Doing business in different regions of China requires a tailored strategy, as each region possesses unique characteristics, business regulations, and labor laws. To succeed in the Chinese market, entrepreneurs and companies must thoroughly understand the functions and factors of major cities. In this article, we will provide insights into the economics, industrial development, policies, and trends of the four major clusters of the Chinese economy.
Four Great Regions for Business in China
China is a vast and diverse country, making it essential to consider specific regions for business opportunities. Let’s delve into the following four major clusters:
Shanghai, located in the East, is China’s most populous city and serves as an international hub for finance and trade. This region is known for its focus on innovation, technology, transportation, and logistics. Notable highlights of the Shanghai-Jiangsu-Zhejiang cluster include:
- Shanghai boasts the highest GDP of any mainland Chinese city, estimated at 3.3 trillion yuan in 2018, signifying its economic significance.
- The city is transitioning to a post-industrial economy with a focus on six key industries: electronic data, automotive, petrochemicals and fine chemicals, steel production, complex equipment, and biomedical sectors.
- The top three major industries in Shanghai are financial services, retail, wholesale, and real estate.
- Shanghai is closely connected with Zhejiang and Jiangsu provinces, fostering collaborative relationships in Suzhou Industrial Park and Changshu Economic and Technological Development Zone, where domestic and foreign manufacturers and traders have established their operations.
Shanghai Free Trade Zone
Shanghai, being one of the four municipalities under direct central government control, is subject to special policy emphasis. It has become a significant port for domestic and international trade, attracting substantial foreign investment. By the end of 2017, the Shanghai Pilot Free Trade Zone had absorbed 7 billion yuan in foreign direct investment, accounting for 41.2% of the city’s total.
In August 2019, China’s State Council expanded the Shanghai Pilot FTZ to include the new Lingang area, offering various tax breaks and favorable policies to attract more talent and investment.
Shanghai Stock Exchange
Shanghai houses one of China’s two main stock exchanges, the Shanghai Sci-Tech Innovation Board, also known as STAR Market, with the potential to become the “China NASDAQ.” It serves as a crowdfunding platform to drive innovation and foster new growth sources.
The North cluster, consisting of Beijing, Tianjin, and Hebei, boasts the second-largest GDP in China, surpassing 3 trillion yuan in 2018. Beijing, as the capital, stands as the seat of China’s central government and headquarters of major state-owned enterprises and Fortune Global 500 companies. Key points to consider include:
- Chaoyang District in Beijing, often likened to Wall Street, attracts substantial foreign investment due to its favorable business environment, efficient transportation, and advanced telecommunications systems.
- Zhongguancun National Demonstration Zone, established in 1988, serves as a high-tech park and the Chinese headquarters and research center for numerous domestic and international tech giants like Google, Baidu, Microsoft, HP, and Sina.
- Tianjin and Hebei provinces serve as logistics hubs and host various industries beyond heavy manufacturing.
Xiong’an New Area
In April 2017, President Xi announced the creation of Xiong’an in Hebei Province as China’s 19th new national region, expected to become a vital business center. Similar to Pudong and Shenzhen, Xiong’an aims to facilitate the Jing-Jin-Ji integration by moving non-capital entities like hospitals, universities, and public services to the region.
Three-Year Action Plan
In August 2019, the Beijing Municipal Bureau of Commerce introduced a three-year action plan for the service sector, designed to attract more foreign investment and talented immigrants. The plan consists of eight documents, each covering specific sub-categories:
These are just two of the four major clusters in China that offer unique opportunities for businesses. The North and East regions have their distinct advantages and key industries, making them attractive destinations for entrepreneurs and companies seeking to thrive in the Chinese market. Understanding the specific characteristics and policies of these regions is crucial for success.