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THE GBA: TIME TO PUT PLANS INTO ACTION

Rather than halting progress, the pandemic has helped to fast-track China’s economic development with the Guangdong - Hong Kong - Macao Greater Bay Area (GBA) expected to further its role as the important driver and Hong Kong the super-connector, linking the region’s cities to world markets - by Daniel Chan

Opportunities like the GBA come around once in a generation. Even against the backdrop of the pandemic, the region has shown its potential for prosperity and as a driver for global growth. For multinational businesses that have been eyeing the emerging opportunities, it is no longer a question of ‘if’ to develop the GBA operations, but rather ‘how’ to take their plans forward.

From promise to reality

Market confidence in the GBA has always been encouraging. In a survey that we conducted with KPMG and the Hong Kong General Chamber of Commerce, of the 700 business executives interviewed across mainland China, Hong Kong and Macau, over 80% of them expected the GBA to grow faster than the rest of China. Over half of the respondents also planned to expand their own businesses across the GBA cities by 2022.

The pandemic has not dampened this outlook. China has already regained its pre-pandemic activity, showing encouraging growth momentum while leading the recovery for Asia . We are also seeing greater focus on the ‘dual circulation’ economic model which will provide opportunities for foreign companies in China to broaden their business operations. As these trends continue, the GBA has a vital role acting as the bridge to overseas markets offering great growth potential for businesses and entrepreneurs from around the world.

The bay area will become an even more significant facilitator of cross-border trade and capital flows, particularly as China has reached a number of trade agreements recently. This includes the Regional Comprehensive Economic Partnership which is set to shift the flow of global trade and enhance the connections between China, the rest of Asia and Europe, delivering increased activity for the GBA.

Hong Kong has an important role to play

The global confidence in Hong Kong, as an entry point to tap into the opportunities in mainland China including the GBA, remains strong. According to a joint survey by Invest Hong Kong and the Census and Statistics Department, Hong Kong is home to some 9,025 international and Mainland companies, of which 1,504 use the city as a base for their regional headquarters. This is an increase of 10 percent and 6 percent over 2017 figures, respectively.

With its leading financial services, transportation, trade, aviation, and professional services , it serves as the ideal location to establish regional headquarters or treasury centres for multinational corporations. As the policies of the bay area are implemented and strategies are rolled out, Hong Kong's role in facilitating the region's internationalisation and economic growth will continue to grow.

HSBC is the leading international bank in mainland China with a presence in all 21 prefecture level cities in Guangdong, a dominant position in Hong Kong and an unrivalled international footprint. This positions the bank to be the preferred financial partner regionally, and well positioned to support foreign businesses wanting to capture the opportunities in the GBA. Our International Subsidiary Banking (ISB) team can provide the connections to unlock the opportunities both regionally and globally.

Embracing opportunities

As an area of strategic priority for HSBC, the GBA initiative is not new to us. We see it as the Pearl River Delta’s (PRD) next iteration, but one that is supercharged by growth factors as a result of improved connectivity, rising affluence and the emergence of an enhanced digital economy – from manufacturing to e-commerce, to smart cities.

For businesses, the GBA has long held a range of opportunities – particularly for those specialising in infrastructure and manufacturing. But this is diversifying with the progress of technology, environmental and sustainable solutions, as well as the new opportunities for investment and financial services. By increasing connectivity, the GBA has also become an accessible and sizable region for products and services, presenting great opportunities for businesses with burgeoning middle class and consumption power.

By various estimates, the GBA's GDP will grow to top US$4.6 trillion by 2030, presenting potential that international companies simply cannot miss. Talent circulation and development will be a pivotal driver of this success and looking ahead, further policy coordination between the GBA cities to enhance the flow of talent is essential.

Some of the initiatives that HSBC has been involved in reflects this diversification and the new areas of interest. These include the GBA+ Technology Fund, to help finance innovative companies that are driving the transformation of economy and developing innovative green financing products for businesses covering energy, construction, and transportation to reduce carbon emissions in the GBA.

Supporting the future of financial services

We believe that the GBA is where the future of financial services is being written. To that end, HSBC is investing heavily in our digital infrastructure, cross-boundary product capabilities and talent pools. This includes taking big steps in serving the needs of our personal and business customers, and offering insight, foresight and unified banking solutions to cross-border customers.

As a vibrant city, the GBA has strong demand for wealth management needs, driven by their fast-growing wealth creation. There are 450,000 high-net-worth families with more than RMB6 million in investable assets across Guangdong, Hong Kong and Macau. Their aggregate estimated investable assets have reached at least RMB2.7 trillion . There is a growing trend for the affluent to diversify their investment from property to financial products outside China. We believe the upcoming Wealth Management Connect will significantly facilitate accessing broader asset class and more international opportunities. Four in five surveyed mainland investors in the GBA said in our recent survey that they plan to invest in Hong Kong via the scheme. As the leading international bank in the GBA with strong wealth manufacturing capabilities, we are well-positioned to be among the first batch of banks to launch Wealth Management Connect, offering seamless journey with market-leading wealth solutions.

Our business customers in the region benefit from the unified banking experience provided by HSBC's IBS team. We are in a position to use our regional footprint to help firms expand their own presence in the GBA, as well as supporting our mainland Chinese business customers use Hong Kong as a springboard to go international, leveraging our network that covers 90% of global trade flows.

By investing in these areas, we're hoping to better connect people and businesses to nearby cities and markets. Many businesses are already playing a part in the future of the GBA, but this is just the start of the story. We are confident that many individuals and businesses will seize the opportunity, just like we're doing at HSBC, to be part of this exciting journey.

Daniel Chan, Head of Greater Bay Area, HSBC

The Hongkong and Shanghai Banking Corporation Limited

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