pillar industries in Shenzhen

 

1.High-tech

Strong R&D capability and a complete industrial chain have made high-tech industries Shenzhen's most important pillar.

 

OUTPUT VALUE

The total output value of high-tech products made in Shenzhen reached 1.4 trillion yuan in 2013, up 9.3% from the previous year. That accounted for 50.36% of the total output value of industrial enterprises.

INPUT IN R&D

In 2013, Shenzhen spent 58 billion yuan, or 4% of its GDP, on R&D, leading the Chinese mainland.

 

R&D POWER

In 2013, over 80,000 patent applications were filed, up 10.3% from the previous year. The PCT applications amounted to over 10,000, up 25.2% from 2012. Shenzhen had 62,000 invention patents, ranking the second in China. Every 10,000 residents in Shenzhen owned 58.1 patents. There are 3,800 recognized State-level high-tech enterprises in Shenzhen. The 4G technology

 

HIGH-TECH INDUSTRIAL PARK

Construction of the Shenzhen High-Tech Industrial Park, known as SHIP, started in September 1996, with a planned area of 11.5 square kilometers. It is one of the six national pilots to build world-class high-tech parks. Today, SHIP is home to numerous firms, forming mature industrial chains in telecommunications, computer services, software and medicine. 

 

VIRTUAL UNIVERSITY PARK

Shenzhen Virtual University Park was built in 1999. The park's major functions are to train and introduce first-class professionals, integrate industrial and research resources, establish key research labs and doctoral workshops, and promote cooperation between Hong Kong and Shenzhen research centers. So far, the park has pooled the strength of 57 prestigious universities from home and abroad. It has educated more than 183,600 professionals, and fostered 791 start-up companies and 184 research centers. 

 

HI-TECH FAIR

Cosponsored by the Ministry of Commerce, Ministry of Science and Technology, Ministry of Industry and Information Technology, National Development and Reform Commission, Ministry of Education, Ministry of Human Resources and Social Security, Ministry of Agriculture, State Intellectual Property Office, Chinese Academy of Sciences, Chinese Academy of Engineering and Shenzhen Municipal Government, the China Hi-Tech Fair (CHTF) began in 1999 and has been held each year since. The 16th CHTF will be held in November 2014.

 

BGI-SHENZHEN

BGI-Shenzhen, established in 2007, is engaged in scientific research of public interest. BGI Shenzhen has achieved breakthroughs in the large-scale discovery of gene resources, in the sequencing of complicated genomes of higher forms of life, and in the research of inherited diseases. BGI-Shenzhen ranked 87th among global scientific institutions, 5th among Chinese scientific institutions and 17th among Asia-Pacific scientific institutions according to NPI 2013 Asia-Pacific published in March 2014.

 

SHENZHEN INSTITUTE OF ADVANCED TECHNOLOGY OF CAS

The Shenzhen Institute of Advanced Technology of CAS was established in 2006 by the Chinese Academy of Sciences (CAS), the Shenzhen Municipal Government, and The Chinese University of Hong Kong. With a talent pool of 1,950 scientists, the institute focuses on fields including robotics, healthcare and medicine, new energies and new materials, cloud computing and the Internet of Things.

 

KUANG-CHI INSTITUTE OF ADVANCED TECHNOLOGY

The Kuang-Chi Institute of Advanced Technology is a research institute sponsored in 2010 by industries, government and venture capitalists. Kuang-Chi Institute attracts distinguished scientists from different countries and territories and features collaborative cross-disciplinary research on metamaterials. By the end of 2013, the institute had applied for 2,443 patents in metamaterial research, accounting for 86% of the total in this field. 

 

NATIONAL SUPERCOMPUTING CENTER

The National Supercomputing Center in Shenzhen (Shenzhen Cloud Computing Center) is the city's largest scientific infrastructure facility. The Dawn 6000 supercomputer system can perform 1.27 quadrillion calculations per second, certified in 2010 as the second-fastest system in the world. The center was put into use in November 2011, processing massive data for scientific research, technological and engineering projects as well as serving as a cloud computing center for the whole society. 

 

SHENZHEN-HK INNOVATION CIRCLE

The establishment of the Shenzhen-Hong Kong Innovation Circle fosters technological collaboration between Shenzhen and Hong Kong to create a global innovation center across the region. Since Shenzhen and Hong Kong SAR governments signed an agreement promoting the Innovation Circle in 2007, a five-year plan had sponsored 57 joint research projects.

 

HIGH-TECH TALENT POOL

By the end of 2013, Shenzhen was home to 1.22 million professional technicians. Of those technicians, 50,000 had studied abroad. The Peacock Plan, aiming to attract top talent from overseas, helped 270 professionals settle in the city in 2013 and helped 454 talents in total.

