Where the unicorns roam

The Greater Bay Area (GBA) is a vibrant region of southern China that encompasses nine cities in Guangdong province – including Guangzhou and Shenzhen – and Hong Kong and Macau.

Chinese policymakers are pushing deeper integration across the GBA in a bid to boost its combined economic output to $5 trillion by 2030. WiC spoke to David Wong, head of Greater Bay Area business development at InvestHK, a Hong Kong government agency, for more on the opportunities for Hong Kong in the GBA and why so many of China’s unicorn companies are coming from this fast-growing region.

How well do you think the GBA is understood as an opportunity by companies that you typically target as investors?

Knowledge about the GBA varies across different regions. But for companies already in Hong Kong and in the region, their questions are mostly about the technical or practical aspects of various supporting policies and how can they take advantage of them.

Covid has dulled some of the impetus for the plan but where are you seeing practical steps in moving the GBA forward into an actionable area of interest for companies and investors?

On the contrary, Covid has accelerated the pace of change around innovation and technology, e-commerce, and the need to connect digitally. There have also been new policy announcements from time to time, including the GBA Youth Employment Scheme and the upcoming Wealth Connect scheme.

What will you be looking out for as indicators that the GBA is taking shape as an economic entity to rival other mega clusters around the world?

The GBA is perhaps the most exciting business opportunity in the world. Its current GDP ranks around tenth in the world if compared as a country. Its large population of 72 million, growing by around two million people a year for the past two years, is testament to its growing attraction across the region.

The argument is made that the GBA’s constituent sectors and cities add up to more than the whole. But which industries and cities do you see as the pacesetters in making the GBA a reality?

The Outline Development Plan of the GBA clearly states that the development of the GBA is innovation driven and led by reform. Innovation and Technology (I&T) is clearly at the forefront of GBA development, supported by policy innovation and reform. Fintech and e-commerce are also accelerating rapidly due to Covid-19.

How about the more immediate challenges that need to be resolved before the GBA becomes a recognised investment destination? A more unified tax system? GBA-related travel passes etc?

The GBA’s development has a long-term horizon with targets set at 2035. To facilitate this the freer flow of people, capital, goods and information have been the target of policy support and innovation.

Is the GBA proving to be a breeding ground for unicorn companies?

To date, the GBA has already produced 43 unicorns – start-ups with a valuation of more than $1 billion – that are collectively valued at $1.1 trillion. The region is drawing attention as a fast-developing I&T hub.

Homegrown tech start-ups are leveraging prototyping and manufacturing capabilities, with research and development facilities growing in cities like Dongguan and Shenzhen. Across the border, Hong Kong is also well-positioned to serve as their launch pad to markets around the world, in addition to its role as a key financing hub.

Are Hong Kong’s start-ups taking advantage of the GBA, both as a source of innovation and a market?

A recent study from the Hong Kong Trade Development Council (HKTDC) found that 34% of the city’s start-ups already have business operations within the GBA, while 43% were interested in expanding further into the region and 38% were in the process of identifying business partners there.

This is one of the themes that will be explored at our StartmeupHK Festival in early June.

How does InvestHK see the future in promoting Hong Kong within the GBA and more widely overseas? What is the Hong Kong ‘brand’ and how is it going to differentiate itself from rival hubs?

Under “one country, two systems”, Hong Kong enjoys the dual advantages of being part of China, while maintaining its global outlook and institutional advantages.

Hong Kong is an international financial centre and the world’s leading offshore RMB business hub with a full range of globally benchmarked services such as banking, financing, investment, insurance, asset and wealth management and offshore RMB businesses.

With the common law system, strong rule of law and an independent judiciary, Hong Kong can act as a “deal maker” and “dispute resolver” for enterprises and serve as the international legal and dispute resolution services centre for the GBA.

Hong Kong has a full range of mature business services, including expertise in marketing, accountancy, project management and risk management, logistics, supply chain management and maritime services (such as ship finance, marine insurance and maritime legal and arbitration).

With top-notch tertiary institutions and outstanding scientific research achievements, a robust intellectual property protection regime, advanced financial infrastructure, free flow of information and a vibrant business environment, Hong Kong is well placed to become an international I&T hub.

More broadly, how does InvestHK measure success in its investment promotion?

We measure our results based on the number of completed projects every year, i.e. the number of companies which we have assisted in setting up or expanding in Hong Kong. We also measure the amount of investment and the number of jobs created.

Obviously our target markets and sectors have evolved over the last decade to align with our government’s policy objectives and global economic trends. But in 2020, our top five markets were Mainland China, the US, the UK, Japan and Singapore. And our sector focus includes innovation and technology, financial services (including family offices), fintech and creative industries, etc.

Finally, how is the job of an investment promotion agency like InvestHK changing? Even after travel restrictions ease, do you foresee more of your work continuing to be done digitally?

We have accelerated our pace in digitalising our organisation and our service offerings. More of our work will be done online and digitally even after travel restrictions have eased. This is a global trend.

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