Dongguan’s multinational factories from Gillette to Samsung give it an edge as a manufacturing hub for the bay area
- Dongguang is the fifth-largest city in the Greater Bay Area by size of economy, boosted by investments by the likes of Swire Pacific and Samsung
- The city is seeking to wean itself off a reliance on low added-value and labour-intensive manufacturing as growth has lagged the nation’s average
Dongguan’s rise may partly stem from its geographical advantage. Being located between Guangzhou and Shenzhen enables the city to benefit from a spillover effect from the two biggest economies in the region. And Dongguan is 140 kilometres away from Hong Kong, a distance that can be covered in 30 minutes by high-speed train.
It is getting close to joining the trillion-yuan club in the area that includes Shenzhen, Hong Kong, Guangzhou and Foshan. It set itself a target five years ago to boost the economy to more than 1 trillion yuan in 2021.
It is all a far cry from humble beginnings. When the Communist Party won the civil war in 1949, Dongguan’s economy was worth a mere 600 million yuan, heavily relying on the agricultural industry.
Still, that is a double-edged sword. Dongguan’s economy grew by only 1.1 per cent last year, well behind the 2.3 per cent expansion for the whole nation. Its export-led and labour-intensive economy proved to be vulnerable to shrinking overseas demand resulting from the global outbreak of Covid-19. The manufacturing sector contracted 0.9 per cent in 2020, and exports decreased 4.4 per cent.
“Though the epidemic has had a big impact on Dongguan’s economy, the positive perspective is that it has forced Dongguan to heed and speed up the restructuring of industry,” said Li Xiaofeng, a professor at the Guangdong University of Foreign Studies.
Providing added value in the industry chain and raising the proportion of hi-tech sectors will be at the top of the government’s agenda to strengthen Dongguan’s competitiveness in manufacturing, according to the city’s party secretary, Liang Weidong.
“We’ll focus our resources into building a base for strategic emerging industries and promoting an overall increase in the value of the industry chain,” Liang said on the sidelines of a government conference in January.
Dongguan has lavished money on research and development to help nurture hi-tech firms. Research and development expenses accounted for 3.1 per cent of the city’s economy output in 2019, the second-highest in Guangdong province, behind Shenzhen.
Dongguan’s development has gone through some twists and turns. Its image was once tarnished by its sex service industry, the discovery of which shocked the whole nation. The police stormed and closed almost 2,000 sauna houses, entertainment resorts and hair salons overnight in February 2014 after China Central Television first exposed the huge and sprawling network of illegal underground businesses in the city. The crackdown also extended to the entire Guangdong province, with the police cracking 214 gangs linked to pornography, and arresting about 3,000 people by June 2014.