 

 

2.Modern Logistics

The overall competitiveness of logistics in Shenzhen leads other cities in China, with an operating efficiency close to the standards of second-tier developed countries.

 

BASICS OF LOGISTICS

The logistics industry in 2013 yielded 144.56 billion yuan of added value, growing 11.42% from 2012, and accounting for 9.97% of the city's GDP.

 

LOGISTICS COMPANIES

More than 15,000 logistics companies have settled in Shenzhen. The traditional logistics service has transformed to third-party logistics and supply chain management service. SF Express, a Shenzhen-based and the largest private logistics company, has over 30 air freighters with an annual sales volume of 23 billion yuan. It has opened branch offices in Taiwan, Singapore, Malaysia, South Korea, Japan and the United Stated. Another representative company, China Merchant Logistics, has built a network that covers most cities in China. Its total asset ranks first among third-party logistics enterprises. 

 

SIX LOGISTICS PARKS

Shenzhen is home to six major logistics parks: Yantian, Qianhaiwan, Longhua, Pinghu, Sungang- Qingshuihe and airport logistics parks. By the end of 2013, five logistic park projects have been built, including Shenzhen Airport Bonded Logistics Center, South China International Logistic Center 1-9 Warehouse, South China International Industrial Raw Material City Phase 1, Yuehai Global South China Logistics Supply Chain and Longgang Highway Freight Transportation Hub.

 

CHINA (SHENZHEN) INTERNATIONAL LOGISTICS & TRANSPORTATION FAIR

The 2013 China (Shenzhen) International Logistics & Transportation Fair, jointly organized by the Ministry of Transport and the Shenzhen Municipal Government, was held from Oct. 14- 16 at Shenzhen Convention and Exhibition Center. Themed "Smart Logistics, Booming Industry, Smooth Transportation and Excellent Life," the exhibition provided 12 display areas and 1,500 booths, with an exhibition area of 54,000 square meters. Twelve high-end forums were also held.

 

3.Financial Services

Shenzhen is a financial hub of China, with the financial industry comprising a hefty portion of the city's GDP. Shenzhen has 315 financial institutions. Shenzhen ranked 18th among the world financial centers, according to the Global Financial Centers Index 15 that was released in March in London. Shenzhen was the 15th most competitive financial center worldwide based on the Xinhua-Dow Jones International Financial Centers Development Index (IFCD) in 2013.

 

FINANCIAL INDUSTRY

In 2013, the add value of Shenzhen's financial industry reached 200.82 billion yuan, up 15% from the previous year, ranking third in China. The add value of the financial industry accounted for 13.8% of the city's GDP. The city's total assets of the industry amounted to 5.9 trillion yuan, ranking third in China. Shenzhen has 183 listed companies, ranking sixth in the country. The total market value of the listed companies reached 2 trillion yuan. Shenzhen has 315 financial institutions with the numbers of its banks, security institutions, insurance companies and foreign financial companies and employees ranking among the tops in China.

 

BANKING

By the end of 2013, total savings deposits in Shenzhen banks reached 3.39 trillion yuan, up 14.43% from the previous year and ranking third in the country. Loans reached 2.47 trillion yuan, up 13.17% from 2012 and ranking third in China. Shenzhen is the first Chinese city to provide cross-border RMB loan service. In 2013, the recorded loans reached 15 billion yuan.

 

SECURITIES INDUSTRY

As one of the centers of China's securities markets, Shenzhen is home to the Shenzhen Stock Exchange (SSE) - one of the two stock exchanges on the Chinese mainland. By the end of 2013, 1,536 firms were listed at the SSE. The total stock transaction of SSE reached 24 trillion yuan, comprising a half of the total volume in China. The Small and Medium Enterprises Board was launched in 2004 and the NASDAQ-style growth board ChiNext was launched in 2009. There are 17 securities companies in Shenzhen, which ranks third in China. The total assets, net assets and net capital of the city's securities companies continued to top the country. Shenzhen has 20 fund companies, which managed one-third of the net assets of China's total stock funds. The number of fund companies, the funds they managed, the total scale of the fund, and the net value of fund assets ranked second in China. 

 

INSURANCE

Shenzhen insurance firms saw robust growth in 2013. The total premium income reached 46.876 billion yuan, growing 16.82% from 2012 and ranking fourth in the country. The number of insurance companies amounted to 17, ranking third in China. The total assets of insurance company amounted to 1.9 trillion yuan, comprising 1/5 of that in China and ranking second in the country.

 

EQUITY INVESTMENT

Shenzhen's equity investment industry leads China. In 2013, the number of equity fund companies in Shenzhen amounted to 8,862. One-third of the country's venture capital enterprises have their headquarters in Shenzhen. The Qianhai Equity Transaction Center started to operate in May 2013 with over 2,800 enterprises listed, making it a regional equity transaction center with the most listed enterprises in China. Shenzhen has become the pilot city to have Qualified Foreign Limited Partner and the registered capital is over 4 billion yuan.

