GPRD-Book Eng Apr2014

The Greater
Pearl River Delta

A report commissioned by
Invest Hong Kong
7th Edition
The Greater Pearl River Delta
Contents
Executive Summary 4
Authors
Thomas M.H. Chan Section 1 Overview of the Greater Pearl River Delta Region
Justina H.W. Yung
1.1. 9+2 Cities from Three Jurisdictions 14
Man-Kit Chung
Public Policy Research Institute, 1.2. Greater Pearl River Delta Economic Overview 17
The Hong Kong Polytechnic University 1.2.1. World-Class Exporting Region
1.2.2. Link between Global Economies and Mainland China
Editorial 1.2.3. Coastal Chinas Economic Powerhouse
1.2.4. Emerging World-Class Metropolis
Invest Hong Kong
First Published April 2003 Section 2 Transformation and Development in the

Second Edition June 2004 Greater Pearl River Delta Region
Third Edition October 2005
Fourth Edition October 2006 2.1. Development Model Prior to 2000 30
Fifth Edition September 2007
2.2. A Journey of Economic Transformation 33
Sixth Edition May 2010
Seventh Edition April 2014 2.2.1. The 10th to 12th Guangdong Province Five-Year Plans
2.2.2. Labour Issues in the Pearl River Delta Region
Copyright reserved
2.3. Infrastructure and Regional Connectivity 40
ISBN-978-988-97122-7-3 2.3.1. Railways
2.3.2. Expressways
Published by Invest Hong Kong 2.3.3. Airports
Printed by the Government Logistics Department 2.3.4. Ports
Hong Kong Special Administrative Region Government 2.3.5. Cross-Border Infrastructure Development between
Hong Kong and Pearl River Delta Cities
The information and material contained in this report is for reference only and 2.4. Urban Governance and Regional Integration 58
does not necessarily represent the views and positions of the Government of the
2.4.1. Economic Integration
Hong Kong Special Administrative Region. While every effort has been made to
keep information current and accurate, readers are advised to exercise caution and 2.4.2. Spatial Coordination
check that the information is still current before acting upon it. 2.4.3. Knowledge Collaborations between Hong Kong and
the Pearl River Delta Region
Contents
Section 3 Economic Trends in the Pearl River Delta Region Section 5 Hong Kongs Role in the Greater Pearl River Delta Region
3.1. From Manufacturing to Technology 69 5.1. Regional Economic Roles of Hong Kong in the 109
3.1.1. The Development of High-Technology Industries Greater Pearl River Delta Region
3.1.2. Research and Development in the Pearl River Delta Region and 5.1.1. Investment-Led Service Hub
Guangdong Province 5.1.2. An Enhanced Two-Way Investment Platform
3.2. From Manufacturing to Services 76 5.1.3. A Shopping Paradise and Marketing Arena
5.1.4. A Key Investor and Service Supporter of Macao
3.2.1. Transformation and Upgrading
3.2.2. The Development of Modern Service Sectors 5.2. New and Projected Advantages of Hong Kong to the 116
Greater Pearl River Delta Region
3.3. The Emergence of an Integrated Market in the 84
Greater Pearl River Delta Region 5.2.1. World-Class Infrastructure
5.2.2. Jurisdiction for Knowledge Economy
3.3.1. A Rapidly Developing Market
5.2.3. Human Capital and Talent Mobility
3.3.2. E-Retailing in Guangdong Province
3.3.3. An Integrated Market with Hong Kong 5.3. Additional Roles of Hong Kong in the New Era 125
5.3.1. Marketing A Place to Build Image
Section 4 H
ong Kongs Contribution to the Development of 5.3.2. Investment A Place to Facilitate and Protect Investor Benefits
the Pearl River Delta Region 5.3.3. Knowledge and Talent A Place to Innovate
4.1. Hong Kongs Collaborations with the 94

Invest Hong Kong and Useful Contacts 132
Pearl River Delta Region

4.2. A New Regulatory Framework between Hong Kong 96
and the Mainland
4.3. Renminbi Internationalisation and Financial Cooperation 98
4.3.1. Hong Kong in Renminbi Internationalisation
4.3.2. Hong Kong-Guangdong Financial Cooperation
4.4. Helping Enterprises to Explore the Mainland Market 106

Executive Summary Executive Summary
4 5
Executive Many academic discussions have focused on the development
Summary
model of the Greater Pearl River Delta region prior to the handover
of Hong Kong and Macao, and Chinas accession to the World Trade
Organization (WTO). Such discussions have provided fascinating
insights into how the Greater Pearl River Delta has been transformed
from an agriculture-based region to a newly industrialised one, and Hong
Kongs instrumental role linking global economies to the Mainland.
However, few of the discussions have provided thorough discussions
on the evolution of the Greater Pearl River Delta post-2001. Indeed, the
development of the Greater Pearl River Delta region is equally exciting
and challenging for example, in terms of increased labour costs,
industrial upgrading, and economic transformation.
Since 2001, PRD-driven development programmes have

showcased how a newly industralised region has sought its way
upwards, beyond its development plateau. At the same time,
the changes that have occurred in Hong Kong and Macao
have also been journeys of the two Special Administrative
Regions, integrating into the economic communities of
Greater China, making use of the global economic
network and rule of law framework from their
days of colonial governance. The two places have
converted their inheritances into new advantages,
The Greater Pearl River Delta making them fit to meet present challenges, and
region (GPRD) consists of nine the emergence of a knowledge economy.
cities in the Pearl River Delta (PRD)
region of Guangdong Province: Guangzhou,
Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan,
Zhongshan, Jiangmen, and Zhaoqing; plus Mainland
Chinas Hong Kong Special Administrative Region (HKSAR), and
Macao Special Administrative Region (MSAR). The region is known for
its pioneering role in Chinas Open-Door Policy, and its huge economic
success since Mainland Chinas economic reform.
6 7
This report consists of five sections; the first section provides an overview Delta region, and Bohai Rim as National Optimised Development Zones,
of regional development, before moving onto how the development the inclusion of Hong Kong and Macao have made the Greater Pearl River
model in the Pearl River Delta region has evolved, including discussions Delta the most globally integrated among the three.
on policy orientation, infrastructure development and spatial layout
in section two. In section three, recent economic trends such as the
emergence of an integrated market and online retailing are explored,
while sections four and five focus on Hong Kongs participation in the
Greater Pearl River Delta region, with an emphasis on Hong Kongs
evolving role, and its enhanced and increasingly strategic links to the
economic development of Mainland China.
Regional Overview
Traditionally, the Greater Pearl River Delta region has been known for
its export performance, as it continues to be, spurred on by Chinas
accession to the WTO. In 2012, the consolidated trading transactions
of the Greater Pearl River Delta region were behind only two foreign
economies those of the US and Germany; but ahead of Japan. The
economic scale of the Greater Pearl River Delta region makes it an
ransformation and Development in the Greater Pearl
T
economic powerhouse in coastal China, and an undisputed economic River Delta Region
centre in southern China.
Since 2001 the Pearl River Delta region has undergone a series of policy
Comparisons have been made between the development status of the orientation shifts, with the clear objective to drive economic upgrades
Pearl River Delta region, and that of the Yangtze River Delta region, and and transformations. These shifts echo changes in both international and
Bohai Rim. The Pearl River Delta region excels both not only in its export domestic markets, and the policy priorities of the Central Government.
performance and strong tertiary industry but also its high residential Perhaps more importantly, the shifts in policy reflect the determination
income, and government budgetary revenues that denote wealthy of local governments to maintain the competitiveness of the region in
persons and governments regionally. the long term.
As a result of the regions past three decades of industrial and urban Large scale infrastructure projects have been carried out to improve
development, and the participation of Hong Kong and Macao, a polycentric regional connectivity, re-define economic space, and encourage regional
metropolis is taking shape in the region, encompassing key players such integration. Among them, the development of railways is arguably the
as Hong Kong, Macao, Guangzhou and Shenzhen. Although the Central most important, in terms of both the scale of investment and network
Government has prioritised the Pearl River Delta region, Yangtze River coverage. The concepts of a city-region, an intra-regional One-Hour
8 9
Intercity Commuting Circle, and a Multi-Tier Development Space have 7.9 percent of total retail sales in the Mainland, and Guangdong Province
been adopted in the co-commissioned plans of the three jurisdictions. recorded the highest number of online shoppers, 12.2 percent of the
Cross-boundary transportation facilities are currently under construction, national total. The booming of Guangdong Provinces e-commerce
and set to fundamentally alter the spatial layout of the Greater Pearl activities has been driven by the increasingly higher incomes of local
River Delta region. residents, and larger quantity of Pearl River Delta enterprises and
individuals active in the e-supply chain including the smartphone
The reunification of Hong Kong and Macao to China has enabled them to
giants in the region. These enable the economic entities in the region to
conduct knowledge collaboration with the Pearl River Delta region in the
capitalise on the Mainlands fastest growing consumer market segment,
sectors of technology and education, enabling the three jurisdictions to
and ride on the future consumption wave driven by digital revolution.
develop into a knowledge-based economy.
Hong Kong is also in the picture
regarding an integrated Greater
Recent Economic Developments in the Greater Pearl Pearl River Delta market, in
River Delta Region particular, servicing Pearl River
Delta residents from middle to
The economic development of the Greater Pearl River Delta region
high income groups, and young
since 2000 can be seen from three perspectives: 1) the technology-
enthusiasts of western lifestyles,
driven upgrading of the manufacturing sector; 2) the shift in economic
who prefer to purchase luxury and
orientation from the manufacturing sector to the service sector, and 3)
top quality items from Hong Kong.
the emergence of the Greater Pearl River Delta market.
In the last 10 years, the Pearl River Delta governments have dedicated
a great deal of fiscal and policy resources to transform the region from
Hong Kongs Contribution to the Development of
processing trade-oriented manufacturing clusters into a high technology- the Pearl River Delta Region
oriented exporting region.
Hong Kongs interaction with the Pearl River Delta region is not static, but
As of 2006, the region has been keen to develop tertiary industries a dynamic trajectory evolving in step with Mainland China government
and highlighted these intentions in the Guangdong Province Five-Year policy shifts, and changes in the global economic environment. Since
Plan under the Modern Services Sector. Three districts of Qianhai 2003, Hong Kong has actively sought a new regional role in the post-
(Shenzhen), Nansha (Guangzhou), and Hengqin (Zhuhai) have been WTO era, in order to re-establish and re-strengthen its economic ties with
designated for the development of modern services sectors. In the past Mainland China and the Pearl River Delta region.
five years, the growth rate of Guangdong Provinces tertiary industry has
With support from the Central Government, Hong Kongs efforts have led
surpassed the overall GDP growth rate of Guangdong.
to the establishment of a new institutional framework between Hong
An even more exciting change in the Greater Pearl River Delta region has Kong and the Mainland in the form of a preferential trade agreement the
been its robust retail sales. In 2012, the Pearl River Delta region represented Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA).
10 11
New Business Trends
The financial development of Hong Kong has attracted many Mainland

companies to list on the Hong Kong stock market. As at January 2014,
Mainland companies accounted for about 50 percent of all companies
listed on the Hong Kong Stock Exchange. In 2013, 127 China Fortune-500
firms, with a total revenue of US$778 billion and profit of US$74 billion,
listed Hong Kong as their headquarters.
Hong Kong has seen itself evolve from being a source of unilateral
investment into a two-way investment platform linking Pearl River Delta
region investors to the global market, and global investors to the Pearl River
Delta region and China markets.
Thanks to the Individual Visit Scheme, Hong Kong attracts more than 40
million Mainland Chinese visitors annually. These visitors are keen on
The inclusion of Hong Kong into Chinas 11th and 12th Five-Year Plans shopping for luxury products in Hong Kong, believing in the quality that
(2006-2015) allows for a strategic position of Hong Kong in the Mainlands Hong Kongs retail sector offers. This has transformed Hong Kong into a
development, as shown by a more active role in certain business sectors, shopping paradise and marketing arena for prestigious consumer brands.
specifically, financial development and renminbi internationalisation.

These strengthen Hong Kongs business relationship with Mainland New Advantages
China, to go beyond the merchandise trading that is often confined Driven largely by Hong Kong government and public institutions, various
within the Pearl River Delta region and to penetrate a wider scope of changes have taken place since the new millennium, which have created
service cooperation. new advantages for Hong Kong.
With respect to infrastructure development, multi-dimensional

Hong Kongs Role in the Greater Pearl River Delta Region transportation systems between Hong Kong and the Greater Pearl River
Delta region are in construction and planning stages. The Hong Kong
Since 2001, the Pearl River Delta region has moved into a new
SAR Government also accords priority to developing the innovation and
development phase, while the global financial crisis of 2008 has also
technology industries. Five research and development (R&D) centres
led Hong Kong into a new stage. On an institutional level, the Hong Kong
were set up in Hong Kong and they have been working closely to conduct
Government has sent out a clear message for economic transformation,
industry-oriented R&D and proactively promote technology transfer
and progressive reappraisal of its role within the Greater Pearl River
to the relevant industries. Combined with the Pearl River Delta regions
Delta region. On a business level, changes have also followed.
world-class manufacturing base, the competitive advantages of industry
players in the Greater Pearl River Delta region should be further enhanced.
12 13
In terms of tapping into the knowledge economy, Hong Kong has brand image, and tap into this enormous market potential. Hong Kong
strengthened its jurisdiction framework in relation to knowledge sectors, can also help Mainland investors to build a well-respected corporate
for example, developing arbitration services and collaborating with image to meet the demands of a knowledge economy.
Guangdong Province on the protection of intellectual property rights.
Investment A place to facilitate and protect investor benefits
Through knowledge ties with human
capital and talent exchange, Hong Hong Kongs CEPA framework allows foreign investors to enjoy
Kong is using its higher education progressive market liberalisation of market access granted by Mainland
system to enrich its talent pool, China. Hong Kongs business practices and talent are assets to Mainland
attracting young Mainland talent to enterprises in terms of managing global business in a regulated way,
Hong Kong to create new prospects which eventually grants them better business exposure. A strong
for Mainland-Hong Kong cooperation. presence of legal practitioners well-versed with commercial best
The Hong Kong visa-free arrangement practice in Hong Kong provides an international standard of legal
scheme covers a majority of countries services to safeguard the economic interests of foreign investors.
and territories, while the mobility of
international talent and Hong Kong Knowledge and talent A place to innovate
residents enables foreign investors
The marketing, commercial, and incubation support that Hong Kongs
to serve the Greater Pearl River Delta
public institutions and government renders to foreign innovators
market, and Mainland investors to
provides a better chance of success for the commercialisation of
serve the global market from their
innovative ideas into Mainland China. Meanwhile, Hong Kongs
Hong Kong headquarters.
protection of intellectual property (IP) rights offers higher levels of
confidence to international innovators, and assists Mainland innovators
Additional Roles in carrying out a wider scope of international collaboration. More
Hong Kong continues to advance and importantly, Hong Kong is an ideal meeting place for innovation talent
ready itself to embrace the emerging from the east and the west, providing an ideal business environment
opportunities of the knowledge marked by the rule of law, vigilant intellectual protection regime, world-
economy. An enhanced two-way platform is transforming Hong Kong class infrastructure, a cosmopolitan lifestyle, and remuneration of
into a meeting point for key decision makers to start their dialogue, knowledge and experience.
develop new forms of collaboration, and conclude business deals.
Marketing A place to build image
Hong Kong is an ideal place for foreign enterprises to demonstrate their

international image and convince Mainland consumers of their global
Section 1 Overview of the Greater Pearl River Delta Region Section 1 Overview of the Greater Pearl River Delta Region
14 15
Overview coastal region of China, and one of the prominent exporting regions of the
world. It is also an emerging world-class metropolis.
Greater
Figure 1-1: The Greater Pearl River Delta Region
of the
Guangzhou Huizhou
Zhaoqing
Foshan Dongguan
Zhongshan
Jiangmen Shenzhen
Zhuhai Hong Kong
Macao
The Greater Pearl River Delta region is perhaps best known for its
pioneering role in Mainland Chinas Open Door Policy launched
1.1. 9+2 Cities
in 1979. The Central Government authorised two of the first four
from Three
Special Economic Zones (SEZs) to be located in the Pearl River
Jurisdictions Delta region in 1984. The two concerned SEZs, Shenzhen
and Zhuhai, were so entrusted due to their proximity to
The Greater Pearl River
Hong Kong and Macao. Incentives such as preferential
Delta region (GPRD) consists of
nine cities in the Pearl River Delta
1
Traditionally and particularly in the 1980s and 1990s, only parts of Huizhou (the urban
(PRD) region of Guangdong Province: district of Huizhou, Huidong County, and Boluo County), and parts of Zhaoqing (the
urban district of Zhaoqing, Gaoyao, and Sihui) were categorised as the Pearl River
Guangzhou, Shenzhen, Zhuhai, Foshan, Delta region. As of 2000, certain statistics, government plans and academic
Huizhou, Dongguan, Zhongshan, Jiangmen, and discussions had begun to include the entire territory of Huizhou and
Zhaoqing in the PRD regional discussions. This report adopts
Zhaoqing1; plus the Hong Kong Special Administrative the later approach to analyse Huizhou and
Zhaoqing.
Region (HKSAR), and Macao Special Administrative Region
(MSAR) of Mainland China. The region is an economic powerhouse in the
16 17
tax concessions, the bonded system on processing trade, and simplified 1.2. Greater Pearl River Delta Economic Overview
examination procedures on foreign investment were provided, making
the region attractive for foreign investment. Since then, the Greater Pearl 1.2.1. World-Class Exporting Region
River Delta region has been considered an integrated force, combining the
Since 1979, the Mainland Chinese government has launched numerous
economic and institutional strengths of the Pearl River Delta region, Hong
reforms in the Pearl River Delta region to drive merchandise trade, and to
Kong, and Macao. Despite their different jurisdictions, the three places have
attract export-oriented foreign manufacturing investment. As of the end
worked closely together, jointly entering an export-oriented development
of 2012, the merchandise trading volume of the Greater Pearl River Delta
phase, new to the Peoples Republic of China. Over the past three decades, a
region stood at US$1,778.2 billion. 2 This was US$93.8 billion higher than
massive inflow of foreign investment to the Greater Pearl River Delta region
that of Japan in the same period, making the Greater Pearl River Delta
has led to numerous infrastructure projects, and the migration of thousands
region equivalent to the fourth largest trading economy in the world.
of international talent and millions of domestic workers. The region has
undergone a comprehensive transformation in terms of its economic Table 1-2: Milestones of Merchandise Trade in the Greater Pearl River Delta Region
structure, spatial layout, population mass and institutional setups.
Period Milestone
As a result of this development, the Pearl River Delta region is widely 1990 Equivalent to 10th largest trading economy globally, ahead of Spain, Korea
recognised to be a role model, exemplifying the transition of a developing and Switzerland. Trading activities were primarily driven by Hong Kong, and
supported by Hong Kong-invested companies in the Pearl River Delta region.
phase into a newly industrialised one. Indeed, through implementing Much intra-regional trade took place in the region, and Hong Kong accounted
an accelerated industrialisation strategy, and utilising the institutional for 73.7 percent of merchandise trade in the Pearl River Delta region.
advantages of different jurisdictions to the full, the Pearl River Delta 1995-2000 Equivalent to sixth largest trading economy globally, ahead of Italy and
Canada. This standing was supported by strong manufacturing development
region has evolved from an agricultural-based region into a modern in the Pearl River Delta region, inclusive of Taiwanese companies in the region.
industrialised zone to grasp the lions share of the economic benefits of Hong Kong and Macao continued to be major trading partners of the Pearl
River Delta region, representing 27.2 percent of merchandise trade in 1995.
Mainland China, despite its limited natural resources. Since then, the Pearl River Delta region has actively developed direct trade
with world economies, and Hong Kongs and Macaos share of merchandise
Table 1-1: The Pearl River Delta Region in 2012: Limited Resources, Enormous Output trading in the Pearl River Delta region has stabilised at around 20 to 23 percent.
Endowed with: 0.57% of national land area 2005 Equivalent to sixth largest trading economy globally, ahead of the UK. After
4.2% of national population China ranked as the third largest trading economy in 2005, the Greater Pearl
Generated: River Delta region came in behind the four foreign economies of the US,
GDP 9.2% of national GDP Germany, Japan, and France. The Pearl River Delta region quickly narrowed its
219.6% of per capita GDP of national average gap with Hong Kong.
Sectoral Performance 10.4% of national industry output 2010 Equivalent to fifth largest trading economy globally, ahead of France, and
10.7% of national tertiary industry behind the three foreign economies of the US, Germany, and Japan.
Residents Wealth 8.9% of national saving deposits by urban and rural
2012 Equivalent to fourth largest trading economy globally, ahead of Japan, and
residents
behind the two foreign economies of the US, and Germany. Hong Kong and the
Market Potential 7.9% of total national retail sales Pearl River Delta region swiftly recovered from the global financial crisis, and
Foreign Economic Cooperation 26.7% of national export, 21.8% of national import picked up exporting momentum.
19.3% of foreign direct investment (FDI) actually utilised
Source: China Statistical Yearbook 2013 and Guangdong Statistical Yearbook 2013. 2
US$ 1,999.8 billion before deducting the double counting of trade transactions among the three jurisdictions.
18 19
Table 1-3: Merchandise Trade in the Greater Pearl River Delta Region (US$ Billion) demonstrate Hong Kongs institutional advantage as a free port serving
the region. 5
1990 1995 2000 2005 2010 2012
Pearl River Delta3 41.9 94.3 159.1 411.1 751.3 943.4 Being the cornerstone of intra-regional trade, processing trade has
Hong Kong 167.1 369.9 416.7 592.3 842.1 1,046.4
enabled Hong Kongs financial portfolio to carry out cross-border trade
financing services as in the past, and, in recent years, to provide Hong
Macao 3.2 4.0 5.2 7.0 6.5 10.0
Kong with a huge trading mass to develop renminbi cross-border trade
Double count trade 4 (32.3) (26.5) (35.6) (87.1) (154.5) (221.6)
settlements. Processing trade also generates huge trade surpluses to
Greater Pearl River Delta 180.0 441.8 545.4 923.3 1,445.4 1,778.2 Mainland China, particularly to the Pearl River Delta region. Meanwhile,
(Equivalent World Rank) (10th) (6th) (6th) (6th) (5th) (4th) intra-regional trade, largely in the form of processing trade, is not only
a key driving force for Greater PRD development, and differentiating
US 910.6 1,355.6 2,041.2 2,633.8 3,247.7 3,881.2
the region from other Chinese regions, but the most important vehicle
China 115.4 280.9 474.3 1,421.9 2,974.0 3,867.1
linking the economic players of the region for joint development.
Germany 776.8 987.3 1,049.0 1,748.0 2,313.7 2,574.3
In 2011, Hong Kong trade involving outward processing in Mainland
Japan 522.9 779.0 858.8 1,110.8 1,463.9 1,684.4
China amounted to US$174.7 billion, 98.6 percent of which transactions
Source: WTO database and Guangdong Statistical Yearbook, various years. were with Guangdong Province. Within the province, the Pearl River
Delta cities of Shenzhen and Dongguan accounted for 34 percent and 31
It should be pointed out that a fairly large share of trading activities in percent of processing trade value, respectively. In addition, the frequent
the Greater Pearl River Delta region are processing trade and intra- transactions between small and medium-sized enterprises (SMEs) in
regional trade which may give rise to a double counting of trading the region, arising from processing trade and intra-regional trade, make
transactions. Some academic discussions tend to estimate intra-regional heavy demands on the cross-border logistic, financial, and professional
trade and delete this from economic analysis. However, this analytical services that are instrumental for the rapid development of service
approach may overlook the contribution of processing trade to Pearl sectors in the region.
River Delta development. In reality, processing trade assists export-
led manufacturers, cutting short the lengthy process of dealing with
It is extremely challenging to estimate intra-regional trade as a result of statistical, economic and institutional
5
Mainland Chinese Customs, and improving cash flow by minimising factors. The Hong Kong trading figure does not specify trading transactions with the Pearl River Delta region,
but Mainland China as a whole. The Chinese statistical bureau adopts the principle of goods origin to compile
pre-paid import duties. More importantly, processing trade allows import data, Hong Kongs re-export activities, and, particularly, exporting transactions from Hong Kong to the Pearl
River Delta region, which are not recorded. On institutional considerations, particularly after the mid-2000s, in
manufacturers to retain their financial management in Hong Kong, order to speed up and streamline the tax rebate mechanism for exporting goods, many PRD-based processing
where they can enjoy free international capital flow and low taxation. manufacturers exported goods produced in the Pearl River Delta region to Hong Kong first, then re-imported the
same products back to the Pearl River Delta region. To counter this, the Central Government established a bonded
The scale of processing trade is one of the ideal economic indicators to warehouse, however, some Pearl River Delta region manufacturers declared to Customs that they export to Hong
Kong via these bonded warehouses for the purposes of their financial arrangements, though the goods have
never entered Hong Kong, nor have been recorded by Hong Kong Customs. Given the constant changes in trading
patterns of processing manufacturers, in response to the Mainland Customs regulations, it is almost impossible to
3
The PRDs trade data were calculated with the principle of production and marketing.
develop a simple formula to estimate processing trade and intra-regional trade figures. Among all trading statistics,
4
The estimated trading transactions between the PRD region and Hong Kong/Macao, based on the Guangdong the processing trade figure estimated by the Census and Statistics Department of the HKSAR Government may
Statistical Yearbook; trading transactions between Macao and Hong Kong, based on the Statistics and Census be the best indicator of intra-regional trade. The complexity of intra-regional trading figures demonstrates the
Service of the Macao SAR Government, to be deducted from the aggregated trading volume. institutional uniqueness of the region, with Hong Kong as the focal point.
20 21
Table 1-4: Hong Kongs Processing Trade with Mainland China (US$ Billion) 1.2.2. Link between Global Economies and Mainland China
1990 1995 2000 2005 2010 2011
The uniqueness of the Pearl River Delta region lies in its global economic
Total processing trade with
30.4 79.8 109.0 138.9 165.0 174.7 links. Of all key economic indicators, the Pearl River Delta region
Mainland China
Processing exports to Mainland

performs best in foreign-related indicators. In 2012, the region accounted
11.8 28.1 36.2 50.0 66.8 71.4
China for a quarter of national exports and a fifth of foreign direct investment,
Processing imports from Mainland
18.6 51.7 72.8 89.0 98.1 103.3
mainly due to the strong support of Hong Kong. Indeed, Hong Kongs
China
cumulative investment into Guangdong Province (1979-2012) was
Trade surplus of processing trade to
Mainland China
6.8 23.5 36.6 39.0 31.3 31.8 US$184.7 billion, and accounted for 61.8 percent of the foreign direct
investment actually utilised in the period. In fact, the majority of Hong
Source: Census and Statistics Department of HKSAR Government, Hong Kongs Trade Involving
Outward Processing in the Mainland of China, various issues. Kong investments went to the Pearl River Delta region.
Indeed, simply looking at the export performance of the Pearl River Delta Table 1-6: I ndicators of the Pearl River Delta Region, as Percentages of National
Performance
region alone, not including the contribution of Hong Kong and Macao,
the Pearl River Delta region qualifies classification as a prominent world- Domestic-Related Indicators Foreign-Related Indicators
class exporting region. In 2012, the export volume of the Pearl River Savings Foreign
Total Retail
Gross Deposits Direct
Land Permanent Sales of
Delta region stood at US$547.7 billion, on a par with Korea at US$547.9 Area Population
Domestic
Consumer
by Urban Exports Imports Investment
Product and Rural Actually
Good
billion, surpassing that of Russia (US$529.3 billion), and behind just six Residents Utilised
foreign nations (i.e. the US, Germany, Japan, the Netherlands, France, and 1990 2.1% 5.4% 5.1% - 35.8% 36.9% 35.4%
Korea). 6 1995 2.7% 6.7% 7.2% - 34.5% 32.5% 21.2%
2000 3.4% 8.5% 8.2% 10.4% 34.0% 33.0% 25.5%

