Tag Archives: cross border

Hengqin breaches the Great Firewall

Hengqin’s moment in the spotlight is coming. Its massive new railway station is around three months from opening, but already the special economic zone opposite Macau’s Cotai district is gearing up to play a leading role on the Greater Bay Area’s main stage: This week it rolled out China’s first experiment with a city internet network that sits outside the Great Firewall.

Built by the Zhuhai Branch of China Mobile Guangdong, the Hengqin New Area now has an “international” internet infrastructure. Companies that plug into this network will enjoy significantly faster cross-border data transmission speeds, with buffering down from 70ms to 14ms, thereby increasing its efficiency by 80%.

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Building a Cross-Border Startup

Vickey Li is the cofounder of OnePiece Work, a cross-border startup incubator from Silicon Valley. It leases space, but also provides consulting services to small and micro enterprises. Li views Shenzhen as a great place to start a business.

Vickey Li has had more than a taste of both American and Chinese corporate cultures. Educated in the US for senior high school and college, she returned to China after graduation to dive into Shanghai’s competitive real estate industry. That lasted three years before Li returned to the US to found her current company, OnePiece Work. Today she finds herself back in China, setting up a new office in Shenzhen. We caught her story at a recent event organized by Startup Grind Shenzhen.

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Cross-border e-commerce surges

Guangdong may be weathering a difficult external trade environment, yet growth in one key segment is exploding: cross-border e-commerce. In the first half of this year, imports and exports ordered and shipped via the internet grew 76.8% to RMB43.02 billion. Nearly all went through special bonded zones in Guangzhou, Shenzhen, Zhuhai and Dongguan, where 3,000 enterprises have clustered to take advantage of easier tax and other regulations.

Admittedly, this is still a small drop in the bucket. The province’s overall trade was worth RMB 3.28 trillion in the first six months, up 1.3% year-on-year, accounting for 22.4% of China’s total imports and exports. More than half was accounted for by private enterprises, which saw their trade numbers grow 5.9%, up 2.2 percentage points YoY.

Guangdong FDI rises

Hong Kong may be a worrisome mess, but foreign investment continues to like what it sees in the rest of the Greater Bay Area. In Guangdong, 7,820 new foreign direct investment enterprises were established in the first half of the year, worth RMB83.77 billion, up 5.9% YoY.

One of the highlights came from Fortune 500 company General Electric (GE), which has set up the Asian Biotechnology Park in Guangzhou. It now plans to build a world-class offshore wind turbine assembly base in Jieyang as well as an operation and development center in Guangzhou.

The provincial government has made efforts recently to improving the business environment by introducing an “express lane” for multinational companies to receive approval on projects. As a result, Siemens has signed a comprehensive cooperation agreement with Guangdong, while another 17 major projects have settled here.

Guangdong to boost retirement communities

We have been tracking news related to the liberalization of the elderly-care market in Guangdong for some time. Now, the provincial government has issued some guidelines that look promising for investors, although the emphasis is clearly on non-profit organizations first.

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Velotrade: Cross-border trade financing made easier

The world of finance is being shaken up in myriad ways. Companies like Hong Kong-based Velotrade are slotting into niches, such as accounts-receivable financing, and taking off. We spoke to the firm’s co-founder and chairman, Vittorio de Angelis, about how it all works.

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GBA to establish ‘financial dispute mediation cooperation mechanism’

On Thursday, Zhuhai’s Hengqin hosted the GBA Financial Dispute Mediation Cooperation Forum. In attendance were representatives from regulatory authorities and financial dispute mediation centers from Hong Kong, Macau and GuangdongThe parties have also signed a cooperation framework on cross-border financial dispute mediation.  

Is this the beginning of long-awaited “integration” across the GBA’s three jurisdictions in the area of law enforcement? It might be a long way off, but this does appear to be some kind of tentative start. 

Earlier this month, Guangdong released a directive in which it highlighted the importance to push forward financial interconnectivity among the three regions in order to “build an international financial hub”.  

“Because the Greater Bay Area is built on one country, two systems and three jurisdictions, it has great differences in legal framework and economic systems,” said Bai Hexiang, president of the People’s Bank of ChinaGuangzhou Branch. “To solve financial disputes in the three regions through traditional litigation will face the challenges of judicial differences, which will become a time-consuming and costly process. 

It is of great significance to establish a financial dispute mediation cooperation mechanism between Guangdong, Hong Kong and Macau, Bai said. He suggested to learn from the more mature financial dispute resolution system that Hong Kong, Macau and other developed economies have adopted and to establish a jointly recognized cooperation mechanism among the regions to protect the rights and interests of the consumers and enhance the quality of financial servicein the Greater Bay Area.  

The World Trade Center Macau Arbitration Center, the Guangzhou Financial Consumption Dispute Resolution Center, The Shenzhen Consumer Rights Protection and representatives from the financial dispute centers in Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing signed the framework agreement. The cooperation will involve the establishment of a liaison mechanism, a financial dispute mediation cooperation mechanism and a joint research mechanism. 

Guangdong speeds up GBA plan

Amid reports that a senior Politburo official is running a Hong Kong crisis taskforce in Shenzhen, the release today of an accelerated plan for GBA integration by the provincial government should come as no surprise. The standard response to any crisis of government legitimacy in China – since at least 1976 – is to throw out a bunch of carrots while wielding a big stick. Guangdong’s announcement today that it is accelerating the GBA’s integration looks to be trained on one priority: creating new growth opportunities for Hong Kong people and businesses. (The stick is still sitting patiently in its Tamar barracks.)