 

FINANCIAL ENVIRONMENT

Shenzhen is one of the financial centers in China. The status of the financial industry as a pillar of its economy has been enhanced with cluster development. The financial clusters include Futian, Luohu and Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone.Representative enterprises include China Merchants Bank and Ping An Insurance Company of China. The city's Internet payment, loans, equity crowdfunding and other Internet finances top other cities on the Chinese mainland.

 

 

4.Cultural Industry

The cultural industry has grown quickly in Shenzhen, becoming the fourth pillar of the city, after the high-tech, finance, and logistics industries.

Since 2003, when Shenzhen took the lead in China for establishing strategies for developing a "culture-based city," the local cultural and creative industr ies have achieved robust growth, with an annual growth rate of more than 20%. The cultural and creative industries yielded an added value of more than 135.7 billion yuan in 2013, among the highest in the country. From 2004 to 2013, the added value produced by the cultural and creative industries accounted for 4.6% to 9.3% of the city's GDP. The sector has become an important engine for rapid and healthy economic development.

 

INDUSTRIAL BASES

With 34 cultural and creative industrial parks and 20 cultural and creative industrial bases,Shenzhen has formed a clustered cultural and creative industry. There are 12 State-level model bases for the cultural industry, covering areas including creative design, cultural software, animation and games, new media, cultural information services, intangible cultural heritage, high-end arts and crafts, digital publishing, cultural tourism, high-end printing, and industrial education and training.

 

SECTORS WITH A COMPETITIVE EDGE

Shenzhen is where China's modern graphic design industry was born. Local industrial design and indoor design take a large percentage of the national market. Animation and gaming industries, cultural software services, Internet information services, digital TV and digital audio industries have gained momentum in growth. Shenzhen is home to China's largest high-end printing industry, taking 60% of the national market.

 

CITY OF DESIGN

Shenzhen was accepted as a member of the Creative Cities Network by UNESCO on Nov. 19, 2008, and named a UNESCO City of Design, becoming the first Chinese city to win the honor. It was the sixth city in the world to earn the title.

 

ICIF

Cosponsored by the Guangdong Provincial Government, Shenzhen Municipal Government and State institutions, the annual China (Shenzhen) International Cultural Industries Fair (ICIF) is certified by the UFI. The only State-level cultural expo in China, it is held in Shenzhen each May. 

 

CULTURE ASSETS AND EQUITY EXCHANGE

Shenzhen is one of the earliest cities to have established (in 2009) a Culture Assets and Equity Exchange. The Chinese Cultural Industry Investment Fund has Shenzhen as its second-largest shareholder. Shenzhen has become one of the most important centers for the exchange of culture assets and equity, as well as investment and financing services in China.

 

INTERNATIONAL CULTURAL TRADE BASE

In December 2013, Shenzhen Creative Information Hub built the national International Cultural Trade Base and made it the third base that was granted by the Ministry of Culture after Beijing and Shanghai and the first of its kind in South China. The base will utilize the State preferential policies, international trade channels and international communication platforms to create a cultural trade service chain a high integrated with cultural and creative industries. It aims to build an innovative international cultural trade pilot area with unique leading power and resource accumulation capacity, and promote excellent Chinese cultural products and cultural services.

 

DAFEN OIL PAINTING VILLAGE

Located in Buji Subdistrict, Longgang District, the 4-square-kilometer village is the world's largest mass producer of oil paintings, essentially an art factory. Originally conceived by Hong Kong businessman Huang Jiang, who began production with a dozen artists in 1989, the village has grown in leaps and bounds over the past 20 years. About 15,000 artists and craftsmen work in more than 40 factories and 800 studios and workshops.

 

GUANLAN PRINTMAKING BASE

Located in Bao'an District, the base perfectly combines modern printmaking with traditional Hakka buildings. It has become a State-level model base with a sound environment and good economic returns.

ShenZhen Major Social and Economic Indicators (2020)

 

Note: the above figures are based on the Statistical Communiqué of Shenzhen on the 2020 National Economic and Social Development

