[Sponsored Article] About three in four international businesses are planning to invest or expand in the Greater Bay Area (GBA) in the next three years, according to the latest HSBC Navigator survey. The optimism is especially noticeable among Malaysian and Singaporean firms looking to foray into the mainland market. “The positive business sentiment, particularly among businesses in Asia Pacific, shows that the GBA is set to become an even more significant facilitator of cross-border trade and capital flows, expanding the corridor for trade, investment and innovation between China and other regions,” said Daniel Chan, Head of Greater Bay Area, HSBC. ‘Dual circulation’ model renews market confidence Market confidence in the GBA has always been encouraging, and the pandemic has not dampened the outlook. China has already regained its pre-pandemic levels of activity, showing encouraging growth momentum while leading Asia’s recovery 1 . There is also a greater focus on the ‘dual circulation’ economic model, which will allow foreign companies in China to broaden their business operations. As these trends continue, the GBA has a vital role in acting as the bridge to overseas markets offering excellent growth potential for businesses and entrepreneurs worldwide. And this potential is buoyed by strong support from government authorities and international businesses, who have been investing in the framework that will enable cross-border trade to flourish and implementing initiatives to ensure the region’s sustainable growth. GBA’s advantages conducive to tech, manufacturing and trade HSBC’s Navigator survey also revealed what international businesses identify as the core advantages of the GBA: leading technological advancement and research capabilities, a burgeoning middle class, and a highly skilled workforce. These important factors are conducive to doing business in the region, particularly in technology, manufacturing and trade. Recognising this potential in emerging areas, in August, HSBC unveiled a US$700 million GBA+ Healthcare fund to support the scaling up of fast-growing, early-stage healthcare companies with viable business models, and upsized its GBA+ Technology Fund from USD880 million to USD1.13 billion, and upsized its GBA+ Technology Fund from USD880 million to USD1.13 billion. Aside from helping entrepreneurs capitalise on the region’s many possibilities, this furthers HSBC’s support of new economy sectors, which the bank believes will be the key drivers of the GBA’s economic growth. To support businesses across all sectors expanding their operations in the region, in September, HSBC launched Credit Connect, a market-first credit facility solution that provides flexibility in addressing onshore and offshore funding needs. According to Daniel Chan, this was also in response to “the GBA’s increased economic activity which has accelerated cross-boundary business activities in the region”. As the GBA initiative takes shape, so too has investor interest. Foreign direct investment in China grew at the fastest pace in more than a decade during the first quarter of 2021, according to data released by the Ministry of Commerce in April 2 . The data also revealed that more than 10,000 new foreign-invested companies were established in China during the first three months of the year, an increase of almost half from the same period a year before 3 . Land of opportunity It is estimated that by 2030 the region’s GDP will grow to top US$4.7 trillion, presenting growth potential that international companies simply cannot afford to miss out on 4 . Having been actively involved in the region for many years, the initiative is not new to HSBC. The bank sees this as the Pearl River Delta’s next iteration, but supercharged by factors such as improved connectivity, rising affluence and the emergence of an enhanced digital economy that will encompass manufacturing to new retail, to smart cities. For businesses, the GBA has long held a range of opportunities – particularly for those specialising in infrastructure and manufacturing. But this is set to diversify in the period ahead. HSBC’s Navigator survey identified that the top investment priorities for international businesses operating in the GBA are technology and innovation; improving supply chain reliability; digitisation and establishing regional partnerships. These investments will develop further opportunities in technology, environmental and sustainable solutions, and investment and financial services. Looking to a sustainable future With the world’s attention most recently on Glasgow and the distressing findings from the IPCC report released in August, the urgency for economies to transition to net-zero couldn’t be more pressing. For the GBA, fostering this transition is a key item on the agenda and where the private and public sector is heavily invested, particularly in green infrastructure. This also presents an opportunity for foreign expertise and funding. Hong Kong has an important role to play in promoting the development of green finance for the region, serving as a platform and bridge to attract foreign investment into green and sustainability-related projects in mainland China and helping the GBA create its green finance ecosystem. Partnering with businesses to write their GBA story HSBC believes that the GBA is where the future of financial services is being written. The Bank has invested heavily in digital infrastructure, cross-boundary product capabilities and talent pools. This includes taking big steps in meeting the needs of those using personal and business services and offering insight, foresight and unified banking solutions to cross-border customers. Even against the backdrop of the pandemic, many businesses have been playing a part in the GBA. With markets around the world opening and a more positive global outlook taking hold, growth momentum for the region can only accelerate from here. https://www.oecd.org/economy/china-economic-snapshot/ http://english.mofcom.gov.cn/article/newsrelease/press/202104/20210403054114.shtml Ibid https://www.business.hsbc.com.hk/-/media/library/business-hk/pdfs/en/gba-booklet-english-version.pdf
