Business Environment in Zhuhai

Zhuhai's Economic Advantages and Opportunities

Good Location:
Located on the west bank of the Pearl River at its entry to the South China Sea, Zhuhai lies adjacent to Shenzhen and Hong Kong across the river to the east, and adjoins Macau over land to the south.
Hot spots for foreign investment:
Zhuhai is one of the hot spots for foreign investment. By the end of 2002, investors from 52 countries or regions had invested in Zhuhai, with 7,303 direct foreign investment projects. More than 30 famous transnational companies, such as Mitsubishi Corp., Mitsui & Co. Ltd., Toshiba, Canon and Panasonic from Japan, Flextronics from Singapore, Carrefour from France, Exxon Mobil, Coca-Cola, Celenese and Flextronics from US, BP from UK, Siemens and DaimlerChrysler Group from Germany as well as Philips from Netherlands had settled down in Zhuhai. In 2002, foreign-funded enterprises covered 71.6% of Zhuhai's industry gross output value and taxation, 48%. Now Zhuhai has established trade relationships with 140 countries and regions. In 2003, the city hosted the first World Economic Development Declaration Conference.
Sustentation:
As one of the earliest special economic zones in China, the city enjoys local legislative power granted by the National People's Congress. Zhuhai boasts a comprehensive, outward-looking economy with new- and high-tech industries as the core and supported by the coordinated development of a diverse range of services and industries such as commerce and trading, tourism, finance, real estate, information, logistics, agriculture and fishery. Back up by well-developed infrastructure facilities and sufficient power and water supplies, Zhuhai ranks among the top mainland cities in terms of coverage rate of water and power supply network, cable TV network, and broadband network.
Good Environment:
The city has won the "State Environmental Protection Model City" award for several years in a row, as well as the "International Best Practices to Improve the Living Environment" award by the United Nations Center for Human Settlement. Moreovere, Zhuhai was also named the "National Advanced City of Science and Technology".
Labor and Employment:
For more than 20 years, Zhuhai has devoted itself to building a market-orientated employment mechanism. In 2002, the unemployment rate in the urban area was 2.94%. By 2004’s data, the city's population had been reached 1.33 million, of which, 0.79 million were permanent residents.
Review of Zhuhai’s Economy in 2006:
Local budgetary financial revenue hit 6.03 billion yuan ($771 million) in 2006, retail sales of consumer goods 25.55 billion yuan ($3.27 billion), and investment into fixed assets 25.5 billion yuan ($3.26 billion), up 21, 15.1 and 21.8 per cent respectively.
Imports and exports topped $32.8 billion, with exports at $14.8 billion, ranking first among cities in the Pearl River Delta. RMB and foreign currency savings deposits registered a balance of
1.15 trillion yuan ($14.7 billion) in 2006, a year-on-year increase of 15.4 per cent, helped Zhuhai become one of the Top Ten China Financial Ecological Cities.
City infrastructure is increasingly more comprehensive and great achievements have been made in environmental protection. The Guangzhou-Zhuhai Intercity Railway is being constructed and work on the Guangzhou-Zhuhai Railroad will resume soon. Preliminary work on the Hong Kong-Zhuhai-Macao Bridge and construction of two 50,000-tonnage ship container wharfs and a public petrochemical wharf are progressing smoothly. Cooperation between Zhuhai Airport and Hong Kong Airport is now concrete.
A group of old in-town villages have been reconstructed and unfinished buildings completed. Sewage treatment in urban areas has exceeded 63 per cent.
Meanwhile, an economic system reform went into action. A new round of government institutional reform and administrative examination and approval system has been instituted. The Zhuhai Civil Service Overall Handling Centre went into operation. Actually utilized foreign direct investment totaled $1.96 billion in the past three years, a rise of 29.3 per cent.
Education, public health, culture and sports undertakings underwent all-around development in 2006. The goal of becoming a Guangdong Provincial Education-Intensive City was achieved a year ahead of schedule. Twenty-five weak rural schools have been merged or renovated and
55,000 rural students have been covered by free compulsory education. The number of on-campus college students totaled 63,000, ranking second in the province. Coverage of a new cooperative rural medical system reached 88 per cent.

