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HSBC forum hears the Greater Bay Area is poised to deliver new business

There are excellent opportunities for Hong Kong companies in the Guangdong-Hong Kong-Macao Greater Bay Area, HSBC Greater China Chief Executive Helen Wong Pik-kuen said during a seminar on May 30.

Wong said HSBC emphasised the importance of the region because it was the most economically vibrant area in southern China. “The Greater Bay Area is a very rich region, and the GDP per capita of Pearl River Delta is 2.2 times the average in mainland China,” Wong said at the forum to promote the Greater Bay Area.

“It has become our priority market. The reason we are actively expanding our business in the Greater Bay Area is because we want to fulfil the business needs of our clients.”

HSBC Commercial Banking initiated the Greater Bay Area Exchange Forum, bringing together industry leaders and business executives to explore investment opportunities in the fast-growing megalopolis.

The Greater Bay Area has a population of 70 million and a combined GDP of US$1.6 trillion, accounting for 12 per cent of China’s GDP. By 2030, the regional economy could be worth US$4.6 trillion, a value that would surpass other global bay areas such as Tokyo, New York and San Francisco.

Integrated approach

In February, China’s State Council issued its Outline Development Plan, which identified a set of development priorities and called for enhanced regional cooperation.

Wong noted that the economy in the Greater Bay Area had always been very open, adding that differences in regulation between mainland China, Hong Kong and Macao might create challenges, but businesses will ultimately enjoy many benefits. “We need to understand that the process of integration could take a long time, and it might not go smoothly all the time,” she said. “But I think the goal of the development is crystal clear.”

Hong Kong’s Secretary for Constitutional and Mainland Affairs Patrick Nip Tak-kuen said that the concept of “One Country, Two Systems” has presented a unique advantage for Hong Kong in the Greater Bay Area. “It is an important basis for the Greater Bay Area to reach an international market,” he said.

Nip believed that while Hong Kong has actively participated in the reform and opening up of Guangdong province over the past two decades, the Greater Bay Area presents new opportunities. “The support and attention that the Greater Bay Area receives from the Central Government have been unprecedented,” he added.

Nip explained that Beijing has prioritised the development of the Greater Bay Area and provides a significant amount of support to ensure its success. The development of the Greater Bay Area will also be crucial for Hong Kong because it will allow companies to grow, even in an environment of protectionism and a slowing global economy.

“Even though Hong Kong has long upheld the policy of free economy and free trade, our traditional industries have unavoidably faced fierce competition in the era of economic globalisation,” Nip said. “With a population of 70 million and a combined GDP of US$1.6 trillion, the Greater Bay Area will be able to inject new synergy for Hong Kong’s development.”

High-level support

Following the event’s welcoming speeches, industry leaders and company executives offered their views on how the development of the Greater Bay Area might change the business landscape.

George Leung Siu-kay, Advisor, Asia Pacific, The Hongkong and Shanghai Banking Corporation Limited, said a trade dispute between China and the United States might hurt businesses around the world but could help accelerate development in the Greater Bay Area.

“The Greater Bay Area is set to assume a more important role because it helps China connect with Southeast Asia and with the countries along the Belt and Road,” Leung said. The Greater Bay Area also allows companies to reallocate their workforce across the region to better develop their businesses, he added.

Federation of Hong Kong Industries Chairman Jimmy Kwok Chun-wah said Hong Kong offers high-quality research facilities, while Shenzhen features access to substantial investments in research and development. “Companies can evaluate, they can utilise the division of labour to develop their businesses, and I believe the introduction of new policies can often create new business opportunities,” he said.

Powering competitiveness

In the second panel discussion, industry leaders discussed what the Greater Bay Area’s governments could do to enhance their competitiveness.

One initiative was the standardisation of the region’s taxation policies, noted Larry Leung, the Managing Director of Novotown, an integrated tourism and entertainment project in Hengqin, Zhuhai. Leung said his company invested in the project because Hengqin pioneered a scheme that provides tax concessions to workers from Hong Kong and Macao, an initiative that has created significant cost savings.

The scheme sees employees taxed according to the law in their home jurisdiction and the municipal government covers the outstanding amount. “The main reason why we invested in the project was that the local government provided significant support on taxation,” Leung said.

Ivy Cheung, Head of Audit, Hong Kong, KPMG and a former president of the Hong Kong Institute of CPAs, echoed that municipal governments should further provide tax concessions to attract investments from international companies. “The taxation system in mainland China is more complicated than Hong Kong, and the tax burden is also higher,” she said.

She also observed that while the 11 cities in the Greater Bay Area all have unique positions, the different tax systems between Hong Kong and the mainland are potential obstacles to the flow of capital and people across the border.

“The development of the Greater Bay Area comes with a high demand for professionals,” she said. “Currently, Hengqin and Qianhai have already implemented subsidy schemes for personal tax, and I think it is only a matter of time before other municipalities follow suit.”

Hailong Shang, Managing Director of SenseTime Hong Kong, believes that Hong Kong should enhance its investment in innovation and technology. “It is never too late to invest in technological development,” he said, adding that Hong Kong has a pool of talent in technological research, with renowned tertiary institutions. “Hong Kong should be more innovative and roll out pioneering policies in technological research. This way, the government will be able to lead the change in the entire Greater Bay Area.”

Business opportunities

Besides suggesting ways for governments to help enhance competitiveness in the Greater Bay Area, the panel also discussed the opportunities provided for different sectors.

Josh Zhang, Chief Innovation Officer of Ucommune, a co-working space provider in China, said that the development of the Greater Bay Area will also benefit mainland Chinese companies that wish to expand their operations globally.

“When mainland enterprises wish to expand their operations overseas, we suggest that they first come to Hong Kong,” he said, adding that Hong Kong can continue to serve as a gateway for mainland companies to understand more about the international business landscape.

Zhang also observed that with more and more young people starting their own businesses, demand for co-working spaces will increase. “The younger generation prefers an office with more open space and communal support, and a shared office environment will be able to meet their needs.”

The medical and health care industry is also set to benefit from the development of the Greater Bay Area. Dr Dennis Lam, Chairman and CEO of C-Mer Eye Care Holdings Limited, said his company has been working on transforming the medical landscape and elevating the standard of private health care across the region. Acknowledging that the public in mainland China currently has more confidence in public hospitals, he said his company hopes to show that the private sector can also provide world-class health care services.

“You can easily open a private hospital in the mainland, but the issue is whether it can meet international standards,” Lam said. “This is what we want to do: Show a successful example and give patients a real choice.”

He added that municipalities have been welcoming to his company because they are also looking to ease the burden on public hospitals. “With more high-quality health care providers joining the market, this will accelerate the development of the medical industry across the country,” he said.

As the development of the Greater Bay Area accelerates, Hong Kong has great potential to capitalise on the opportunities and consolidate its role as a leading international financial centre. “Hong Kong has always been one of the most open economies in the world,” said Wong of HSBC.

“With well-established tertiary institutions and a large pool of talent, Hong Kong is set to develop into a knowledge-based commercial centre for the Greater Bay Area.”

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