Tag Archives: Guangdong

Coronavirus update: Guangdong stays at zero

Guangdong has seen zero new infections of COVID-19 for two days in a row, the first time since it started reporting the numbers, as recoveries are steadily climbing in the province. The total infections so far are 1,347, of which 873 have left hospital, with 32 discharged on Wednesday alone, according to the Guangdong Health Commission.

In Hong Kong, six new cases testing positive yesterday were confirmed, taking the city’s total to 91. Among those, 24 patients have been discharged, adding six new recoveries today, according to the city’s Centre for Health Protection. The death toll in the GBA remained at nine.

Continue reading Coronavirus update: Guangdong stays at zero

GBA firms have potential, need finance – He Xiaojun speech

Edited transcript of a speech by He Xiaojun, Party Secretary and Director of the Guangdong Provincial Local Financial Supervision Administration:

The central government has launched two major initiatives in the region this year, for which we should all be grateful. They are the Greater Bay Area, and the designation of Shenzhen as a Pioneering Zone for Socialism with Chinese Characteristics. With these, we have the means and the framework to conduct significant reforms, especially of the financial sector.

First, let me share some data points. Looking back on international patent applications for the most recent year available, 2017, we see that the three other “bay areas” of Tokyo, New York and San Francisco registered 22,000, 12,000 and 35,000 patents, respectively. Our Greater Bay Area registered more than 176,000, almost eight times that of Tokyo, 16 times that of New York, and about five times that of San Francisco.

However, this is nothing to celebrate. Most of our patents are in the consumer electronics industry and advanced manufacturing. We must be soberly aware that we remain stuck at the lower end of the industrial manufacturing value-added chain. Basic research is where we are lacking.

This can be improved, but it is going to require a more thoughtful approach to how we use financial resources. Policy-based finance and medium- and long-term credit insurance funds, for instance, can help. These can support the construction of national key laboratories and high-level universities. However, this will take a long time.

What is required mostly is a shift in mindset. I went to Dongguan for research some time ago, where I saw a professor who had just come back from the United States and was doing basic research on robotics development in the Songshan Lake district. He lamented the drive to constantly transform scientific research into commercial success. If your only indicator of the success of research is how much money it can generate, the quality will never be good enough.

Clearly, we are still excessively demanding that our scholars develop their research in the direction of industrialization. We have too many short-term and fast-action requirements. We must start to pay more attention to the next step of long-term funding to conduct major breakthroughs in basic research.

The good news is that we have an incredibly strong foundation on which to build a better model for financing industrial growth. Take supply chain finance. There will always be a need for finance to support the continuous optimization of manufacturing and industrial chains. In this regard, we have an unrivalled supply chain, which just needs a better financing mechanism.

There are currently 500 of what I like to call “professional towns” in Guangdong. The combined GDP of these towns accounts for three average Chinese provinces. Of these, 146 each generate output of more than RMB 10 billion per year. A dozen are above the RMB 100 billion level. Those in Dongguan, Foshan and Zhongshan are particularly eye-catching. Xiaolan Town of Zhongshan produces 70% of the world’s lock cylinders. Guangzhou’s Xintang Town produces 60-70% of the world’s denim. But these towns have not been having an easy time rising up the value-added chain, because of access to finance. This is vital to take the next step of Guangdong’s industrial transformation.

Most of these enterprises are small and medium-sized. This is why we have started to build a financing platform for SMEs in Guangdong, since July 17. It makes good use of big data and blockchain technology to build up trustworthy credit profiles for these companies. It is working already, with a good case study being the conglomerate TCL (based in Huizhou). All of TCL’s SME suppliers can now get unsecured loans, which will help them to rebuild and restructure the industrial chain, and further improve the quality of the industry. We are leading the country in this effort.

At the same time, we are also building a platform for the registration and protection of intellectual property. Everyone knows that SMEs have many talents, but they are all light on assets. What they have in abundance is intellectual property rights. Therefore we are raising their capacity to access credit by placing a higher value on that IP.

