In the past three decades, Zhuhai has experienced strong economic growth due to its geographical proximity to Hong Kong and Macau. It is the only deep-water port on the western side of the Pearl River. In this article, Rainy Yao from Dezan Shira & Associates takes a closer look at this emerging force in South China.
In 2013, Zhuhai’s gross domestic product (GDP) reached RMB 166.2 billion, up 10.5 per cent from the previous year. Zhuhai was originally planned as a high-tech research area, with the establishment of heavy industry prohibited. Nonetheless, Zhuhai’s economy is largely based on light industries, such as textiles and electronics. In 2013, the city’s primary industry contributed RMB 4.3 billion of its total GDP, and its secondary industry RMB 84.9 billion, accounting for more than 51 per cent of the economy. The remaining RMB 77 billion came from the service sector, among which the modern service sector brought in RMB 44.2 billion (10.3 per cent growth).
Now a major manufacturing base for electronics, Zhuhai is making an effort to promote the growth of a wide range of hi-tech and high value-added industries, such as its software, petrochemical and ocean-based industries. The six major industries of the city include electronic information, bio-pharmaceuticals, petrochemicals, electrical appliances, precision machinery manufacturing and energy.
Zhuhai’s transport network has greatly improved in recent years, and the Hong Kong-Zhuhai-Macau Bridge, currently under construction, is expected to be completed in 2015. Improved connectivity between the three cities will undoubtedly give a boost to Zhuhai’s economic presence in the region. The bridge will connect the west of Hong Kong with Macau and Zhuhai. The city is already connected to the other major metropolitan centres in the Pearl River Delta via the Guangzhou-Shenzhen-Zhuhai superhighway. Zhuhai Airport services more than 30 flights a day to major cities in China.
Zhuhai’s main development zones include:
Zhuhai Economic and Technological Development Zone (ETDZ)
The Zhuhai ETDZ, previously known as the Gaolan Port Economic Development Zone, was promoted to become the first national economic and technology development zone west of the PRD in 2012. It is one of the most important large-scale comprehensive harbour industry zones in South China, with a focus on equipment manufacturing, petrochemicals and energy.
Hengqin New Area
Hengqin New Area, located in the Zhuhai Special Economic Zone, is only a stone’s throw from Macau. As part of the ‘One Country, Two Systems’ policy, the central government is trying to integrate the economies of Hong Kong, Macau and Mainland China. Hengqin is directly across the water from Macau, and as such is a pilot zone for integration. It has already attracted over RMB 226.3 billion (USD 36.4 billion) in total investment. With professional zone management, as well as the most preferential investment policies in South China, Hengqin New Area offers appealing incentives to investors.
Zhuhai National Hi-tech Industrial Development Zone
Established in 1992, the zone mainly features industrial clusters such as food processing, pharmaceutics and electronics. It is home to several research and development (R&D) centres and focuses on the commercialisation of newly-developed technology. The zone houses branch offices of major government bureaus to facilitate administrative processes. It has been rapidly expanding and now encompasses the industry parks of Nanping, Sanzao, Xinqing and Baijiao.
Zhuhai-Macau Cross-border Industrial Park
The Zhuhai-Macau Cross-border Zone spans the jurisdictions of Macau and Zhuhai, with each government managing its own section. It is a bonded zone, with reduced export duties and 24-hour port clearance.
In 2014, the Zhuhai Government released a slew of administrative measures to promote the development of its bio-pharmaceutical, ocean-related and high-tech industries. For example, enterprises regarded as national high-tech enterprises can benefit from a reduced corporate income tax (CIT) rate of 15 per cent. Companies investing in R&D are eligible for financial support and subsidies of up to RMB 2 million per company. The city is home to over 50 financial institutions including Morgan Stanley, Bank of East Asia and Standard Chartered. Compared with other coastal cities labour costs are lower in Zhuhai, with a monthly minimum wage of RMB 1,380.
In March 2014, China issued a Preferential Corporate Income Tax Catalogue for Hengqin New Area, which identified five industries and 72 business categories, such as ocean-sourced pharmaceuticals and healthcare, for preferential tax treatment. While China’s standard rate of corporate income tax is 25 per cent, eligible enterprises listed in the catalogue will be taxed at a reduced 15 per cent rate – closer to corporate income tax levels in Hong Kong and Macau.
The Chinese Government has recently announced plans to soon establish a free trade zone (FTZ) in Guangdong Province, following the model of the China (Shanghai) Pilot Free Trade Zone. The new FTZ will cover three development zones in Guangdong Province including the Hengqin New Area in Zhuhai, which will make it one of the city’s most attractive destinations for foreign investment.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.