Profiles of China Provinces, Cities and Industrial Parks

General Background

The Pearl River Delta economic zone (PRD) is one of China's leading economic regions and a major manufacturing center. It locates at the Pearl River estuary where the river enters the South China Sea. The zone is formed by 9 cities, namely Guangzhou (the provincial capital), Shenzhen, Foshan, Zhuhai, Jiangmen, Zhongshan, Dongguan, four districts and counties of Huizhou and four districts and counties of Zhaoqing.

PRD in Numbers

PRD is one of the most vibrant economic regions. In 2010,

• Real GDP of the PRD grew by an average of 12.2%
• The PRD accounted for 4.2% of China’s total population
• The PRD accounted for 9.4% of China’s GDP
• The PRD accounted for 10.3% of China’s gross industrial output
• The PRD accounted for 27.4% of China’s total export
• The PRD accounted for 9.8% of China’s total retail sales of consumer goods

Major Economic Indicators (2010)

Note: a) the figure in value terms are calculated at current prices;   b) statistics of value-added of industry cover all state-owned and non-state-owned enterprises with an annual sales revenue over 5 million yuan
Source: Guangdong Statistical Yearbook 2011

PRD as a Manufacturing Base

The PRD started producing labor-intensive consumer goods such as food and beverages, toys and clothes in early 1980s. After 1985, industrial relocation, mainly from Hong Kong, accelerated the growth of light industry in PRD until early 1990s, following which heavy industry featuring hi-tech electronic equipment and machinery, chemical products and autos etc. played a leading role in industrial output and export.

As a manufacturing base of the world, the region is playing a leading role in some industries. Some categories of the toy industry in the PRD have a world production share in excess of 60%. Other leading products include footwear, lighting fixtures, furniture etc, to name but a few.

In short, Guangdong, especially PRD has formed a diversified industry profile featuring 9 pillar industries:

Performance of the 9 Pillar Industries of Guangdong in 2010

Note: a) the figure in value terms are calculated at current prices   b) statistical coverage includes all state-owned and non-state-owned enterprises with an annual sales revenue over 5 million yuan
Source: Guangdong Statistical Yearbook 2011

Foreign capital plays a major role in PRD's industrial development. In 2010, the region's utilized FDI reached US$20.3 billion, 19.2% of the national total. Foreign enterprises, most of which from Hong Kong, accounted for 62% of Guangdong's total exports. Shenzhen, Dongguan and Guangzhou, thanks to their proximity to Hong Kong, are the 3 cities in PRD that attracted the most FDI.

In recent years, when private enterprises are formally allowed and recognized in China, private enterprises mushroomed in the PRD. By the end of 2010, the total number of private enterprises in Guangdong reached 948,202, up from 258,620 in 2002. From 2000 through 2010, exports by Guangdong’s private enterprises skyrocketed from US$4.1 billion to US$99.8 billion.

Industrial Clusters

PRD’s broad range of industries has developed in clusters. The two banks of the delta present different industry profiles. The east bank focuses on electronics and IT products while the west bank is famous for household appliance products. In fact, China’s success in manufacturing can be attributed to the cluster effect, whereby industries obtain competitive advantage by concentrating geographically. In PRD, a supply chain has taken shape, where it is convenient to source all parts, components and accessories of a product, so that orders could be completed quickly. When upstream and downstream industries are clustered, resources are consolidated and specialization is deepened. Thus, efficiency is enhanced and cost reduced. Clusters emerged in PRD include the following:

Clusters in PRD Cities

*Panyu is a district of Guangzhou. Chencun, Nanhai and Shunde are districts of Foshan
Source: Michael J. Enright, Edith E. Scott, Ka-mun Chang, “Regional Powerhouse: the Greater Pearl River Delta and the Rise of China” John Wiley & Sons (Asia) Pte Ltd, 2005

Industrial Restructure

Despite the mature light industry, PRD is heading the way to shift its emphasis to heavy industry. In terms of gross output value, Guangdong's ratio of light industry to heavy industry (above designated size) has turned from 1.39:1 in 1995 to 0.62:1 in 2010. There are plans to encourage relocation of labor-intensive industries in PRD to peripheral areas, and develop telecom, equipment manufacture, auto and petrochemical industries in PRD. Heavy industries are emerging in PRD, especially in Guangzhou and Huizhou.

Guangzhou is becoming one of the three auto manufacturing bases in China. The number of sedan cars produced in Guangdong reached 1.1 million in 2010, accounted for nearly 12% of the national total. The plant set up by Honda in 1998 initiated the autos and parts cluster in Guangzhou, and joined later by Nissan and Toyota, and business cars specialist Hyundai etc.

Many world famous auto parts manufacturers are locating in nearby areas, such as Japan's biggest car parts maker, Denso. Around 450 auto and auto parts manufacturers have been set up in Guangdong. Other PRD cities surrounding Guangzhou are developing auto parts industry by establishing development zones e.g. in Foshan, Zhongshan, Shenzhen and Huizhou Daya Bay.