Industries:

The information industry and electrical machinery manufacturing are the two engines of growth of Zhuhai's industrial sector where new- and high-tech industries are making up an increasingly large share.
Zhuhai's top 10 industries are:
Electronics and communications, electrical machinery, electricity and gas, instruments and meters, textiles and garment, plastics and metals, pharmaceuticals, food and beverages, chemicals, and paper making. In recent years, the city authorities have realigned the priorities for developing five key sectors, namely electronics and communications, electrical machinery, petrochemicals, biomedicine, and software.
Thanks to the implementation of consolidation to foster the software sector, especially following the issuance of the Several Policies on Encouraging the Development of the Software and Integrated Circuit Industries and the establishment of the national software base in Zhuhai, the output value of the software sector has been growing at an average annual 50%. About 500 software companies are currently operating in Zhuhai. The industry as a whole is developing on a fast track in a positive direction.
Services industries:
Zhuhai enjoys unparallelled advantages in developing services industries in the Greater PRD region. The proportion of the city's primary, secondary and tertiary industries is 3.6 : 57.3 : 39.1. Services have been expanding rapidly to make up a significant share of the economy. Leading sectors such as trading, commerce, distribution and tourism continue to surge while the real estate market is growing at a steady pace as control measures take hold. Modern services such as finance and insurance, warehousing and transportation, post and telecommunications, and logistics are also posting rapid growth. Tourism, logistics and convention and exhibition will become the development priorities of Zhuhai in future.

Investment Environment

Commercial services:
Zhuhai's well developed commercial sector comprises a large number of supermarkets, department stores and western-style restaurants, including famous French retail chain Carrefour, Vanguard, Moi Department Store, Minrun Xinqixing, Jusco, McDonald's, Kentucky Fried Chicken and Pizza Hut.
Financial services:
Zhuhai's financial sector has expanded into a network of more than 600 establishments. In addition to the People's Bank of China and the state-owned commercial banks, a number of foreign banks have also established a presence in the city, including Nantong Bank, Standard Chartered Bank, Bank of East Asia of Hong Kong, and Banco Nacional Ultramarino of Macau.
Human resources:
From 2001 to 2004, Zhuhai has set up 17 universities and a large number of R&D bases. The QSI International School of Zhuhai recruits students among the expatriate community in the city. The talent database currently has 1,770 entries. Nearly 2,000 tertiary institution instructors and R&D experts have taught or conducted research in the city. The Zhuhai National Hi-tech Industrial Development Zone and United Laboratories of Zhuhai have recently been approved by the Ministry of Personnel to establish post-doctorate research centers in the city.
Legal Services:
Zhuhai stresses the protection of intellectual property rights, and has adopted various measures to actively implement the relevant State laws and regulations. In 1996, the Press and Publications Bureau was set up to work on behalf of the municipal government exercising supervision and administration, and providing services to the press and publications sector.
Legal services in Zhuhai have developed rapidly. At present there are 31 law firms, with 335 registered lawyers. Approved by the provincial administration of justice, a government-funded law firm has been established in Zhuhai.
Comprehensive economic development zones:
Apart from the Xiangzhou special economic zone, there are five other special zones all of which have reached a mature stage of development and are performing specific economic functions. They are: Zhuhai National Hi-tech Industrial Development Zone, Zhuhai Bonded Zone, Wanshan Marine Development Experimental District, Hengqin Development Zone, and Zhuhai Harbour Industrial Zone. Meanwhile, foundation for the construction of the Zhuhai-Macau cross-boundary industrial zone was laid at the end of 2003 and the overall plan for the Zhuhai part is now completed. Tenders are expected to be invited soon for the construction of infrastructure facilities and construction will then officially begin. The Zhuhai National Hi-tech Industrial Development Zone has been expanding steadily to encompass the technology and industrial parks of Nanping, Sanzao, Xinqing and Baijiao, as well as the demonstration base for the commercialisation of hi-tech achievements. The development zone has also established the "University Park" to serve specific functions and develop itself into a region with unique advantages.

