China's Greater Bay Area: Your Next Business Destination

By Sebastian Hoffmann, Senior Sales & BD Associate and German Desk Manager, Hawksford

The Greater Bay Area (GBA) lays its foundations in the Pearl River Delta, China’s first manufacturing and logistics hub, now transforming into an innovation and technology centre and a city cluster for emerging industries. Local and central authorities invest heavily in infrastructure, talents, and the economy. Domestic and international companies can enjoy a wide range of business support programs and financial incentives in the Greater Bay Area.

1. Connectivity in Talent and Infrastructure

Favourable policies are continuously being developed to encourage high-end talent and talent in short supply to settle down in the region. One of the key advantages is the low tax rates, enabling higher mobility and more effortless connectivity to talents worldwide. Usually, the income tax rate for an individual taxpayer can be up to 45%, but eligible individuals working in the GBA can enjoy a preferential tax rate of 15%. Living allowances are also available for eligible high-level professionals and technical personnel.

Cross-boundary facilities and transportation networks are being developed between mainland cities and Hong Kong to strengthen geographical connectivity and talent exchange for creating a “one-hour living circle”.

2. Global Hub for Technology & Innovation

Shenzhen has become a forerunner in innovation and technology after a 40-year reformation. The main merits of establishing a tech company in Shenzhen include becoming neighbours with Chinese tech giants, such as Tencent, Huawei, DJI, and ZTE. It also means that you gain access to advanced equipment, best practices, and an extensive network with innovation leaders, local manufacturers, and distributors.

Other initiatives to further boost the innovation and technology ecosystem set out in the plan include coworking spaces, entrepreneurship exchanges, innovation platforms, and R&D institutes. Hong Kong can pool together regional and worldwide innovation resources to promote R&D for global businesses and boost GBA’s competitiveness.

3. Financial Powerhouse

A range of initiatives have been set out to increase the scope for the cross-border use of Renminbi (RMB) in the GBA, including cross-border RMB interbank lending, RMB foreign-exchange spot, forward business, and the creation of RMB derivative products.

Local banks in the Greater Bay Area will be supported by enhancing their cooperation with external venture capital institutions under the premise of legal compliance and risk control, actively exploring supportive and diversified financial business models. This will improve the crossborder capital flow of venture capital funds and facilitate income exchange. The reforms laid out a blueprint for the structural transformation of deeper collaboration within the regional financial industry and will strengthen the cooperation of financial management among industry organisations

4. Wealth Management Connect Program

The Greater Bay Area's Wealth Management Connect program officially kicked off in September 2021. The implementation rules released by the People's Bank of China came into effect in October 2021. The program supports individuals to invest in cross-boundary RMBdenominated financial products issued by banks across the nine mainland cities, Hong Kong, and Macao. It will lead to a significant increase in investment opportunities for individual investors, largely promote the opening of the mainland's financial markets and extend the reach of use of RMB.

5. End-to-end supply Chain

The GBA possesses hi-tech manufacturing centres which support cost-efficient production by AI-powered equipment and devices. The new technologies and process management automation will increase industrial supply chain management efficiency, move up the value chain, and significantly increase imports and exports. This will boost the so-called GBA "maker culture" with flexible facilities for quick prototyping and product optimisation.

Meanwhile, GBA offers the world’s leading container ports to ensure convenient global distribution after manufacturing. This makes the Greater Bay Area an ideal end-to-end supply chain for innovation, combining research, design, production, and global distribution all at once.

6. Free Trade Zones as Entry Gate

Business owners can enjoy notable benefits when selling across borders via Free Trade Zones (FTZ), one of which is faster customs clearance and moving goods between FTZs and overseas countries without paying taxes and duties in China. It will also be easier to manage cross-border currency exchanges with banks. Qianhai Free Trade Zone, one of the most well-known FTZ areas in the Greater Bay Area offers business owners subsidies up to CNY 1 million (USD154,000) if conditions are met.

Conclusions

The Greater Bay Area represents a privileged business destination for domestic and foreign companies operating in finance, logistics, innovation and technology, and capital-intensive industries. It is important to understand that the initiative is a long-term strategic project, success will not happen overnight, but the region can provide an ideal business environment.

In light of this, companies should carefully plan an entry strategy in the GBA, evaluating all the necessary resources and steps, including leveraging synergies and incentives in the area. Working with a trusted partner with local expertise will help you better navigate China’s booming market.