0.57%
Table 1-5: Export Performance of the Pearl River Delta Region (US$ Billion) 2005 3.5% 9.9% 8.8% 10.8% 29.8% 27.8% 18.8%
1995 2000 2005 2010 2012 2010 4.2% 9.4% 8.0% 9.6% 27.4% 22.9% 17.4%
Pearl River Delta Region 51.3 84.8 227.3 431.8 547.7 2012 4.2% 9.2% 7.9% 8.9% 26.7% 21.8% 19.3%
China 148.8 249.2 762.0 1,577.8 2,048.7 Source: B ased on data from the China Statistical Yearbook 2013 and Guangdong Statistical Yearbook
2013.
US 584.7 781.9 901.1 1,278.5 1,545.7
Germany 523.5 551.8 970.9 1,258.9 1,407.1

Hong Kong serves as the most important gateway linking Mainland
Japan 443.1 479.2 594.9 769.8 798.6
China and the Pearl River Delta region to the economies of the world.
Netherlands 203.2 233.1 406.4 574.3 655.7
The economic interaction between Hong Kong and the Pearl River
France 301.2 327.6 463.4 523.8 568.9
Delta is trade and investment driven. In the early 1980s, Hong Kong
Korea, Rep. 125.1 172.3 284.4 466.4 547.9
manufacturers, by establishing labour-intensive processing factories in
Russia 81.1 105.6 243.8 400.6 529.3
the Pearl River Delta region, initiated a revolutionary export-led working
Source: WTO database and Guangdong Statistical Yearbook 2013.
relationship with Mainland China. The low-cost goods assembled in the
6
In 2012, the import volume of Hong Kong was US$553.5 billion and behind six foreign nations (the US, Germany,
Pearl River Delta region were then re-exported to global markets via
Japan, the UK, France and the Netherlands), surpassing that of Korea (US$519.6 billion). Generally, the PRD
region performs better in export activities, while Hong Kong does better in import activities, primarily due to its
institutional advantage in being a free port.
22 23
Hong Kongs well-established international trading networks. Attracted Table 1-7: Gross Domestic Product of the Greater Pearl River Delta Region (US$ billion)
by the industrial foundation of the Pearl River Delta region, as well as the 1990 2000 2005 2010 2012
producer services and financial support that Hong Kong provided, other Greater Pearl River Delta 98.6 276.9 411.6 815.9 1,064.3
international investors subsequently followed Hong Kongs lead into Pearl River Delta 18.7 101.7 222.0 558.9 757.5
the Pearl River Delta. At its peak in the 1980s, the region represented Hong Kong 76.9 169.1 177.8 228.7 263.3
more than a third of Mainland Chinas total foreign direct investments. Macao 3.0 6.1 11.8 28.4 43.6
(Equivalent World Rank) - - - (16th) (16th)
Following the opening-up of the Yangtze River Delta region, and Chinas
accession to the World Trade Organization (WTO) in 2001, the FDI
Korea, Rep. 263.8 533.4 844.9 1,014.9 1,129.6
proportion of the Pearl River Delta region stabilised at around 20 percent
Indonesia 114.4 165 285.9 709.2 878.0
of the national total. Turkey 150.7 266.6 483.0 731.1 789.3
Netherlands 294.9 385.1 638.5 772.1 770.6
The large scale of foreign investment projects attracted a huge influx of
Source: G uangdong Statistical Yearbook 2013 and World Bank database (for 2010 & 2012 data). The
migrant workers into the Pearl River Delta region, and swiftly built up
GDP figures of the Pearl River Delta are proportionate to the total GDP of Mainland China.
economic and population mass. There were other changes as well: the
improvement of domestic household incomes led to a rapid growth of The Pearl River Delta region is the core force of the economy of
saving deposits in the Pearl River Delta region, which consequently Guangdong Province, and is a major economic player in the coastal
boosted the expansion of the domestic market. The increasing China region. In fact, its performances in GDP, fixed investment,
consumption power of the Chinese quickly drew in the investment and retail sales surpass those of most of the Mainlands key coastal
aspirations of international manufacturers, retailers, and distributors provinces and municipalities. In 2012, per capita GDP of the Pearl River
keen to capture the China market. In the early 2000s, Japanese Delta region stood at US$13,363 (RMB84,355). This was 219.6 percent
automobile manufacturers Toyota, Honda, and Nissan, had set up of the national average, higher than that of Jiangsu and Zhejiang
manufacturing facilities in Guangzhou, serving Mainland consumers provinces, and on a par with Shanghai. In addition, apart from its
from their Pearl River Delta manufacturing facilities. outstanding export performance, the Pearl River Delta region also
excels in services development. In 2012, the output of the Pearl River
Deltas tertiary industry amounted to US$391 billion (RMB2,471 billion),
1.2.3. Coastal Chinas Economic Powerhouse
which was the highest among all coastal provinces and municipalities
An even better indicator of the economic competence of the Greater including Beijing, Shanghai, Tianjin, Jiangsu, and Zheijing. Not only is
Pearl River Delta region may be Gross Domestic Product (GDP). In 2012, the Pearl River Delta region blessed with high disposable income, it
the regions GDP was equivalent to that of the 16th largest economy in also encompasses wealthy local governments with high government
the world, ahead of Indonesia, Turkey and the Netherlands, and only budgetary revenues, which allows the regions authorities to carry out
slightly behind Korea. ambitious infrastructure investments.
24 25
Table 1-8: Indicators for Three Coastal China Regions in 2012 1.2.4. Emerging World-Class Metropolis
Pearl Bohai Rim

With 64.66 million residents in 2012, the Greater Pearl River Delta region
Guang- Yangtze River Delta Region
River
dong
(Jing-Jin-Ji Cluster)
China
is a highly populous area in China that is equivalent to the 22nd most
Delta
Region
Province
Shanghai Jiangsu Zhejiang Beijing Tianjin Hebei populous country in the world, ahead of the UK and Italy.
Permanent
Table 1-9: Resident Population of Greater Pearl River Delta Region at Year-End9
Population7
56.9 105.9 23.8 79.2 54.8 20.7 14.1 72.9 1,354 (million persons)
(year end,
million persons)
2000 2005 2010 2012
Gross Domestic
Greater Pearl River Delta 50.05 52.80 63.76 64.66
Product 757 904 320 856 549 283 204 421 8,221
(US$ billion) 8
Pearl River Delta 42.90 45.47 56.16 56.90
Primary industry
16 45 2 54 26 2 3 51 830 Hong Kong 6.71 6.84 7.05 7.18
(US$ billion)
Macao 0.44 0.49 0.54 0.58
Secondary
industry 350 439 124 430 274 64 106 222 3,725 (Equivalent World Rank) (23rd) (24th) (21st) (22nd)
(US$ billion)
Source: World Bank database and Guangdong Statistical Yearbook 2013.
Tertiary Industry
391 420 193 373 248 217 96 149 3,666
(US$ billion)
Among all Greater Pearl River Delta member cities, Guangzhou,
Per Capita GDP
13,363 8,570 13,471 10,827 10,022 13,857 14,760 5,795 6,086 Shenzhen, and Hong Kong are the key populous cities with resident
(US$)
populations of 12.84 million, 10.55 million, and 7.18 million, respectively.
Investment in
Fixed Assets 221 297 81 489 280 97 126 311 5,936
Typically, the Greater Pearl River Delta region is categorised into three
(US$ billion) zones the central zone including member cities Guangzhou, Foshan,
Total Retail Sales and Zhaoqing; the east zone including Hong Kong, Shenzhen, Dongguan,
of Consumer
Good
262 359 117 290 215 122 62 147 3,332 and Huizhou; and the west zone including Macao, Jiangmen, Zhongshan,
(US$ billion) and Zhuhai.
Exports
(US$ billion)
548 574 207 329 225 60 49 30 2,049 Given the geographical proximity of Guangzhou and Foshan; and
Imports
Hong Kong and Shenzhen; and their inter-city economic interactions,
396 410 230 219 88 348 67 21 1,818
(US$ billion) industrial compatibility, and domestic market potential, Guangzhou and
Local Govern- Foshan together with Hong Kong and Shenzhen are often perceived to
ment Budgetary
Revenue
65 99 59 93 54 52 28 33 968 be major metropolises in the Greater Pearl River Delta region. They have
(US$ billion) 20.1 million and 17.7 million residents, and population densities of 1,819
Source: China Statistical Yearbook 2013 and Guangdong Statistical Yearbook 2013. and 5,708 persons per square kilometre, respectively.
7
Permanent population refers to the population that has stayed in the surveyed place for more than six months. 9
opulation in the Pearl River Delta region refers to the permanent population that has stayed in the surveyed place
P
8
US$1 = RMB 6.3125 for 2012 for more than six months. The Hong Kong Resident Population comprises Usual Residents and Mobile Residents.
Visitors are not included in the Hong Kongs population.
26 27
Together with the other member cities of the Greater Pearl River Delta Figure 1-2: Three Potential Metropolitan Areas in the Greater Pearl River Delta Region
region, in particular, the cross-jurisdiction cooperation between Macao

and Zhuhai, the Greater Pearl River Delta region has emerged as a world-
class polycentric metropolis with three key areas in the centre and east
zones: Hong Kong and Shenzhen, Guangzhou and Foshan as well as
Macao and Zhuhai. As a result of the last three decades of industrial and
Integrated Guangzhou /
urban development in Shenzhen and Dongguan, and Hong Kong being Foshan Metropolitan Area
one of the most densely populated places in the world, the east zone of
the Greater Pearl River Delta region has the highest population density.
Intenational Hong Kong /
Table 1-10: Population and Land Area of the Greater Pearl River Delta Region (2012) Shenzhen Metropolitan Area
Population Land Area Population Density Distinctive Macao /

(million persons) (sq.km) (persons/ sq.km) Zhuhai Metropolitan Area
Central Zone
Metropolitan Area
Guangzhou 12.84 7,249 1,771 Bay Area
Foshan 7.26 3,798 1,912 Regional Development Axis
Zhaoqing 3.98 14,891 267

Source: B ased on Construction Department of Guangdong Provincial Government,
Development Bureau of the Hong Kong SAR Government, Secretariat for Transport
East Zone and Public Works of the Macao SAR Government, Planning Study on the Coordinated
Development of the Greater Pearl River Delta Townships, 2009, p.45.
Shenzhen 10.55 1,997 5,282
Recognising the strategic importance of the Greater Pearl River
Dongguan 8.29 2,460 3,371
Delta region in both a national and worldwide context, the Central
Huizhou 4.67 11,346 412
Government has positioned the Pearl River Delta Region as one of three
Hong Kong 7.18 1,104 6,481
National Optimized Development Zones under its National Territory
Development Plan (released in December 2010). This means that the
West Zone Pearl River Delta region shares the same developmental status as the
Jiangmen 4.48 9,505 472 Yangtze River Delta region and the Bohai Rim. It is the only region in
Zhongshan 3.16 1,784 1,769 southern China to do so.
Zhuhai 1.58 1,724 918
Macao 0.57 29.9 18,997
Source: China Statistical Yearbook 2013 and Guangdong Statistical Yearbook 2013.
28 29
Figure 1-3: National Optimised Development Zones in Mainland China
The Northern Slope of Harbin-Changchun Region

Tianshan Mountains Region
Hohhot-Baotou-Yinchuan Region
Bohai Rim Region
Guanzhong Region
Chengdu-Chongqing Central Plains Region YangtzeRiver

Yangtze River
Region Delta
DeltaRegion
Region
National Optimised Development Zone

City Cluster with 100 million residents Middle Yangtze Region
Southeast Fujian
City Cluster with 30 million residents Region
and above
City Cluster with 10 million residents

and above Pearl River Delta Region
Railway route
Beibu Gulf Region
Source: Based on Land-Use Planning of Guangdong (2006-2010). specifically, the city cluster Hong Kong-Shenzhen-Dongguan and the
The polycentric metropolis is not unique to the Greater Pearl River Delta city cluster Guangzhou-Foshan already had a resident population
region, it can also be found in the US and Europe. There are four such of 46.09 million, surpassing the Greater Tokyo region where about 36
metropolises in the US, and one in Europe. The latter is located along a million people reside.
discontinuous corridor of urbanisation in western Europe that stretches

from London in the north to Milan in the south. Polycentric metropolises
Conclusion
cover the territories of the worlds highest concentrations of people,
money, and industry, and are globalised places with economic strength
and competence in innovation.
The Greater Pearl River Delta region not only excels in
The Pearl River Delta region, Yangtze River Delta region, and Bohai Rim economic performance, but in its enormous development
are the global economic integration zones in Mainland China. However, potential strengthened by its growing local consumption mass
the Greater Pearl River Delta is the most globally integrated of them and global links due to Hong Kong. All of these factors result
all due to Hong Kong and Macao. By 2012, thanks to a huge population in distinct advantages and market attractiveness for potential
mass driven by the urbanisation and industrial development of the international investors.
region, the two regional metropolises comprising five member cities
Section 2 Transformation and Development in the Greater Pearl River Delta Region Section 2 Transformation and Development in the Greater Pearl River Delta Region
30 31
Transformation of the Guangdong Government, and the public institutions of the
and Development
region. Between 1978 and 2012, the Pearl River Delta region experienced
tremendous economic growth resulting in a structural change in its
economic and industrial make up.
Back in 1978, many districts of the Pearl River Delta region were engaged
of the Greater Pearl River Delta Region in agricultural activities, with primary industry constituting 29.8 percent
of regional GDP. Guangzhou and Hong Kong were the prime cities in
the region and specialised in manufacturing and service activities.
Guangzhou served the Mainland China market, while Hong Kong
targeted the international one.
To accelerate the pace of industrialisation in the Pearl River Delta region,

the Guangdong and local governments provided various investment
incentives to Hong Kong, Taiwan and foreign manufacturing
enterprises. These included preferential taxation measures,
competitive land provisions, and the establishment of
bonded zones, and hi-tech industrial parks. At the turn of
the new millennium, the secondary sector became the
largest economic sector in the Pearl River Delta region,
representing 47.6 percent of regional GDP, while the
portion of primary industry decreased to 5.4 percent in
2000. The decline was due to rapid industrialisation
and urbanisation in the region.
2.1. D
evelopment What truly distinguishes the Pearl River Delta region
Model Prior to 2000 from other developing economies is that the
region launched its industrialisation
Since 1979, when Mainland China
strategy at a time when its
introduced its Open Door Policy, the economic
development of the Pearl River Delta region has
been policy-driven, and boosted by continuing macro-
economic reforms and adjustments launched by various levels of
Chinese governments, from the Central Government to various levels
32 33
Industrial Value Added

manufacturing-related activities stood at a moderate level in other (US$ billion)
Percentage of GDP
words, 41 percent of Guangdongs GDP in 1978. Rather than adopting a 800 100
de-industrialisation strategy, the Pearl River Delta region chose to launch 700 Tertiary Industry 90 Tertiary Industry
Secondary Industry 80 Secondary Industry
an export-led strategy of industrialisation and incorporate Hong Kong 600 Primary Industry Primary Industry
70
as the integral element in this strategy to strengthen its manufacturing 500
60
sector. The producers services logistic, financial, trading, investment, 400 50
and management services that Hong Kong provided were crucial to 300
40
this upgrading process. By introducing processing trade activities into 200

30
20
the Pearl River Delta region, the manufacturers of the region, regardless 100
10
of their Hong Kong, Taiwan or local investment background, faced keen
0 0
1978 1990 1995 2000 2005 2010 2012 1978 1990 1995 2000 2005 2010 2012
competition from global sources and were under tremendous pressure
to compete. Through combined efforts, the Pearl River Delta region
upgraded its manufacturing capabilities, and Hong Kong benefited from The increase of tertiary industry in the Pearl River Delta region is also
the enlarged hinterland, and transformed into the regional servicing hub largely to do with Hong Kong. Firstly, Hong Kong service providers have
in terms of financial, logistic, investment and management functions. extended their producers service networks to the Pearl River Delta
region, particularly logistic and transportation functions. Well-known
Table 2-1: Gross Domestic Product for the Pearl River Delta Region, 1978-201210
projects include Hopewells highway investment linking Guangzhou and
Value (US$ billion) Composition of GDP
Shenzhen, and Hutchisons container terminal investment in Shenzhen
Primary Secondary Tertiary Primary Secondary Tertiary
Total
Industry Industry Industry Industry Industry Industry
and the region. In no time, Hong Kong consumer services providers
1978 11 11.0 3.3 5.2 2.6 29.8% 46.6% 23.6% followed in the footsteps of companies such as Jardines, which had
1990 21.1 3.2 9.2 8.6 15.3% 43.9% 40.9% retail activities in Guangzhou, Hong Kong-based property developers
1995 48.8 4.1 23.8 20.9 8.5% 48.7% 42.8% with real estate investments, and the many multinational groups with
2000 101.7 5.5 48.4 47.8 5.4% 47.6% 47.0% five-star hotel investments across the Pearl River Delta region via their
2005 223.2 6.8 113.1 103.2 3.1% 50.7% 46.3% Hong Kong branches.
2010 556.5 12.0 270.5 274.0 2.1% 48.6% 49.2%
2012 756.9 15.6 349.9 391.5 2.1% 46.2% 51.7%
Source: Guangdong Statistical Yearbook 2013. 2.2. A Journey of Economic Transformation

After 20 years of economic development, the Pearl River Delta region
10
Exchange Rate: 1978: US$1=RMB1.68; 1990: US$1=RMB4.7832; 1995: US$1=RMB8.3510; 2000: US$1=RMB8.2784; 2005:
US$1=RMB8.1917; 2010: US$1=RMB6.7695; 2012: US$1=RMB6.3125. This set of exchange rates (period average) is had completed its first stage of capital accumulation and possessed
provided by the China Statistical Yearbook 2013. The GDP figures in this table are slightly different from Table 1-7
a sound industrial foundation. This being so, in 2000 the Guangdong
due to the different exchange rates and calculation approach adopted to estimate Chinas GDP. The differences are
generally between 1 to 3 per cent, except for the year 1990 when the RMB exchange rate was volatile, and due to Provincial Government decided to aim for another stage of economic
Mainland China adopting a dual-track scheme on exchange rates around that period.
transformation, which has resulted in a shift in the regional development
11
This set of GDP values was for Guangdong Province in 1978, instead of the PRDs regional GDP. In view that PRD cities
were the most important economic players for Guangdong Province in the 1970s, the provincial GDP composition
was largely in line with the regional GDP structure.
34 35
model, with sizeable consequences on the Greater Pearl River Delta 10th Guangdong Province Five-Year Plan (2001-2005)
region as a whole.
When the Guangdong Provincial Government devised its 10th Provincial
Despite the development of the Pearl River Delta region being largely Five-Year Plan (2001-2005) in 2000, China was already close to its World
policy driven, the highly marketised degree of the regional economic Trade Organization accession. Guangdong Province felt immense
structure has led to a strong connection between policy initiatives and pressure to keep its industries strong, fearing potential competition
market changes, particularly international changes. from a variety of sources in the post-WTO era. The development of Nine
Major Industries became the key theme for economic transformation
2.2.1. The 10th to 12th Guangdong Province Five-Year Plans in Guangdong Province. The nine industries categories were further
divided into three major categories, and Guangdong Province attached
In Mainland China, the Five-Year Plan (FYP) is the most important
strategic importance to the Three Major Emerging Industries and Three
policy platform for Chinese government at various levels to highlight
Major Potential Industries. The first category related to electronic and
their development intentions, and to allocate development resources
information technologies, while the second involved the automotive
economically, politically, and socially. The Guangdong Provincial
and pharmaceuticals industries. Both categories were recognised
Government made substantial shifts in its policy orientation over the
as high-technology industries under Organisation for Economic Co-
three consecutive five-year plans from 2001 to 2015.
Operation and Development (OECD) guidelines. Guangdong Province
Table 2-2: Policy Orientations of the Pearl River Delta Region for 2001-2015
also prioritised the initiative of encouraging indigenous innovation.
10th Five-Year Plan 11th Five-Year Plan 12th Five-Year Plan The Pearl River Delta regions governments devoted their full attention
(2001-05) (2006-10) (2011-15)
to development within their jurisdiction, and massive infrastructure
Background Chinas WTO accession Chinas huge foreign Global financial crisis projects such as container terminals and highways were implemented.
reserves
Economic Upgrading Transformation Transformation and The Pan-Pearl River Delta (Pan-PRD) cooperation has been a key
Strategy Diversification
Manufacturing-led Manufacturing-led regional cooperation project that Guangdong Province proposed and
strategy: A move strategy: Developing Service-led strategy:
from labour intensive technology and capital Developing modern
has driven since its 2003 inception. The Pan-PRD covers nine provinces
processing to the Nine intensive industries services sector and two Special Administrative Regions in southern China including:
Industries
Guangdong, Fujian, Jiangxi, Hunan, Guangxi, Hainan, Sichuan, Guizhou,
Regional Pearl River Delta Pan-Pearl River Delta Integration of the
Yunnan, Hong Kong, and Macao. In 2012, it constituted 35 percent of
Strategy development Cooperation Greater Pearl River
Delta region the national population, and 33 percent of national GDP. The rationale
Key Container terminals, High-speed intercity Regional and cross- behind Guangdong Province driving the regional initiative is to foster
Transportation highways railways and airports boundary railway economic development in a larger regional area.
Projects networks and bridges
36 37
Figure 2-1: The Pan-Pearl River Delta Region backing to technological-based industries with a view to transforming
the Pearl River Delta into a high-technology exporting region within five
to 10 years.
The most important guiding principles of Guangdong Provinces 11th

