1.    An Overview of the Guangzhou Economy

1.1  Macroeconomic background and development planning

Guangzhou's GDP reached Rmb821.6 billion in 2008, corresponding to a year-on-year growth of 12.3% and a 2.7% share of the GDP of the whole country. In terms of GDP, Guangzhou is next only to that of Shanghai and Beijing. Being the capital city of Guangdong province and a major commercial centre in southern China, Guangzhou occupies a significant position in the whole country and commands strong influence. The share of the tertiary industry in the city’s GDP had risen from 55% in 2000 to 59% in 2008. The per capita GDP of Guangzhou in 2007 was Rmb71,808, which was more than double that of Guangdong province (Rmb33,151).

Guangzhou's GDP in Recent Years

Source: Guangzhou Statistical Yearbook 2008, Communiqué of Guangzhou Municipal Statistics Bureau

The private economic sector in Guangzhou has grown rapidly. Between 2001 and 2007, the number of private enterprises in the city rose by 170% from 52,000 to 140,000. Foreign capital plays a significant role in the city’s economic development. For instance, foreign-invested (including Hong Kong, Macau and Taiwan) enterprises accounted for 59% of the city’s total industrial output value in 2008. In 2007, there were 8,861 registered foreign-invested enterprises in the city, the largest number among all cities in Guangdong province.

The economic development of Guangzhou will be guided by the provisions of three major development plans, namely the Implementation Plan for Developing Guangzhou into a Modern Services Centre, the Outline of the Plan for Developing Modern Service Functional Zones in Guangzhou, and the Guangzhou Headquarters Economy, all of which were drafted by the Guangzhou Municipal Development and Reform Commission and duly approved by the Guangzhou Municipal People’s Government. On the basis of these plans and policies, Guangzhou will strive to create a brand of “Guangzhou Service”, enhancing the influence and defining the regional role of the modern services industry. Development Plan

A new central business district (CBD) straddling the Zhujiang New Town-Yuancun-Pazhou district and the Tianhe North-Huanshi East-Dongfeng Road district is expected to emerge in Guangzhou before 2020. The urban development of Guangzhou will be driven by the two landmark business axes, namely the old town areas around Beijing Road and the new city in Tianhe District. This new CBD comprising the Zhujiang New Town-Yuancun-Pazhou district and Tianhe North-Huanshi East-Dongfeng Road district will place emphasis on modern services such as finance, business service, convention and exhibition, information, high-end retail, legal and accounting, etc, with an aim to become a modern CBD with extensive regional influence.

Guangzhou sets its sights on becoming a choice location for multinationals to set up their south China regional headquarters as well as for mainland enterprises to establish their head offices. Indeed, the city strives to become a preferred location for companies to set up Asia-Pacific regional headquarters. According to the plans, the share of the tertiary industry in the city’s GDP is projected to rise to 65% in 2015 and 70% in 2020.

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2.    Guangzhou’s Consumer Market

2.1  Growth in retail sales

In 2008, total retail sales of consumer goods reached Rmb314 billion in Guangzhou. A total of 2,189 wholesale and retail enterprises above a designated scale operated in the city. In terms of these two indicators, Guangzhou ranks third among major mainland cities, trailing only Shanghai and Beijing. In terms of per capita retail sales, Guangzhou surpasses Shanghai and Beijing, underscoring the enormous breadth and depth of the consumer market in Guangzhou.

In terms of retail sales, the consumer market of Guangzhou posted an average annual growth rate of 15% from 2003 to 2008, which reflects the steady increase in overall spending power and product sales in Guangzhou. Based on the resident population, per capita retail sales stood at Rmb30,838 in 2008 and have maintained an average annual growth of 16 % in the past four years.

Retail Sales of Consumer Goods

Source: Guangzhou Statistical Yearbook 2008 and Communiqué of Guangzhou Municipal Statistics Bureau

With the rapid pace of urbanisation and growing affluence of the population, retail sales of major consumer goods in Guangzhou have recorded continuous growth in the past few years. Some of these goods represent the modern living style and consumption preference of the middle class. Cars, computers, mobile phones and jewellery are among items which have recorded rapid retail growth in recent years.

Such trend is also reflected in changes in the ownership rates of durable consumer goods in recent years. Basic household appliances such as TV sets, washing machines and refrigerators are very common in a relatively advanced city like Guangzhou and their ownership rates have recorded steady growth in recent years. On the other hand, products like fitness equipment, pianos, home air-conditioners and computers, etc, have also recorded significant increases in ownership rates in recent years. This shows that Guangzhou families are becoming more modern and more focused on comfortable living and child nurturing and more middle-class.

Retail Sales of Major Consumer Goods *

* Retail enterprises above a designated scale
Source: Guangzhou Statistical Yearbook 2004-2008 

Average Ownership of Consumer Durables per 100 Urban Households at Year End

Source: Guangzhou Statistical Yearbook 2003, 2008

2.2  Per capita disposable income and consumption expenditure

The per capita disposable income of urban households in Guangzhou increased by 12.9% to reach Rmb25,317 in 2008. Meanwhile, the per capita consumption expenditure rose by 9.9% to top Rmb20,836. The average annual increase in per capita disposable income between 2004 and 2008 was 11% while that of per capita consumption expenditure was 12.3%.

According to the statistics of 2007, the average per capita disposable income of high-income households reached Rmb43,366 while the average per capita consumption expenditure topped Rmb29,658.

Per Capita Disposable Income and Consumption Expenditure of Urban Households in Guangzhou 

Source: Guangzhou Statistical Yearbook 2008 and Communiqué of Guangzhou Municipal Statistics Bureau

Thanks to rising incomes and growing material affluence, urban households in Guangzhou have reported a decrease in expenditure on food as a percentage of total consumption expenditure but increases in transportation, communications, and cultural and recreation activities, etc. Taking per capita consumption expenditure of Rmb18,951 as an overall average, though food is still the major consumption item, its share has dropped from 42.6% in 2000 to 32.8% in 2007, while the shares of expenditure on transportation and communications have risen to 12.1% and 6.4% respectively, and cultural and recreation activities have risen to 11.4%.

Source: Guangzhou Statistical Yearbook 2001, 2008

2.3  Average remuneration by industry sector

Incomes from different industry sectors may vary widely. In 2007, among all workers in Guangzhou, those in the financial sector had the highest average annual package of close to Rmb100,000, while workers in hospitality and catering services had the lowest average annual pay of Rmb21,546. In the manufacturing sector and the wholesale and retail sector which had the largest workforce, the average annual package amounted to Rmb28,554 and Rmb38,310 respectively.

Average Remuneration of Workers by Industry Sector*

* Refers to people who earn wages by performing manual labour or earn income by operating a business, including all fully-employed workers, private entrepreneurs, operators of individually-run businesses, workers employed in private and individually-run businesses, rural enterprises, and other rural entities.
Source: Guangzhou Statistical Yearbook 2008

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