Home Headline AmCham South China: Guangdong remains hot spot for foreign investment

AmCham South China: Guangdong remains hot spot for foreign investment


[Guangdong Economic Watch②]

Editors’ Note: As a manufacturing heartland and leading foreign trade player in the country, Guangdong has served as an important window that showcases Chinas achievements in reform and opening up to the world and an important window for the international community to observe Chinas reform and opening up. What will be the situation of Guangdong’s economy this year? GDToday & Nanfang Daily launched a special series titled Guangdong Economic Watch, aiming to analyze the economic prospect of Guangdong.

Guangdong remains the most popular destination for foreign investment, and Guangzhou, its capital city, has been rated as the most popular investment city for the last five consecutive years, according to the latest report released by the American Chamber of Commerce in South China (AmCham South China).

83% of its member companies said that the business environment in Guangdong continued to improve, showing an overall upward trend.

As China’s most significant economic province, Guangdong has attracted many foreign companies to invest in in recent years. By the end of 2021, Guangdong had established a total of 289,000 foreign-invested enterprises, with a total actual utilization of 523.91 billion USD in foreign capital. In 2021, the province’s actual utilization of foreign capital exceeded 180 billion yuan.

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According to the province’s 2022 Provincial Government Work Report, Guangdong will take multiple measures to expand domestic demand, stabilize external demand, and improve its function of linking domestic and international dual circulation. It means that the province will continue to optimize the business environment, promote high-quality economic development, and attract more high-quality foreign companies to develop here.

Foreign companies value the potential of Guangdong’s market growth

According to the AmCham South China’s report, most foreign-funded enterprises said the main reasons for developing in Guangdong were its market growth potential, transportation and logistics advantages as well as better infrastructure.

It is inseparable from Guangdong’s high economic growth in recent years. In 2021, Guangdong became China’s first province with a GDP exceeding 12 trillion yuan.

In addition, Guangdong has successfully introduced a series of measures to optimize the business environment continuously. The province has implemented its regulations on protecting the rights and interests of foreign investment since March 1, which is also the first local version of such regulations in China.

Previously, Guangdong introduced a series of policies to encourage multinational companies to set up regional headquarters, optimize port business environments, promote cross-border trade facilitation, aiming to attract more international companies to invest, and encourage their participation in the Guangdong-Hong Kong-Macao Greater Bay Area.

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According to Guangdong Provincial Department of Commerce, foreign investment in Guangdong has gradually shifted from labor-intensive industries in the initial stages to high-tech industries, such as electronic information, petrochemicals, automobiles, and modern service industries. The actual investment in high-tech manufacturing in Guangdong has seen a doubled increase.

As a leading materials science company globally, Dow’s portfolio of plastics, industrial intermediates, coatings, and silicon businesses delivers a broad range of differentiated, science-based products and solutions for its customers in high-growth market segments.

Jon Penrice, President of Dow Asia Pacific, pointed out the prosperity of the consumer market is one of the important considerations for our investment layout. The GBA excels in supporting policies for industrial development and encouraging talent development also providing an excellent environment for enterprise development, making it attractive for multinational companies to invest. In addition, the GBA has good maritime transportation convenience and a mature inland logistics network and has the investment conditions for the establishment of chemical industry projects.

Creating open market environment in line with international standards

The global political and economic environment is becoming increasingly complex. Many economists have analyzed that it is difficult to achieve rapid growth in global cross-border investment. There are many challenges in restructuring the international industrial chain, and competition among countries to attract foreign investment is more intense. The epidemic still exists and given these challenges, some companies are watching how Guangdong will respond.

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Bai Ming, associate director of the Institute of International Market research Under the Chinese Academy of International Trade and Economic Cooperation in MOFCOM, suggested that Guangdong regards continuous business environment optimization as an essential task.

On the one hand, by continuing GBA development, Guangdong can strengthen the connection with Hong Kong and Macao in rules and mechanisms, and develop deep integration of economies in three places, managing to create an open market environment that is in line with international standards.

On the other hand, Guangdong can focus on developing manufacturing industry clusters such as home appliances, automobiles, and communications, with methods of merging similar items reasonably and improving the upstream and downstream industry chains, improving Guangdong’s overall industrial and supply chain.

It coincides with the work arrangement of Guangdong in 2022. According to reports, Guangdong will continue to develop the GBA and pilot a new zone for international investment and trade rules with Hong Kong and Macao.

In addition, last year, Guangdong issued a policy to promote 20 strategic industrial clusters and is striving to build a world-class advanced manufacturing cluster. The province will formulate promotion plans for crucial manufacturing industries to attract foreign capital and encourage local cities to select 1-2 key manufacturing industry clusters to attract further foreign investment.

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Last December, Clariant, the world’s leading specialty chemical products company, announced its first Chinese production facility for its successful Exolit OP flame retardants at its existing site in Daya Bay, Huizhou, Guangdong Province. With an investment of CHF 60 million (about 400 million yuan), the project will be completed and put into production in 2023. These products can be used in electric vehicles, 5G equipment, and consumer electronics.

Tan Zhenyu, general manager of Clariant Chemical (Huizhou) Co., Ltd., said that the local government had provided strong support in taxation, planning,as well as industrial and commercial registration, offering good production and business environment for the project. “We will seize important strategic opportunities of the development of the GBA and become a true ‘insider in the Chinese market’ with methods of strengthening innovation drive, customer experience, and optimizing processes”. 

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