Sichuan Five-Year Plan were the development priorities outlined in the National
11th Five-Year Plan. One of its most striking features was to diversify the
development thrust from the previous export-driven model towards
Jiangxi
Hunan balanced market development. This was done by incorporating the
Guizhou development of the domestic market into top policy priority, which was
Fujian
Yunnan
a first since the countrys economic reform.
Guangxi Guangdong Due to heavy domestic currency pressure exerted by the Mainlands
Hong Kong huge foreign reserves (US$818 billion in 2005), processing trade, which
Macao contributed the largest trade surplus to Mainland China, was no longer
unreservedly favoured by the Central Government. Indeed, as a measure
Hainan to keep its foreign reserves at a reasonable level, the Central Government
decided to tighten its grip on processing trade. First, it reduced or
removed preferential measures to processing trade manufacturers, and
11th Guangdong Province Five-Year Plan (2006-2010)
then it encouraged them to relocate from the wealthy coastal region to
By 2006, the secondary sector of the Pearl River Delta region had reached the less-developed inland region, including the Pan-PRD region. Last but
a peak at 51.4 percent. The gross industrial output of the electronics not least, the Central Government put into force the Labour Contract Law,
and the information technology industry, electrical machinery and and urged local governments to annually review the minimum wage. By
special-purpose equipment industry, both of which fall under Emerging exerting cost pressure on processing manufacturers, Mainland Chinese
Industries, and motor vehicles/motorcycles industry under Potential authorities aimed to assist and drive low value-added manufacturers
Industries, rapidly rose from 31.5 percent of the provincial industrial share towards industrial transformation.
in 2000 to 40.1 percent in 2006. At the same time, much agricultural land
was converted into industrial areas, and land resources emerged as a key The Central Government also prioritised the development of an express
hurdle restraining the Pearl River Delta region from further industrial railway and intercity network as a key national development project
expansion. When the Guangdong Provincial Government devised its that is expected to fundamentally change the spatial structure of
11th Provincial Five-Year Plan (2006-2010), the government decided to national development, and attempt to avoid the potential problems of
deepen its economic transformation. Encouraged by the remarkable excessive highway development. Of all the express railway projects, the
progress resulting from the industrial upgrading programmes of the Guangzhou-Shenzhen-Hong Kong Express Rail Link to be completed by
previous Five-Year Plan, the Guangdong Government decided to give full 2015 is iconic to the Greater Pearl River Delta region.
38 39
The new policy orientation set by both national and Guangdong can rest. These aspects further accelerate the building of a world-class
governments in the 11th Five-Year Plan, marked the 2006 to 2010 metropolis in the Greater Pearl River Delta region, re-shaping the entire
period as a turning point in the development of the Greater Pearl River region in a holistic manner.
Delta region.
2.2.2. Labour Issues in the Pearl River Delta Region
12th Guangdong Province Five-Year Plan (2011-2015)
To the surprise of Mainland Chinese governments and Pearl River
Largely due to the global financial crisis, the Pearl River Delta region Delta manufacturers, labour shortages hit the Pearl River Delta regions
didnt turn out as envisaged in the 11th FYP, with the unfavourable manufacturing sector hard in 2003, making labour issues a challenge
global business environment and sluggish global exporting markets for the Greater Pearl River Delta region for the first time since economic
posing a huge challenge to the export-oriented manufacturing sector. reform. According to various researchers, many migrant workers were
The Guangdong Provincial Government put aside the manufacturing- reportedly dissatisfied with salary levels, and were less willing to work
led development concept Nine Major Industries, replacing it with a in the manufacturing sector. To counter this, the Mainland authorities
services-led Modern Services Sector, under the initiative of establishing launched two important labour-related policies, which greatly impacted
a Modern Industrial System. In 2012, the tertiary industry accounted for the countrys labour competitiveness.
more than half of regional GDP, with a growth rate that surpassed that
When the Labour Contract Law was first implemented in 2008,
of the industrial sector in the previous two years. By consolidating the
enterprises in the Pearl River Delta region expressed strong concerns
economic performances of Hong Kong and Macao with that of the Pearl
that it would not only lead to higher labour costs but also give rise to
River Delta region, about 60 to 63 percent of the combined GDP for the
employer-employee disputes. Responding to this, in December 2012 the
Greater Pearl River Delta region has been derived from the service sector
Standing Committee of Chinas National Peoples Congress adopted the
in the last five years. Developing the domestic market has been another
Decision on Revising the Labour Contract Law of the Peoples Republic of
policy highlight. It is also the extension of the RMB4 trillion stimulus
China to tackle legal loopholes, and seek a better balance between the
package (US$580 billion) that was launched in 2009.
interests of contractual parties.
The Greater Pearl River Delta integration is a key policy initiative of
After the US adopted quantitative easing as a key initiative to tackle its
Guangdong Provinces 12th Five-Year Plan. By re-strengthening the regional
economic downturn and high local unemployment, Mainland China
ties of the three jurisdictions, Hong Kong and Macao are (and will continue
experienced imported inflation which cast heavy shadows on the
into the future) energising regional development and capitalising on the
quality of living of its factory workers. To compensate for their loss of
emerging opportunities of new development strategies.
consumption power, the Mainland authorities frequently reviewed
These new movements indicate a new development era for the the minimum wage level, keeping it on a par with the domestic rate
Greater Pearl River Delta region. The service sector is positioned as the of inflation. Shenzhen provides a worthwhile example its minimum
future business sector, while the domestic market has become a new monthly wage surged from RMB690 (US$87) in 2006 to RMB1,600
economic foundation on which the Greater Pearl River Delta companies (US$254) in 2013. Given the combined impact of renminbi appreciation
40 41
and increasing labour costs, the Pearl River Delta region is now no Table 2-3 : Selected Major Infrastructure Projects in the Greater Pearl River Delta Region
longer competitive enough to support labour-intensive manufacturing Connectivity Infrastructure Selected Major Projects under Construction/Planning
projects. However, if enterprises were to look at the same situation Within the H igh-speed railways to Nanning, Guiyang, Xiamen and
from a market perspective, higher employee income actually means Pearl River Maoming
Delta region I ntercity railways linking the cities and major towns in
higher consumption power, which could result in a market boom in the and Guangdong Railways
the Pearl River Delta region
Mainlands retail sector. Province
Metros or urban transits in Guangzhou, Shenzhen and
Dongguan
The new developments between 2001 and 2010, from both policy 1 ,110 km of national network and 3,410 km of provincial
Expressways
and market perspectives, converted the strength of the Greater network in the 12th Five-Year Plan Period
Pearl River Delta region from PRD Manufacturing to PRD Services, Cross-boundary Guangzhou-Shenzhen-Hong Kong Express Rail Link
Railways
links in the Hong Kong-Shenzhen Western Express Line
and enlarged its market coverage from an export market to domestic Greater Pearl
market as well. This signified a new development era in the Greater River Delta Hong Kong-Zhuhai-Macao Bridge
Expressways
region Liantang/Heung Yuen Wai Boundary Control Point
Pearl River Delta region.
International T he third, fourth, and fifth runways of Guangzhou
and external Baiyun International Airport and its neighbouring
connectivity Airport economic zone
2.3. Infrastructure and Regional Connectivity development T he third runway of Hong Kong International Airport
T he third runway of Shenzhen Baoan International
To achieve their new development objectives, the Guangdong Province Airport
and the Pearl River Delta regional governments launched a series of Phase three of Nansha Port in Guangzhou
Container
regional policies and projects, such as massive construction of regional terminals
T he container ferry in Yantian Port and phase two of
Dachanwan Port in Shenzhen
infrastructure to improve regional connectivity. This was to re-define
economic space and spatial layout, and further encourage the integration 2.3.1. Railways
of the Greater Pearl River Delta region.
Due to its unique economic and technical advantages, the Guangdong
The construction of infrastructure projects aims to improve regional Provincial Government chose railways to be the backbone to facilitate
connectivity on three levels: 1) To improve connectivity within the integration of the Greater Pearl River Delta region. Compared with other
Pearl River Delta region and other parts of Guangdong Province. 2) transportation modes, railways can handle a large amount of passengers
To streamline and enhance cross-boundary links in the Greater Pearl with much less energy consumption and pollutants emissions. In
River Delta region, especially links between the Pearl River Delta addition, railways occupy less space meaning that scarce land resources
region and Hong Kong and Macao, and 3) To expand the connectivity can be saved for other more valuable uses. Sustainable development
of the Greater Pearl River Delta region to international economies and of the region has become policy makers major concern. As such, much
other Mainland China regions. emphasis is being put on the construction of a railway network to
increase its share among transport modalities and support the efficient
transportation of people which is required in the integration process.
42 43
This being so, an intercity railway network with a total length of 1,890 Figure 2-2: Greater Pearl River Delta Region Intercity Railway Network
kilometres will be constructed to satisfy the anticipated demand

for passenger transportation over the coming decades due to the
Qingyuan Heyuan
integration of cities in the Greater Pearl River Delta region. Through Guangzhou-
Dongguan-Shenzhen
the provision of frequent train departures, The Plan on the Intercity Guangzhou-Foshan Extension
Loop
Railway of the Pearl River Delta Region (2009 amended) envisages the Guangzhou-
Dongguan-Shenzhen
Guangzhou
Intercity
formation of a rapid transit system in the shape of three circular and Guangzhou-Foshan Dongguan Huizhou
Metro
eight outbound routes, connecting the nine municipals in the region
Zhaoqing Foshan
with Hong Kong and Macao, as well as the other part of Guangdong Yunfu
Shanwei
Province. Railway access to the eastern and western wings of Guangzhou-Zhuhai

Intercity
Jiangmen Shenzhen
Guangdong Province, as well as its northern mountainous areas, will
Zhongshan
be considered before 2030, if deemed necessary. Hong Kong Legend
Zhuhai Intercity railway completed /
Hong Kong-Shenzhen in operation
WEL
An average distance of about five to 10 kilometres between stations on Macao
Intercity railway under
construction
various routes will make the railway network exceptionally adaptable New projects to be initiated
before the end of 2015
Intercity railway under
to short- and mid-haul commuting in the densely populated region, planning / consideration
while its extensive coverage of major airports and public transport

Source: B ased on the Plan on the Development of Integrated Transportation System of Guangdong
hubs in the region is planned to establish its unique role in facilitating
Province in the Twelfth Five-Year Plan Period.
intermodal transportation.
High-speed railways are mainly assigned for the purpose of cross-
With Guangzhou as the core, 23 railways with a maximum speed of province corridors, and also to meet certain intraregional passenger
140 kilometres per hour or 200 kilometres per hour, will transform traffic needs. In the most recent plan, four state-of-the-art lines with
the region into a one-hour commuting circle. According to The Plan two different speeds of 200 to 250 kilometres per hour and 300 to 350
on the Development of Integrated Transportation System of Guangdong kilometres per hour were proposed to radiate from Guangzhou South
Province in the Twelfth Five-Year Plan Period, the Guangdong Provincial Station at Panyu, which is the central position of the integrating cities
Government is striving for the completion of 16 railways with a of Guangzhou and Foshan. The idea is that two rail lines will stretch
combined length of 1,480 kilometres, by the end of 2020. Meanwhile, along the eastern and western coasts of the province linked by the new
some 700 kilometres of this is planned to be in operation by 2015. To Humen-Nansha Bridge at the Pearl River Estuary. In August 2013, the
increase efficiency in the use of resources, special attention is being Guangdong Provincial Government announced its ambitions to provide
paid to specifications related to the interconnectivity of different all municipalities under its jurisdiction (21 municipalities) with access to
railway networks as preparation for the future, for example, through high-speed passenger services by 2020.
operation between the newly built intercity railways and conventional
or high-speed lines. The coverage of railway services will be extended into a network of nodes
in the congested urban districts of Guangzhou and Shenzhen via the fast
44 45
growing metro systems in these two cores of the Greater Pearl River Delta
region, and by urban transit to the scattered towns in Dongguan.
The Plan on the Development of Integrated Transportation System of

Guangdong Province in the Twelfth Five-Year Plan Period shows that a
series of high-speed trunk lines equivalent to 1,087 kilometres in length
will be ready for service by 2015.
To further strengthen the function of the high-speed network, a

connection between Guangzhou-Shanwei Railway and Xiamen-
Shenzhen Railway is in the planning stages, and may be completed
during the 13th Five-Year Plan (2016-2020).
Figure 2-3: Outbound High-Speed Railways of the Greater Pearl River Delta City-Region
Legend
Pan-PRD
Beijing
Outer Guangdong
Province
GPRD
Major City
Wuhan
GPRD Origin City
Chongqing As the capital of Guangdong Province, it is planned that the largest

Shanghai
South Asia, metro network in the Greater Pearl River Delta region be constructed
Guiyang Changsha
Middle East
Kunming Guilin
Hezhou
in Guangzhou before 2040. The aim of the 20-line metro network is to
enhance the central districts transit service and their connections to
Wuzhou
Shaoguan Hangzhou
South East Nanning the periphery districts of Luogang, Panyu, Nansha, and Huadu, as well
Guangdong
Asia
Guigang Yunfu
Province
as to the districts of Conghua and Zengcheng. By 2020, 16 alignments are
Zhaoqing
GPRD expected to be in service to ensure that residents inside the ring road, and
Guangzhou/
Foshan those at the sub-centres, will be able to reach the city centre within 30 and
Xiamen
Shantou 60 minutes, respectively. Thirteen routes with a combined length of 228.9
Huizhou
kilometres, at a cost of 124.1 billion yuan, have already been approved
Hainan Western Macao/ Hong Kong/
Guangdong Zhuhai Shenzhen by the National Development and Reform Commission. Meanwhile,
the operating length of the Guangzhou Metro will be expanded to
Source: B ased on Construction Department of Guangdong Provincial Government, Development
Bureau of the Hong Kong SAR Government, Secretariat for Transport and Public Works of 520.5 kilometres after completion of the above projects and following
Macao SAR Government, Planning Study on the Co-ordinated Development of the Greater the implementation of The Short-Term Planning on the Construction of
Pearl River Delta Townships, 2009, p.83
Guangzhou Urban Transit (2012-2018).
46 47
Table 2-4: Approved Construction Projects of Guangzhou Metro (2012-2018) and

Shenzhen Metro (2011-2016)
Guangzhou Metro
Route No. Alignment Length (km) Period
8 Baiyunhu-Wenhua Gongyuan 15.0 2012-2015
13 Yuzhu-Xiangjingling (First Section) 28.3 2012-2016
14 Jiahe Wanggang-Jiekou (Phase One) 51.2 2013-2017
Tianhe Gongyuan-Zengcheng
21 58.7 2013-2017
Guangchang
Jinzhou-Nansha Keyungang
4 11.7 2013-2017
(Southward Extension)
Guangzhou Station-Guangzhou East
11 42.4 2014-2018
Station-Guangzhou Station
Subject to the development
14 Xinhe-Zhenlong (Branch Line) 21.6
progress along the alignment
Shenzhen Metro
11 Futian Central-Songgang 51.2
9 Xiangxicun-Shenzhenwan 25.0 To be completed in or
7 Taian-Dongwuyuan 29.8 before 2016
6 Shenzhen North Station-Songgang 37.2

Subject to the progress of
8 Guomao-Xiaomeisha 26.4 Intercity railways are integrating with national railways (including the
the initial work
state-dominated joint-venture high-speed railways) and metros in the
Source: National Development and Reform Commission.
Greater Pearl River Delta region to form one of the most comprehensive
The scale of the Shenzhen Metro network will be second only to that multi-layer railway networks in the world. According to The Plan on the
of Guangzhou. Indeed, the Shenzhen government has made known its Intercity Railway of the Pearl River Delta Region (2009, amended), the
aspirations to build a 720-kilometre long network consisting of 20 metros density of railways in the region will significantly increase from the 1.35
in the Railway Planning of Shenzhen City (Amended). Five projects have kilometres/100 square kilometres in 2008 to 11.8 kilometres/100 square
already been listed in the Short-Term Planning on Construction of Urban kilometres, which is comparable to 13.4 kilometres/100 square kilometres
Transit of Shenzhen City (2011-2016). Their completion, in the final year in the metropolitan area of Paris, France. The enhanced access to railway
of the plan, implies that the total operation network of the citys metro services, and its growing advantages in total travelling time, will redefine
system will be 10 metro lines and an operating length of 348 kilometres. the economic space of the region.
Dongguan is also planning to establish a rail transit network consisting Indeed, the whole region is becoming a one-hour commuting area for
of four routes and a length of about 194 kilometres. Currently, Line R2 is local residents, while day-return trips for a greater number of travellers
under construction. are now possible from the major cities of neighbouring provinces. As a
48 49
result, huge intraregional and interregional flows of passengers pass
Source: B ased on Highway Department of HKSAR Government, Hong Kong-Zhuhai-Macao Bridge and Related Hong Kong Projects-Newsletter
Expressway
Shenshan
through the railways each day, concentrating at the nodes which enjoy
SHANTOU
HONG KONG
Chaoguan Expressway
excellent environment and comprehensive urban functions.
Road under Planning/ Construction

YANTIAN
INTERNATIONLAL
Proposed route, about 40 km long,

about 45-minute travelling time
HONG KONG
AIRPORT
2.3.2. Expressways
Expressway
4-hour travelling time
SHENZHEN
Existing route, about
Jihe
200 km long, about
The Guangdong Provincial Government is also continuing to construct a
Expressway
Guanghui
Existing Road
large number of expressways. The expansion of the expressway network
Zenguanshen
Expressway
DONGGUAN
is not only to enhance internal links within the Greater Pearl River Delta hen
ngs
G u a o a st a l y
C swa
res
region, but also to improve Exp
Expressway
Changhu
HZMB
connectivity between the
Expressway
Guangshen
Greater Pearl River Delta
Humen Bridge
Highway
Jingzhu
region and other parts of
MACAO
Figure 2-4: Expressway Development in the Greater Pearl River Delta Region
To BEIJING
Guangdong Province. This
ZHUHAI
ZHONGSHAN
is with the aim of balanced
GUANGZHGOU
development purposes.
Guangzhu West
Expressways provide an
Expressway
Jiangzhong
Highway
alternative to daily traffic
Expressway
Jiangzhu
ay ta
sw el
and play an irreplaceable
es r D
JIANGMEN
p ve
Ex Ri
r
role in supporting freight
ng arl
R i Pe
y
in
wa
s
ay
services under current development conditions. The Plan on the
igh
sw a
res elt
H
p D
Ex ver
Development of Integrated Transportation System of Guangdong
tal
ng R i
-ri arl
Expressway
as
r
e e
ut P
o
Xintai
Province in the Twelfth Five-Year Plan Period shows that Guangdong
nC
O in
sway
Guangwu
Highway
ter
wa
FOSHAN
aims to invest 294 billion yuan (US$47 billion) to build 1,661
Jiangluo Expres
es
res
W
xp E
kilometres of expressways. According to the Framework of Fostering
an
ZHAOQING
zh
gm ay
ing
ng
w
the Construction of Major Infrastructure in the Province (2013-2015),
To ZHANJIANG
Gu ress
a
Gu
an
p
YANGJIANG
Ex
Guangdong wishes to connect all its counties with expressways.
To WUZHOU,
GUANGXI
50 51
2.3.3. Airports
Following decades of development and expansion, major airports in the

Greater Pearl River Delta region generally show considerable growth in
the aviation market except from Macao International Airport, which
suffered from the financial crisis of 2008, the implementation of the
Three Direct Links in 2009, and fierce regional competition.
Hong Kong International Airport (HKIA) has long played the role of
strategic hub, providing access for the international network to the
Greater Pearl River Delta region. Today, HKIA continues to maintain
advantages in terms of internationalisation. Indeed, flights are operated
by over 100 airlines to about 140 foreign destinations, while the other two
largest airports of the region, Guangzhou Baiyun International Airport
and Shenzhen Baoan International Airport, have only 63 and nine
international routes operating, respectively.
It should be noted that Hong Kong International Airport is facing both
Table 2-5 : Passenger and Cargo Figures of the Five Major Airports opportunities and challenges from Mainland China. It is also facing
internal challenges in its expansion to deal with the gap between
Passengers (million)
handling capacity and growing traffic demands. The development of a
Year Hong Kong Macao Guangzhou Shenzhen Zhuhai
third runway is being discussed in Hong Kong, despite concerns about its
2008 48.59 5.10 33.44 21.40 1.12
2009 46.17 4.25 37.05 24.49 1.39 economic feasibility and potential environmental impact.
2010 50.92 4.08 40.98 26.71 1.82
At the same time, the airports of Guangzhou and Shenzhen are fostering
2011 53.90 4.05 45.04 28.25 1.80
expansion projects of their own. Guangzhou Baiyun International
2012 56.47 4.49 48.31 29.57 2.09
Average Annual
Airport plans to develop five runways, with its third runway expected
3.83% -3.12% 9.64% 8.42% 16.84%
Growth (2008-2012) to open in October 2014. Perhaps more importantly, an airport
economic zone occupying about six percent area of the city (about 439
Freight (million tonnes)
square kilometres) is to be developed around the Guangzhou airport.
2008 3.63 0.17 0.69 0.60 0.01
2009 3.35 0.05 0.96 0.61 0.01
Multiple projects including: the airport companys headquarters, the
2010 4.13 0.05 1.14 0.81 0.02 China Southern Airlines base, the river bank commercial area, aviation
2011 3.94 0.04 1.18 0.83 0.02 manufacturing and repair centres, exhibition centres, and bonded
2012 4.03 0.03 1.25 0.85 0.02 areas will be distributed within a 10-kilometres radius from the
Average Annual
2.64% -36.20% 16.16% 9.34% 9.93% airports core. The aerotropolis is positioned to become a growth pole
Growth (2008-2012)
in southern China, one of the logistics centres of Asia, and a globally
Source: Civil Aviation Administration of China; Hong Kong International Airport; Macau International
Airport.
integrated aviation hub.
52 53
The plans for Shenzhen airport are relatively less ambitious than that the Greater Pearl River Delta region among ports, which will bring about
of Guangzhou. The T3 terminal has just been inaugurated, and the change in the relative position of container water transport.
plans for the third runway and T4 terminal will, in 2040, theoretically,
In terms of container handling, Shenzhen rather than Guangzhou is
satisfy demand. The feasibility of building a second airport in eastern
leading the Pearl River Delta region. However, even though Shenzhen
Shenzhen is being explored, with an aim to facilitate general rather than
port ranked fourth busiest container terminal in the world in 2012, and
civil aviation.
its lag behind Hong Kong port is minimal, Shenzhen is continuing to
Figure 2-5 : Airports in the Greater Pearl River Delta City Region develop its container ferry in Yantian port in the eastern wing of the city,
and phase two of Dachanwan port in its western wing.
Meanwhile, Guangzhou will invest more than US$3.17 billion (RMB 20

billion) on phase three of the development of Nansha port, as well as
Guangzhou Baiyun
International Airport the construction of ferries for grains delivery and general navigation to
strengthen the citys logistic functions, and increase its attractiveness for
inland sources of goods.
Zhuhai seems to have adopted a strategy of differentiation, planning

Shenzhen Baoan
International Airport
to develop its Gaolan port into a regional logistic centre with functions
such as a world-class navigation equipment manufacturing base, an
Hong Kong International Airport international base for clean energy and a national petrochemical base.
Macao International Airport
Table 2-6: Distribution of Container Terminals in the Greater Pearl River Delta City-Region
Zhuhai Airport
Major Airport Total Volume of Containers Handled (million TEU)
Subsidiary Airport
Item 2000 2005 2010 2011 2012
Coastal Ports in Guangdong Province 6.55 23.78 38.68 41.03 42.56

Bureau of Hong Kong SAR Government, Secretariat for Transport and Public Works of Macao Guangzhou Port 1.43 4.68 12.70 14.25 14.55
SAR Government, Planning Study on the Co-ordinated Development of the Greater Pearl Shenzhen Port 3.96 16.20 22.51 22.57 22.94
River Delta Townships, 2009, p.80
Total Volume of Freight Handled (million tonnes)

2.3.4. Ports Coastal Ports in Guangdong Province 255.0 592.7 1,053.0 1,144.6 1,212.7
Guangzhou Port 111.3 250.4 425.3 431.5 435.2

A new system of major ports, branch ports and feeder ports is emerging
Shenzhen Port 42.2 153.5 221.0 223.3 228.1
in the Greater Pearl River Delta region as a result of recent decades of
Source: Guangdong Statistical Yearbook 2013.
economic transformation and the organisation of regional production in
various cities. Economic integration is leading to fiercer competition in
54 55
Figure 2-6: Ports in the Greater Pearl River Delta City Region the Hong Kong International Airport and Baoan International Airport in
Shenzhen.
Figure 2-7: C ross-Boundary Transportation Facilities in the Greater Pearl River Delta
City Region
Me
igu
an
dge
en Bri
Ex
Hu m
Foshan
pre
Dongguan
ssw
it
Tra ai
Zhaoqing
ns
Huizhou
ay
p id u h
y
Ra Z h
Shenzhen wa r
ss do
it y o u -
International pre rri
Ex Co
erc zh
e
Airport Ji - H rn
Guangzhou Nansha
I nt u a n g
ste
Huizhou Daya Bay Jiangmen-Z Gu SHENZHEN Ea
zh a n g
G
hongshan
Ho hen Cor
e n zh
W
Expressw
Ex ou-
S rn
ng zh rid
ay
es
Shenzhen pr Sh
te
Ko en or
es
sw en
Shenzhen Yantian
ng
Zhongshan West ZHONGSHAN ay
-
Jiangmen
Hong Kong
Ho
Gu Kon
Ta
ng
an
ia
idge
Hon tern Exp

ilway Br
Wes
Rapid Ra
g z h Pa s s
oE
Macao Coastal
g Ko
xp
ou
g
res
-Sh nger
ng-S ess Lin
sw
en
Zhuhai
e
Xiangzhou
ay
hen
zh e L i n e
r
Port District
HONG KONG
n-
zh e n
GPRD Port Hong Kong
International
-
Hung Hom Station
e
GPRD Inland River Terminal ZHUHAI Airport
e
Bridg
acau
hai-M
-Zhu
Kong
Source: Construction Department of Guangdong Provincial Government, Development Bureau Hong
Macao International Legend
of Hong Kong SAR Government, Secretariat for Transport and Public Works of Macao SAR Airport
Airport Expressway
Government, Planning Study on the Co-ordinated Development of the Greater Pearl River MACAO
Port Railway
Delta Townships, 2009, p.81. Hengqin
Railway Staion Intercity Transit
Existing Railway
Sanzhao Airport Boundary
2.3.5. Cross-Border Infrastructure Development between Hong Kong Control Point Existing Transit Line
and Pearl River Delta Cities