• Shenzhen, also known as "Pengcheng" (the City of Giant Eagle), is a coastal city in South China, adjoining Hong Kong. It is an "early and pilot implementation" area under the country's reform, opening-up and modernisation.
• The Shenzhen Special Economic Zone was established in August 1980. In March 1981, Shenzhen was promoted to a sub-provincial city. In July 1992, Shenzhen was granted with legislative power for its special economic zone.
• Shenzhen has developed a convenient and efficient integrated transport system. Beijing-Kowloon Through Train, Guangzhou-Shenzhen-Hong Kong Express Rail Link and Xiamen–Shenzhen railway form a national railway node at Shenzhen. Shenzhen Metro consists of eight lines, of which the Longhua Line connects with Hong Kong's mass transit railway network. Shenzhen has a well-developed highway network connecting Shenzhen to other cities of the Pearl River Delta. As at end 2019, 47 passenger airlines operating at the Shenzhen Bao'an International Airport reached 192 cities in the world, including 62 international destinations such as London and Paris.
• Shenzhen has boundary checkpoints covering land, sea and air travel. It is the city with the largest number of checkpoints, largest inbound/ outbound passenger flow and vehicular flow in the Mainland. Among all, Lo Wu Checkpoint is one of the busiest Chinese land passenger checkpoints, Huanggang Checkpoint offers 24-hour clearance, Futian/ Lok Ma Chau Checkpoints connects directly to Shenzhen metro and Hong Kong mass transit railway respectively, Shenzhen Bay and West Kowloon Station Checkpoints adopts "colocation" arrangement.
• The four pillar industries of Shenzhen are advanced technology, modern logistics, financial services and cultural industry. Shenzhen focuses on the development of seven emerging industries of strategic importance, namely biotechnology, Internet, new energy, new materials, cultural and creative industries, new generation information technology, as well as energy conservation and environmental protection, plus future industries on life and health, marine, aerospace and aviation, robots, wearable devices, and smart equipment.

Major Development Areas

• National level: Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone, Shenzhen High-Tech Industrial Development Zone, Shenzhen Bonded Zone, Yantian Port Bonded Logistics Park, Shenzhen Export Processing Zone, and Shenzhen Qianhaiwan Free Trade Port Area
• The Central Government promulgated on 6 September 2021 the Plan for Comprehensive Deepening Reform and Opening Up of the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone (Qianhai Plan). According to the Qianhai Plan, the area of the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone will be increased significantly from 14.92 square kilometres to 120.56 sq km. It also stresses the promotion of high-level opening up in Qianhai, the fostering of innovative development of modern service industries, and the acceleration of the building of a system of modern services that is compatible with Hong Kong and international standards.
• The establishment of the China (Guangdong) Free Trade Pilot Zone was officially approved by the State Council on 31 December 2014, which comprises three areas totaling 116.2 square kilometres. Qianhai & Shekou Area of Shenzhen was officially launched on 27 April 2015. The planned area is 28.2 square kilometres, divided into Qianhai Block (15 square kilometres, i.e. Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone) and Shekou Block (13.2 square kilometres). The Overall Development Plan on Hong Kong/ Shenzhen Cooperation on Modern Service Industries in Qianhai Area was endorsed by the State Council in August 2010. It positioned the 15-square-kilometre Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone as a demonstration area of innovation and cooperation of Guangdong-Hong Kong modern service industry, focusing on the development of finance, modern logistics, information services, technology services and other professional services.
• There are a number of preferential policies for Hong Kong people and enterprises in Qianhai, including:
  • implementation of cross-border Renminbi (RMB) lending;
  • imposition of 15% enterprise income tax for eligible Hong Kong enterprises;
  • rebate of personal income tax paid in excess of 15% of taxable income from the Shenzhen municipal government to eligible Hong Kong talents in Qianhai;
  • dedicated funding programme on innovation and entrepreneurship for eligible Hong Kong enterprises, and funding programme for Hong Kong-invested headquarters in Qianhai;
  • housing quota for eligible Hong Kong enterprises and talents;
  • designation of Qianhai as a pilot area for Hong Kong and Guangdong law firms operating in the form of partnership association;
  • pilot housing construction projects in which Hong Kong's construction and related engineering enterprises and professionals are allowed to provide services in Qianhai; and
  • an exemption from the employment permit requirement for Taiwan, Hong Kong and Macao residents in Qianhai.
• As at the first half of 2019, 18 land parcels were sold to Hong Kong enterprises, with an area of 372,600 square meters, accounting for 45.9 percent of the land sold in Qianhai for commercial uses. A total of 11,555 Hong Kong-funded enterprises with a registered capital of RMB1,234.36 billion had registered in Qianhai.

Economic and Trade Relations Between Shenzhen and Hong Kong

• In 2020, the total value of import and export between Shenzhen and Hong Kong amounted to RMB610.78 billion; of which, the total export to Hong Kong was RMB603.117 billion and the total import from Hong Kong was RMB7.663 billion.

