HSBC made headlines last year with an announcement that it will recruit 4,000 new employees in the Pearl River Delta as part of a plan to boost annual pre-tax profits in the region to $1 billion within five years.

Week in China talked to Helen Wong Pik-kuen, chief executive for Greater China at HSBC, about the basis for the plan, and for more on her personal experience of doing business in the region.

 

Family ties

“Almost every business is looking at China as a growth market,” Wong tells WiC. “But at HSBC we are particularly excited about Guangdong province and the Pearl River Delta region within it.”

Wong says that HSBC has the advantage of having operated in the region for years and benefits from close cultural links between the Pearl River Delta and Hong Kong, another of its key markets.

Her own background is further testament to the long-term ties between Hong Kong and its neighbour a few miles to the north.

“I have strong family connections to Guangdong,” Wong explains. “Although my parents met in Hong Kong, they came originally from two cities in the Pearl River Delta called Dongguan and Huizhou. Later, my grandmother travelled from Guangdong to Hong Kong to look after my siblings and me while our parents were working. That was very typical for my generation.”

Wong says she can recall her first trip to Guangdong as a young child. “The journey is one of the most vivid memories of my childhood as we travelled first by train, then by bus to the township, and finally by oxcart to our village. It felt like such an adventure. I remember that I was even carried in a wicker basket for part of the journey!”

When Wong opened HSBC’s new outlet in Meizhou a couple of years ago, she took time to visit the local Hakka museum and recalled conversations in the Hakka language she had with her grandmother as a child. “There were exhibits on how the Hakka people had moved from the north into Guangdong and acquired their name, which means ‘visitors’ or ‘guest people’. When I saw them, I remembered the stories my father told me about our origins and history in Guangdong.”

 

How the economy has evolved

Parts of Wong’s career have coincided with the emergence of the Pearl River Delta as an export economy. “I was involved in negotiations for the financing of projects between foreign interests and local governments,” she explains. “At the time I was quite junior so it was my first real taste of doing business in China, as well as an early glimpse of how the Pearl River region was starting to develop its manufacturing base.”

Businesses from Hong Kong were more likely to invest in industries like toys and textiles, she recalls, while for the Taiwanese there were big shoe factories working for global brands like Nike and Adidas.

By the mid-1990s Wong was running HSBC’s capital markets desk, supporting larger clients that wanted to invest in Guangdong, including state-owned firms from China that had listed on the Hong Kong stock exchange.

“Many of these clients were ‘red-chip’ companies like Guangdong Enterprises, China Travel, COFCO and China Merchants,” she says. “They were already well established in Hong Kong but they wanted help with capital for their activities overseas, including some of their projects back in China”.

Later Wong’s client base widened again, incorporating the next generation of Chinese entrepreneurs. “Gradually we established commercial relationships with some of the leading private enterprises from the region, including companies like Huawei,” she continues. “We had an advantage in Shenzhen, where many of the newer firms were based, because HSBC was one of the first foreign banks to set up a representative office in the special economic zone there. The office was then formalised as a branch in 1985, our first in Guangdong.”

Given her long experience of operating in the region, Wong is also well positioned to review the latest round of special economic zones to be established there. “Qianhai is focusing more on financial innovation rather than manufacturing,” she explains. “That’s apparent in how the zone is taking shape. It’s a much smaller plot of land than the other zones, and they’re building office blocks rather than factories.”

In November last year HSBC announced that it would be partnering with Qianhai Financial Holdings in a new securities joint venture based in the zone. Wong says that it’s an exciting prospect, although still subject to regulatory approval: “We’ve known Qianhai Financial for a while as a client, including helping them to issue a dim sum bond. Now we are building a relationship with them to capitalise on the growth of domestic capital markets in China.”

“What’s important for HSBC is that this could allow us to be involved in areas like capital raising, M&A activity, and research and sales onshore in China. That’s not just for our customers in Qianhai – the venture is applying for a national licence that will allow us to help clients in other parts of the country.”

The focal point of another of the new zones – Nansha, on the opposite side of the Pearl River – is going to be different, she says. “It looks very promising for maritime and logistics businesses. It’s a much bigger parcel of land with its own port and there’s plenty of space for warehousing. We think that Nansha will serve as one of the key entry points into the Delta.”

 

Over 150 years of history in the PRD region

Wong is bullish about the bank’s broader ambitions in the region too. “One of our core competitive advantages is supporting cross-border business,” she explains. “As a privately owned company in the Pearl River Delta you may already be an exporter or perhaps you have aspirations to do more overseas. Our global footprint means that we can connect you with rest of the world, help you to set up in new markets, and even advise you on M&A options if they arise.”

HSBC also has high hopes for its retail business in Guangdong, leveraging the bank’s existing branch network to offer a wider range of consumer products such as insurance, credit cards and mortgages.

Journey times from Hong Kong

“One of our targets is more customers for our wealth management businesses,” Wong says. “In some cases it might be executives at the firms that we are already banking as corporate clients. But the opportunity is much bigger than that, especially as Guangdong’s per capita income is about twice China’s on a national basis.”

In growing its share of the market, HSBC hopes to capitalise on the common culture across much of the region. “Some of that interconnectedness comes from the family ties that I mentioned earlier,” Wong says. “But there are other ways that we are more connected. People in Guangdong tend to know the HSBC brand better than those in other parts of China, for instance. Its residents have access to Hong Kong’s TV channels, which isn’t the case for other provinces. And investment in new roads and railways is reducing travel times across the region. It could take many hours to get around the province in the past, but this is changing. I can already get from Shenzhen to Hong Kong in about 40 minutes – and this greater proximity between the Pearl River Delta’s towns and cities will be another boost for business.”