Source: Construction Department of Guangdong Provincial Government, Development Bureau of the
Hong Kong will improve its connection to the Greater Pearl River Delta Hong Kong SAR Government, Secretariat for Transport and Public Works of the Macao SAR
Government, Planning Study on the Co-ordinated Development of the Greater Pearl River
region by means of a series of new cross-boundary infrastructures. One Delta Townships, 2009, p.97.
of the most important infrastructures should be the 26-kilometre long
The Hong Kong-Zhuhai-Macao Bridge, to be completed one year after the
Hong Kong section of the Guangzhou-Shenzhen-Hong Kong Express
express rail link, is another important land infrastructure that will greatly
Rail Link. Upon its 2015 inauguration, it will take 48 minutes to travel
expand Hong Kongs connectivity to the western part of the Greater Pearl
from Guangzhou to Hong Kongs West Kowloon Station by this new high-
River Delta region. The bridge head is to be located on an artificial island
speed link, rather than the current one hour 55 minutes by ordinary rail.
to the northeast of Hong Kong International Airport, while the bridge
This decrease in travelling time will up Hong Kongs competitiveness as
will cut the travelling time between Zhuhai to Hong Kong International
an access point for global business opportunities and an international
Airport by more than 80 percent to about 45 minutes. Drivers of vehicles
transit hub, given its superior world city functions and international
using the bridge to travel to the Kwai Chung Container Port will also save
network. In addition, plans are underway for the 42-kilometre long rail
more than 60 percent of their travelling time.
link, the Hong Kong-Shenzhen Western Express Line, which will connect
56 57
The Liantang/Heung Yuen Wai Boundary Control Point will be The position of Hong Kong as an important entrepot in the world is
constructed to establish a new traffic corridor linking the eastern parts currently maintained by frequent ship departures, and advantages
of both Hong Kong and Shenzhen. as a free port with zero tariffs. Although in recent years there have not
been any major expansion projects, Hong Kong continues to act as the
Upon completion of the above cross-boundary projects, the travelling
Greater Pearl River Delta regions efficient gateway for shipping goods to
time between Hong Kong and other Pearl River Delta cities will be
western countries.
significantly reduced.
In terms of container and aviation handling, Hong Kong is not only
Table 2-7: Travelling Time between Hong Kong and Other Pearl River Delta Cities
maintaining its leading position in the Greater Pearl River region,
Current 2016 but also globally. Despite Guangzhou and Shenzhen swiftly closing
Via Train Via Express and Intercity Railway
their development gap behind Hong Kong, Hong Kong still excels in
Guangzhou 1 hour 55 minutes 48 minutes
many operating parameters, demonstrating a profound function as
Shenzhen 45 minutes 14 minutes (Futian) ; 23 minutes (Longhua)
Dongguan 1 hour 10 minutes 33 minutes the link between global economies and Mainland China, as well as an
Huizhou - 1 hour international transportation hub in the Greater Pearl River Delta region.
Foshan 2 hours 55 minutes 1 hour 10 minutes
Zhaoqing 4 hours - Table 2-8: Global Ranking in 2012: Top-20 Busiest Container Terminals and Airports
Via Road Via Hong Kong-Zhuhai-Macao Bridge Container Terminal Aviation
Guangzhou 3 hours - Rank Through-

Passengers
Throughput
Port put (million Airport Airport (million
Shenzhen 1 hour - (million)
TEU) tonnes)
Dongguan 2 hours - Hong Kong,
1 Shanghai, China 32.53 Atlanta, US 95.5 4.06
Huizhou 2 hours 30 minutes - China
Foshan 3 hours 30 minutes - Beijing Capital,

2 Singapore 31.65 81.9 Memphis , US 4.02
China
Zhaoqing 4 hours 30 minutes -
Shanghai
Zhongshan 3 hours 1 hour 45 minutes London
3 Hong Kong, China 23.10 70.0 Pudong, 2.94
Heathrow, UK
Jiangmen 3 hours 30 minutes 2 hours 15 minutes China
Tokyo Haneda, Incheon,

Zhuhai 4 hours 45 minutes 4 Shenzhen, China 22.94 66.8 2.46
Japan South Korea
Macao 4 hours 30 minutes 45 minutes
Busan, Anchorage,
5 17.04 Chicago, US 66.6 2.45
Korea, Rep. US
Via Ferry
Ningbo-Zhoushan,
Shenzhen 1 hour - 6 16.83 Los Angeles, US 63.7 Dubai, UAE 2.27
China
Shenzhen Airport 40 minutes -
7 Guangzhou, China 14.74 Paris, France 61.6 Louisville, US 2.17
Dongguan 1 hour 10 minutes -
Dallas/Fort
Guangzhou East 1 hour 45 minutes - 8 Qingdao, China 14.50 58.6 Paris, France 2.15
Worth, US
Zhuhai 1 hour 10 minutes - Jakarta, Frankfurt,
9 Dubai, UAE 13.30 57.8 2.07
Indonesia Germany
Jiangmen 2 hours 30 minutes -
Tokyo Narita,
Zhongshan 1 hour 30 minutes - 10 Tianjin, China 12.30 Dubai, UAE 57.7 2.01
Japan
Zhaoqing 3 hours 45 minutes -
Macao 55 minutes -
58 59
Container Terminal Aviation Commission. By engaging planning institutions at Central Government

Through- Throughput
Rank
Port put (million Airport
Passengers
Airport (million
level in devising policy, the Guangdong Provincial Government aimed to
(million)
TEU) tonnes) secure support from the Central Government to elevate the development
Rotterdam, Frankfurt,
11
Netherlands
11.87
Germany
57.5 Miami, US 1.93 of the Pearl River Delta region to the level of national strategy. Guangdong-
12
Port Kelang,
10.00
Hong Kong,
56.1 Singapore 1.84
Hong Kong-Macao cooperation was an important part of the Outline, and
Malaysia China
provided the Greater Pearl River Delta region with a new development turn.
Kaohsiung, Beijing
13 9.78 Denver, US 53.2 1.79
Taiwan, China Capital, China
Hamburg, Bangkok, Los Angeles, The Outline sets out a number of economic targets, such as the target
14 8.86 53.0 1.77
Germany Thailand US
for GDP per capita of the Pearl River Delta region to reach RMB135,000
Singapore, Taipei,
15 Antwerp, Belgium 8.64 51.2 1.58
Singapore Taiwan, China (US$21,400), and its services sectors to account for 60 percent of
16 Los Angeles, US 8.08
Amsterdam,
51.0
London
1.56 regional GDP by 2020. The Outline marks the first time that the Pearl
Netherlands Heathrow, UK
17 Dalian, China 8.06 New York, US 49.3 Chicago, US 1.51

River Delta region has officially aimed to become a service-oriented
Amsterdam,
economy. Referring to the cooperation between the Pearl River
Keihin ports, Guangzhou,
18 7.85 48.5 The 1.51
Japan China
Netherlands
Delta region, Hong Kong, and Macao, a number of programmes were
Tanjung Pelepas, Bangkok, launched on industrial transformation, services cooperation, and
19 7.70 Madrid, Spain 45.2 1.35
Malaysia Thailand
institutional setups between the Pearl River Delta region and the
20 Xiamen, China 7.20 Istanbul, Turkey 45.1 New York, US 1.28
two Special Administrative Regions in the form of Guangdong Early
Source: World Shipping Council, the Airport Council International.
and Pilot Implementation under the Closer Economic Partnership
Arrangement (CEPA). The uniqueness of the Outline is that it also covers
2.4. Urban Governance and Regional Integration major infrastructure projects between the three places, calls for the co-
building of a quality residential area in the Greater Pearl River Delta
Since 2008 and the introduction of various policy initiatives to the
region, and encourages collaboration in public service sectors such
Pearl River Delta region, regional integration has been a hot topic in the
as education, healthcare, social security, transport, environmental
Greater Pearl River Delta region, encouraging participation from Hong
protection and emergency management.
Kong and Macao.
Many initiatives stipulated in the Outline are reiterated in the 12th
2.4.1. Economic Integration National Five-Year Plan (2011-2015), and escalate the development of
the Greater Pearl River Delta region as part of national strategy.
The Outline of the Plan for the Reform and Development of the Pearl
River Delta (2008 2020) Guiding Opinions on Expediting Economic Integration in the Pearl River
In the first quarter of 2009, the State Council approved The Outline of Delta Region
the Plan for the Reform and Development of the Pearl River Delta (2008 to The Guiding Opinions on Expediting the Economic Integration in the
2020) (the Outline) formulated by the National Development and Reform Pearl River Delta Region (the Guiding Opinions) was announced in
60 61
2009, subsequent to the Outline. They were more focused than their Table 2-9: Indicators of Three Economic Zones in the Pearl River
predecessor on integration within the Pearl River Delta region. In Delta Region (2012)
addition, the concept of Three Economic Zones was proposed, which ( US$ billion)
replaced the earlier independent development of Nine Cities. Gross Domestic Product Investment
Total Retail International Foreign
Sales of Trade Capital
in Fixed
Consumer Actually
Guangzhou-Foshan-Zhaoqing, Shenzhen-Dongguan-Huizhou, and Total Primary Secondary Tertiary Assets Export Import
Goods Utilised
Zhuhai-Zhongshan-Jiangmen were categorised into three major Guangzhou-Foshan-Zhaoqing Economic Zone
economic zones, with the aim of promoting economic integration, joint Guangzhou 214.65 3.33 74.77 136.55 59.53 94.69 58.9 58.3 4.57
planning, public service sharing, and a harmonised intercity public Foshan 104.71 2.06 65.11 37.54 33.71 31.99 40.1 20.9 2.35
Zhaoqing 23.13 3.80 10.61 8.71 13.51 6.87 3.8 2.6 1.15
transport system. Despite its many challenges, the three major economic
342.50 9.19 150.50 182.81 106.76 133.55 102.8 81.8 8.07
zones concept is the foundation of the urban integration of Guangzhou
and Foshan, and one that greatly strengthens Guangzhous status as the Shenzhen-Dongguan-Huizhou Economic Zone
regional hub of the Pearl River Delta region. Shenzhen 205.15 0.16 90.93 114.22 36.66 63.51 271.4 195.4 5.23
Dongguan 79.37 0.32 37.70 41.50 18.69 21.46 85.1 59.5 3.37
Figure 2-8: Three Economic Zones for PRD Regional Integration Huizhou 37.54 1.90 21.86 13.78 19.15 11.95 29.2 20.3 1.73
322.06 2.38 150.50 169.50 74.50 96.91 385.7 275.2 10.33

To South Central China To Southeast Coastal China
Zhuhai-Jiangmen-Zhongshan Economic Zone
Zhuhai 23.76 0.63 12.36 10.93 12.48 10.06 21.6 24 1.45
Jiangmen 29.78 2.38 15.21 12.20 13.47 12.79 13 5.8 0.87
Zhongshan 38.65 0.95 21.39 16.32 14.15 12.82 24.6 8.9 0.80
92.20 3.96 48.95 39.45 40.10 35.67 59.2 38.7 3.12

To Southwest Guangzhou-Foshan-Zhaoqing
China Economic Zone
Source: Based on Guangdong Statistical Yearbook 2013.
Guangzhou Huizhou
Zhaoqing
Dongguan
Foshan 2.4.2. Spatial Coordination
Shenzhen-Dongguan-Huizhou
To Southeast
Economic Zone
Coastal China
Shenzhen
Jiangmen
Zhongshan Coordinated Development of the Greater Pearl River Delta Region
Zhuhai-Zhongshan-Jiangmen Hong Kong
Economic Zone Zhuhai
Legend To realise the full economic potential of the Greater Pearl River Delta
Macao Development Axis
region, the three jurisdictions (the Pearl River Delta, Hong Kong, and
Economic Zone
To Southwest
China To Overseas Markets City
Macao) decided to step up spatial coordination by conducting joint
Green Belt studies on regional planning and cross-boundary infrastructure links.
Source: Based on Planning for Urban-Rural Integration of the Pearl River Delta
The Planning Study on the Coordinated Development of the Greater Pearl
River Delta Township was the first planning exercise commissioned by
the governments of the three jurisdictions.
62 63
The key findings of the Study were released in October 2009, and Figure 2-10: A One-Hour Intercity Commuting Circle
addressed the policy objectives set out in The Outline of the Plan for
the Reform and Development of the Pearl River Delta (2008 2020). Its
findings can be read as a high-level strategic outline of recommendations
on key planning issues for the region, and a blueprint for key cross-
boundary infrastructure links. In the Outline, the spatial structure of the Huizhou
Guangzhou
Greater Pearl River Delta region was proposed in forms such as: City- Zhaoqing
Guangzhou/Foshan Metropolitan Area Dongguan
region; the intra-regional One-Hour Intercity Commuting Circle; and
Foshan
Multi-Tier Development Space linking the Greater Pearl River Delta to its
external regions. Most recommendations indicated have already been Zhongshan Shenzhen
implemented by the respective governments. Hong Kong/Shenzhen

Zhuhai Metropolitan Area
Jiangmen Hong Kong

Figure 2-9: Spatial Structure of the Greater Pearl River Delta City-Region Macao/Zhuhai Metropolitan Area
D Macao
n PR
Pa
D
PR
m
cu Legend
Cir
Bay Area One-hour Commuting Circle
City Node within Sub-region
One-hour Commuting Circle One-hour Commuting Circle

within Metropolitan Area within Bay Area
Central
Sub-region Guangzhou Huizhou
Zhaoqing
Guangzhou / Foshan Dongguan Eastern
Sub-region Bureau of the Hong Kong SAR Government, Secretariat for Transport and Public Works of the
Metropolitan
Foshan Area
Macao SAR Government, Planning Study on the Co-ordinated Development of the Greater
Pearl River Delta Townships, 2009, p.53.
Shenzhen
Zhongshan
Jiangmen
Hong Kong / Shenzhen Co-Building A Quality Living Area
Metropolitan Area
Western Sub-region Zhuhai
Hong Kong Pan-PRD and Major
Domestic and The Regional Cooperation Plan on Building a Quality Living Area was the
Macao / Zhuhai International Markets
Metropolitan Area
Circum-PRD
second joint study commissioned by Guangdong Province, Hong Kong,
Macao
Outer-PRD and Macao, in response to the proposals of The Outline of the Plan for
The Bay Area the Reform and Development of the Pearl River Delta (2008 2020). It
Legend was the first time that the three jurisdictions had applied the concept of
Three Major Metropolitan Areas Bay Area Integrated Centre sustainable development on regional development, and strived to find
Regional Development Axis Development Tier Specialized Centre
a balance between economic, social development, and environmental
Source: B ased on Construction Department of Guangdong Provincial Government, Development protection to transform the Greater Pearl River Delta region into a low-
Bureau of the Hong Kong SAR Government, Secretariat for Transport and Public Works of the carbon, high-technology, and low-pollution city cluster for quality living.
Macao SAR Government, Planning Study on the Co-ordinated Development of the Greater
Pearl River Delta Townships, 2009, p.44.
64 65
Issues of: enhancing environmental quality and ecology, promoting low- However, technological cooperation has not been limited to regional
carbon development, cross-boundary cultural exchange, education, level but has also taken place at municipal level with the aim of tapping
social welfare, food safety, and green transportation are stipulated in the the technical strength of each member city. In May 2007, Hong Kong
regional plan. cooperated with Shenzhen to launch the Shenzhen-Hong Kong
Innovation Circle. This scheme aims to consolidate the technological
2.4.3. Knowledge Collaboration between Hong Kong and the Pearl resources of both jurisdictions, and build on their complementary
River Delta Region strengths. Under the arrangement, four Hong Kong universities
established innovation centres in the Shenzhen Innovation Circle. In
The reunification of Hong Kong and Macao to China has enabled the
addition, many Shenzhen technological enterprises set up research
Greater Pearl River Delta region to develop new cooperation modes
centres in the Hong Kong Science Park to tap into Hong Kongs
with respect to technology and education. Research and tertiary
advantages of attracting international talent, its sound legal system and
institutions, technological enterprises, professionals, and experts
intellectual property rights, and to promote international technological
are highly encouraged to participate in the so-called knowledge
collaboration and international sales.
collaboration, which has received funding from the governments of all
three jurisdictions.
Education
Technology The Pearl River Delta regional governments are proactively seeking
education cooperation with Hong Kong institutes, and have received the
A technology cooperation between Guangdong Province and Hong
enthusiastic support of Hong Kongs public tertiary institutions.
Kong was first initiated in 2003 when the respective governments
established the Guangdong-Hong Kong Expert Group on Cooperation In 2005, a first tertiary education institution founded by a Mainland
in Innovation and Technology. Since then, both jurisdictions have and Hong Kong university the Beijing Normal University-Hong Kong
launched various projects to promote technological cooperation and Baptist University United International College (UIC) was founded in
the commercialisation of technology achievements, to enhance the Zhuhai. In 2007, The Hong Kong University of Science and Technology
productivity and competitiveness of enterprises in the Greater Pearl (HKUST) set up the HKUST Fok Ying Tung Graduate School in Nansha,
River Delta region. Guangzhou, to promote technology innovation and advancement
in the Pearl River Delta region through research and postgraduate
The Guangdong-Hong Kong Technology Cooperation Funding Scheme
education, as well as knowledge transfer and industry collaboration.
was launched in 2004 to encourage collaboration in applied research
Meanwhile, the Shenzhen campus of The Chinese University of Hong
and development projects between research institutions and enterprises
Kong will open in 2014.
in Guangdong Province and Hong Kong. In 2006, following the
establishment of five publically funded research and development However, the cooperation between the Pearl River Delta region and
centres in Hong Kong, the Hong Kong Government organised Hong Kong tertiary institutions goes beyond education. The University
roadshows to the Pearl River Delta region cities, and sought cooperation of Hong Kong (HKU) has collaborated with the Shenzhen Municipal
opportunities with Pearl River Delta region partners.
66 67
Government to set up a comprehensive public hospital The University

of Hong Kong Shenzhen Hospital (Shenzhen Binhai Hospital). With a Through example and by way of demonstration, it is the
total investment of RMB3.5 billion by the Shenzhen Government, and Greater Pearl River Deltas role to lead Guangdong Province and
HKU responsible for medical expertise and overseeing the hospitals the Mainland to overcome the middle income trap through:
daily operation, the hospital opened on a trial basis in July 2012. It is industrial upgrading, development of services, innovation
designed to undertake medical services, research, and teaching, as well on the basis of an open society, institutional diversity, great
as to provide 2,000 patient beds and have the capacity to receive 6,000 external and internal connectivity, and accessibility through an
to 10,000 outpatients every day. extensive and dense railway network of high-speed, intercity,
and underground railways and related infrastructure. It is the
Greater Pearl River Deltas role to lead the province and nation
from industry-led through infrastructure-led to institution-
led growth and, possibly, to balanced comprehensive societal
development. This is mostly to take place through urban
polycentricity, with institutional diversity already embedded
Conclusion and safeguarded in the special economic zones and the One
Country, Two Systems policy.
The latest developments in the Greater Pearl River Delta region In this regard, by proactively participating in regional cooperation,
see the region transcending its earlier economic cooperation Hong Kong continues to enjoy its advantages. Through the
for harmonisation of urban governance, talent exchange, and construction of state-of-the-art transportation projects and joint
joint competence building. These aspects showcase the new planning, Hong Kong ensures its geographical connectivity
development phase that is taking form in the Greater Pearl River to emerging business opportunities, while through fostering
Delta region. knowledge collaboration with the Pearl River Delta, Hong Kong
maintains a firm foothold in the emerging knowledge economy
According to a World Bank research report, the Middle Income Trap
that is new to the region in the new millennium.
may cast shadows on Mainland Chinas economic development.
The trap occurs when a country reaches a growth plateau, and
eventually stagnates after reaching middle income levels. The
threshold is per capita GDP of US$12,000, and the economic
capability to join the Organisation for Economic Co-Operation and
Development. The Greater Pearl River Delta metropolis passes this
threshold, while the Pearl River Delta region is the first region to
enter high income status in Mainland China.
Section 3 Economic Trends in the Pearl River Delta Region Section 3 Economic Trends in the Pearl River Delta Region
68 69
Economic The first two developments are largely confined within the Pearl River
Delta region with the Chinese authorities as driving forces. The rapid
T
growth of market potential has been induced by regional economic
rends in the development and the improvement in residents income and, since
2009, has been accelerated by the effectiveness of the consumption
stimulus policy. Both Hong Kong and Macao are also instrumental
Pearl River Delta Region in the region due to their increasing investments, complementing
themselves to Pearl River Delta development strategies and, gradually,
changing policy orientation to respond to new opportunities and
address new challenges.
3.1 From Manufacturing to Technology

In the last 10 years, the most distinctive feature of Guangdong Province
manufacturing strategies has been the drive in the Pearl River Delta
from processing trade-oriented manufacturing clusters into a high-
technology-oriented exporting region, which calls for supportive
industrial and technological policies.
3.1.1. The Development of High-Technology Industries
As early as the late 1980s, the Guangdong Provincial

The economic
Government had recognised the importance of high-
development of
technology industries. Among all the Pearl River Delta
the Greater Pearl
cities, Shenzhen stood out as the first to apply itself
River Delta region since
to the development of high-technology industries,
2000 can be seen from three
and gave the highest priority to technological
perspectives: 1) the technology-
development in the early 1990s. Shenzhen
driven upgrade of the export sector;
launched numerous measures
2) the shift in economic orientation from
to encourage
the manufacturing sector to the service sector,
driven by the Guangdong Provincial Government, and
3) the emergence of the Greater Pearl River Delta market,
driven by the growing consumption power of the regions residents.
70 71
technological development including: providing tax concessions, Figure 3-1: O

utputs and Exports of High-Technology Products in Guangdong Province
(2000-2011)
increasing research and development expenditure, introducing a Percentage
45
government reward system, attracting talent, and allowing flexible 40 37.7
39.4 39.2
37.6
35.6 35.8 35.3 35.4
capital arrangements in relation to know-how contribution. From 35 32.3
34.4
1992 to 1999, the output of Shenzhens high-technology industries grew 30 27.0
30.5 30.4 30.9 30.0 31.2
23.4 28.7
at an annual rate of 55 percent and amounted to 41 percent of total 25 19.4 24.8
23.5 Proportion of High-tech Products Export in
20
industrial output. 19.1
21.6
Provincial Industrial Manufactured Exports (%)
15 17.2
Proportion of High-tech Products Output in
Provincial Total Industrial Output(%)
Witnessing the tremendous 10
0
achievement of Shenzhen, 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
the Guangdong Provincial Source: G uangdong Provincial Department of Science and Technology.
Available at: http://www.sts.gd.cn/show.asp?ArticleID=762.
Government set the
development objective Guangdong Provinces success was not only limited to within the
in its 10th Provincial Five- Pearl River Delta region. It induced a spillover effect to Hong Kong via
Year Plan (2001 to 2005) of processing trade. The total value of high-technology products increased
becoming one of Mainland from US$113 billion (HK$884 billion) in 2002 to US$442 billion (HK$3,430
Chinas most important new, billion) in 2012, while its share in total merchandise trade surged from
high-technology industrial 27.8 percent in 2002 to 46.7 percent in 2012. 12
research, production and
Figure 3-2 : I mports and Exports of High-Technology Products in Total Value of Overall
export bases; and strived
Merchandise Trade in Hong Kong
US $billion Percentage
to establish a vibrant, open, innovative market-oriented system based 500
46.7
50
44.6 44.9
on the technological contribution of private enterprises, universities 39.8
43.4
39.0
400 40
and scientific research institutions. Of all research and development 32.8
34.8
36.6
30.4 209.4
players, Guangdong Province particularly valued the efforts of private 300 27.8 195.3 30
174.5
enterprises and often offered tax concessions and subsidies to high- 143.3
200 129.9 137.0 20
technology companies. 95.6
109.9
80.9 232.9
100 65.1 214.2 10
52.4 192.7
Guangdongs technological initiatives gained it huge success. Within 109.1 128.5 147.8 155.8 151.8
73.4 92.9
60.9
a decade, in terms of provincial industrial totals, the output of high- 0 0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
technology products had increased from 17.2 percent in 2000 to Value of Total Exports of High-Technology Products Percentage of Value of Imports and Exports of High-
Technology Products in the Total Value of Overall
34.4 percent in 2011. Meanwhile, the export sector was also better Value of Imports of High-Technology Products Merchandise Trade
performing, with export sales of high-technology products up from 19.4 Source: Census and Statistics Department of HKSAR Government, Hong Kong as a Knowledge-based
Economy A Statistical Perspective, 2013, p.59.
percent in 2000 to 37.6 percent in 2011.
12
ome imported high-technology products, manufactured in Mainland China and developed countries, are
S
retained in Hong Kong for domestic consumption, or for retail selling to the Mainland visitors (such as electronic
devices). The growth of export sales is a better indicator to demonstrate the spillover effect of the technological
upgrading of the PRD manufacturing sector to the Hong Kong trading sector.
72
development and sales.

and Guangdong Province
increased from 9.5 in 2000 to 39.1 in 2011.

