The Greater Bay Area Means Big Business: Innovation & Technology Development Updates

Renee Pan

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The GBA at a Glance

The Greater Bay Area (GBA) is a megalopolis made up of nine cities and two special administrative regions in South China. It is also known as the Guangdong-Hong Kong-Macau region that also includes Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen, and Zhaoqing.

Fast-growing to become one of the biggest centres for innovation and technology, the GBA is fostering growth by boosting infrastructure and financial links between cities. The world’s second-largest economy is improving connectivity and making the region’s cities central hubs in finance and trade, technology, and tourism.

 

The GBA is Developing into an Innovation & Technology Hub

Benefits to the GBA include speeding up the development of innovative goods and services while attracting high-calibre talent in Research and Design (R&D). Government policy acts as a key role in driving the development of the I&T hub. In a report conducted by Ernst & Young, China, and the Association of Chartered Certified Accountants (ACCA), the highest priorities in government policies were tax concession and intellectual property (IP) protection.

To support the area’s transformation the mainland Chinese government is enhancing IP protection and introducing tax incentives. In March 2019, Hong Kong and overseas working talent in the I&T sector were able to receive tax subsidies for any individual income tax paid in excess of 15% of their salary. In June 2019, a reduced corporate tax rate of 15% was introduced for foreign projects in high-tech industries.

When it comes to bringing new growth opportunities to the GBA, an increased flow of funds is required. The first go-to forms of financing are private equity and venture capital funds. With bank financing and government subsidies, the GBA is able to improve access to RMB and make it easier for mainland investment from foreign investors. Multinational corporations are encouraged to set up centralised management and financial functions, while GBA-specific funds and financial subsidies to Chinese Holding Companies (CHC) fuel the necessary growth to support innovation-driven development.

 

GBA to Welcome More Financial Openings in China

To promote financial openings and the integration of the GBA, 26 new measures were issued in May 2020. These are designed to guide financial reform and provide greater direction with measures that promote cross-border finance. Areas such as private equity, foreign exchange, and wealth management will boost cross-border trade and investment, while the application of blockchain, big data, and AI will help to integrate financial infrastructure into the region. There will be stronger financial cooperation between the banking, securities and insurance sectors.

 

Major Economic Indicators of the Guangdong-Hong Kong-Macao Greater Bay Area (2019). Source: Hong Kong Trade Development Council.

Economic Growth and Tech and Innovation

The GBA is showing great areas of success, transforming into a world-class technology and innovation hub for emerging industries. Over the course of three years between 2017 and 2019, Shenzhen was the fastest-growing GBA city. It achieved 8.4% growth and thus collectively 5.3% GDP growth for the region. During the first three quarters of 2020, Shenzhen achieved positive GDP growth despite global economic impacts caused by COVID-19.

To facilitate the growth of emerging industries, the GBA has implemented new technology such as fintech, blockchain, big data, and artificial intelligence (AI) with the support of Chinese government policies. The additional increasing presence of Fortune 500 companies in the GBA and the development of smart infrastructure have propelled the growth of the innovation and technology sector.

Rising investments in the GBA cities are expected to further boost the growth of the sector. Guangzhou’s technology-related contract deals showed a 39.3 percent increase year-on-year, based on an increase from US$10.7 billion to US$14.9 billion between 2018 to 2019. In 2019 the city also spent approximately US$2.2 billion on the development of science and technology infrastructure, such as a deep-sea ecosystem and a dynamic wide-range velocity vehicle test unit.

 

The Brinc Guangzhou Office

As one of China’s third-largest cities in the GBA after Shenzhen and Hong Kong, Guangzhou is a gateway to increased cooperation and resources mobility. The city of 15 million residents has been identified as a core engine for regional development in the GBA. It 2019 output exceeded that of Denmark, South Africa, and Malaysia, according to data from The World Bank. Brinc Guangzhou office is an extension to the venture capital and accelerator arm of Brinc.

Since early 2020, Brinc has been operating its Innovation Co-working Space (3500sqm) in Tianhe, Guangzhou. It is open for international and local startups to work, network and support the local innovation ecosystem.

 

In Nov 2020, Brinc has a new satellite office in the Guangzhou International Cooperation Center (GICC) which is established by the Foreign Affairs Office of Guangzhou. It aims to become a national center for overseas organizations who come to China for market expansion, trade promotion, and technology cooperation. It could provide space and one-stop services to organization or companies when they first enter China. Brinc is a strategic partner to provide accelerator services and network support.

Our Guangzhou office has the ability to inspire a global start-up ecosystem, as it introduces international start-ups to China and bridges the gap with community culture.

 

GBA: A Vibrant Innovation and Technology Hub

With increased support from China’s government policies, the GBA is able to expand its initiatives targeting talent supply and easier access to finance. Growing funds through increased public and private investments are driving the innovation and technology hub towards greater transformation. A more open business environment is facilitated, attracting start-ups and investors to a thriving ecosystem of technology and innovation that will continue to prosper economically.

The GBA is a springboard — an effective platform for start-ups with wide-ranging professional services and market resources that can be taken greater advantage of. The stabilisation of regional economic development means that more business opportunities can be explored, paving the way for greater growth and success.

Renee Pan

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