Youth Innovation Entrepreneurship Bases

• Measures to support the development of Hong Kong and Macao youths in Qianhai by the Administrative Bureau of the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone took effect on 1 March 2019 and are valid for 3 years. These include supporting Hong Kong and Macao youths to visit, take up internships and employment, start innovative businesses, optimising their development platform and strengthening their living benefits.
• There are many youth innovation entrepreneurship bases in Shenzhen, offering young people of Guangdong, Hong Kong and Macao a wide range of support services to foster youth innovation and entrepreneurship.
  • Established in 1999, the Shenzhen Virtual University Park (SZVUP) is an innovative demonstration base for collaboration among industry, education and research located inside the Shenzhen High-tech Industrial Park. SZVUP aims at providing a base for innovation and entrepreneurship platforms to work on innovation and entrepreneurship, scientific research, talent development, technological innovation, product commercialisation and Shenzhen/ Hong Kong cooperation, etc. The SZVUP has gradually become a vibrant community for high-calibre talents as well as research institutes and technology SMEs.
  • Established in 2000, the Shenzhen Overseas Chinese High-Tech Venture Park is located inside the Shenzhen High-tech Industrial Park. It is an important platform for attracting and helping overseas Chinese students to start a business in the country as well as supporting their businesses. It is run by returned overseas Chinese students with government policy support. It provides basic facilities and services including counselling, financing, talent recruitment, exchange and training, marketing, management consultation, professional talks and networking, etc.
  • Established in 2013, the Shenzhen-Hong Kong Youth Innovation Entrepreneurship Base is located in the Nanshan Park of Nanshan District, serving as a major innovation and start-up platform for young people of Shenzhen, Hong Kong and Macao. It is run by Hong Kong operator with government policy support, providing office space at discounted rent, necessary facilities and professional consultation services for young people of Hong Kong and Macao who aspire to start business in Shenzhen.
  • Established in 2014, the Qianhai Shenzhen-Hong Kong Youth Innovation and Entrepreneur Hub (E Hub) is located in Qianhai area. It provides supporting services to young people of Shenzhen, Hong Kong and other places in starting up business. E Hub focuses on modern logistics, information services, technology services, cultural and creative industries, and professional services. It provides one-stop business services to young people and start-ups such as office space at concessionary rates, tax concession, financial support, seed money, mobile communications, accommodation facilities, etc.
  • Established in 2016, MH Maker is located in Guanlan, Longhua District of Shenzhen. It is an important cultural and creative platform in Shenzhen, Hong Kong and Macao which focuses on five main areas, namely, craft making, original design, exhibition, technology, and culture and entertainment.
  • Established in 2019, Zetta Bridge Qianhai Hong Kong-Shenzhen Design Innovation Hub is located at Mawan, Qianhai. It is an exchange platform for the creative industries including design and architecture to boost further co-operation between Shenzhen and Hong Kong.
  • The innovation and entrepreneurship base for Hong Kong and Macao youths in Lohu and Gangxia, Futian are two other examples of such platforms in Shenzhen.

For Shenzhen's key measures on taking forward the development of the Guangdong-Hong Kong-Macao Greater Bay Area, please refer to the webpage of Work Report of Shenzhen Municipal Government (in Chinese only).

Why Starting a Business in Shenzhen Free Trade Zone Is Advantageous

Shenzhen is one of China’s most important financial hubs. Despite being much smaller in size than Shanghai and Beijing, the city looks set to increase its economy to ¥2.6 trillion by the end of 2020.

While this economic growth may seem unwarranted and unjustifiable at first, you’ll understand how the city generates this revenue if you take a closer look, especially at the Free Trade Zone – an economic sector which invites foreign players to invest little and earn big.

Today, we’ll be taking a closer look at why it’s profitable to do business in Shenzhen Free Trade Zone.

1.Lower Tax Rate:

As the name suggests, the Free Trade Zone boasts unmatched financial advantages and tax breaks that make doing business here a profitable venture. The corporate tax rate in Shenzhen Free Trade Zone is just 16.5% (as compared to the national average of 30%).

This reduced tax presents businesses a golden opportunity to start and operate a company on Chinese soil.

2.Duty Free Warehousing:

Gone are the days when you would have to devote hours of your time to figure the import tax and pay over the odds just to get your goods delivered as Shenzhen Free Trade Zone offers duty free warehousing.

All companies need to do get their goods into the country is to ship them directly to their respective FTZ warehouses and then list these products for sale in Mainland China. No import tax required!

3.State Backing:

The Chinese government is well-renowned for its ability to attract foreign investors to the country by providing them incentives and grants. This fact is perfectly encapsulated by the fact that companies that operate in Shenzhen Free Trade Zone are given ‘bonuses’ and ‘grants’ to continue doing business in the country.

These monetary incentives are lucrative enough to convince even the most skeptical of investors as it encourages them to operate in Shenzhen Free Trade Zone.

How to Penetrate the Chinese Market:

For foreign businesses and investors, making the first move can be a pretty daunting task, especially if you go about it alone. Thankfully, you don’t have to as Business China will be there to help you out with any problem you may encounter when penetrating the Chinese market.

We have years of experience in the industry and have countless organizations not only enter the Chinese market, but also to thrive in it. At Business China, we offer a comprehensive range of company registration and company management services to clients both foreign and domestic.