Section 3 Economic Trends in the Pearl River Delta Region
3.1.2. Research and Development in the Pearl River Delta Region
patents-in-force, and came second in R&D expenditure on new product

export revenue of new products, total personnel in R&D institutions, and
activities in the Pearl River Delta region and Guangdong Province.
Meanwhile, the province topped the expenditure on R&D project,

an exceptional performance in enterprise-related R&D indicators.
Mainland coastal provinces the same year, Guangdong delivered
Comparing Guangdongs 2011 R&D performance with that of other
personnel engaged in R&D per 10,000 persons (full-time equivalent)
GDP increased from one percent in 2000 to 1.96 percent in 2011, while
Research and development expenditure as a percentage of provincial
The development of high-technology industries accelerated R&D
Table 3-1: R&D Indicators of Industrial Enterprises above Designated Size for Selected Coastal China Regions in 2011
Overall Performance New Products
(000 Expenditure (US$

Expenditure Total Patent (thousand)
person) on New Sales Revenue billion)
on R&D Personnel
Products of New
Project (US$ in R&D Doctor and
Application In Force Development Products Export
billion) Institutions Master (US$ billion)
National Total 78.2 1,816.5 228.9 386.1 201.1 106.0 1,557.3 313.1
Guangdong Province 12.5 319.6 61.1 72.5 66.5 16.5 222.6 88.0
Yangtze Shanghai 4.5 69.9 12.9 19.4 12.5 6.9 120.3 16.0
River
Jiangsu 12.0 241.6 24.7 72.8 26.7 18.3 229.8 68.0
Delta
Zhejiang 7.0 237.1 15.8 52.2 18.1 9.3 155.6 39.3
Bohai Beijing 2.0 50.5 12.5 13.0 7.3 3.3 53.9 10.0
Rim
Tianjin 2.5 35.3 4.0 11.9 5.2 2.9 59.3 11.6
Hebei 2.1 45.2 5.0 5.8 2.6 2.3 29.4 3.5
Of National Share
Guangdong Province 16.0% 17.6% 26.7% 18.8% 33.0% 15.6% 14.3% 28.1%
Yangtze Shanghai 5.8% 3.9% 5.6% 5.0% 6.2% 6.5% 7.7% 5.1%
River
Jiangsu 15.3% 13.3% 10.8% 18.8% 13.3% 17.3% 14.8% 21.7%
Delta
Zhejiang 8.9% 13.1% 6.9% 13.5% 9.0% 8.8% 10.0% 12.5%
Bohai Beijing 2.5% 2.8% 5.5% 3.4% 3.7% 3.1% 3.5% 3.2%
Rim
Tianjin 3.2% 1.9% 1.8% 3.1% 2.6% 2.7% 3.8% 3.7%
73
Hebei 2.7% 2.5% 2.2% 1.5% 1.3% 2.2% 1.9% 1.1%

Section 3 Economic Trends in the Pearl River Delta Region
Source: China Statistical Yearbook on Science and Technology 2012.

74 75
Figure 3-3: R&D Personnel in Coastal China Regions (2011) Table 3-2 : High-Technology Industry and Patents Granted in Guangdong Province and Pearl
Full-time Equivalent of R&D Personnel ( 000 Man-Year)
River Delta Region
450
Value Added of High-Tech Industry
411 Patents Granted (2011)
400 (2012)
Region
343 Amount Percentage of Percentage of
350 Case
(US$ billion) Provincial Total Provincial Total
300
Provincial Total 86.79 100.0% 128,413 100.0%
254
250 Pearl River Delta 82.56 95.1% 116,233 90.5%
217
200 Shenzhen 46.72 53.8% 39,363 30.7%
149 Dongguan 9.75 11.2% 19,352 15.1%
150
Guangzhou 8.15 9.4% 18,346 14.3%

100
74 73
Huizhou 7.14 8.2% 2,917 2.3%
50
Foshan 3.45 4.0% 16,340 12.7%
0
Guangdong Shanghai Jiangsu Zhejiang Beijing Tianjin Hebei Zhongshan 2.84 3.3% 10,027 7.8%
Zhuhai 2.74 3.2% 3,690 2.9%
Source: China Statistical Yearbook on Science and Technology 2012.
Zhaoqing 1.09 1.3% 889 0.7%
Shenzhens first-mover advantage, and its persistence in developing high- Jiangmen 0.69 0.8% 5,309 4.1%
technology industries, has won it the undisputed lead in Guangdong Source: G uangdong Provincial Department of Science and Technology, and Guangdong Statistical
Yearbook 2013.
Province and Mainland China. In 2012, the city represented 53.8 percent
of the value-added provincial high-technology industry, and 30.7 percent Figure 3-4 : H igh-Technology Industry and Patents Granted in Guangdong Province and
of the total provincial patent granted. Dongguan came second, due to its Pearl River Delta Region
processing trade development, and it being a home to Hong Kong, Taiwan, Hunan
and foreign manufacturers. Meanwhile, Guangzhou ranked third, thanks Shaoguan Fujian
to its position as the provincial capital and housing various prestigious Guangxi
Qingyuan
universities and research Meizhou
Heyuan
institutions. The Pearl River Chaozhou
Delta region constituted 95.1 Zhaoqing

Jieyang Shantou
Guangzhou
percent and 90.1 percent of the Foshan Dongguan
Huizhou
Shanwei
Yunfu
Guangdong provincial value Shenzhen
Zhongshan
added of the high-technology Jiangmen Value Added of
Patents Granted
High-Tech Industry
(2011, Case)
industry and patents granted. Maoming
Yangjiang Zhuhai (2012, US$ billion)
46.7 Shenzhen 39,363
9.8 Dongguan 19,352
8.2 Guangzhou 18,346
Zhanjiang
7.1 Huizhou 2,917
3.4 Foshan 16,340
2.8 Zhongshan 10,027
2.7 Zhuhai 3,690
1.1 Zhaoqing 889
0.7 Jiangmen 5,309
Source: G uangdong Provincial Department of Science and Technology, and Guangdong Statistical
Yearbook 2013.
76 77
Due to its push for R&D and manufacturing-based development, the The new national trade policy on managing a reasonable trade surplus,
intensity of R&D activities in Guangdong Province surpassed that of as decreed by the Central Government in the 11th National Five-Year
Hong Kong in the same period. To keep pace with Guangdong Province, Plan, exerted huge pressure on the export-led manufacturing clusters.
the Hong Kong Government revised its technology policy in 2000, Reacting to the shift in national strategy, the Pearl River Delta regional
and has since increased R&D in the territory. Through joint efforts, the governments enforced the new policies of the Central Government but
Greater Pearl River Delta region has progressively transformed from also devised a series of industrial upgrading programmes to strengthen
a labour-intensive manufacturing region into an innovation-driven traditional industries, including: offering tax benefits to procure
manufacturing region. modern equipment, providing training courses to the workforce, and
enhancing R&D competencies to preserve the diversity of the industrial
Table 3-3: R&D Activities in Guangdong Province and Hong Kong, 2000-2011
configuration of the Pearl River Delta region.
Personnel Engaged in R&D per 10,000
R&D Expenditure as Percentage of GDP
Persons (full-time equivalent)
Guangdong Hong Kong Guangdong Hong Kong
2000 1.00% 0.46% 9.5 13.8
2005 1.12% 0.77% 15.5 25.1
2010 1.76% 0.75% 33.0 31.6
2011 1.96% 0.72% 39.1 33.4
Source: Guangdong Provincial Department of Science and Technology, Census and Statistics
Department of HKSAR Government.
3.2. From Manufacturing to Services
3.2.1. Transformation and Upgrading

The Guangdong governments selected certain specialised towns as
Specialised Towns and Export-Led Traditional Industries pilot and demonstration zones for industrial upgrading, and gave them
fiscal resources to promote their innovation activities. Meanwhile, the
After 20 years of rapid development, numerous industrial clusters in
governments encouraged export-oriented manufacturers to enter the
the form of specialised towns have emerged in the Pearl River Delta
domestic market by rewarding their brand-building activities. They also
region. These towns provide scale advantages, network benefits, and
attempted to control pollution either through transferring the offending
synergy effects to the Pearl River Delta region, which have transformed
manufacturers into specially-designed industrial buildings or parks
the region into a leading exporting region, and earned a huge amount of
with centralised treatment facilities, or ensuring that they complied to
trade surplus for Mainland China. However, many of these specialised
stringent environmental standards.
towns are engaging in labour-intensive manufacturing activities, and
some are polluted.
78 79
By implementing the above measures, the Pearl River Delta regional During the period of the 11th Five-Year Plan (2006 2010), the Guangdong
governments aim to improve the value-added performance of traditional Provincial Government promoted industrial relocation under the
industries, empower manufacturers to face the challenges of increasing slogan of Emptying the Cage for New Birds. The most notable policy
labour costs, and eventually upgrade and transform the manufacturing initiative was the Dual transfer of industries and labour force from
configuration of the region. the Pearl River Delta region to other parts of Guangdong Province. In
May 2008, the Guangdong Government put into force the Decision on
Figure 3-5: Pilot Zone of Industrial Clusters for Upgrading in Guangdong Province
Promoting Relocation of Industries
Hunan Shilong - Electronics and Labour Force, known as the
Huadu - Automobile Dalang - Knitted wear (wool)
Guangxi Leather products Humen - Garment
Rongcheng - Shoes
Double Relocation strategy. In the
Fujian
Changan - Metal
Chancheng - Ceramics
Shaoguan Chaozhou -
strategy, labour-intensive and high
Dalingshan - Furniture
Shunde - Electrical Appliances Ceramics
Xiqiao - Textiles Meizhou Chaoan - Food energy-consumption industries were

Dali - Aluminum Materials
Qingyuan
Heyuan
encouraged to relocate to other
Danzao - Metal
Chaozhou
Shishan - Electrical Appliances Jieyang regions of Guangdong Province,
Stone Zhaoqing Guangzhou
Huizhou
Shantou while advanced manufacturing
Stainless Steel Shanwei
Yunfu
Foshan Dongguan industries were retained in the Pearl
Yangdong - Shenzhen
Metal and Cutlery Jiangmen
Zhongshan
Haifeng - Garment River Delta. To facilitate this, the
Zhuhai Hong Kong Toy and Souvenir
Electrical Appliances
Macao
Huidong - Shoes
Arts Craft and
Guangdong Provincial Government
Jewellery Knitted Wear
Maoming
Yangjiang Xiaolan - Metal Products
(wool) allocated about US$8 billion (RMB50
Guzhen - Lights
Motorcycle
Nantou - Electrical Appliances
billion) between 2008 and 2012.
Zhanjiang Kaiping - Sanitary Ware
Shaxi - Garment
Xinhui - Metal
Enping - Audio Equipment
Huangpu - Food
Pilot Zone of Industrial
However, despite this, the massive
Torch - Food and Medicines
Clusters for Upgrading
Dongfeng - Electrical Appliances out-transfer went unnoticed due to
the outbreak of the global financial
Source: Based on Land-Use Planning of Guangdong (2006-2010).
crisis though the Double Relocation
Double Relocation did assist nearby regions with

building industrial competence,
After 20 years of development, a majority of Pearl River Delta land
readying them for take-off in the
resources had been used for industrial development, and much were
longer term. In essence, the policy
occupied by Hong Kong and Taiwan-invested manufacturers engaging
initiative was a most important
in labour-intensive, yet low value-added processing trade. As a result,
vehicle for the Pearl River Delta region, enlarging its economic hinterland
industrial relocation surfaced on Guangdong Provinces policy agenda,
beyond its administrative boundary, and representing a new mode of
with an emphasis on the outward relocation of traditional industries,
inter-regional cooperation.
and inward high-technology manufacturers.
80 81
Figure 3-6: Industrial Relocation from PRD Region to Other Parts of Guangdong Province Table 3-4: Value Added by Tertiary Industry in Guangdong Province (US$ billion)
Hunan Lechang Annual Growth

2005 2010 2012
Shixing (2005-12) #
Fujian
Zhenjiang
Guangxi
Gross Domestic Product 273.04 679.71 904.05 14.3%
Xingning
Meizhou
Tertiary Industry 117.17 305.96 420.12 15.6%
Heyuan/Heping
Qingyuan Chaozhou
Wholesale and Retail Trade 27.13 68.66 100.34 16.1%
Huaiji
Deqing Haifeng Real Estate 17.77 41.57 57.73 14.0%

Guangzhou
Dongguan Huidong Finance 8.23 39.28 50.25 24.8%
Foshan
Yunfu / Yucheng Shenzhen
Transport, Storage
12.10 26.96 37.50 13.3%
Xinyi
Zhongshan and Postal Services
Leasing and Business Services 9.44 23.09 33.77 15.6%

Lianjiang Dianbai
Yangjiang / Yangxi / Information Transmission, Computer

Yangdong / Yangchun 8.40 20.27 25.63 13.0%
Wuchuan Services and Software
Industrial Relocation Park
Public Administration and
Original Location of Industries 7.72 20.15 25.92 14.6%
Longmen Social Organisations
Education 6.43 15.69 21.91 14.8%

Source: B
ased on Fung Business Intelligence Centre (formerly known as Li and Fung Research Centre),
Chinas industry relocation and upgrading trends: implications for sourcing business, China Accommodation and
6.36 15.88 20.72 14.1%
Distribution and Trading - Issue 56, December 2008. Catering Services
Services to Households and

4.21 10.77 14.19 14.6%
3.2.2 The Development of Modern Service Sectors Other Services
Healthcare, Social Security and

3.56 9.45 13.53 16.6%
Social Welfare
Developmental Initiatives
Scientific Research, Technical
Since 2006, Guangdong Province has been keen to develop tertiary Services and Geological Prospecting
2.55 7.15 9.47 16.2%
industries. In its 12th Provincial Five-Year Plan (2011-2015), it elaborated

Culture, Sports and Recreation 1.81 4.18 5.23 12.1%
on the concept of the Modern Services Sector. The province has
Management of Water Conservancy,
categorised the sector into financial, logistic, information, exhibition, Environment and Public Facilities
1.48 2.87 3.93 10.8%
cultural and creative, and healthcare services. #

Growth rates are based on the nominal renminbi values of tertiary outputs.
In the last five years, the growth rate of Guangdong Provinces tertiary Source: Guangdong Statistical Yearbook 2006, 2010, 2013.
industry has surpassed overall GDP growth, with finance, healthcare,

and wholesale and retail trade services as the outperformers.
82 83
Table 3-5: Value-added by Tertiary Industry in the Pearl River Delta Region (US$ billion) Development Aims
Average Annual
2000 2005 2010 2012
Growth (2000-12) #
1. Q ianhai New District, Shenzhen: To develop Qianhai into an
Pearl River Delta 47.71 103.28 274.02 391.45 16.5% important production service centre in Asia Pacific by 2020,
Guangzhou 16.67 36.38 96.91 136.55 16.5% and a Hong Kong/Guangdong Province Modern service industry
Shenzhen 13.17 28.08 74.60 114.22 17.1% innovation and cooperation exemplary zone.
Dongguan 4.11 11.35 30.58 41.50 13.9%
2. Nansha New District, Guangzhou: To develop Nansha into a
Foshan 5.32 10.74 29.54 37.54 15.2%
business service centre, an innovation and technology centre,
Zhongshan 1.69 3.91 10.78 16.32 17.8%
and an education training centre serving the Mainland and
Huizhou 1.45 3.30 9.01 13.78 18.4%
Jiangmen 2.42 3.66 8.57 12.20 18.0%

linked with Hong Kong and Macao; and to build a Port-related
Zhaoqing 1.21 2.44 6.50 8.71 11.9%
industries support services cooperation zone.
Zhuhai 1.81 3.30 7.53 10.93 14.9%
3. H engqin New District, Zhuhai: To progressively develop the
#
Growth rates are based on the nominal renminbi values of tertiary outputs. area into an exemplary zone for a new mode of cooperation
Source: Guangdong Statistical Yearbook 2006, 2010, 2013.
between Guangdong Province, Hong Kong and Macao, a pilot
Guangzhou and Shenzhen are the two major service providers contributing zone for deepening reform and technology innovation, and a
60 to 65 percent of regional tertiary outputs. As such, the Guangdong new platform for upgrading industries in the western region of
Provincal Government and the Municipal governments of Guangzhou and the Pearl River estuary.
Shenzhen attach strategic importance to the tertiary sectors, and allocate
financial and land resources to drive their development. Massive infrastructural projects have been carried out in three districts,
with most of the key projects kick-started in Qianhai. The hardware of
Qianhais development, such as the reclamation of the development
Three Special Zones
zone, railway networks, and the first phase of commercial premises are
Among the seven major cooperation projects across Guangdong expected to be completed around 2015. Meanwhile, on the soft-skill
Province, Hong Kong and Macao as listed in the 12th National Five- side Qianhai is conducting a number of pilot reforms on investment
Year Plan, the development districts of Qianhai (Shenzhen), Nansha regulation, corporate governance, international dispute settlement, and
(Guangzhou), and Hengqin (Zhuhai) have been lifted to national project- attracting talent.
level. It is Guangdong Provincial Governments utmost aim to build these
districts into development platforms for modern service sectors. Hong
Improvements to the Investment Environment
Kong and Macao consider these districts to be gateways for further
market access, particularly to facilitate service cooperation between As of 2012, the Guangdong Provincial Government was the first Mainland
themselves and Guangdong Province. The governments of the three province to launch a pilot reform to simplify business registration
jurisdictions jointly seek support from the Central Government to procedures, with the aim of encouraging local investment and generally
launch pilot reforms, provide preferential measures to encourage local improving the Pearl River Delta regions business environment.
investment and attract foreign investment.
84 85
Since 1 March 2013, registration procedures and requirements for very high per capita consumption expenditure of urban households
commercial entities in both Shenzhen and Zhuhai have been simplified (183 percent of the national average). In 2012, the total retail sales of
substantially. Under this pilot scheme, investors may decide, at their consumer goods of Guangzhou and Shenzhen stood at US$94.7 billion
sole discretion, to register a capital amount with the local offices of the (RMB598 billion) and US$63.5 billion (RMB401 billion), respectively
State Administration for Industry and Commerce. A Capital Contribution even greater than Hong Kongs total retail sales which stood at US$57.4
Verification Report is no longer required, exempting the company billion (HK$454 billion).
from injecting capital before obtaining its business license, and the
Table 3-6: Retail Sales, Residential Income, and Expenditure in 2012 13
requirements on domicile and business locations have also been relaxed.
This reform provides flexibility, cost efficiency, and procedural reduction Total Retail Total Urban Per Capita of Urban Per Capita of Rural
Sales of and Rural Households (US$) Residents (US$)
to investors. In addition, a company is able to obtain its business license Consumer Resident
Goods Income Disposable Consumption Net Living
within several working days rather than the weeks of waiting under the (US$ billion) (US$ billion) Income Expenditure Income Expenditure
former system. The Guangzhou Municipal Government designated the National 3,331.6 - 3,891 2,641 1,254 936
Nansha district to conduct the pilot reform as of 1 September 2013. Total GPRD 330.2 -
Guangzhou 94.7 70.9 6,028 4,830 2,659 1,737

The Guangdong Provincial Government intends to extend the new
Shenzhen 63.5 68.1 6,454 4,234
scheme to other Pearl River Delta cities and the entire province within
Foshan 32.0 38.7 5,478 4,145 2,485 1,815
two years. Upon completion of the reform, Guangdongs business Dongguan 21.4 53.7 6,803 4,969 3,952 2,565
environment will be additionally uplifted and liberalised to serve the Zhongshan 12.8 14.8 4,931 3,531 3,065 1,793
south China market. Jiangmen 12.8 15.1 4,280 2,922 1,797 1,324
Huizhou 11.9 17.5 4,747 3,529 1,967 1,313
Zhuhai 10.1 7.7 5,224 3,815 2,123 1,600

3.3. T
he Emergence of an Integrated Market in the Zhaoqing 6.8 9.6 3,446 2,492 1,642 1,019

Hong Kong 57.4
Macao 6.6
3.3.1. A Rapidly Developing Market
Source: China Statistical Yearbook 2013, Guangdong Statistical Yearbook 2013.
Thanks to its profound economic performance, residents of the Pearl
River Delta region enjoy higher income and expenditure levels than the The higher retail sales of Guangzhou and Shenzhen are partially to do
national average, which guarantees robust retail sales in the region. In with their large population sizes and automobile-related consumption,
2012, the Pearl River Delta region represented 7.9 percent of total retail but, more importantly perhaps, the residents of their nearby cities who
sales in the Mainland. are making use of their improved connectivity to do their weekend
shopping in Guangzhou and Shenzhen. This is clear from Guangzhous
Among nine Pearl River Delta cities, Guangzhou tops retail sales. This total retail sales of consumer goods, which is larger by US$23.8 billion
is due to its huge resident population (12.84 million persons), and (representing 33.6 percent of Guangzhous total resident income) than
13
Exchange rate (for 2012): US$1 = RMB 6.3125; HK$7.756; MOP7.9899.
86 87
its total resident income. Meanwhile, Guangzhous rich neighbouring Guangdong Provinces e-commerce is closely related to its development
cities, Donguan and Foshan, have retail sales of just 22.6 percent and 33.8 of mobile telecommunication and postal services. In 2012, the number
percent of that of Guangzhou, despite their total resident income being of Guangdong mobile telephone users and internet subscribers stood at
75.7 percent and 54.6 percent of Guangzhous total. It is anticipated that 125 million and 20 million respectively, with an annual growth rate for
with an expanded intercity railway network operating within five to 10 the past 12 years of 20 percent. The duration of internet use grew at 62.6
years, Guangzhous retail sector will undergo the fastest development of percent during the same period, and reached three trillion minutes in
the region. 2012. E-shoppers can retrieve product information and place e-orders
easily, and in Mainland China, the merchandise delivery of online orders
3.3.2. E-Retailing in Guangdong Province is often done via door-to-door express mail services. Largely because of
online shopping, express mail services jumped from 591 million pieces
In recent years, Guangdong Province has seen a boom in e-commerce
to 1.33 billion pieces within two years, giving an unprecedented thrust to
and online shopping. In 2012, the province recorded the highest number
the development of logistic services.
of online shoppers, 12.2 percent of the national total followed by Jiangsu,
Shangdong, and Zhejiang provinces. The development of Guangdong Table 3-7: The Development of Telecommunication and Postal Services in Guangdong
Provinces e-commerce activities is not only driven by the increasing income Province
of Guangdong residents, but also by the increasing quantity of Guangdong Annual

Province enterprises and individuals active in the e-supply chain. The 2000 2005 2010 2011 2012 Growth
(2000-2012)
diversity of manufacturing clusters in the Pearl River Delta region, coupled
Number of Subscribers of
with a far-reaching logistic network and experienced service providers,
Local Telephones (million 14 34 32 32 31 6.9%
greatly helps Guangdong Province to top Chinas e-commerce sector, and subscribers)
assist the economic entities of the province which are capitalising on Number of Mobile Telephone
Mainland Chinas fastest growing consumer market segment. Subscribers (million 14 64 97 108 125 20.3%
subscribers)
Figure 3-7: Geographic Distribution of Online Shoppers in China (2012) Number of Internet
Percentage Subscribers (million 2 10 15 17 20 20.2%
14% subscribers)
12.2%
12% Duration of Internet Use by
9 319 1,987 2,510 3,084 62.6%
Subscribers (billion minutes)
10%
Pieces of Express Mail
13 33 591 864 1,338 46.9%
8% 7.3% Services (million pcs)
6.7% 6.2%
6%
5.1% 5.0% Popularisation
Rate of Mobile China 6.7 30.3 64.4 73.6 82.5
4.2% 4.2% 4.1% 4.0%
4% Telephones
(subscribers/
2% Guangdong 17.6 69.7 93.1 102.7 117.7
100 persons)
0%
Guangdong Jiangsu Shangdong Zhejiang Hebei Henan Fujian Sichuan Hubei Liaoning Source: China Statistical Yearbook 2013 and Guangdong Statistical Yearbook 2013.
Source: F
ung Business Intelligence Centre, Online Retailing in China, June 2013. Re-quoted from
iResearch.
88 89
The rapid growth of eretailing has the potential to create a leapfrog Table 3-8: Shopping Expenditure of Mainland China Visitors in Hong Kong
effect in Chinese retail, transforming it into a more digitalised and Overnight Visitors from Same-day In-town Share of Shopping
efficient industry even faster than traditional chain stores. Such China Visitors from China 14 Expenditure of
a scenario could have profound effects on Chinas consumption, Shopping Shopping Mainland Visitors in
Annual Annual Hong Kongs Total
Expenditure Expenditure
productivity, logistics, and even urban development. By providing a Growth Growth Retail Sales
(US$ billion) (US$ billion)
powerful launch pad for entrepreneurs and merchants of all sizes to sell
2005 3.1 3.6% 0.6 20.5% 14.0%
directly to consumers, eretailing is also fast becoming an area in which
2006 3.4 12.0% 0.9 45.8% 15.3%
Mainland China could lead the world in innovation rather than relying
on its labour cost advantage. 2007 4.4 27.9% 1.3 53.3% 18.1%
2008 4.9 11.0% 1.9 38.7% 19.2%