PRD is also progressing in petrochemical industry. Construction works in Guangzhou Royal Dutch Shell, a US$4.3 billion petrochemicals complex jointly set up by CNOOC (China National Offshore Oil Corp) and Shell Petrochemicals Company Ltd, has been finished at Daya Bay in Huizhou. The JV company will produce about 2.3 million tones per year of products, generating up to USD 1.7 bn in products sales, primarily supplying customers in Guangdong and the high consumption areas of China's coastal economic zones.

PRD as a Market

PRD is one of the mainland's largest and most sophisticated consumer markets. Strong demand for consumer goods is driven by the growing income and influx of tourists. In 2010, PRD enjoyed a per capita GDP of RMB68,633, 2.3 times of the national average of RMB 29,992. With 4.2% of China's total population, the region accounted for 9.8% of the nation's total retail sales of consumer goods.

Retail sales of consumer goods in the region reached RMB1,300.2 billion in 2010, grew by 20% from 2009. Major consumer markets are in Guangzhou and Shenzhen, accounting for 34.5% and 23% of PRD's retail sales respectively.

The retail sector has been developing quickly. When China further liberalized its distribution sector in accordance to its WTO commitments, competition between local retailers and foreign giant retailers intensified. PRD's retail landscape is now characterized by diversified modern operations such as department stores, chain stores, supermarkets, warehouse type markets and convenience stores. Major foreign retailers present in PRD include Carrefour, Wal-mart, Watson's and Park'N Shop etc.

Services Industry

Over the past two decades, the composition of economy has experienced a typical change with tertiary industry having increased in share of the economy. Increased affluence on the part of residents fuelled demand for services such as education, recreation, traveling and telecom services. In recent years, business services are also burgeoning in PRD, together with the rapid growth of secondary industry. In fact, in recent years, the pace of foreign investment in services has speeded up, concomitant to China's further liberalization.

PRD Composition of GDP (%)

Source: Guangdong Statistical Yearbook 2011

Major Tertiary Industry GDP in PRD Cities, 2010

Sources: Guangdong Statistical Yearbook of 2011

Domestic and International Connectivity

PRD has built a complete network for water, land and air transportation. Cities in the PRD are interconnected by highways and railways. PRD is improving its land network to strengthen linkages among cities. In 2005, the "Plan of High Speed Express Ways Network Linking Cities of the PRD" was approved which means the "metropolitan region within one hour drive" will be achieved in 2020. The main frame of the network is formed like an "A shape" by two principal axis (Guangzhou--Shenzhen, Guangzhou--Zhuhai), two subordinate lines (Guangzhou--Zhaoqing, Xiaolan in Zhongshan--Jiangmen, Dongguan--Huizhou) and two minor lines connecting cities on the two banks of the PRD (Shunde--Panyu--Dongguan, Zhongshan--Humen).

In 2010, passenger traffic of PRD reached 3.7bn and contributed 79.5% of the total passenger traffic of the province. Total freight traffic of PRD increased steadily to 1.4bn tonnes in 2010 which accounted for 70% of the province’s total.

Ports in PRD play a critical role for transporting manufactured goods abroad. With its geographical advantage, PRD has built excellent ports facilities, including coastal ports and ports of inland rivers. Major ports in PRD include Guangzhou Port, Yantian Port, Shekou Port and Chiwan Port of Shenzhen etc. In 2010, ports of Shenzhen were the world’s 4^th busiest container seaport, ranked just behind Shanghai, Singapore and and Hong Kong.

With regard to land transportation, PRD has over 55,000km of highways. As far as connection to Hong Kong is concerned, it takes just 2 hours from Guangzhou to Hong Kong by train now. The Hong Kong-Shenzhen Western Corridor had been put into use as the 4th vehicular land crossing between Shenzhen and Hong Kong. It was designed to have a handling capacity of 58.6 thousand vehicles per day. Another key project under construction is a new "Y-shaped" bridge connecting Hong Kong, Macau and Zhuhai. It is expected to boost the economy in west PRD by improving its accessibility to Hong Kong. Since the operation of Shenzhen Metro in Dec 2004, Hong Kong and other cities in the Pearl River Delta area are now interconnected by subway and rails. By 2015, the express rail link will be established between Guangzhou, Shenzhen and Hong Kong and the travel time from Hong Kong to Guangzhou will be significantly reduced to 48 minutes.

There are 6 airports in PRD (incl. Hong Kong and Macau). The Baiyun Airport in Guangzhou is one of the 3 air hubs of China. By end-2010, It operates 165 scheduled flights with 116 domestic lines and 46 international lines and 3 regional lines, connecting to 140 cities. In 2010, the passenger traffic of the Baiyun airport surpassed 40.9 million and volume of freight handled over 1.14 million tonnes. The Shenzhen international airport has also grown considerably in the past decade with passenger traffic over 26 million and the volume of freight handled up to 808 thousand tonnes.