Read more.

Earthquake alert: Shenzhen will build an earthquake-alert system next year which will send out messages to residents through an app on mobile phones or computers. Read more.

New finance zone: Guangdong has issued a white paper to explore the establishment of a Guangdong-Hong Kong-Macau financial cooperation zone, which would trial cross-border finance, financial leasing, shipping and marine finance. Read more

HK GDP: Hong Kong’s GDP increased by 0.6% in real terms in the first quarter of 2019 over a year earlier, compared with the 1.2% increase in the fourth quarter of 2018. Read more

Huizhou lagging: According to Huizhou’s statistics bureau, average per capita disposable income reached RMB33,929 last year, with about 70% coming from monthly salary. The average salary rose 7% in real terms, slower than the average of the province. Read more