We are also determined to create the right multi-level financing platform to support the cultivation of “star” enterprises. We need to be more like Japan and South Korea, which have clear plans to cultivate at least 100 companies with global clout. This doesn’t always mean they must be large. They have found that they can have technological leadership in the cross-border trade chain at the SME level. Such stars will be grown into the multinational behemoths of the future.

Guangdong is also preparing such a plan to cultivate star enterprises that can grow into major multinational enterprises.

We have some already: companies with enormous potential that can become global giants with the right access to funding. Take Shenzhen Guangfeng Technology, which recently listed on the Shanghai STAR market, as an example. It makes 150-inch, high-tech laser-projected TVs, which sell for RMB 1.5 million each. Before its recent listing, Guangfeng was valued at between RMB 1 billion and RMB 2 billion. Although its stock price has experienced twists and turns after the listing, it has recently stayed at a market cap of around RMB 15 billion.

Transsion Technology is another. This Shenzhen-based company entered the African market in only 2012, selling cheaper mobile phones. It now has almost half of the entire African market and is currently valued around RMB 38 billion.

We need to bring more of such enterprises to our capital market and cultivate our own stars.

Look at it this way. There are now 600 listed companies in Guangdong, but we have 45,000 state-level high-tech enterprises based here – which means only 1.8% are listed. Under the guidance of the CSRC, Guangdong will address this. We will dig out more star enterprises and encourage them to raise public equity.

Macau could play a valuable role in this endeavour. When I was in Shenzhen, we helped the Macau SAR government draft a plan for the Macau Stock Exchange. I hope that it will become the Nasdaq equivalent for the offshore Renminbi. The plan has been sent to the central government, and I hope that it will be approved before the 20th Anniversary ceremonies are held (on December 20).

We can also use “green finance” to help our technological innovation efforts become more competitive at the international level. In Guangzhou, we have established a national-level “green financial experimental zone”. Guangdong’s carbon emissions trading already accounts for 70% of the national total this year. This is why it makes sense to establish the Guangzhou Futures Exchange. It should be approved before the end of this year.

These things will make Guangdong and the entire Greater Bay Area’s financial innovation initiatives speed up.

Looking at the demand side of the equation, it is clear that we need to catch up. The Greater Bay Area has a population of 77 million, with per-capita GDP exceeding US$20,000. That is a developed-country level, with high potential for a takeoff in consumer spending. But these consumers need more sophisticated financial products.

Look at the statistics. Online shopping in Guangdong ranks first in the country. Of 100 households, 43 have cars. Residential property markets turn over 100 million square meters of space every year. Seven of the country’s 12 youngest cities are here, with the average age of residents at least 10 years younger than the Yangtze River Delta. We need a better financial industry.

This is all before the rise of the industrial internet, thanks to the rollout of new 5G mobile networks, which will provide a golden opportunity for equipment leasing. Guangdong will be at the forefront of development of the industrial Internet of Things. This will quickly become a RMB 1 trillion industry. Through financial leasing, enterprises can better sell products that will be rapidly upgraded, rather than relying on longer product life-cycles.

The Greater Bay Area’s future clearly lies in cross-border finance. We have always attached great importance to this aspect, and we are applying technological solutions quickly. For example, we recently launched a provincial trade financing platform using blockchain technology. Orders are encrypted and tracked, verified with Customs and external management. There is no “false water” trade finance data, in other words. This platform is being trialed at the moment and is expected to be put into use by the end of October. Such innovations will provide a good support for cross-border capital flow monitoring.

The iterative development of the financial industry itself is a very important area of ​​technological innovation. Take the example of Webank (owned by Tencent), which opened less than three years ago. It has loans outstanding of RMB 3 trillion, with 150 million registered users, 70% of whom are blue-collar workers – and of these, 37% did not have any prior credit record. The bank’s average loan size is just RMB 8,000. They have extended more than 300,000 corporate loans without any written materials, approved within the same day.

Where is our banking industry going? Webank’s general ledger system is built on blockchains. It has fewer than 2,000 staff, half of whom are science and technology personnel. The ecology of the banking system itself is also changing.