So, don’t let your dream of becoming a major player in the Shenzhen Free Trade Zone, go to waste! Give us a call today to increase your chances of success!

Why You Should Set Up Business Register Company in Shenzhen To Make Investment?

 

After a year of worldwide economic devastation, with countries like the US and all members of the EU facing worrying recessions (at times in double digits), one country emerges from this fray: not unscathed, but showing signs of growth.

This is of course the People’s Republic of China and more specifically, the city of Shenzhen, which in these trying times has shown that even though it is not coronavirus proof, it is certainly coronavirus resistant.

As of January 2021, the projected 2020 GDP for Shenzhen is US$4.33 trillion — around US$15.5 billion more than it was in 2019. Data from the International Monetary Fund (IMF) from the end of last year showed that the momentum of growth that China has known in the past 40 years will indeed continue with Shenzhen as one of its crowning jewels.

Growth story of China’s first special economic zone

Of course, all this had to start somewhere. With the seeds of foreign openness and trade being planted by Henry Kissinger in the early 1970s, it was only through Deng Xiaoping’s open-door policy in 1978 that foreign investment was officially welcomed into China.

At the forefront of this policy was the launch of the first special economic zone (SEZ) — these regions were granted free-marketed oriented policies and flexible government measures to attract foreign investment.

And so, they did. With the establishment of Shenzhen as the first SEZ in May 1980; the development of the city, which we now are witnessing and will still in the coming years, had been launched. Fast forward to the present, data from China Daily showed that more than 90,000 foreign invested companies were set up in Shenzhen during the pandemic last year — one of the worst years in recent memory.

The reason for this extraordinary feat of economic resilience is due to the momentum of growth for the city, which started all the way back in 1980 and was further consolidated by implementation of policies, subsidies, and infrastructure that has now made Shenzhen one of the most attractive cities in China for foreign direct investment and have poised it to become the leading urban center within the Greater Bay Area (GBA).

The Chinese Government is set on developing Shenzhen and the GBA, by progressively implementing policies that make it easier and attractive to invest in the region, something that was made clear during President Xi’s visit to Shenzhen in October 2020, during which he urged the city to create “another miracle in the next five years”.

ndustry developments in Shenzhen

The government recently announced its intention to double the city’s GDP and GDP per capita in 15 years, according to a proposal on the city’s 14th Five-Year Plan to guide its economic and social development over the coming five years and the blueprint for a long-term strategy that outlines its vision for 2035.

In the immediate future, Shenzhen aims to have its GDP reach RMB 4 trillion (US$618 billion) by 2025, become a benchmark smart city in the world, and a model city of digital China, according to a document published recently by the Shenzhen city government.

This sustained development will leverage the city’s seven strategic emerging industries, such as new-generation information technology, digital economy, high-end equipment manufacturing, biomedicine, new materials, green, low carbon technology, and marine economy.

In fact, the number of newly registered companies in these emerging fields reached 2,683 in October 2020, witnessing a year-on-year growth of 11.3 percent, according to the Shenzhen Municipal Enterprise Registration Bureau.

In addition to this, other plans are in store for the city’s infrastructure; the local government will form more than three industrial clusters in niche sectors of digital industries whose business revenues will each reach more than RMB 100 billion (US$15.44 billion) by the end of 2023.

These sectors are high-end software, big date, cloud computing, information security, internet, smart city, fintech, e-business, and digital creativity.

The city and its officials appear focused on retaining the unofficial title of China’s Silicon Valley and even though no concrete measures have been announced yet, the appetite for these mentioned industries will most certainly be supported by the government with further subsidies, tax exemptions, and attractive policies for investment.

Incentives to invest in Shenzhen SEZ

As the flux of foreign investment is increasingly being directed towards Shenzhen, should you decide to incorporate a business in the city and especially in the Qinhai-Shekou Free Trade Zone, the local government may deem you eligible to the following aids and subsidies:

Subsidies for R&D

Up to  RMB 10 million (US$1.5 million) for international R&D teams setting up independent entities in emerging industries or technological transfer as well as up to RMB 5 million (US$750,000) for setting up R&D facilities for new products and technologies in internet, biomedicine, emerging, or advanced manufacturing industries.

Subsidy for startups

This could reach RMB 1 million (US$154,000), provided certain conditions are met. Companies set up in Qianhai Venture park for more than six months will get a one-off fund equal to RMB 50,000 (US$7,700).

Establishment of headquarters of companies

For the establishment of headquarters of companies (subject to the requirements of The Implementations Measures for Encouraging the Development of Headquarters in Shenzhen), subsidies granted may be up to RMB 20 million (US$3 million).

