Business Focus - From Greater Bay Area to Greater Tech Area

From Greater Bay Area to Greater Tech Area

New opportunities for Italian companies and investors in Hong Kong and beyond

Plans to turn the Greater Bay Area (GBA) into a global technology and innovation powerhouse are gaining momentum, opening new opportunities for Italian investors and entrepreneurs.

The GBA is a cluster of 11 cities, which include the special administrative regions of Hong Kong and Macau as well as the mainland metropolis of Shenzhen and Guangzhou, among others.

It is now one of the key pillars of China’s strategy for opening up while securing critical products and technology, as the world’s second-largest economy seeks to strengthen its industrial supply chain.

Hong Kong

On 24th February, Hong Kong’s Financial Secretary Paul Chan unveiled a raft of new measures that will boost funding for technology companies as he delivered the annual city budget speech.

Chan revealed that the city’s top financial watchdog, the Securities and Futures Commission (SFC), and the bourse operator HKEX are considering to reform IPO rules to allow pre-profit or pre-revenue advanced technology companies to list on the Hong Kong Stock Exchange.

The budget speech also outlined a series of government-led investments in technology. The Hong Kong Growth Portfolio will pour HKD 5 billion into a strategic tech fund for local startups and another HKD 5 billion into a Greater Bay Area investment fund focused on opportunities in Guangdong province.

The Hong Kong government will also earmark an additional HKD 10 billion for the development of life science technology. In addition, Chan reiterated plans for the establishment of an “InnoLife Healthtech Hub” to bring together 24 laboratories to focus on research in biomedicine, big data and artificial intelligence.

The hub will be based in a future “technopole” – that is, a cluster of hi-tech and information-based companies. It will be based in San Tin, an area bordering Shenzhen, as announced earlier in October by Hong Kong leader Carrie Lam during her annual policy address.

The Technopole on the Hong Kong side and the Shenzhen I&T Zone will form a Shenzhen-Hong Kong innovation and technology cooperation zone of about 540 hectares, which is expected to play a key role in the development and integration of the Greater Bay Area.

Intensified collaboration between Hong Kong and mainland Chinese authorities are also expected to bear fruit in fintech – a key area for Hong Kong plans to consolidate its position as a world-class financial centre.

The Hong Kong Monetary Authority (HKMA) and the People’s Bank of China (PBOC) recently agreed to create a one-stop sandbox platform in the Greater Bay Area that will allow financial firms and technology companies to develop cross-border fintech products faster and at a lower cost. The HKMA is also working with the PBOC on the possibility of using the Chinese digital yuan – also known as e-CNY – in Hong Kong.

Shenzhen

In January, China’s National Development and Reform Commission (NDRC) – the country’s top economic planner – and the Ministry of Commerce (MOFCOM) issued a blueprint to accelerate institutional reform in Shenzhen in areas such as technology, finance, health care, education and transport.

The city – which is known as China’s Silicon Valley – has been a poster child for China’s economic opening-up since the early 1980s. The NDRC and MOFCOM called for the establishment of international platforms to improve semiconductor sourcing and data exchanges as China doubles down on efforts for technological self-reliance amid increasing geopolitical rivalry with the United States.

In addition, authorities plan to allow mainland Chinese companies or citizens to set up schools for the children of foreign residents who work in Shenzhen, making it easier for firms in mainland China to attract foreign talent.

Macau

In September, China’s top central authorities – the Communist Party’s Central Committee and the State Council – issued a plan for building a Guangdong-Macau “in-depth cooperation zone” in Hengqin island. While Hengqin is mainland Chinese territory, parts of it have been leased to the special administrative region of Macau. In those areas, Macau law applies.

The latest plan is intended to turn the island into a new platform to boost Macao’s economic diversification from the gaming industry. Among others, it calls for the development of scientific and technological research and high-end manufacturing in the zone, highlighting industries such as integrated circuits, electronic components, new materials, new energy, big data, artificial intelligence, the internet of things and biomedicine.

Useful contacts

Italian startups can establish their base here:

● Hong Kong Science & Technology Park (HKSTP) https://www.hkstp.org/en/

● Cyberport https://www.cyberport.hk/en

Information about Greater Bay Area: https://www.bayarea.gov.hk/en/opportunities/ it.html

Free advice and services for companies: https://www.investhk.gov.hk/en/home.html

Riccardo Ghia is an Italian financial journalist based in Hong Kong. He currently serves as Research Editor APAC at global financial news and data service Mergermarket (ION Group).