This being China, the newly updated plan looks largely indistinguishable from the old. But read between the lines, and it’s the intention that matters. The “three-year action plan” for the development of the Greater Bay Area includes 100 measures and nine key tasks. Its end-goal is actually next year, i.e. it started in 2017, before the GBA masterplan was even unveiled. Still, it makes for interesting reading in how it seems to be prioritizing and pushing harder on rolling out the welcome mat for international talent and investment. 

All language is couched in the correct terminology, of course. In talking about the construction of an international science and technology innovation hub, the plan proposes 14 specific measures including the establishment of a comprehensive national science center, joint laboratories with Guangdong, Hong Kong and Macau, and the construction of a “science and technology innovation corridor” that connects Guangzhou, Shenzhen and Hong Kong.

Where a greater sense of urgency comes through is in sections related to the accelerated flow of capital and “talents”. Guangdong will: 1) Introduce specific policies and measures to support Hong Kong and Macau institutions of higher learning and scientific research institutions to participate in the province-funded science and technology plans; 2) Establish a basic research fund open to Guangdong, Hong Kong and Macao enterprises; 3) Open provincial research facilities to participants from Hong Kong and Macau; 4) Establish trial zones for foreign “innovative talents” to enjoy the same treatment as Chinese nationals in building scientific and technological enterprises; 5) Obtain national approval for the usage of medical data and blood samples required for Guangdong, Hong Kong and Macau scientific cross-border research cooperation projects in selected universities, research institutions and laboratories.

By 2020, i.e., six months from now, the GBA will have 200 R&D institutions, with the region’s total R&D budget accounting for 2.8% of the GDP. There will be 2.6 patents per 10,000.

The provincial government has also proposed 10 measures to facilitate innovation, including nurturing strategic emerging industries, building advanced manufacturing industry clusters, and building an international financial hub together with Hong Kong and Macao. By 2020, 60% of the region’s economy will be in services. 

The plan also set specific targets and measures for livelihood issues including infrastructure, environmental protection, education and medical care.

Among them, there are a total of 22 measures focusing on building a quality living and business circle. For example: 1) Support Hong Kong University of Science and Technology and other Hong Kong and Macao universities to open new campuses in Guangdong; 2) Establish a GBA university; 3) Take the lead in implementing a better talent retention policy; 4) Trial a new employment-based migration policy in the region; 5) Develop tax incentives for overseas (including Hong Kong, Macau and Taiwan) talents; 6) Build Hong Kong and Macau youth innovation and entrepreneurship bases; 7) Relax restrictions on the use of Hong Kong and Macau drug and medical devices.

Transport upgrades are a key component of the plan. By 2020, annual passenger throughput of airports in the GBA will reach 140 million, while the annual container throughput in ports will reach 62 million TEU. By 2020, the area will have 2,400 kilometers of rail transit and 5,000 kilometers of expressway mileage.

The environment is giving a top priority, too. By 2020: 1) Black and odorous water bodies in the urban areas of the GBA will be eliminated; 2) Prefecture-level cities (the big nine) will reach 90% of days with good air quality, and the annual average of PM2.5 concentrations will not be more than 34 micrograms per cubic meter; 3) Sewage treatment rate will be 95%; 4) Forest coverage will be 52%.

Foreign investors are clearly going to be given a high priority. The plan says Guangdong will focus on accelerating a “new kind of opening up and cooperation.” This will involve: 1) 

Deepening reform of the business environment by building the Guangdong Free Trade Zone with “high standards”; 2) Fully liberalizing (i.e., equalizing) the business landscape for Hong Kong and Macau individuals; 3) Promoting the expansion of mutual recognition of professional qualifications; and 4) Actively participating in international economic cooperation and other initiatives. More specifically: By 2020, the time needed for filing foreign investment outside the negative list will be reduced to less than one working day, and the time needed for starting a business will be controlled within four working days.

The three star zones get renewed attention: Shenzhen’s Qianhai, Guangzhou’s Nansha and Zhuhai’s Hengqin.

Read more.

Nansha’s foreign trade warming up

If there is a trade war going on, someone ought to let Nansha know about it: the special economic zone on the southernmost tip of Guangzhou saw imports jump 15% in the first five months. Driving this appears to be Nansha’s “bonded logistics” status, which essentially allows for duty-free imports of goods that are then reassembled or repackaged before being distributed. These accounted for nearly 30% of total trade through the port in the January-May period, at RMB20.37 billion, up nearly 40% YoY.

Similarly to neighboring Dongguan, cross-border e-commerce is the other big driver of trade growth through Nansha, rising 25.4% YoY in the first five months. Nansha now accounts for nearly 80% of Guangzhou’s total cross-border e-commerce value. The two hottest items were – surprise – accounted for by mothers and daughters: milk powder (+3.8%) and cosmetics (+55%).

The government ought to take a pat on the back. Since April 1, VAT for imports has been cut from 16% to as low as 9% on some goods. Clothing, shoes and hats, household equipment, daily chemical products, cultural and entertainment-related products are seeing the strongest growth.

Read more on Guangzhou Daily.