Hong Kong’s Position in Qianhai: A Win-Win Game

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By Fang Ying, Senior Writer, China Business Knowledge @ CUHK

Hong Kong should strengthen the collaboration with Qianhai, which not only helps Hong Kong enterprises, particularly the small and medium sized enterprises (SMEs), to enter into the mainland China market, but can also facilitate the mainland enterprises to go out to overseas markets, achieving a win-win outcome, according to Regina Ip, co-chair of the Maritime Silk Road Society.

Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone (Qianhai) is the first of its kind. It is the ‘special economic zone’ within the Shenzhen Special Economic Zone, which is very innovative in terms of policy, technology and financial service,” Ip said in her speech at a conference co-organized by Qianhai International Liaison Services Limited and Hong Kong Chamber of Commerce in August, 2017.

“Hong Kong would benefit a lot from the collaboration, particularly in terms of innovation and technology, and other modern service industries.”

With an attendance of over 200 professionals, the conference focused on China’s Belt and Road Initiative and the opportunities in Qianhai for professionals.

Explaining the background of Qianhai, Ip said that Qianhai aims to promote greater openness, experiment with further market reform, and promote the development of higher value-added professional services in Shenzhen, Hong Kong and the wider region.

Launched in August 2010, the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone is a pilot area for innovative cooperation between Guangdong and Hong Kong in terms of modern industries, such as financial services, logistics, technology and start-ups.

According to Wang Yanxia, deputy director general of Shenzhen Qianhai Authority, Qianhai has become the most innovative and open national development zone in China, adopting lots of pilot policies that are more special than many special economic zones in terms of finance, tax, human resources and education. There are four pillar industries in Qianhai, namely, finance, modern logistics, information services and technology innovation.

Ip noted that many large Hong Kong corporations, such as HSBC, MTR Corporation and Chow Tai Fook, have already established operations there, but some SMEs may still find it difficult to set up their branches in Qianhai owing to tight qualification requirements.

Ip believes Qianhai has its potential and resources to facilitate Hong Kong’s enterprises, particularly for SMEs to enter into a greater market in China. To achieve that, “Qianhai and Hong Kong would need to work closely together to overcome the hurdle of market access and achieve greater synergies,” she urged. 

Some Hong Kong SMEs have expressed concerns that they cannot meet the necessary capital requirements to establish offices in Qianhai. In light of that, Witman Hung, chief liaison officer for Hong Kong for the Shenzhen Qianhai Authority, clarified by saying the capital requirement has been lowered.

“Some SMEs may not know about this change, but actually they can set up an office in Qianhai with a lower amount of capital now,” Hung said.

Hung said the Qianhai authority would work with the Hong Kong government on how to further reduce barriers for Hong Kong SMEs to develop their businesses in Qianhai.

According to China Daily, the number of Hong Kong-funded enterprises had reached 4,494 by the end of April 2017, with a registered capital of 388.9 billion yuan. Hong Kong companies only accounted for 4 percent of registered enterprises in Qianhai but contributed 22 percent of the total added value generated in the zone and 27 percent of tax revenue in the first quarter of 2017. 

Hung said that both Qianhai and Hong Kong are important strategic points of China’s One Belt One Road Initiative, and Hong Kong professionals should seize the opportunity to set up footholds in Qianhai and offer their expertise for mainland companies to enter the global market.  

“Utilizing the geographical advantage of its close proximity with Hong Kong, Qianhai plays an important role in strengthening the partnership between Hong Kong and Shenzhen,” said Hung. “In particular, through Qianhai, Hong Kong and Shenzhen can cooperate to serve as a center of fundraising and professional services for the One Belt One Road Initiative.”

“Hong Kong and Qianhai can complement each other, as Qianhai enjoys favorable and innovative policies while Hong Kong has expertise and experience. Leveraging these strengths and working together, Qianhai and Hong Kong will be able to play a bigger role in the region together,” Wang remarked.

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7 COMMENTS

Dandan Tong
10/29/2017 7:56:13 PM
Although capital requirement has been lowered at policy level, the increasing real estate price remains to be a challenge. SMEs that find it difficult to set up their own branches in Qianhai may try to form joint ventures in order to leverage strengths while lowering costs.
Dandan Tong
10/29/2017 7:52:29 PM
Many Chinese entrepreneurs that are highly innovative and competitive are moving to Qianhai, making it even more difficult for Hong Kong SMEs to play a role. A SME should evaluate its own competence and strategic goals.
Dandan Tong
10/29/2017 7:47:15 PM
Although it would be desirable to enjoy first-mover advantages in the collaboration with Qianhai for SMEs in Hong Kong, whether a particular enterprise can reap the prospect benefits of the act depends on its costs and benefits in doing so.
K. Si
10/25/2017 9:16:00 PM
I think flexibility in policies can help and encourage SMEs in Hong Kong to move to Qianhai for development. This also brings challenges to the HKSAR government in terms of keeping a balance between local development and cooperation with China.
K. Si
10/25/2017 9:13:14 PM
It would be particularly advantageous for Hong Kong to strengthen its innovativeness because its neighbor Shenzhen is one of the top technology-oriented cities in China.
K. Si
10/25/2017 9:11:38 PM
I personally think that Hong Kong is behind mainland China in terms of technology innovation and adoption. With more and deeper connections with mainland, Hong Kong can surely complement its weakness.
Hong HUANG
10/23/2017 9:10:00 PM
I would like to hear some real cases of the cooperation between Hong Kong and Qianhai which help SEMs. The cooperations between Hong Kong and Guangdong have been effective in helping Chinese firms to go overseas and HK firms to enter mainland. What is the special feature of Qianhai
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