Ping An Technology is another great example. It has more than 1,700 patents on financial technology, the world’s No. 1, surpassing Bank of America and many others. The company has 99,000 software engineers. Its voiceprint recognition, facial recognition, and artificial intelligence technology is world-leading.

Indeed, the development of technology is changing our world. Those who don’t keep up can only expect their financial leadership to be affected. Therefore, in the next step, we must pay special attention to the renewal and development of financial technology, and lead our financial technology companies to jointly promote the progress of everyone.

Macau pushes for Nasdaq-style offshore RMB market

The central government is giving serious consideration to a formal proposal submitted by Macau to establish a new kind of stock exchange in the Special Administrative Region. Traded in the offshore Renminbi, stocks listed on this exchange would be heavily weighted toward technology companies, much like the Nasdaq board in New York, and the recently established STAR Market in Shanghai.

It looks like this new market is part of a broader move within the region, if not the rest of country, to embrace diverse means of raising equity for Chinese companies. At the same time, Guangdong is looking into establishing a market like Shanghai’s STAR Market, in Guangzhou. And it has also applied formally to establish a Commodity Futures Exchange, like the Chicago equivalent, in Guangzhou’s Nansha district.

Could this be the start of a major push to get more Guangdong-based companies into the hands of equity investors? It certainly seems so, and there is huge upside room to move on this: just 1.8% of Guangdong’s 45,000 National-Level technology firms are publicly listed. Moreover, the person who revealed the details is just the kind of official to make this clear – and public.

Continue reading Macau pushes for Nasdaq-style offshore RMB market

Guangdong to launch its own STAR Market

Not usually one to play catch-up to Shanghai, Guangdong has announced it is getting its own Science and Technology Innovation Board, otherwise known as a STAR Market. 

Shanghai launched the first STAR Market on July 22. Its first day of trading made national headlines as share prices soared, but they came down in the subsequent days as traders locked in early profits. 

Now, it has been decided that Guangdong is following suit, under guidelines released by the central government earlier this year aimed at boosting innovation by making it easier for small and micro enterprises to raise equity on regional exchanges.

Continue reading Guangdong to launch its own STAR Market

All rise: ‘Smart court’ is now in session

Guangzhou has taken the lead in reform and advancement of the country’s legal system, establishing the world’s first “smart court”.

According to a report in Nanfang Daily, the first national-level Intelligent Court Laboratory has been built in Guangzhou, in which big data, blockchain, and many other technologies are being used to change the way legal proceedings are conducted.

Continue reading All rise: ‘Smart court’ is now in session

Guangdong leads in charity stakes

Guangdong is the country’s most generous, philanthropic, charitable province.

This not what Cantonese people are known for around the country, we dare to say. Nevertheless, the facts speak for themselves. By the end of August, the province had 1,050 charities, ranking it first in China. Only 121 of these were public. Continue reading Guangdong leads in charity stakes

Walmart to add 100 Guangdong stores

Walmart intends to add another 100 stores in Guangdong over the next five years, according to a company statement. They will include Sam’s Clubs, shopping malls and shops in residential communities, said the Arkansas-based retail giant, adding that it will also set up cloud-based warehouses for the branches.

Walmart opened its first China store in Shenzhen in 1996, and now has over 400 across the country. In March it completed its largest investment in China to date – a distribution center for fresh foods in Dongguan costing more than RMB700 million, serving over 100 brick-and-mortar shops.

Its newest store format, outlets in residential communities, debuted in Guangdong last year. It also set up a WeChat mini program for home deliveries this year, offering service to doorsteps within an hour of placing an order.

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.

Majority of enterprise loans go to private sector

Loans to private companies in Guangdong rose 15.12% to RMB4.29 trillion in the first half, accounting for the majority (54%) of total lending to companies, official data shows. 

Guangdong banks remain the country’s richest. At the end of June, the province’s balance of domestic and foreign currency loans was RMB15.88 trillion, a year-on-year increase of 16.2%; the balance of various deposits was RMB22.54 trillion, a year-on-year increase of 11.9%.

Private SMEs are getting the attention they deserve, apparently. As of the end of June, the balance of small and micro loans was RMB1.35 trillion, up 17% since the beginning of the year.