40,900 new firms set up in Qianhai zone in 2017 but Hong Kong broker tenants still in short supply

Total number of companies on site up a third to 164,000, including 289 start-ups, half of which hail from Hong Kong

PUBLISHED : Monday, 26 February, 2018, 7:31pm
UPDATED : Monday, 26 February, 2018, 11:48pm

The number of companies registered in the Qianhai special economic zone has risen 33 per cent year-on-year to 164,900, but some smaller local financial tenants and stockbrokers in Hong Kong still complain they might find it hard to set up shop there.

Some 40,900 companies were newly registered during 2017 in the zone, which is only an hour’s drive by car from Hong Kong.

Of those 164,900, 40 per cent have already started operating, including some major names such as HSBC, Hang Seng Bank and Credit Suisse, Witman Hung, principal liaison officer for the Hong Kong office, at the Qianhai Authority, told an annual media briefing on Monday.

“We are glad to see international firms such as HSBC and Credit Suisse as well as some Hong Kong financial firms such as Bank of East Asia starting to operations in Qianhai last year,” Hung said. 

The special economic zone offers tax incentives and relaxed policies to attract principally financial, logistics and new economy firms to set up. 

So far, financial firms are taking the lead, followed by logistics companies, Hung said. 

There are also 289 newly created start-ups working out of the Qianhi Shenzhen-Hong Kong Youth Innovation and Entrepreneur Hub, based in the zone, with half of those hailing from Hong Kong, which offers them cheaper rents. 

Hung said some of the start-ups had been successfully lured to take space with a combined 1.4 billion yuan (US$221.66 million) in funding from other investors.

Hang Seng Bank started a joint venture fund company in Qianhai last year, and will soon launch its second fund in the mainland, from the zone.

HSBC operates both banking and securities business there, while Bank of East Asia and Credit Suisse have so far only launched securities operations.

Hong Kong Exchanges and Clearing, operator of the Hong Kong stock exchange, plans to buy land in Qianhai in future to set up its commodities exchange platform there, Hung said while the Chinese Gold and Silver Exchange Society has set up an outlet too. 

Some local stockbrokers, however, complaint they have been offered no room to develop business there, as the key incentives being offered are largely targeted at attracting larger financial firms.

“Qianhai and the Greater Bay Area [which consists of nine cities in Guangdong and the two special administrative regions of Hong Kong and Macau] offer a lot of growth opportunities but then many of its policies only benefit large international financial firms,” said Christopher Cheung Wah-fung, lawmaker for the financial services sector, who is also a stockbroker.

That is borne out in the fact that still less than 500 Hong Kong-based local stockbrokers have so far gained approval to do business in the area, he added.

“Many Hong Kong brokers have decades of investment experience. If they could be allowed to operate in Qianhai or the Greater Bay Area, they could help educate mainland investors on investment [practices],” Cheung said.

Hung said Qianhai Authority would like to attract more financial services tenants but would need the country’s securities regulator – the China Securities Regulatory Commission – to make a decision on whether to open up further, to attract more local stockbrokers.

Likewise, Qianhai would also like to have more Hong Kong insurance companies operating in the zone but that additionally there is the need to wait for the country’s insurance regulator to decide if it will be given the green light on that possibility.

Hung said overall, 7,120 Hong Kong companies are now operating in Qianhai, with funds under management of 8.7 billion yuan (US$1.3 billion)

“Hong Kong companies are playing an important role in the development of Qianhai,” he added.