The Manufacturing SMEs in the GBA are Reacting Actively to COVID-19 Influence

The Greater Bay Area (GBA), a city cluster consists of Hong Kong, Macao, and the other nine cities of Guangdong Province, is one of the most economically developed areas with the highest degree of openness in China.

Skyline of Guangzhou

As the south portal of China, the GBA plays a remarkable strategic role in the overall development of the country. Counts for only 0.6% of China’s land area, it contributes more than 12% of the country's GDP, which lifts it into one of the areas with the strongest economic vitality in China without a doubt. Here locates the headquarters of lots of manufacturing magnates, such as Huawei, BYD, GAC Motor, and Midea. At the same time, it also brings boundless opportunities to small and medium-sized enterprises (SMEs).

Since the COVID-19 outbreak, many manu-facturing SMEs in the Greater Bay Area have been facing multiple pressure: delayed resumption of work, operation costs, order reduction, travel and customs restrictions, logistics, cash flow, and more. “Our products are mainly exported to Europe. But sales in Europe dropped by around 20% because of the pandemic, for some high-class machines it dropped even by more than 50%. Our company depends mainly on export, so the impact is quite high,” said one of our members from the household product manufacturing industry.

Local governments well noted the challenges and promptly announced a series of

© marcuspon/ AdobeStock_194683929

Machines for Medical Supplies Manufacturing

new policy initiatives to support the SMEs in the GBA. In February, just after the national holiday and before resuming work, cities including Guangzhou, Shenzhen, Zhuhai, Foshan, Dongguan, and Zhongshan issued preferential policies on after another, such as 2-month rents free, subsidizing equipment investment and company operations fee, reducing loans interests, postponing the tax payment, and much more financial supports. To encourage the banks to lend to SMEs, for example, Guangzhou City requires Guangzhou Bank and Guangzhou Agricultural Comm-ercial Bank to increase loans to SMEs by 57 billion yuan. In Shenzhen, the maximum compensation ratio for risks and losses of loans to commercial banks has been increased from 50% to 80%. Another encouraging news is, in 2020, the China Development Bank (CDB) will provide a total of 360 billion yuan of financing to the GBA, to foster the area to play a greater Zones in Qianhai of Shenzhen, Nansha

role in the prevention of the post-impact of COVID-19 and maintaining a stable economic operation.

With the support of the preferential policies, SMEs are taking an active response to adapt to the changes. In Shenzhen, one of our members from the mould manufacturing industry finalized a capital investment to enhance the capacity of its manufacturing facility. The platform for its annual sales of injection moulded products to increase from the current level of USD20 million to USD30 million over the upcoming years, where the company believes there will be a postCOVID-19 increase in demand for medical manufactured products globally.

The manufacturing SMEs in the GBA is supporting the "front line" of the fight against COVID-19 with practical actions. “People say it is a bad time, but I suppose a bad time does better things on business than the so called good time during which people will not take time to think about improving anything. The way of innovation and progress are always found in the crisis. With support from the government and fellows, I believe the future of our business will run wonderfully,” our metal plastic manufacturer member showed a positive attitude towards the changes.

Despite the obstacles posed by the COVID-19, with its preferential policies, manufacturing cluster, and Free Trade investment provides an infrastructure

of Guangzhou, Hengqin of Zhuhai, and various districts, the GBA is an ideal base for manufacturing SMEs.

Written by Melanie Song, German Chamber of Commerce in China | South and Southwest