CEPA (Closer Economic Partnership Arrangement)

Implementation Measures

The Zhuhai-Macau cross-boundary industrial zone, with its foundation laying ceremony taking place on 9 December 2003, marked the start of a new era of all-rounded cooperation among Zhuhai, Hong Kong and Macau under CEPA.
Gongbei Customs of Zhuhai set up a country of origin office and developed nine sets of standards and procedures including online supervision; verification, analysis and monitoring of country of origin; measures for mutual assistance and liaison with Macau authorities; and measures for Gongbei and other customs authorities to verify Macau-origin goods.
At the same time, Zhuhai organises a series of CEPA promotions such as publishing the Zhuhai CEPA Services Guide, organising CEPA related networking events, launching a CEPA website and establishing hyperlinks with relevant Hong Kong and Macau government websites, and enabling investors from Hong Kong and Macau to complete investment project advance registration online.
To facilitate CEPA implementation, Zhuhai installs an automated entry-exit visitor checking system and a one-stop electronic passenger vehicle checking and clearance system at Gongbei checkpoint since 2004. With the two new systems, customs clearance efficiency significantly improved from 40 seconds to 3 seconds per visitor, and from 1 minute to 15 seconds per vehicle.

Latest Investment Incentives

Zhuhai announced the incentives for investing in the Zhuhai-Macau cross-boundary industrial zone on 19 December 2003.
Customs supervision:
The entry-exit of goods will be administered by a filing system where no tariffs or licences are required. Equipment, parts and components, building materials and reasonable quantities of office supplies for own use and fuel for production use are exempt from tariffs and import-related VAT. The new customs clearance model of "one declaration, one checking of forms and one inspection" will be applied to the import-export of goods. There will be no restriction on the ratio of domestic to export sales. Materials, parts and products imported by export processing enterprises may be sold domestically provided that tariffs and import-related VAT are duly paid.
Foreign exchange control:
Both foreign currency and RMB can be used for settlement. Enterprises may retain foreign currency as working capital. Both domestic and foreign financial and insurance institutions may set up branch operations or offices in the zone.
Inspection and quarantine:
Goods imported by enterprises in the zone from Macau for producing export processing products can be exempt from quality inspection. However, if scrap material is being used as raw material, environmental protection inspection is still required in accordance with the relevant regulations. Goods leaving the Zhuhai part that are subjected to inspection can be exempt from quality inspection and food hygiene inspection provided that they do not carry the "made in China" label or China-registered trademark or China origin label, or are not required by inspection and quarantine authorities to present quality certificates.

