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Business in South China – Part 1: Business Landscape

Posted by: Fabia Meinhold
Category: Business in China
South China Business Landscape

In the last few years, South China has been receiving more and more attention from the Chinese government. This has been an ongoing trend since the first opening-up reforms of 1978. The regular announcements of reforms and new development plans in the area benefit a lot of companies and continuously attract foreign investments.

Have a look at one of our previous articles: Spending Power in China – Top 40 Cities

What are the business specificities and differences between the most dynamic cities in South China? What special advantages do they offer? Keep reading to find out!

South China’s Most Attractive Regions

South China

First of all, what do we talk about when mentioning the attractive regions of “South China”? The Southern part of China is mostly composed of coastal regions, namely the provinces of Zhejiang, Hainan, Guangxi, Fujian and Guangdong. In the South-West of China, there is also the non-coastal Yunnan province.

The Guangdong – Hong Kong – Macau Greater Bay Area

The “Greater Bay Area” (GBA) is considered to be the economic center of South China. It includes 9 municipalities in the Guangdong province (Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing), as well as the special administrative regions of Hong Kong and Macau. The GBA was created to integrate the regions’ cities and transform them into a global technology and innovation center. The “Outline Development Plan for the Guangdong – Honk Kong – Macao Greater Bay Area” that was issued in February 2019, provides guidelines for the development and cooperation of the region.

Guangdong

More specifically, the leading region in South China in terms of Gross Regional Product (GRP) and Import/Export is Guangdong and comprises cities such as Guangzhou, Shenzhen, Foshan, Dongguan, Zhongshan and Zhuhai. According to the National Bureau of Statistics of China, in the second quarter of 2019, its economy had the largest GRP (50,501.17 hundred million yuan) among all provinces and municipalities in China, accounting for 11.04% of the national GDP. Fujian represented 3.64%, with a GRP of 16,640.15 hundred million yuan. Guangxi´s GRP amounted 8,906.91 hundred million yuan and accounted for 1.95% of the national GDP, while Hainan, with a GRP of 2,668.96 hundred million yuan, represented 0.58%. Guangdong’s imports and exports also ranked first in 2018, representing 23.46% of China’s total value of imports and exports (Fujian: 4.06%; Guangxi: 1.35%; Hainan: 0.28%).

Economic Specificities and Main Industries in South China

Many Free Trade Zones (FTZs)

One specificity of South China is its particularly high number of Free Trade Zones and other Special Economic Zones. This attracts many companies and foreign investments to the region. FTZs are a type of Special Economic Zones with certain advantages. Companies in FTZs benefit from a variety of incentives, special policies, facilitated administrative procedures and relaxed rules that are meant to facilitate and boost business activities and trade in the area. Tax incentives on corporate tax for example, often allow companies to benefit from a 15% tax rate if they meet some requirements, instead of the 25% standard rate elsewhere in China.

Focus on Specific Industries

Furthermore, most cities in South China focus on the development of only a few specific industries. This not only gives them a competitive advantage but also enables companies to benefit from their synergies. Foshan is for example structured in a variety of specialized townships: 41 of them focus on one industry, and 38 are specialized in one particular sector. Additionally, South China’s big cities are equipped with a large number of development zones and industrial parks concentrating industry-specific activities and facilitating development.

In the following table you will find all major provinces of South China and most attractive cities of Guangdong with their respective economic specificities and industries.

Conclusion

The business landscape of South China is very dynamic and constantly evolving. Most of China’s technology and financial centers are now located in the Southern coastal regions who are the first to benefit from China’s economic reforms.

Investing and doing business in South China is becoming more and more advantageous for foreign companies as governments facilitate business activities and support their development and integration in the region.

Do you need help with your business in South China?  Get in touch with our team for a consultation and follow us on social media to receive the latest news.

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Author: Fabia Meinhold

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