Financial enterprises headquarters

For financial enterprises headquarters, subsidies may be up to RMB 10 million (US$1.5 million) and 50 percent of support for relocation costs. In the case of establishments of logistics companies, these aids may be in the amount of RMB 10 million (US$1.5 million), depending on the amount of registered capital of the company in question.

Professional services companies

Finally, in the case of companies providing professional services (that is, law firms, HR companies, CPAs, etc.) subsidies may be up to RMB 2 million (US$308,000).

Talented individuals – foreign talents, hiring subsidies

For talented individuals, the subsidies in place may reach RMB 6 million (US$926,000). The local Qianhai-Shekou Free trade zone provides rent support for foreigners who qualify as talented individuals, as well as scholarships and grants for companies hiring and/or providing internship and contract positions to foreigners (with a priority given to Hong Kong and Macao residents).

Moreover, to attract foreign talent, a 15 percent exemption of personal income tax is granted to overseas high-end talents located in Qianhai and who meet the needs of the region and its development.

Tracking local subsidy schemes

The above does not constitute an exhaustive description of all the subsidies awarded by the authorities and the process of applying for these subsidies, as well as its range and amount, shall be updated on a regular basis. It is therefore worth taking a look at the local government websites to be updated on the requirements, as these tend to change.

Operational costs

In addition to the above, despite the rising living costs, the operational costs of incorporating and maintaining a company in the city remains quite low. Virtual offices are oftentimes allowed as the legal registered address, even when a requirement of a physical office is imposed.

As of Q3 2020, the rental cost of office leasing was US$32 per square meter, down 0.5 percent quarter-on-quarter. As the city develops more office buildings and the cost of rent continues to be low, the office spaces have an overall vacancy rate of 18.4 percent.

Corporate tax rate

Corporate tax rates remain attractive too. Rather than the normal 25 percent rate adopted nationally, the law allows for a reduced rate of 15 percent.

Tax holidays are also available for companies engaging in preferred sectors, such as technologically advanced service enterprises (information technology outsourcing, technical business, knowledge process outsourcing, computer and information services, research and development and technical services, cultural and technical services, and Chinese medicine medical services) and certain integrated circuits production companies.

Granted that this is a policy applied nationwide, in Shenzhen – there is the added advantage of the infrastructure set in place and the top quality business environment, as Shenzhen takes first place in the business environment of major Chinese cities, shown in a report jointly released by the Academy of Guangdong-Hong Kong-Macao Greater Bay Area Studies and the 21st Economic Research Institute.

Shenzhen’s future developments

As exciting as the present is for Shenzhen, the future looks even more promising.

Foreign-funded enterprises account for only two percent of business entities in Shenzhen. However, they generate about one-fifth of the city’s GDP, 40 percent of its import and export volume, and nearly 30 percent of its tax revenue every year, as data from the municipal bureau of commerce showed. Information like this is testament to the fact that foreign companies have and can succeed in the region.

Taking into account the recently announced EU – China Comprehensive Agreement on Investments, which, among other things, will further ease European companies’ ability to easily invest in China, added by the efforts of the local and national Chinese government to make Shenzhen more attractive for investors, the short- and long-term future seems ideal for foreign businesses in Shenzhen, the GBA, and in China as a whole.

Hi-tech park in SZ expands

 This year marks the 40th anniversary of the Shenzhen Special Economic Zone. To mark the occasion, we are publishing a series of reports celebrating the city’s achievements in different aspects over the past four decades.

AS a hotbed of high tech, the city’s pillar industry, the Shenzhen Hi-Tech Industrial Park has expanded from its core location in Nanshan District into an area of 159 square kilometers encompassing several separate locations, including Pingshan, Longgang, Bao’an and Longhua districts.

The expanded Shenzhen Hi-Tech Industrial Park is one of six national pilot zones for building world-class high-tech parks and is the second-largest national high-tech zone in terms of size. It ranks No. 2 in GDP among the 157 national high-tech parks, surpassed only by Zhongguancun in Beijing.

Shenzhen’s high-tech industry started in 1996 in Nanshan after the Shenzhen Hi-Tech Industrial Park, an area of 11.5 square kilometers, was approved by the State science commission.

In 2002, the industrial output value of the city’s high-tech industry reached 71.9 billion yuan (US$10 billion), equal to about 20 percent of the city’s total industrial output.

In 2011, the industrial output value of the Shenzhen Hi-Tech Industrial Park reached 405.4 billion yuan, 40 times its value from when it was founded in 1996.

It yielded 24.4 billion yuan of GDP and 4.3 billion yuan of tax revenue per square kilometer in 2018, the greatest share among its counterparts in the country.

The expanded high-tech park has five locations, and houses more than 60 percent of Shenzhen’s total number of high-tech enterprises.

The zone’s Nanshan park is intended to develop into the main comprehensive national-level science center of the Guangdong-Hong Kong-Macao Greater Bay Area.