Opportunities for Hong Kong and Macau

Due to geographic proximity and extensive personal connections, Zhuhai has long fostered close ties with Hong Kong and Macau. Business people from Hong Kong and Macau are among the longest-standing traders and investors in Zhuhai. To date, Hong Kong and Macau have remained the largest and second largest sources of FDI in the city respectively. In terms of exports, Hong Kong and Macau are Zhuhai's largest and fifth largest partners respectively. Given the new circumstances under CEPA, more opportunities for economic cooperation between Hong Kong, Zhuhai and Macau will emerge.
New bridge:
The Hong Kong-Zhuhai-Macau Bridge, a spur to Greater PRD economic development, is currently at the stage of discussion. Upon completion of the bridge linking the three cities, it will only take a few ten minutes to drive from Zhuhai and Macau to Hong Kong, which is more than three hours faster than the present journey via Humen bridge. The planned bridge will significantly shorten the distance between the west bank of the Pearl River and Hong Kong. The bridge therefore will play a pivotal rule in facilitating the economic development of the Greater PRD region. It will not only give an impetus to PRD development but also drive the growth of the western part of the PRD region, paving the way for the emergence of the Greater PRD economic region. The Greater PRD region will in turn extend its reach to the ASEAN free trade zone and exert its influence on other provinces such as Guangxi, Hainan, Yunnan, Guizhou and Sichuan. The region is poised to become a multifunctional, highly open and vibrant economic region in the world.
Logistics:
Logistics is one of Zhuhai's development priorities. In the Zhuhai Bonded Zone and Harbour Industrial Zone, the logistics industry has made significant progress. More than 30 of the world's top 500 players and large warehousing enterprises have launched logistics operations in the Gaolan port area in the Harbour Industrial Zone. Under CEPA, freight sorting and logistics services have been further opened up for Hong Kong's participation and hence more opportunities are unfolding for Hong Kong industry players. Moreover, the planned Hong Kong-Zhuhai-Macau Bridge will link up Hong Kong's land transport with the Beijing-Zhuhai highway. Goods from Wuhan can expect to arrive in Hong Kong in one day. By taking the coastal highway, the journey from Hong Kong to Guangxi can be shortened to half a day. The reach of Hong Kong logistics players is significantly extended as a result. Experts project 30% and 35% increases in sea and air freight respectively for Hong Kong if industry players can extend their services to cover the western part of the PRD after completion of the Hong Kong-Zhuhai-Macau Bridge.
Tourism:
Tourism is one of Zhuhai's niche industries and a driver of the city's services sector. Similarly, in Hong Kong tourism is one of the four economic pillars. Tourism is highly developed and well managed by a sound system. Thanks to CEPA and the relaxation of visa requirements, Zhuhai's tourism market can expect to align with those of Hong Kong and Macau. There is complementarity between Zhuhai's future development direction (including leisure, resort, convention and exhibition) and that of Hong Kong and Macau. Through coordinated publicity efforts, the tourism resources of the Greater PRD region can be integrated and the image of the region encompassing Hong Kong and Zhuhai as a tourist destination can be reshaped. In May 2004, China Travel Service (Hong Kong) launched a hot spring project in Zhuhai, an indication that Zhuhai's tourism resources are attracting more Hong Kong investors.
Convention and exhibition:
Thanks to the attractive natural environment, comprehensive range of supporting services and vigorous economy, Zhuhai is an ideal city for hosting conventions and exhibitions. Zhuhai places strong emphasis on the development of this industry. The attractiveness of Zhuhai is clearly illustrated by the success of the Aviation Expo held in the city. The unique features of the Zhuhai Bonded Zone are another attraction for Hong Kong exhibition organizers to stage international trade shows in Zhuhai. In Hong Kong, the convention and exhibition industry has a long history of development. Hong Kong has a wealth of experience, extensive international exposure, strong sales networks and a high degree of professionalism in the convention and exhibition field. Under CEPA, Hong Kong companies can provide convention and exhibition services in the mainland in the form of wholly-owned operations. There is an enormous scope of development for Hong Kong and Macau companies in this sector.
Entrepot trade:
Upon completion of the Hong Kong-Zhuhai-Macau Bridge linking up the eastern and western parts of Guangdong province, Hong Kong stands to benefit from gaining easier access to Guangdong and Yunnan and even to countries like Vietnam. In other words, the large volume of trade between China and the ASEAN free trade zone may be handled through the Hong Kong International Airport.
Commerce:
To implement CEPA practically, the Zhuhai business community has launched a number of commercial property projects such as shopping streets and shopping districts capitalising on the CEPA concept. Hong Kong and Macau suppliers can offer their goods at these venues for retail. This is another opportunity for Hong Kong and Macau business people.
Airport:
The Hong Kong-Zhuhai-Macau bridge will connect the airports of Hong Kong, Shenzhen, Macau and Zhuhai. The flow of people and goods among the four airports can become better coordinated and transshipment more efficiently deployed. It will also help ease the pressure caused by the ever increasing freight volume at the Hong Kong International Airport.
Research and technology:
New- and high-technology is the leading growth area of Zhuhai, posting Rmb36 billion in annual output value, or one-third of the city's total industrial output. The Zhuhai University Park and Zhuhai New- and High-Tech Development Zone have both developed rapidly to give the city a strong technology flavour. New- and high-tech firms and scientific research organisations from Hong Kong may consider setting up operations in Zhuhai.

Reference Resources:

http://www.tdctrade.com/alert/cba-e0406p1.htm
http://www.zhuhai-trade.gov.cn/en/index-e.htm
http://www.zhuhai.gov.cn/english/
http://www.zhuhai.com.cn/english/index.asp?id=1018