In addition, the emerging integration of all networks (TV and broadcasting,
2009 6.3 28.3% 2.3 23.7% 24.3%
computer/internet and telecommunication) creates a seamless global
2010 8.2 31.2% 3.1 34.1% 27.1%
platform for the digital transformation of all producer and consumer
2011 10.1 23.1% 4.1 33.8% 27.3%
services (P2P, B2C, B2B, social media and financial services) and
e-shopping via mobile phone is expected to be the next shopping hit in 2012 11.8 16.3% 5.9 41.8% 30.7%
China. Global Chinese firms based in Shenzhen such as Huawei, ZTE, and Source: Based on data from Census and Statistics Department of HKSAR Government and Hong Kong
Tencent (Wechat), as well as many firms which are innovating in mobile Tourism Board, Statistical Review of Hong Kong Tourism, various years.
services, applications, and local brands, parts, and components in the

Pearl River Delta region visitors represent about 70 percent of total
Pearl River Delta, are readying themselves for the smart phone-driven
Mainland visitor arrivals. Given the proximity of the Pearl River Delta
digital revolution. It is anticipated that Guangdong Province will be able
region to Hong Kong, a vast majority of same-day in-town Mainland
to ride on this consumption wave, given the extreme popularity of the
visitors are from the PRD region, visiting Hong Kong for leisure and
mobile telephone there 117.7 subscribers per 100 persons.
shopping purposes. One striking feature when comparing the spending
pattern of same-day in-town visitors from Mainland China with other
3.3.3. An Integrated Market with Hong Kong short-haul markets (excluding Mainland China) is that seven percent of
Since July 2003, the residents of 49 major Chinese cities have been the expenditure of Chinese visitors concerns daily items (for personal
permitted to visit Hong Kong under the Individual Visit Scheme. care, including shampoo and diapers) rather than the 0.7 percent
Between 2003 and 2013, 101 million Mainland China visitor arrivals out expenditure of other short haul markets. This demonstrates a very
of a total of 181 million came to the territory on the scheme. It is estimated important trend: that an integrated Greater Pearl River Delta market is
that the shopping expenditure of Mainland visitors accounted for 30.7 underway via improved resident mobility and transport connectivity.
percent of Hong Kongs total retail sales in 2012, up from 14 percent in
2005.
14
T
he shopping expenditures of same-day in-town Mainland China visitor of the year of 2005 and 2006 are
estimated figures.
90 91
Table 3-9: Same-Day In-Town Visitor Spending by Main Shopping Category (2012)
Short Haul Markets (excluding

Mainland China
Mainland China)
Main Shopping Items
Spending Spending
Share Share
(US$ million) (US$ million)
Cosmetics and
887 15.2% 21.4 9.3%
Skin Care/Perfume
Electrical /
855 14.6% 23.1 10.0%
Photographic Goods
Food, Alcohol,
1,039 17.8% 46.4 20.1%
and Tobacco
Garments/Fabrics 754 12.9% 67.4 29.2%
Jewellery and
1,016 17.4% 13.5 5.9%
Watches
Leather/Synthetic
489 8.4% 30.2 13.1%
Goods
Personal Care
412 7.0% 1.5 0.7%
(Shampoo, diapers, etc)
Other Items 399 6.8% 27.6 11.9%
Total: 5,851 100.0% 231.2 100.0%
Source: Based on data from Hong Kong Tourism Board, Statistical Review of Hong Kong Tourism 2012.
In the context of an integrated Greater Pearl River Delta market, it is

observed that many Pearl River Delta residents, especially those from
middle to high income groups, often prefer to purchase luxury and
top quality items from Hong Kong, mid-range and durable items from
Conclusion
The transformation in economic development models and the
Guangzhou and Shenzhen, and daily items from residing city and
emergence of consumption in the Pearl River Delta region provide
neighbourhood outlets.
Hong Kong with various advantages. The Pearl River Delta may
These consumption trends allow Hong Kong to capitalise on the emerging no longer be competitive as a source of cheap labour, but the
market potential of the Greater Pearl River Delta region and, more evolution of its consumer market presents new opportunities for
importantly, the high-end and high value-added luxury markets that are international investors. At a time when the world is suffering from
the expert domain of prestigious international brand names and lifestyle excess production capacities, it is of great importance for every
innovators. By establishing a retail outlet in Hong Kong, the international enterprise in the world to realise that new customer bases are
investor is able to reach more than 40 million Mainland visitor arrivals being developed. Exploring the Mainland China market via Hong
annually, and, more excitingly, these visitors belong to the middle to high Kong is a viable marketing option for international investors.
income classes, including young enthusiasts of western lifestyles.
Section 4 Hong Kongs Contribution to the Development of the Pearl River Delta Region Section 4 Hong Kongs Contribution to the Development of the Pearl River Delta Region
92 93
Hong Kongs requiring soft skills, the Pearl River Delta contributed on the hardware
Contribution to the
side, providing manufacturing premises, infrastructural support, cheap
labour supply and land. For the past two decades, both parties worked
closely via the unilateral investment ties extended from Hong Kong to
the Pearl River Delta region. They jointly created the miracle of economic
Development of the Pearl River Delta Region development in the Greater Pearl River Delta region.
Figure 4-1: Front Shop and Back Factory Cooperation between Hong Kong and the Pearl
River Delta Region
Front Shop
Hong Kong
R&D, Financial Logistic

Marketing Procurement
Design Management Coordination
Management and Services Components from

International Suppliers
Headquarters in Hong Kong Re-export to

International Market
Investment and Capital Flow Parts and Assembled

Equipment Products Producer Services by Hong Kong
Boundary
Limited Direct Export to

Factory in the PRD Region
Domestic Sales International Market
Manufacturing and Assembling
Prior to Chinas
Infrastructure Support
accession to the Labour Process Local Transportation
by the PRD Region
Management Procurement & Warehouse
World Trade Organization
(WTO) in 2001, the Front Shop Back Factory
Pearl River Delta
and Back Factory mode had been
the major type of cooperation between
Hong Kong and the Pearl River Delta region,
with Hong Kong acting as the headquarters and the
Pearl River Delta region as the manufacturing base. While
Hong Kong offered producer services such as marketing support,
financial measures, logistic handling, professional services, and services
94 95
Mainland Chinas accession to the WTO enabled the Pearl River Delta information services, and the maintenance of Hong Kongs status as an
region to go global directly and subsequently, the Front Shop and Back international hub on financial services, trade and shipping. By doing so,
Factory mode of cooperation began to dissolve. Hong Kong was required the Central Government not only re-stated its recognition of Hong Kongs
to seek a new regional role in the post-WTO era. contribution, but indicated, for the first time, what it considered to be
Hong Kongs role in national development strategy.
4.1. H
ong Kongs Collaboration with the Pearl River Delta The National and Guangdong provincial-level 11th FYP covered a
number of strategic policies and initiatives that related to the Hong
Region
Kong economy. These included: speeding up financial system reform,
developing logistic, business, information, and tourism services, as well
During the 10th National FYP Period (2000-2005)
as facilitating coordinated regional development. Guangdong Provinces
Prior to 2000, Hong Kong had always served as the headquarters, Five-Year Plan included: upgrading regional development, enhancing
and acted as Mainland China manufacturers springboard to the cooperation between Guangdong, Hong Kong and Macao, and promoting
international market. Benefiting from the market liberalisation granted Pan-Pearl River Delta cooperation.
by Mainland Chinas accession to the WTO, the Pearl River Delta region
was able to proceed overseas, on its own. In 2003, the outbreak of Severe Numerous strategies in Guangdong Provinces 11th FYP were
acute respiratory syndrome (SARS), and the subsequent economic subsequently incorporated into The Outline of the Plan for the Reform
downturn was a harsh wake up call for Hong Kong, and concerns about and Development of the Pearl River Delta (2008-2020), and the Framework
being marginalised from Pearl River Delta region development became Agreement on Hong Kong/Guangdong Co-operation.
a hot topic in Hong Kong. The signing of the Mainland Hong Kong Closer
Economic Partnership Arrangement (CEPA) in 2003 was Hong Kongs During the 12th National FYP Period (2011-2015)
first step in re-establishing and re-strengthening its economic ties with Encouraged by the achievements during the period of the 11th Five-Year
Mainland China and the Pearl River Delta region. Plan, Hong Kong actively pursued inclusion in the 12th National FYP, and
hence a chapter was dedicated to it and Macaos development.
During the 11th National FYP Period (2006-2010)
In terms of economic development and sectoral cooperation, the Central
Hong Kong proactively sought incorporation into Mainland Chinas
Government gave its support for consolidating and enhancing Hong
national development plan to tap into Chinas emerging market. The 11th
Kongs status as an international centre for financial services, trade and
National Five-Year Plan (2006-2010) was the first Five-Year Plan (FYP) that
shipping. It also facilitated Hong Kongs development into an offshore
Hong Kong strived to take part in.
Renminbi business centre and international asset management centre.
In 2006, when the Central Government released its 11th National Five-
In terms of institutional support, the Central Government reiterated it
Year Plan, Hong Kong was able to secure its place in it. In the plan, the
would continue to implement the CEPA and expand its coverage. Other
Central Government declared that it would: support Hong Kongs
policies facilitating the Guangdong-Hong Kong cooperation include
development on fronts such as financial services, logistics, tourism and
96 97
the establishment of a financial cooperation zone and a world-class To foster Hong Kong-Guangdong cooperation, CEPAs Guangdong Early
metropolitan cluster with Hong Kongs financial system taking the lead, and Pilot Implementation Scheme was first introduced into the CEPA
the opening up of Guangdongs service industries for Hong Kong on mechanism in May 2008, along with the signing of Supplement V to CEPA.
a pilot basis, and extending the pilot scheme to other regions. In short, With an additional five supplements signed in each of the subsequent
service cooperation under the early pilot scheme of CEPA in the Pearl years from 2008, as of end August 2013, a total of 79 Guangdong pilot
River Delta region was crucial, with financial cooperation as the highlight. measures had been launched which spanned a large variety of sectors
including retail, banking, professional services and rail transportation.
Of seven major cooperation projects among Guangdong Province, Hong
Kong, and Macao, four related to Hong Kong, including three cross- There are some critics of the effectiveness of CEPA who described it
boundary infrastructure projects , and one boundary link . Three of the
15 16
as the big doors are open, but the small doors are not yet open. This
projects related to connectivity with Shenzhen, the others to Macao and is because Hong Kong service providers are not entitled to pre-entry
Zhuhai. Upon completion of the four projects, the connectivity between national treatment. During his visit to Hong Kong in August 2011, Li
Hong Kong and the Pearl River Delta region will be greatly improved and Keqiang, the Vice Premier of the State Council, undertook to enhance
the spatial relationship between the places will be redefined. CEPA implementation and basically achieve liberalisation of trade in
services for Hong Kong by the end of the 12th Five-Year Plan period (2011-
2015). Measures include: simplifying the necessary approval procedures,
4.2. A New Regulatory Framework between Hong Kong implementing various preferential measures, enhancing investment
and the Mainland facilitation measures, and pushing forward the implementation of early
and pilot measures in Guangdong and other provinces (municipalities).
CEPA is one of the most important institutional frameworks regulating
the economic relationship between Mainland China and Hong Kong. Subsequently, the Guangdong Provincial Government announced its
The framework agreement was signed in June 2003 and came into effect intention to promote early basic achievement of liberalisation of trade
on 1 January 2004. By the end of 2013, 10 additional supplements were in services between Hong Kong and Guangdong in 2014. This being so,
added to the CEPA framework. A total of 403 liberalisation measures service cooperation between Guangdong Province and Hong Kong may
concerning preferential market access were offered to Hong Kong experience some breakthroughs in the near future.
companies. All manufactured goods that met the Hong Kong rule of origin
Meanwhile, in October 2013, the Central Government established the
and CEPA application requirements were allowed into the Mainland
Shanghai Free Trade Zone (SHFTZ) using a negative list approach
market under the zero-tariff, effective 1 January 2006.17
to regulate the entry of foreign investment. Some commented that
this approach was likely to challenge the positive list-based CEPA
15
Hong Kong-Zhuhai-Macao Bridge, Guangzhou-Shenzhen-Hong Kong Express Rail Link, Hong Kong-Shenzhen
Western Express Line. framework. However, when looking into the SHFTZs liberalisation
16
Liantang/ Heung Yuen Wai Boundary Control Point.
measures and comparing them with those of CEPA, and, particularly,
17
To qualify as a Hong Kong company under CEPA, a company must be incorporated under the laws of Hong Kong,
be liable to pay profits tax in Hong Kong, have more than 50 percent of its Hong Kong staff who are Hong Kong the Guangdong Pilot Measures, many CEPA measures actually enjoy
residents with no limit on stay, and have had substantive business operations in Hong Kong for a specific period of
better market access than those of the SHFTZ. Although Shanghai is
time dependent on industry, with most industries covered by CEPA requiring a three to five-year minimum period
of operation in Hong Kong before qualifying.
98 99
changing its current approval-based foreign investment regulatory As early as 2004, Hong Kong became the first offshore location in
mechanism into a registration-based mechanism, which offers the the world to offer renminbi banking services. These services mainly
advantage of transparency and time-efficiency to new foreign investors, concerned personal banking business. Banks in Hong Kong were
Guangdong Provinces ongoing reform to simplify business registration allowed to offer deposit-taking, currency exchange, remittance, and
may compensate to a certain degree for the loss of time-efficiency. card services. Since then, Hong Kong has progressively expanded its
More importantly, the SHFTZ investment-related policy paper clearly renminbi business scope from traditional renminbi banking services.
states that if any CEPA measures provide better treatment to the foreign It has engaged in the issuance of renminbi bonds (2007) and renminbi
investor than its SHFTZ equivalents, then the preferential measures of sovereign bonds (2009); established a renminbi settlement system
CEPA will prevail. In short, Hong Kong service providers are now party to (2007) and trade settlement services (2009); and introduced the
both CEPA and SHFTZ benefits, granting them the privilege of enjoying Renminbi Qualified Foreign Institutional Investors (RQFII) (2011). Due
most preferential access to the Mainland China market. to its full range of renminbi services, which include deposit-taking,
currency exchange, remittance, trade finance, and wealth management,
Hong Kong is currently the most influential offshore renminbi centre.
4.3. Renminbi Internationalisation and Financial
Cooperation Figure 4-2: Key Milestones in Development of Offshore Renminbi Business in Hong Kong
Personal/ Corporate Renminbi Bond Renminbi Trade Renminbi

The internationalisation of renminbi and Guangdong-Hong Kong Renminbi Services Market Settlement Investment
Personal renminbi services

financial cooperation are two priority initiatives that the Guangdong 2004
for Hong Kong residents
and Hong Kong governments have put forward, which also have the 1st renminbi bond by
support of the Central Government. 2007 Mainland financial

institution
Pilot scheme launched

4.3.1. Hong Kong in Renminbi Internationalisation 2009
1st renminbi in Hong Kong, Macao,
sovereign bond ASEAN countries and five
Mainland cities
Hong Kongs Renminbi Activities Corporate customers Expanded to 20
1st renminbi bond by
2010 allowed to open renminbi provinces and cities in
As of September 2013, the renminbi was the 12th most-used payment deposit accounts
overseas corporate
Mainland China
currency in the world with a 0.86 percent share of all global payments. Renminbi ODI and
Renminbi FDI
In recent years, particularly since the global financial crisis, Mainland 1st renminbi bond
Further expanded to
2011 by Mainland non- RQFII scheme with
authorities have actively promoted renminbi internationalisation: financial institution
whole Mainland China
initial quota of
facilitating international trade and investments denominated and Rmb20 billion
settled in renminbi, and developing offshore renminbi-denominated Personal renminbi services Pilot scheme formalised RQFII quota
2012 for non-Hong Kong to cover all companies in expanded by
financial products. Hong Kong proactively participates in renminbi residents Mainland China Rmb250 billion
internationalisation, and has taken up an instrumental role in the 1st renminbi

2013 sovereign bond with
undertaking. a 30-year tenor
Source: T he Research Office of the Legislative Council Secretariat (Hong Kong), Offshore Renminbi
Centre, Research Brief: RB02/13-14, 12 December 2013.
100 101
Indeed, Hong Kong has the largest pool of renminbi liquidity outside Figure 4-4: Renminbi Trade Settlement Handled by Banks in Hong Kong
Mainland China. According to the Hong Kong Monetary Authority,

renminbi customer deposits and certificates of deposit in Hong Kong
2009
1.9
amounted to RMB1,053 billion (US$173 billion18) at the end of 2013. Initially, (Jul-Dec)
the growth was driven by retail deposits on the expectation of renminbi

2010 369
appreciation, and later boosted by the increase in renminbi receipts by
corporate customers through cross-border trade settlement transactions. 2011 1915
Figure 4-3: Renminbi Deposits and Certificates of Deposit in Hong Kong

2012 2633
RMB billion
1200
1053 2013 3841
1000
0 500 1000 1500 2000 2500 3000 3500 4000

RMB billion
800
720
662 Source: Hong Kong Monetary Authority
600
The Pearl River Delta region is one of Hong Kongs key partners in the
renminbi trade settlement business. In July 2009, when the pilot scheme
400
322
for using renminbi for cross-border trade settlements was first launched,
200
enterprises in the four Pearl River Delta cities, Guangzhou, Shenzhen,
56 63 Zhuhai, and Dongguan, and enterprises in Shanghai, Hong Kong,
33
0 Macao, and ASEAN (Association of Southeast Asian Nations) countries,

2007 2008 2009 2010 2011 2012 2013
were permitted to use renminbi for trade settlements. In June 2010,
Source: Hong Kong Monetary Authority
the Peoples Bank of China further expanded the coverage of the pilot
scheme from the four Pearl River Delta cities to Guangdong Province as
Renminbi Trade Settlement and Hong Kong-Pearl River Delta/Guangdong
a whole. The amount of renminbi trade settlement handled by banks in
Cooperation
Hong Kong amounted to RMB369 billion in 2010 about 30 percent of
In 2009, Hong Kong launched the pilot scheme of the renminbi cross- which came from Guangdong Province alone.
border trade settlement to assist trading companies in China to minimise
Cross-border renminbi business between Guangdong Province and
foreign exchange costs and control exchange rate risks, and in 2011, the
Hong Kong has continued to develop. In 2013, renminbi trade settlement
scheme was extended nationwide. According to the Society for Worldwide
handled by banks in Hong Kong reached RMB3,841 billion (US$620
Interbank Financial Telecommunication (SWIFT), Hong Kong handled
billion), of which over 20 percent was for transactions between Hong
about 70 - 80 percent of worldwide renminbi SWIFT payments in 2013.
Kong and Guangdong Province.
18
US$1 = RMB6.0969 (As at 31st December of 2013)
102 103
under the new measure, Hong Kong-funded banks are able to set up a
cross-location sub-branch within Guangdong Province by investing only
RMB10 million (US$1.6 million), and obtaining the approval of the banking
regulatory commission at provincial level. In early 2013, the Guangdong
Bureau of the China Banking Regulatory Commission allowed Hong
Kong-funded banks to apply for the establishment of multiple sub-
branches in one application. This is further expediting the expansion of
Hong Kong-funded banks into the marketplace of Guangdong Province.
As of September 2013, six Hong Kong-funded banks including HSBC,

Hang Seng Bank, and Bank of East Asia, had been granted permission to
set up a total of about 50 sub-branches in Guangdong Province. Most of
these were in cities in the Pearl River Delta region.
Hong Kongs Other Financial Activities in Guangdong Province
Securities Sector: Supplement VII of CEPA (2009) provided preferential

measures at an opportune time for the development of new financial
4.3.2. Hong Kong-Guangdong Financial Cooperation
products, and the introduction of ETFs (Exchange-traded funds) on Hong
Kong stocks in the Mainland. Thanks to this provision, various Hong
The Cross-Location Sub-Branches Measure under CEPA
Kong-Guangdong financial investment projects have been permitted to
Banking cooperation between Guangdong and Hong Kong is largely launch:
facilitated by CEPA, and mostly through the Guangdong Early and
August 2012: Hang Seng Securities Ltd and Guangzhou Securities Ltd
Pilot implementation scheme. Under Supplement VI of CEPA, Hong
set up the first joint-venture securities investment advisory company
Kong banking institutions are permitted to set up sub-branches across
to operate in Guangdong Province;
different cities in Guangdong Province.
September 2012: The Hong Kong Exchanges and Clearing Ltd
This measure is best known for its advantages including: reduction
(HKEx), Shenzhen Stock Exchange, and Shanghai Stock Exchange
in entry capital requirements and substantial shortening of approval
established a joint venture (China Exchanges Services Company
procedures. Prior to this, banks in Hong Kong were required to set up a
Ltd) in Hong Kong to develop cross-border indices based on products
branch office before they could establish any sub-branch/branch outlets
traded on the three markets, linking the China financial markets with
in the same municipality. The capital requirement of a new branch
the world, and contributing to the further internationalisation of
is RMB100 million (US$16 million), and approval is granted from the
Chinas capital markets;
banking regulatory commission at Central Government level. However,
104 105
O
ctober 2012: The first exchange- in Shenzhen appears to be the most proactive in driving financial
traded fund for Hong Kong-listed development thanks largely to the determination of the Shenzhen
stocks was formally listed on the Government, and Shenzhens proximity to Hong Kong. Three prominent
Shenzhen Stock Exchange. Hong Kong banking institutions, Hang Seng Bank (China), Bank of East
Asia, and HSBC have established branches in Qianhai.
Insurance Sector: Supplement VIII
of CEPA (2011) allowed Hong Kong Under the provisional rules announced at the end of 2012, regarding
insurance brokerages to set up wholly- the management of cross-border renminbi loans, companies which are
owned insurance agencies on a pilot registered in Qianhai and have substantial operations in the area are
basis in Guangdong Province. eligible to borrow renminbi from banks in Hong Kong. This initiative
further enhances cross-border utilisation and the circulation of
Guangdong Provinces Financial renminbi funds between the Mainland and Hong Kong. As of August
Investments in Hong Kong 2013, cross-border renminbi loans registered in Qianhai totalled RMB7
billion (US$1.1 billion).
As at the end of 2012, a total of 136
Guangdong enterprises had been listed
in Hong Kong. By the end of August Future Financial Cooperation between Hong Kong and Guangdong
Province
2013, the Hong Kong subsidiaries of
seven securities companies, eight There are four priority areas on the cooperation agenda between Hong
fund management companies, and Kong and Guangdong Province for the near future:
two futures trading companies from
C
ross-border renminbi handling: To further expand cross-border
Guangdong had obtained licenses to carry out regulated activities in
renminbi lending to the entirety of Guangdong Province, including
Hong Kong. In addition, a Hong Kong subsidiary of a Shenzhen-based
Nansha and Hengqin;
fund management company launched an RQFII A-share ETF product,
which is listed on the Hong Kong Stock Exchange, and trades under the Securities sector: To lower the entry requirement for Hong Kong
Dual Counter model (in other words, renminbi and Hong Kong dollar securities companies into the Mainland market, expand their scope of
trading counters). services, and increase the upper limit of their shareholding percentage;
I nsurance sector: To lower the entry requirement for Hong Kong

Financial Cooperation in Qianhai, Shenzhen
property insurance companies into Guangdong Province, and
Building on the 12th National Five-Year Plan, the Guangdong Provincial encourage Guangdong enterprises to establish their insurers in Hong
Government is very keen to promote financial cooperation between Kong for overseas investments and businesses;
Hong Kong and three Guangdong pilot and experimental zones:
Qianhai, Nansha, and Hengqin. Among the three zones, Qianhai T
he development of the QDII initiative: To facilitate Guangdong
106 107
Conclusion
Hong Kongs interaction with the Pearl River Delta region is
a dynamic trajectory tied to the policy shifts of the Central
Government, and changes in the global economic environment.
The 1997 reunification of Hong Kong with Mainland China
enabled Hong Kong to take up strategic assignments from the
Central Government, for example, financial development and
renminbi internationalisation. This has strengthened Hong Kongs
business partnership with Mainland China so that it goes beyond
merchandise trading, so often confined within the Pearl River
Delta region, to penetrate a wider scope of service cooperation.
CEPA is the most important framework regulating service

cooperation between the Mainland and Hong Kong. By nature,
Province investors participation in the Hong Kong investment market. CEPA is a preferential trading agreement between two customs
territories, and, in reality, a very important institutional platform
for Mainland China to provide unilateral preferential market
4.4. Helping Enterprises to Explore the Mainland Market
access to Hong Kong-based investors. CEPA, and its Guangdong
Recognising the rapidly growing domestic market in Mainland China, the Early and Pilot Implementation scheme is not a static agreement
Hong Kong Government encourages Hong Kong enterprises to develop but a dynamic process, liberalising the Greater Pearl River Delta
their business in China through developing their brands, and upgrading region market to international investors. Now, and in the future,
and restructuring their operations. Hong Kongs contribution to the Greater Pearl River Delta region is
to link global economies to Mainland China, and vice versa.
The relevant policy bureaux and departments, public institutions,
and industrial chambers will regularly relay information to Hong Kong
enterprises to enhance their understanding of the Mainlands latest
policies, regulations, and market trends. In mid-2012, the Hong Kong
Government set up a Dedicated Fund on Branding, Upgrading and
Domestic Sales (the BUD Fund) of HK$1 billion (US$125 million) to assist
Hong Kong enterprises to promote their development in the Mainland.
Such support can extend to foreign companies which have registered
and carried out substantive commercial operations in Hong Kong, which,
Section 5 Hong Kongs Role in the Greater Pearl River Delta Region Section 5 Hong Kongs Role in the Greater Pearl River Delta Region
108 109
Hong Kongs Role pillar industries of financial services, trading and logistics, tourism and
G
professional services. The government announcement pointed at two
reater
things. First, it clarified Hong Kongs strategic intention to embrace new
in the business opportunities in a knowledge-based economy, and, second, it
showed that Hong Kong had reappraised its role within the Greater Pearl
Pearl River Delta Region River Delta region.
5.1. Regional Economic Roles of Hong Kong in the