The zone’s Pingshan park, occupying 51.6 square kilometers, is the largest of the five parks. The Pingshan park will be a pioneer and an experimental field in park design, industrial spatial development, innovative ecological systems and institutional mechanisms, as well as a base for upgrading Shenzhen’s advanced manufacturing industry.

The expanded Shenzhen Hi-Tech Industrial Park will be a world-leading high-tech industrial park, an important base for high-end industries, a key area for innovation and a key node of the Guangzhou-Shenzhen-Hong Kong-Macao Innovation Corridor.

Shenzhen ranks top in urban capital vitality

 Shenzhen tops the comprehensive urban capital vitality ranking for all cities in China, according to the 2019 China Urban Capital Vitality Index Report published Friday.

The report, compiled by Antai College of Economics & Management and Shanghai Jiao Tong University, is issued every two years.

In the ranking, the top 10 are Shenzhen, Hangzhou, Shanghai, Suzhou, Beijing, Guangzhou, Wuxi, Wuhan, Nanjing and Ningbo.

The urban capital vitality index consists of three sub-indexes and five indicators. The subindexes include scale index, efficiency index and structure index.

Scale index consists of two indicators, namely, the number of listed companies and the market value of listed companies; efficiency index comprises the per capita number of listed companies and the per capita market value of listed companies; and structure index measures the industrial emerging degree of listed companies.

Shenzhen, Shanghai and Beijing have retained distinct advantages in capital vitality with larger capital scale and higher capital efficiency. However, compared with Shanghai and Beijing, Shenzhen has gained the upper hand in terms of the degree of emerging industries, as per the report.

According to the report, the capital scale of the top 20 Chinese cities in economic aggregate has been expanding, and the capital efficiency of these cities has also been significantly improved.

As of 2018, the number of listed companies per million people in the top 20 Chinese cities in economic aggregate had reached 14, and the per capita market value of listed companies had reached 252,000 yuan (US$36,000), far higher than the national average.

The report points out that the overall capital vitality of the Beijing-Tianjin-Hebei region is fairly good, but there is still a significant gap between the region and the Guangdong-Hong Kong-Macao Greater Bay Area and the Yangtze River Delta region.

Meanwhile, the capital vitality of the Yangtze River Delta region has been developing steadily, but is subject to a certain pressure of growth and competition.

From the perspective of economic development of the three regions, the report highlights that mutual cooperation and complementary advantages between cities have greatly expanded space for regional development and opened up new possibilities for cities to improve their competitiveness.

The report also points out that the coordination of regional development needs to be further enhanced.

2,000 foreign-funded firms set up in city in H1

 Nearly 2,000 foreign-invested companies were set up in Shenzhen in the first half of the year, attracting approximately US$8 billion of contractual foreign investment, Shenzhen Special Zone Daily reported Saturday.

The actual use of foreign capital exceeded US$4 billion from January to June this year in the city, an increase of 5 percent year on year.

Optimistic about the vitality of sci-tech innovation and the advantages of industrial chain agglomeration, ABB Group, a Swiss-Swedish multinational corporation, opened an innovation center in Shenzhen at the end of last year.

The center focuses on the development of core areas including artificial intelligence, cloud services, cybersecurity, intelligent building and other core areas, and promotes the application of global intelligent building solutions.

“The open and excellent industrial investment environment and the government’s proactive investment policy have made ABB and Shenzhen closely linked with each other,” said Zhao Yongzhan, senior vice president of ABB China.

Most of the newly established foreign-funded enterprises set up in Shenzhen in the first half of this year belong to the service industry, according to the city’s commerce bureau.

By the end of June this year, Shenzhen had approved a total of 94,000 foreign direct investment projects involving US$296 billion of contractual investment. The total amount of foreign capital that has been utilized had amounted to US$117.8 billion.

The fact that foreign-funded companies keep coming to Shenzhen in large numbers is a clear demonstration of the city’s good business environment, said the Daily.

According to Qualcomm’s innovation center in Shenzhen, the city has attached great importance to the establishment of the center at the time it was set up, not only providing support in terms of site selection, but also financial subsidies that could effectively reduce the company’s operating costs.

In July, Shenzhen released a series of measures to promote high-quality development of foreign investments to help foreign businesses get through this challenging time.

To improve services, Shenzhen will formulate a comprehensive service mechanism to maintain communications with foreign businesses and understand their difficulties in resuming businesses.

With the mechanism, the city will be able to understand foreign-funded enterprises’ basic information including the progress on returning to work, rate of employee return, capacity utilization and turnover.

Efforts will be made to attract more foreign investment to fields such as advanced manufacturing, emerging industries and cutting-edge technologies. Foreign-invested companies will be encouraged to participate in government procurements in a fair way.

Channels will be opened for suppliers to address complaints and issues.