5.1.1. Investment-Led Service Hub
In the earlier days, merchandise trade drove the notion of Front Shop and
Back Factory cooperation, which was backed up by the Mainlands
abundant labour resources with Hong Kongs investment as a
crucial driving force serving international customers.
By the mid-1990s, after Hong Kong-based manufacturers had

completed their transfer of industrial competencies and
manufacturing facilities to the Pearl River Delta region,
Hong Kong once again began to feel pressure to sustain the
Since 2001, the scale of its manufacturing investment in the Pearl River
Pearl River Delta Delta region. According to statistical figures reported by
region has been moving the Central Government, Hong Kong has always been
into a new development the largest source of foreign direct investment into
phase, while the global financial Mainland China. That said, a considerable portion of
crisis of 2008 has also seen Hong Kong Hong Kongs manufacturing investment in the Pearl
enter a new stage. Symbolic of this was the River Delta comes from international and Taiwanese
announcement by the Hong Kong Government of enterprises which utilise Hong Kong as a
its intention to develop priority industries in which the gateway into the region.
city would enjoy clear advantages. These include innovation
and technology, testing and certification services, cultural and
creative industries and environmental industries, in addition to the
110 111
Chinas accession to the World Trade Organization has opened up The initiative of trade and investment facilitation under CEPA perfectly
Chinas services market, allowing foreign service providers to establish reflects the emergence of a new set of trading rules in the 21st century,
their commercial presence in China through investing. Likewise, and denotes a shift in international trade patterns from the merchandise-
the Chinese investor enjoys a higher degree of freedom to conduct led trade in goods to a new development model of investment-led trade
international investments rather than the former approach of Chinese in services.
firms which was to list on foreign stock markets, for fund raising and
joining forces with international strategic partners. Since 2000, the 5.1.2. An Enhanced Two-Way Investment Platform
Hong Kong stock market has been the first and preferred listing place
In recent years, Hong Kong has seen itself evolve from being a source of
of Mainland state-owned enterprises. Indeed, in the Global Fortune-500
unilateral investment, to a two-way investment platform linking Pearl
and China Fortune-500 lists, the firms in the Hong Kong category are
River Delta region investors to the global market, and global investors to
mainly Mainland China-based state-owned enterprises such as China
Pearl River Delta region and China markets.
Mobile Communications, China Telecom, Peoples Insurance Co. of
China, and China National Offshore Oil. As at December 2013, some 797
Mainland companies were listed on the Hong Kong Stock Exchange. Pearl River Delta Region Investors in Hong Kong for the
Global Market
In 2013, 127 China Fortune-500 firms with a total revenue of US$778 billion
and a profit of US$74 billion listed Hong Kong as their headquarters.
Financial-Led Investment
Table 5-1: Composition of Chinas Fortune-500 Companies (2013) Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Ltd is the largest
Share
manufacturer and exporter of longitudinal welded steel pipes in China,
Number of
Revenue Profit and is headquartered in Guangzhou. The company has been listed on the
firms listed Firms listed
(US$ (US$
as China
billion) billion) as China Revenue Profit main board of the Hong Kong Stock Exchange since February 2010.
Fortune-500 Fortune-500
By investing and listing in Hong Kong, Chu Kong is able to access a wider
China
Fortune 500 4,147 347 100.0% 100.0% 100.0% portfolio of financial products at competitive prices for overseas business.
500 Its improved corporate image through listing in Hong Kong gives Chu Kong
Beijing 77 1,904 192 15.4% 45.9% 55.3% an added advantage of winning bids from recognised global players and
major construction projects. Strengthened by its Hong Kong investment
Hong Kong 127 778 74 25.4% 18.8% 21.3%
background, Chu Kong has been able to take part in Hong Kong projects
Shanghai 42 382 26 8.4% 9.2% 7.5%
including the Hong Kong-Zhuhai-Macao Bridge, and the Hong Kong section
Shenzhen 27 191 18 5.4% 4.6% 5.1% of the national gas pipeline, West-East Gas Pipeline Phase II. This not only
Guangzhou 10 44 3 2.0% 1.1% 0.8% gives the company business revenue, but also provides accessibility to
state-of-the-art projects that will induce new product development.
Source: B ased on Fortune China, available at: http://www.fortunechina.com/fortune500/c/2013-
07/16/2013C500.htm.
112 113
Science-Led Investment Global Investors in Hong Kong for China and the Pearl River
Delta Market
Shenzhen Huawei is Chinas most renowned manufacturer of
telecommunication equipment headquartered in Shenzhen. The
companys internationalisation began in 1996 when it earned its first Marketing-Led Investment
international order for fixed-line network products from Hong Kongs
Established in New York City in 1941, Coach Asia is a maker and marketer
Hutchison Whampoa. Drawing on its experiences on the Hutchison deal,
of fine accessories, leather goods and gifts for women and men. In early
Huawei pushed its international market expansion.
2000, Coach started with a sourcing office in Hong Kong. Between 2008 and
The companys Hong Kong journey has not just been limited to market 2009, the company decided to step up its commitment to Asia and began
cooperation but also to technological collaboration. In 2012, it set up the taking back its retail operations under the management of its Hong Kong
Noahs Ark Lab in the Hong Kong Science Park, despite the parks proximity regional office. Despite fierce competition in Hong Kongs retail market,
to its Shenzhen Central R&D Laboratory. Huawei aims to use its Hong Kong Coach opened four new stores in 2012, and operates 18 retail stores with 350
operation as a base to attract international talent, and to collaborate with employees in Hong Kong and Macao.
academic institutions in Hong Kong. The Noahs Ark Lab plans to increase its
Andre Cohen, President and Chief Executive Officer Coach Asia, sees
Hong Kong staff number to about 90 in 2014.
Hong Kong as a strategic location for its retail brand in Asia. Its a vibrant
Artop Group is an innovative Shenzhen-based industrial design firm in the city with a well-informed, demanding and sophisticated consumer, who
top 10 of Mainland industrial design companies. Artop mainly focuses on influences fashion trends across the rest of Asia. So, being successful in
industrial design, development integration and high-end manufacturing. Hong Kong has really helped us to build up our awareness and credibility
In 2013, it set up a research centre in the Hong Kong Science Park. Thanks in the region, he said.
to Hong Kongs reputation regarding the protection of intellectual property

The brands experience in Hong Kong has helped facilitate its entry into
rights, the group earned its first major international order from an
the worlds largest market. Building on its presence in cities such as Beijing,
international technological company also situated in the park. Artop plans
Shanghai and Shenzhen, it has penetrated into 40 cities in the Mainland
to gradually shift its headquarters functions to Hong Kong, and leverage
and will continue to extend its reach to the second and third-tier cities.
Hong Kongs advantages in intellectual property rights, to enable extensive
Were using our experience of our mens business in Hong Kong, which
technological collaboration with international customers.
has been a very fast-growing sector, to help develop our business across
Smart China (Holdings) Ltd a leading, integrated solutions provider for the rest of Asia. Hong Kong provides this kind of invaluable opportunity
Smart City development is headquartered in Shenzhen. The company for market research, Cohen concluded.
focuses on integrating smart, green, sustainable technologies to facilitate

city-wide management, on a one-stop basis. By pooling its research and Science and Market-Led Investment
development talent from home and overseas, Smart China could set up
Jolla Ltd established in 2011 and is headquartered in Helsinki, Finland. The
a research centre in the Hong Kong Science Park. The company uses this
company develops mobile devices and an operating system called Sailfish.
platform to develop technologies in which international collaboration and
In November 2012, due to its interest in the Mainland China market, Jolla
Hong Kongs protection of intellectual property rights are essential.
opened its first office outside Finland in Hong Kong Cyberport. Initially,
the company rented a three-seat unit in Cyberport Smart-Space 1, but it has
114 115
recently moved to a 12 seat unit in Smart-Space 2 to accommodate more Indeed, Chinese visitors are keen to shop for luxury products in Hong
employees for its expansion. Jolla remarks that Hong Kong Cyberport is Kong due to price differences and their confidence in the quality of Hong
well-organised, offers flexible leasing terms and business support, as well as Kongs retail sector. Many Chinese customers believe that all products
good networking opportunities and an entrepreneurial start-up culture. available on the Hong Kong retail market hold a level of quality assurance
iFormBuilder mobile platform was created and owned by Zerion Software that complies with international standards, and is recognised by global
Inc. The company has 12 years of experience in software development, and customers. Despite its relatively small population and market potential,
is headquartered in Virginia, US. To break into the Greater China and Asia- many prestigious consumer brands indicate an aim to establish at least
Pacific markets, iFormBuilder opened its first branch office outside the US in one outlet in the territory to demonstrate a global image to Mainland
Hong Kong Cyberport in July 2013. As a member of Cyberport, iFormBuilder customers.
is entitled to use Cyberport facilities in Shanghai, enabling the companys
Table 5-2: P rice Comparison of Selected Luxury Products Sold in Hong Kong and
discussions with Mainland clients.
Shenzhen
Price in Hong Price in Price difference

Brand Product
Kong (RMB) Shenzhen (RMB) (percentage)
5.1.3. A Shopping Paradise and Marketing Arena 100% cashmere

Burberry scarf, size 30cm 3,205 4,500 40.4%
x 168cm
Total retail sales in Hong Kong recorded annual growth at 11.8 percent
from 2005 to 2012, thanks, largely, to the shopping activities of Mainland Lady Dior
Dior handbag, 24,439 29,000 18.7%
Chinese visitors. medium size
Lady Dior
Figure 5-1: Total Retail Sales in Hong Kong Dior 27,243 32,500 19.3%
handbag, large
US$ Billion
80
100% silk scarf,
Hermes 3,045 3,750 23.2%
90cm x 90cm
70 Tank watch,
63.8 Cartier 26,763 36,400 36.0%
medium size
60 57.4
Cartier Love bracelet 34,855 47,300 35.7%
52.1
50 Wallet, Sarah
Louis Vuitton 4,127 4,850 17.5%
41.8 Monogram
40 35.1 35.4 Wallet,
31.7
Louis Vuitton Alexandra 4,808 5,350 11.3%
26.3 28.2
30 Monogram
Handbag, Maxi
20 Bottega Veneta 20,392 25,480 24.9%
Veneta Hobo
10 Handbag,
Chanel classic, medium 32,211 41,000 27.3%
0 size
2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: Fung Business Intelligence Centre, Luxury market in China, April 2013.
Source: The Census and Statistics Department of the HKSAR Government
116 117
5.1.4. A Key Investor and Service Supporter of Macao western bank via the Hong Kong-Zhuhai-Macao Bridge, which will be
completed in 2016.
Although Macao is the smallest economy in the Greater Pearl River
Delta region, it actually enjoys the highest per capita GDP not just in Plans for the expansion of the Hong Kong International Airport are
the region but across Asia. Macao is the only location in China which underway, with completion of the expansion hoped for by 2023. Indeed,
permits gaming, overtaking the Las Vegas Strip in 2008 to become the with the expected operation of all of the above infrastructure projects
worlds largest gaming market. Hong Kongs cooperation with Macao within 10 years, it will be easy to travel from Hong Kong to the Greater
is extensive. STDM, Galaxy, and Melco, three of the six companies with Pearl River Delta region and to cover the southern China region via the
gaming licenses in Macao, have strong ties to Hong Kong, and four of express railway network as well.
the six are listed on the Hong Kong Stock Exchange. Meanwhile, much
of the construction expertise used in the recent development of Macao Science and Research-Based Infrastructure
has come from Hong Kong. In addition, Hong Kongs airport and two ferry
In 1999, the Hong Kong Government accepted the findings of the late
companies run routes between the two places, providing transportation
Professor Tien Chang-lins report on technology development in Hong
access for visitors. Meanwhile, Hong Kong is the second largest source
Kong, and in the years since, there have been a number of major science
of visitors spurring Macaos tourism development. In 2012, there were
and research-based infrastructure projects and several publicly-funded
7.01 million visitor arrivals from Hong Kong 23.7 percent of total visitor
research institutions founded.
arrivals in Macao that year.
Of all the projects, the Hong Kong Science Park is the most iconic,
providing world-class infrastructure for research-based companies, and
5.2. N
ew and Projected Advantages of Hong Kong to the
their business visitors. Situated on the 22-hectare waterfront site in the
Greater Pearl River Delta Region Tai Po District of the New Territories, the park consists of 26 state-of-
the-art buildings in its first and second phases, with the development
5.2.1. World-Class Infrastructure of Phase 3 buildings scheduled between 2014 and 2016. Another key
science-related infrastructure is the Hong Kong Cyberport, located in the
Multi-Dimensional Transportation between Hong Kong and the Greater
Southern District of Hong Kong Island. Cyberport consists of four Grade-A
intelligent office buildings, a five-star hotel, and a retail entertainment
Hong Kong has greatly improved its connectivity to the Pearl River Delta complex, which were all operational in different phases between
region through highway projects such as the Hong Kong-Shenzhen 2002 and 2008. Both the Hong Kong Science Park and Cyberport are
Western Corridor completed in 2007, and the railway network, for designated by the Hong Kong SAR Government as homes to grow
example, the Lok Ma Chau Spur Line that began operations in 2007, as technology enterprises, and as key zones to provide incubation services
well as upcoming projects: the forthcoming Guangzhou-Shenzhen-Hong to strengthen and diversify Hong Kongs economy beyond the realms of
Kong Express Rail Link which will be completed in 2015, and the first traditional service and trading industries.
cross-boundary project linking the eastern bank of the Pearl River to the
118 119
5.2.2. Jurisdiction for Knowledge Economy Centre, and the Secretariat of the International Chamber of Commerce
International Court of Arbitration (Asia Office), Hong Kong is strongly
Thanks to the One Country, Two Systems policy, Hong Kong has been
placed to meet the demand for high-end arbitration services, particularly
able to retain its rule of law practices underpinned by an independent
those related to China development.19
judiciary after its handover to the Mainland. These practices are based
on the common law legal system, which maintains Hong Kongs strong
Protector of Intellectual Property Rights
links with international societies.
Hong Kong is recognised as the frontrunner Chinese city with respect
Indeed, Hong Kongs connection with foreign legal practitioners has not
to intellectual property (IP) rights. Indeed, its historical and legal
diminished since its reunification with the Mainland. In fact, there have
foundation can be traced back to July 1990 when the Intellectual
even been signs of growth in the last five years a reflection of Hong
Property Department was established. Hong Kong further expanded its
Kongs determination to enhance the global standard of its corporate
efforts to protect IP rights into Guangdong Province. In August 2003, the
governance. As of 31 December 2012, there were 7,483 solicitors holding
Guangdong/Hong Kong Expert Group on the Protection of Intellectual
valid certificates to practice law in Hong Kong. Among them, 922 foreign
Property Rights was set up. The group aims to enhance exchange and
lawyers were employed in the territorys law firms, while 322 foreign
cooperation on various aspects of IP protection, including education,
lawyers were in 70 foreign law firms in Hong Kong. Clearly, when an
training, enforcement, research, and providing information. As of August
international firm decides to invest in Hong Kong, it is likely that they
2013, 12 meetings have been held between the two destinations, and law
will be able to find a foreign lawyer who speaks their own language,
enforcement authorities in Guangdong Province and Hong Kong have
and understands the regulatory differences between their own country
worked closely to improve the co-ordination mechanism for handling
and Hong Kong. This may not be possible in the Pearl River Delta region,
IP-related cases, for example, to combat cross-boundary IP rights
where the Central Government has placed certain restrictions on foreign
infringements on the internet.20
legal practitioners.
According to the findings of The Annual Survey of Companies in Hong
Emerging Arbitration Servicer Kong Representing Parent Companies Located outside Hong Kong, foreign
or Mainland companies that set up regional headquarters or offices in
In 2001, the Hong Kong Government proposed developing Hong Kong as
Hong Kong, give weight to the citys protector of intellectual property
an international arbitration centre, and promoting the territory as a legal
rights reputation. In 2013, 52 percent of surveyed companies ranked
services centre for the negotiation and documentation of China-related
Hong Kongs protection of intellectual property rights as a favourable
contracts, and a dispute resolution centre for these contracts. There have
aspect compared to 29 percent in 2001.
been vigorous efforts to achieve this since then, and in June 2011, the new
Arbitration Ordinance came into effect, which was a major milestone
in enhancing Hong Kongs arbitration regime. In September 2012, the 19
S
ource: Speech by SJ at inauguration ceremony of CIETAC Hong Kong Arbitration Centre, 24 September 2012.
China International Economic and Trade Arbitration Commission Available at: http://www.info.gov.hk/gia/general/201209/24/P201209240452.htm.
established an arbitration centre in Hong Kong. Coupled with its existing 20

ource: The Intellectual Property Department, Twelfth Meeting of Guangdong/Hong Kong Expert Group on
S
Protection of Intellectual Property Rights, 6 August 2013. Available at: http://www.ipd.gov.hk/eng/pub_press/press_
arbitral institutions, including the Hong Kong International Arbitration releases/2013/report_12th_meeting_e.pdf
120 121
Table 5-3: I mportance and Favourability of Factors Affecting Hong Kong as a Location for 5.2.3. Human Capital and Talent Mobility
Regional Representation
Hong Kong is known as an ideal place for international talent due to its
Ranking of
Favourable Neutral Unfavourable No comment
importance cosmopolitan lifestyle. In the last 10 years, Hong Kong has opened itself
2001 2013 2001 2013 2001 2013 2001 2013 2001 2013 to a new mode of talent exchange by way of its higher education system,
Rule of and its offer of visa-free arrangements to a majority of countries around
law and
6 4 52% 60% 38% 27% 4% 2% 6% 11% the world.
independent
judiciary
Level
10 9 47% 53% 43% 34% 4% 3% 6% 11%
The Educational Role of Hong Kong
playing field
Proficiency Over the last decade, the Pearl River Delta region has aggressively
12 11 34% 54% 50% 31% 10% 4% 6% 11%
in English upgraded its manufacturing sector and has shifted towards modern
Protection of
service sectors, creating vast employment opportunities in knowledge-
intellectual
16 12 29% 52% 52% 35% 12% 2% 6% 11%
property intensive positions. The average educational attainments of the working
rights
populations of both Guangdong Province and the Pearl River Delta are
Source: Census and Statistics Department of HKSAR Government, Annual Survey of Companies in improving, and are higher than the national average. However, there
Hong Kong Representing Parent Companies Located outside Hong Kong, 2001, 2013.
remains much room for improvement.
By consolidating recent developments in the arbitration sector and
Table 5-4: The Average Educational Attainment of Working Population in the Pearl River
increasing awareness about the protection of IP rights, Hong Kong is
Delta region (Year)
building up its institutional framework to embrace the development of
2000 2010
a knowledge economy.
National Average 8.00 9.10
Guangdong Average 8.81 9.79
PRD Region Average 9.35 10.28
Source: G uangdong Statistical Info Net. Available at: http://www.gdstats.gov.cn/tjzl../tjfx/201306/

t20130618_122622.html.
Meanwhile, the educational attainment of Hong Kongs population is

the highest in the Greater Pearl River Delta region. About 80 percent of
the Hong Kong population (aged 15 and over) has attained secondary
school education or above a ratio that increased from 72.2 percent
in 2002 to 79.5 percent in 2012. The category of degree holders has
grown the fastest, increasing from 11.1 percent in 2002 to 16.2 percent in
2012. Following reunification, the Hong Kong Government put forward
an education policy of bi-literacy and tri-lingualism. This policy is
122 123
advantageous to young Hong Kongers, enabling them to acquire Kong an important place in the Greater China region. The benefits do
language competencies to better handle liaisons between Mainland not only concern higher education (educators, students, and facilities)
China and the western world. but also Hong Kongs long term development through enrichment of its
talent pool. The territory often retains its student talent after completion
Figure 5-2: Population aged 15 and over by educational attainment of Hong Kong, 2002 -
2012
of their studies.
Percentage
Table 5-5: QS World University Rankings 2013/14
100
Rank University Location

90
26 The University of Hong Kong Hong Kong

80
34 The Hong Kong University of Science and Technology Hong Kong
70 39 The Chinese University of Hong Kong Hong Kong
60
46 Peking University Beijing
48 Tsinghua University Beijing

50
88 Fudan University Shanghai
40
104 City University of Hong Kong Hong Kong
30 123 Shanghai Jiao Tong University Shanghai
20 161 The Hong Kong Polytechnic University Hong Kong
10
Attracting Young Mainland Talent to Hong Kong
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Each year, thousands of young students
Post-secondary - postgraduate Post-secondary - non-degree Primary enroll in the undergraduate and postgraduate
Post-secondary - degree Secondary No schooling / Pre-primary programmes of Hong Kongs universities,
and the top students are offered attractive
Source: G
eneral Household Survey Section(3), Census and Statistics Department, the HKSAR scholarships. This diversifies the university
Government
portfolio, and strengthens the competence
In addition, universities in Hong Kong enjoy higher university rankings of Hong Kong graduates. Importantly, many
than the majority of Mainland China universities. According to the QS young Mainlanders prefer to work in Hong
World University Rankings 2013/14, a total of five Hong Kong-based Kong after they graduate. As a result, the
universities are ranked in the Top 200 list. Among them, three Hong Kong territory benefits from a talent thrust, and
universities earn higher rankings than the most prestigious Mainland new prospects for Mainland China-Hong Kong
Chinese universities (Peking University and Tsinghua University). The cooperation arise.
strong academic performance of people in Hong Kong makes Hong
124 125
Hong Kongs Visa-free The Individual Visit Scheme Mobility of Mainland Talent
Arrangement Scheme Mobility
The Individual Visit Scheme (IVS) of the Closer Economic Partnership
of International Talent
Arrangement, permits residents of Guangdong Province to travel to Hong
Among all citizens in the Kong conveniently. The IVS removes the institutional obstacle restricting
Greater Pearl River Delta region, talent exchange and business travel, and promotes the weekend
Hong Kong citizens have the shopping activities of Pearl River Delta residents. This makes a reality of
highest degree of international the one-hour life circle concept.
mobility due to the visa-free
arrangement of the Hong Kong
Government. As of January 5.3. Additional Roles of Hong Kong in the New Era
2014, HKSAR passport holders
Hong Kong is advantageous as a location which multinational firms
have been granted visa-free
can use to access the Pearl River Delta, Mainland China, and the Asia-
access or visa-on-arrival access
Pacific region. Hong Kong remains the preferred location for overseas
to 149 countries and territories,
and Mainland companies to manage their Asia operations, mainly due
compared to Mainland Chinese
to its simple and low tax regime, free flows of information and capital,
residents who are eligible for visa-
and its geographical location. According to an annual survey, the total
free access or visa-on-arrival
number of companies with parent companies overseas and in Mainland
access to about 30 countries and
China reached 7,449 in 2013, with 3,835 of them setting up their regional
territories. In addition, frequent
headquarters or regional offices in Hong Kong. Hong Kong continues to
flight schedules from Hong Kong
advance, and ready itself to embrace the emerging opportunities of the
International Airport mean that
knowledge economy, and widespread mobile technology.
the Hong Kong professional is
ready to depart for international An enhanced two-way platform is gaining development momentum in
services within hours or a day. Likewise, most foreign visitors, especially Hong Kong. Rather than the earlier unilateral investment of international
those from developed countries, are able to visit Hong Kong on the visa- investors into Mainland China, there is now a growing number of
free scheme. outbound investments from China, through Hong Kongs investment
window. Indeed, the development of bilateral investments is turning
Given Hong Kongs close relationship with Mainland China, foreign
Hong Kong into a meeting point for key decision makers to start a dialogue,
visitors can easily apply for a China visa, and with the support of a Hong
to develop new forms of collaboration, and to conclude business deals.
Kong-based Mainland travel agency, application time can be as short as
Apart from the traditional financial strength and professional services
just one working day. This makes Hong Kong an ideal place for foreign
rendered by its service providers, Hong Kong has three additional roles
citizens to stop off before they enter the Mainland.
in the context of Greater Pearl River Delta development.
126 127
5.3.1. Marketing A Place to Build 5.3.2. I nvestment A Place to Facilitate and Protect Investor
Image Benefits
Brand Imaging for Foreign Enterprises Foreign Enterprises Go China
According to some multinational Limited by Mainland Chinas commitments in its World Trade
premium brand owners, although Organization accession, foreign enterprises must follow the measures
they are targeting the Mainland China in the Catalogue of Industries for Guiding Foreign Investment. To
market, it is of great importance that they enjoy preferential treatment, foreign enterprises need to make use of
establish a commercial presence in Hong preferential trade agreements (PTAs) signed between Mainland China
Kong, even if this means just one outlet, and external countries or territories. Among all PTAs that Mainland China
to demonstrate their international image has engaged in, the Closer Economic Partnership Arrangement (CEPA)
and convince Mainland consumers of between the Mainland and Hong Kong is by far the most preferential in
their global brand image. In sales terms, openness and scope.
Hong Kong is also an ideal location to
Despite recent developments in the Shanghai Free Zone, where foreign
serve Pearl River Delta region consumers
investment is scheduled in a negative list, a programme of competitive
and VIP visitors from Southeast Asian
liberalisation is implied, which is the minimum commitment of Mainland
countries, and Taiwan.
China to the world. Meanwhile, the CEPA mechanism is regulated to the
positive list approach, which shows the progressive liberalisation of
Corporate Imaging for Mainland Enterprises
Mainland China and Hong Kong reserves the right to ask for further
Mainland investors with a Hong Kong presence, including companies preferential measures when Mainland China deems further liberalisation
listed on the Hong Kong Stock Market, indicate that they can earn to be suitable. By investing in Hong Kong, foreign entities are able to enjoy
better and more respected business exposure by positioning or both positive list and negative list approaches, and choose whichever
linking themselves with Hong Kong. This is due to the better corporate suits them best.
governance mechanisms enforced in Hong Kong, which lead to an
improved corporate image for them. Hong Kong provides Mainland Mainland Enterprises Go Global
investors with a skilled workforce capable of handling corporate
Over the past five years, the Central Government has strongly driven go-
communications and understanding the cultural differences between
global initiatives for Mainland companies, and Hong Kong has become
the east and west. Before promoting their brand image, Mainland
an ideal gateway for Mainland enterprises to go global and expand
investors should get rid of the earlier image as a low-cost supplier, and
their business overseas. Traditionally, it was believed that the low and
build a well-respected corporate image to meet the development of a
simple tax system of Hong Kong offered Mainland enterprises cost
knowledge economy. An improved corporate image is crucial for the
incentives, while the financial sector provided them with improved
Mainland investors to establish and enhance their brand image.
128 129
lending terms and flexibility. However, better citizen mobility between of their innovation in the
China and Hong Kong now permits Mainland Chinese management to Mainland China market can
easily visit Hong Kong, while the strong international mobility of Hong be equally difficult. Generally,
Kong staff can help an enterprise to address international service foreign innovators dedicate
requirements at very short notice. More importantly, business practices most of their corporate focus
adopted in Hong Kong are in line with international trends which will and resources to innovation
enable Mainland enterprises to adhere to and respect international best activities. However, this subjects
practices and manage their global business in a regulated way, which them to operational hurdles,
eventually enhances their corporate image. given the rapidly changing
regulatory requirements of
Safeguarder of Investor Benefits Mainland authorities. The
marketing, commercial, and
Hong Kong has not only successfully preserved its rule of law tradition
incubation support that the
and business-friendly environment, but provides additional protection
Hong Kong Science Park and
for new investors. The territory is a favourite place for foreign legal
Cyberport offer can be an
practitioners to provide consulting and professional services, and
ideal solution. Aided by the
safeguard investors economic interests. In addition, the Hong Kong
investment facilitation services
Government is determined to protect investors benefits. As at the end
of Invest Hong Kong and the exhibition support of the network of the Hong
of 2013, Hong Kong had engaged 17 economies (16 economies are
Kong Trade Development Council, the commercialisation of innovative
in force) in the Investment Promotion and Protection Agreement. It
ideas and cutting-edge technology via the Hong Kong platform may have
has also signed Comprehensive Double Taxation Agreements (CDTAs)
a better chance of succeeding.
with major trading partners to promote Hong Kongs favourable tax
status and enhance its tax transparency internationally. Including
Mainland Innovators to the Global Market
the one with Mainland China, Hong Kong has signed CDTAs with 29
jurisdictions as at mid-January 2014 and negotiations with 14 more are The situation regarding intellectual property rights in China affects
in progress. Mainland innovators, especially when they seek international
technological collaboration and to conduct research in highly
5.3.3. Knowledge and Talent A Place to Innovate knowledge-sensitive areas. Hong Kongs edge in the protection of
intellectual property rights can offer higher levels of confidence to
Foreign Innovators to the Mainland Market international partners, and help Mainland partners to collaborate. In
addition, Hong Kong is a better place to recruit international talent as a
It may not be easy for foreign innovators to go directly to Mainland
result of its cosmopolitan environment and more flexible working visa
China. The issue of intellectual property rights is often a challenge to
arrangements. R&D activities often involve a large amount of equipment
knowledge-intensive international investors, and the commercialisation
130 131
Conclusion
The global financial crisis of 2008 posed huge challenges to
the Hong Kong economy, and unleashed a new chapter in the
economic and regional development of Hong Kong.
Since then, a number of sizeable infrastructure projects have

been carried out in Hong Kong, greatly improving its connectivity
to the worlds commercial sector and community of innovators.
On the software side, Hong Kong has maintained its rule of
law regime, and has added knowledge-related aspects to its
regulatory portfolio. Hong Kongs well-known higher education
system has enriched its talent pool, and is lending momentum to
the development of knowledge economies.
investment, and Hong Kongs zero tariff and preferential tax measures
towards R&D investment make these activities in Hong Kong more cost Apart from its traditional role as the regional hub of producer
competitive. services and logistic handling, Hong Kong is now playing
additional roles. It has evolved from being a source of unilateral
A Meeting Place for East/West Innovators investment into a two-way investment platform, now linking Pearl
River Delta region investors to the global market. The improved
Hong Kong is a vibrant, cosmopolitan city where east meets west, and
mobility of Mainland visitors into Hong Kong, coupled with their
the same can be said for innovation. Regardless of whether international
shopping patterns while visiting Hong Kong, are turning it into a
innovators come to Hong Kong with ideas, technology, or venture capital,
marketing arena for prestigious consumer brands.
or eastern innovators join hands with Hong Kong for its manufacturing
competence, Hong Kong is able to serve each innovator. It does this via The enhanced two-way platform of Hong Kong is transforming
its sound and well-established regulatory framework, and by providing it into a meeting point for key decision makers commercially
world-class-infrastructure and industrial parks that facilitate R&D and innovation-wise to start dialogues, develop collaboration,
activities, remunerate know-how, and safeguard innovation outputs. conclude business deals, and make their innovations a reality.
Invest Hong Kong and Useful Contacts Invest Hong Kong and Useful Contacts
132 133
Invest Hong Kong: InvestHK has an overseas network with representatives based in 27
cities worldwide and its highly professional teams work seamlessly to
support the successful set up or expansion of clients businesses in Hong
Free, customised and confidential services Kong. Eight sector teams focus on Hong Kongs four pillar industries and
priority industries where Hong Kong enjoys clear business advantages.
to help business succeed
Business and Professional Services
Consumer Products
Creative Industries
Financial Services
Information and Communications Technology
Innovation and Technology
Tourism and Hospitality
Transport and Industrial
InvestHK has strong expertise in Mainland-related investments

and it maintains four dedicated teams in Mainland China to
promote direct investment to Hong Kong.
InvestHKs services include:
P
rovide the latest information on Hong Kongs
business and investment environment with
InvestHK is the Hong
special focus on the Pearl River Delta, including
Kong Special Administrative
comprehensive economic sector profiles, business
Region (HKSAR) Government
incorporation procedures, latest regulations and
Department responsible for foreign
legislation.
direct investment, supporting overseas
and Mainland businesses to set up and expand
in Hong Kong. Its role is to help companies access
opportunities in the Greater Pearl River Delta, by providing
information, assistance and guidance on direct investment
opportunities in Hong Kong.
134 135
Provision of government information on funding and other support

services for business as well as on taxation, import and export
regulations, government projects, employment legislation and
immigration requirements. Gothenburg
Moscow
London
Brussels Berlin
M aking introductions and arrangement of meetings with service San Francisco

Toronto
New York
Paris Milan
Istanbul
Beijing1
Seoul
Shanghai Tokyo
providers, liaison with relevant government departments, advice Jerusalem
Chengdu Osaka
Abu Dhabi Guangzhou Taipei2
on finding the right business location and help with settling in Mumbai Hong Kong
Hong Kong. Bogot Kuala Lumpur

Singapore
Help dealing with government departments on matters such as visa

So Paulo
applications, business licences, trademark registration, intellectual
Sydney
property and trade regulations and business incorporation.
InvestHK partners with companies on a long-term basis and is available

Investment Promotion Units in Hong Kong Economic and Trade Offices
to help at any stage of their Hong Kong business development strategy. Consultants
To find out more, please contact: Notes : 1 Beijing Office

2
Hong Kong Economic, Trade and Cultural Office (Taiwan)
Invest Hong Kong Asia Pacific
Head Office
Australia, Sydney
25/F, Fairmont House, 8 Cotton Tree Drive, Hong Kong
Yin Robards
Tel: (852) 3107 1000
Deputy Head, Investment Promotion (Australia and New Zealand)
Fax: (852) 3107 9007
Level 2, Hong Kong House, 80 Druitt Street
Email: enq@investhk.gov.hk
Sydney NSW 2000, Australia
www.investhk.gov.hk
Tel: (61) 2 9286 2360
Fax: (61) 2 9283 3818
Email: yin_robards@hketosydney.gov.hk
www.hketosydney.org.au
136 137
China, Beijing China, Shanghai
Matt Hu Mabel Yu
Head, Investment Promotion Division Head, Investment Promotion Division
No. 71 Dianmen Xidajie, Xicheng District 21/F, The Headquarters Building, 168 Xizang Road (M)
Beijing, China 100009 Huangpu District, Shanghai, China 200001
Tel: (86) 10 6657 2880 Ext. 865 Tel: (86) 21 6351 2233 Ext 121
Fax: (86) 10 6657 2062 Fax: (86) 21 6351 9368
Email: matt_sl_hu@bjo.gov.hk Email: mabelyu@sheto.gov.hk
www.boj.gov.hk www.sheto.gov.hk
China, Chengdu India, Mumbai
Peggy Leung Shammi Hattangdi

Investment Promotion Manager Principal Consultant
38/F, Tower 1, Plaza Central, 8 Shuncheng Street 12 Deccan Court, 259 S.V. Road
Chengdu, China 610016 Bandra (W), Mumbai 400 050
Tel: (86) 28 8676 8303 Tel: (91) 22 6561 0754
Fax: (86) 28 8676 8300 Email: shattangdi@investhk.com.hk
Email: peggyleung@cdeto.gov.hk
www.cdeto.gov.hk Japan, Osaka
Takemasa Nakata
China, Guangzhou Consultant
Ada Yeung Western Japan Consulting Office
Head, Investment Promotion Division c/o Hong Kong Trade Development Council
Flat 7101, 71/F, Citic Plaza, 233 Tian He North Road 10/F, Osaka Kokusai Building, 2-3-13 Azuchimachi
Guangzhou, China 510610 Chuo-ku, Osaka 541-0052, Japan
Tel: (86) 20 3891 1220 Ext 201 Tel: (81) 6 4705 7019
Fax: (86) 20 3891 1221 Fax: (81) 7 2876 8859
Email: ada_yeung@gdeto.gov.hk Email: tnakata@investhk.com.hk
www.gdeto.gov.hk
138 139
Japan, Tokyo Singapore
Carlos Yukio Sasaki Melvin Lee

Principal Consultant (Investment Promotion) Head, Investment Promotion
30-1, Sanban-cho, Chiyoda-ku 9 Temasek Boulevard, #34-01 Suntec Tower Two
Tokyo 102-0075, Japan Singapore 038989
Tel: (81) 3 3556 8961 Tel: (65) 6330 9338
Fax: (81) 3 3556 8960 Fax: (65) 6339 2112
Email: y_sasaki@hketotyo.gov.hk Email: melvin_lee@hketosin.gov.hk
www.hketotyo.gov.hk www.hketosin.gov.hk
Korea, Seoul Taipei
Liann Chang Gordon Cheung

Lead Consultant Head, Investment Promotion Division
11/F Hosoo Bldg, 68-1 Susong-Dong 25/F President International Tower
Jongro-Gu, Seoul, Korea 11 Songgao Road, Xinyi District, Taipei, Taiwan
Tel: (82) 2 720 8688 Tel: (886) 2 2720 0858 Ext. 13
Fax: (82) 2 720 8633 Fax: (886) 2 2720 8658
Email: lchang@investhk.com.hk Email: gordoncheung@hketco.hk
www.hketco.hk
Malaysia, Kuala Lumpur
Dr Michael Yeoh
Principal Consultant
1718 Jalan Ledang, Off Jalan Duta
50480 Kuala Lumpur, Malaysia
Tel: (603) 2093 5393
Fax: (603) 2093 3078
Email: myeoh@investhk.com.hk
140 141
Americas United States, New York
D. Kelly Jones
Brazil, Sao Paulo
Head, Investment Promotion
Marina Barros 115 East 54th Street, 5th Floor, New York
Principal Consultant NY 10022, USA
Rua Cel. Xavier de Toledo Tel: (1) 212 752 3320
316-1o.and.-Cj. 10A CEP 01048-000-Sao Paulo-SP-Brazil Fax: (1) 212 752 3395
Tel: (55) 11 3159 0765 Email: kelly_jones@hketony.gov.hk
Fax: (55) 11 3159 0778 www.hketony.gov.hk
Email: mbarros@investhk.com.hk
United States, San Francisco
Canada, Toronto Lawrence Tang
Shirley Wong Head, Investment Promotion
Principal Consultant 130 Montgomery Street, San Francisco, CA 94104, USA
174 St. George Street, Toronto Tel: (1) 415 835 9318
Ontario, M5R 2M7, Canada Fax: (1) 415 392 2963
Tel: (1) 416 324 8150 Email: lawrence_tang@hketosf.gov.hk
Fax: (1) 416 924 3599 www.hketosf.gov.hk
Email: shirley_wong@hketotoronto.gov.hk
www.hketo.ca
South America, Colombia, Bogot
Luisa F Dueas C
Cra 11 A # 93.93, Of. 402
Bogot, Colombia
Tel: (57) 1 616 7045
Fax: (57) 1 616 7047
Email: lduenas@investhk.com.hk
142 143
Europe and Middle East Israel, Jerusalem
Sherwin Pomerantz
Belgium, Brussels
Lead Consultant
Siegfried Verstappen 5 Kiryat Mada Street, Har Hotzvim Tech Park
Senior Investment Promotion Executive POB 45005, 91450, Jerusalem, Israel
Rue dArlon 118, 1040 Brussels, Belgium Tel: (972) 2 571 0199
Tel: (32) 2 775 0062 Fax: (972) 2 571 0713
Fax: (32) 2 770 0980 Email: spomerantz@investhk.com.hk
Email: siegfried_verstappen@hongkong-eu.org
www.hongkong-eu.net Italy, Milan
Stefano De Paoli
France, Paris
Consultant
Laurent Sansoucy Via del Mare, 47, 20142 Milano, Italy
Lead Consultant Tel: (39) 02 8953 4108
12 rue de la Chausse dAntin 75009 Paris, France Fax: (39) 02 4550 3617
Tel: (33) 1 4387 5640 Email: sdepaoli@investhk.com.hk
Email: lsansoucy@investhk.com.hk
Russia, Moscow
Germany, Berlin
Leonid Orlov
Dr Wing Hin Chung Principal Consultant
Head, Investment Promotion 6 Energeticheskaya Ulitsa, Moscow 111116, Russia
Jgerstrasse 33, 10117 Berlin, Germany Tel: (7) 495 787 9828
Tel: (49) 3022 6677 223 Fax: (7) 495 956 0552
Fax: (49) 3022 6677 288 Email: leorlov@investhk.com.hk
Email: winghin_chung@hketoberlin.gov.hk
www.hketoberlin.gov.hk
144 145
Sweden, Gothenburg United Kingdom, London
Mats Gerlam David Parker

Consultant Head, Investment Promotion
Kungsportsavenyen 32 411 36 Goteborg Sweden 6 Grafton Street, London W1S 4EQ, UK
Tel: (46) 31 785 96 41 Tel: (44) 20 7290 8207
Email: mgerlam@investhk.com.hk Fax: (44) 20 7409 0647
Email: david_parker@hketolondon.gov.hk
Turkey, Istanbul www.hketolondon.gov.hk
Didem Engin
Yeni Selimiye Sk. 31/2 Yeni Mahalle
34450 Sariyer Istanbul, Turkey
Tel: (90) 212 271 90 00
Fax: (90) 212 271 90 01
Email: dengin@investhk.com.hk
United Arab Emirates, Abu Dhabi
Stephan Engel
Lead Consultant
PO Box 77768 twofour54 Al Salam Street
Abu Dhabi, United Arab Emirates
Tel: (971) 2 401 2587
Email: sengel@investhk.com.hk
146 147
Government Departments Inland Revenue Department
Revenue Tower, 5 Gloucester Road

Business Registration Office
Wan Chai, Hong Kong
4/F, Revenue Tower, 5 Gloucester Road Tel: (852) 187 8088
Wan Chai, Hong Kong Fax: (852) 2519 9316
Tel: (852) 2594 3149 / 187 8088 Email: taxinfo@ird.gov.hk
Fax: (852) 2824 1482 www.ird.gov.hk
Email: taxbro@ird.gov.hk
www.ird.gov.hk Trade and Industry Department
Trade and Industry Department Tower

Companies Registry
700 Nathan Road, Mongkok, Kowloon
14th Floor, High Block, Queensway Government Offices Tel: (852) 2392 2922
66 Queensway, Hong Kong Fax: (852) 2787 7422
Tel: (852) 2234 9933 / 2867 2587 Email: enquiry@tid.gov.hk
Fax: (852) 2596 0585 www.tid.gov.hk
Email: crenq@cr.gov.hk
www.cr.gov.hk
Immigration Department
2nd Floor, Immigration Tower

7 Gloucester Road, Wan Chai, Hong Kong
Tel: (852) 2824 6111
Fax: (852) 2877 7711
Email: enquiry@immd.gov.hk
www.immd.gov.hk
148 149
Greater Pearl River Delta cities Huizhou
Bureau of Foreign Trade and Economic Cooperation of Huizhou

Dongguan
3/F, 45 Nanmen Road, Huizhou, 516001, China
Bureau of Foreign Trade and Economic Cooperation of Dongguan Tel: (86) 752 222 6471
33 Guantai Road, Dongguan, 523071, China Fax: (86) 752 222 7084
Tel: (86) 769 281 7612 Email: hzwmj@163.com
Fax: (86) 769 281 9721 www.hzfet.gov.cn
www.dgboftec.gov.cn
Jiangmen
Foshan
Bureau of Foreign Trade and Economic Cooperation of Jiangmen
Bureau of Foreign Trade and Economic Cooperation of Foshan Jiangmen Investment Promotion Bureau
No.135 Fenjiangzhong Road, Chancheng District 10 West Baisha Ave., Jiangmen, 529000, China
Foshan City, Guangdong Province, 528000, China Tel: (86) 750 3501 818
Tel: (86) 757 8303 6005 Fax: (86) 750 3501 826
Fax: (86) 757 8335 3632 Email: gdyangzi@163.com
Email: fsipc@126.com www.investjiangmen.gov.cn
www.investfoshan.gov.cn
Macao Special Administrative Region

Guangzhou
Macao Trade and Investment Promotion Institute
Bureau of Foreign Trade and Economic Cooperation of World Trade Centre Building, 1st & 4th Floors
Guangzhou Municipality
918, Avenida da Amizade, Macao
No.158 Dongfeng Xi Road, Guangzhou, 510170, China
Tel: (853) 2871 0300 / 2888 1212
Tel: (86) 20 8890 2318
Fax: (853) 2859 0309
Fax: (86) 20 8108 7879
Email: ipim@ipim.gov.mo
Email: info@investguangzhou.gov.cn
www.ipim.gov.mo
www.investguangzhou.gov.cn
150 151
Shenzhen Zhuhai
Invest Shenzhen Bureau of Foreign Trade and Economic Cooperation of Zhuhai

12/F, Great China International Exchange Square Zhuhai Investment Promotion Bureau
Block A, 14F, International Science Centre, 288 Hongshan Road
Fuhua Road 1, Futian District, Shenzhen, China
Xiangzhou District, Zhuhai, Guangdong, 519000, China
Tel: (86) 755 8200 4023
Tel: (86) 756 260 5600
Fax: (86) 755 8200 4008
Fax: (86) 756 212 6700
Email: investshenzhen@sz.gov.cn
Email: contact@investzhuhai.gov.cn
www.szinvest.gov.cn
www.investzhuhai.gov.cn
Zhaoqing
Bureau of Foreign Trade and Economic Cooperation of Zhaoqing

18 Jiangbin Xi Road, Zhaoqing, 526020, China
Tel: (86) 758 282 8903
Fax: (86) 758 283 7791
Email: bgs@zqfte.gov.cn
www.zqfte.gov.cn
Zhongshan
Bureau of Foreign Trade and Economic Cooperation of Zhongshan

57, Zhongshan Er Road, Zhongshan, 528400, China
Tel: (86) 760 8989 2800
Fax: (86) 760 8989 2328
Email: zswjmj@zsboftec.gov.cn
www.zsboftec.gov.cn
This book is printed on paper which is recyclable,
acid-free and Totally Chlorine Free (TCF).
Printed by the Government Logistics Department
I SB N 978-988- 97122-7 - 3
9 789889 712273
25/F, Fairmont House, 8 Cotton Tree Drive,

Central, Hong Kong
Tel: (852) 3107 1000 Email: enq@investhk.gov.hk

www.investhk.gov.hk
Copyright Invest Hong Kong, April 2014. All rights reserved.

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The Greater

Pearl River Delta

First Published April 2003 Section 2 Transformation and Development in the

4.1. Hong Kongs Collaborations with the 94

4.4. Helping Enterprises to Explore the Mainland Market 106

Executive Many academic discussions have focused on the development

Since 2001, PRD-driven development programmes have

New Business Trends

The financial development of Hong Kong has attracted many Mainland

specifically, financial development and renminbi internationalisation.

With respect to infrastructure development, multi-dimensional

Marketing A place to build image

Hong Kong is an ideal place for foreign enterprises to demonstrate their

Processing exports to Mainland

Korea). 6 1995 2.7% 6.7% 7.2% - 34.5% 32.5% 21.2%

2000 3.4% 8.5% 8.2% 10.4% 34.0% 33.0% 25.5%

Germany 523.5 551.8 970.9 1,258.9 1,407.1

Pearl Bohai Rim

region, in particular, the cross-jurisdiction cooperation between Macao

Population Land Area Population Density Distinctive Macao /

Guangzhou 12.84 7,249 1,771 Bay Area

Foshan 7.26 3,798 1,912 Regional Development Axis

Zhaoqing 3.98 14,891 267

Zhuhai 1.58 1,724 918

Macao 0.57 29.9 18,997

Figure 1-3: National Optimised Development Zones in Mainland China

The Northern Slope of Harbin-Changchun Region

Chengdu-Chongqing Central Plains Region YangtzeRiver

National Optimised Development Zone

City Cluster with 10 million residents

discontinuous corridor of urbanisation in western Europe that stretches

Transformation of the Guangdong Government, and the public institutions of the

To accelerate the pace of industrialisation in the Pearl River Delta region,

Industrial Value Added

this upgrading process. By introducing processing trade activities into 200

2012 756.9 15.6 349.9 391.5 2.1% 46.2% 51.7%

Source: Guangdong Statistical Yearbook 2013. 2.2. A Journey of Economic Transformation

The most important guiding principles of Guangdong Provinces 11th

kilometres will be constructed to satisfy the anticipated demand

Province. Railway access to the eastern and western wings of Guangzhou-Zhuhai

while its extensive coverage of major airports and public transport

The Plan on the Development of Integrated Transportation System of

To further strengthen the function of the high-speed network, a

Chongqing As the capital of Guangdong Province, it is planned that the largest

Table 2-4: Approved Construction Projects of Guangzhou Metro (2012-2018) and

6 Shenzhen North Station-Songgang 37.2

result, huge intraregional and interregional flows of passengers pass

Road under Planning/ Construction

Proposed route, about 40 km long,

Following decades of development and expansion, major airports in the

Meanwhile, Guangzhou will invest more than US$3.17 billion (RMB 20

Zhuhai seems to have adopted a strategy of differentiation, planning

Coastal Ports in Guangdong Province 6.55 23.78 38.68 41.03 42.56

Total Volume of Freight Handled (million tonnes)

Guangzhou Port 111.3 250.4 425.3 431.5 435.2

Hon tern Exp

and Pearl River Delta Cities

Via Road Via Hong Kong-Zhuhai-Macao Bridge Container Terminal Aviation

Guangzhou 3 hours - Rank Through-

Foshan 3 hours 30 minutes - Beijing Capital,

Tokyo Haneda, Incheon,

Container Terminal Aviation Commission. By engaging planning institutions at Central Government

17 Dalian, China 8.06 New York, US 49.3 Chicago, US 1.51

322.06 2.38 150.50 169.50 74.50 96.91 385.7 275.2 10.33

First Published April 2003 Section 2 Transformation and Development in the

4.1. Hong Kongs Collaborations with the 94

Table 2-4: Approved Construction Projects of Guangzhou Metro (2012-2018) and

3.1.2. Research and Development in the Pearl River Delta Region

Figure 4-3: Renminbi Deposits and Certificates of Deposit in Hong Kong