China Market Guide

Guangzhou
(Guangdong Province)

A Gateway in Southern China with High Concentration of Trade and Business Activities

  • GDP 3rd highest among Chinese cities
  • Per capita GDP 3rd highest among Chinese cities
  • 2nd largest service centre in China

    Guangzhou, the capital of Guangdong province, is a key city in the Pearl River Delta (PRD) region. As the largest commercial centre in southern China, Guangzhou has a flourishing service industry with financial, trading and transportation services covering its neighbouring cities. The service industry makes up 55.7% of the city's GDP, ranking second in China after Beijing.

    A Regional Transportation Hub with Well-Connected Communications Network

    Guangzhou is a transportation hub in southern China with a well-developed communications network. Two major railway lines running through China - the Beijing-Guangzhou Line and the Bejing-Kowloon Railway - traverse Guangzhou. An extensive network of highways and expressways links up all parts of southern China.

    The transport and logistics industry is advanced in Guangzhou, accounting for about 15% of the city's GDP, almost double that of other major cities such as Beijing (8%), Shenzhen (8%) and Shanghai (7%). The well-developed transportation and logistics system have been a great support to the city's booming internal trade and distribution sector.

    An Important Showcase with Goods Distributed Across the Country

  • The largest internal trade and distribution centre in China
  • 75% of goods are sourced and 70% sold outside Guangzhou
  • The largest distribution centre for garments, shoes, toys and gifts in China

    Guangzhou is traditionally a major market place of merchandise goods and is now the largest internal trade and distribution centre in China, with its goods sold all over the country and to Southeast Asia, Europe and the US. manufacturers and distributors mostly establish a presence in Guangzhou to coordinate their distribution business in Guangdong province and the south China region. There are 12,000 retailers and 17,000 distributors operating in Guangzhou. Of the goods handled by distributors in Guangzhou, 75% are sourced from outside Guangzhou while 70% are sold outside the city.

    Guangzhou is well-known for its large number of wholesale markets. In 2002, total wholesale and retail sales of goods in Guangzhou reached Rmb366.1 billion. The volume of Guangzhou's domestic trade accounted for 36.5% of the total in Guangdong Province.

    Garments:

    In 2002, Guangdong's industrial output of garment manufacturing was Rmb65.7 billion, and garment exports reached US$10.18 billion. The garment industry in Guangdong has a great variety with strong regional division of labour. For instance, Shenzhen and Dongguan serve as the base for women's clothing, while Zhongshan focuses on casual wear and Foshan on children's wear. Guangzhou is the largest garment distribution centre in China.

    Shoes:

    The latest statistics from the China Shoe Industry Association show that about 10 billion pairs of shoes are manufactured and sold a year around the world. Of this, 6 billion pairs are made in China, half of which (3 billion pairs) are from Guangzhou.

    Toys and gifts:

    Toy distributors from all over the country make purchases in Guangzhou, including those from the well-known stationery and toy wholesale centres of Yiwu and Chongqing. This shows Guangzhou holds a dominant position in the sourcing and distribution of toys in China.

    Strong Industrial Foundation and Advanced High-Tech Industry

  • Industrial output of many products highest in the PRD
  • The most mature development centre of applied software in southern China

    Guangzhou has a solid industrial foundation. As the second largest production base in the PRD, Guangzhou takes the lead in many industries in the region, such as transportation equipment, chemical products, textiles and garments, oil processing, food processing, leather goods and pharmaceuticals.

    The Guangzhou government has in recent years vigorously promoted the development of the high-tech industry. Apart from formulating relevant regulations, it has encouraged foreign investment and venture capital to participate in the high-tech industry. This has not only provided funds and market intelligence for high-tech companies, but also spurred the growth of the industry.

    Guangzhou has become the most mature software development centre in southern China. Guangzhou has an advanced information technology infrastructure, broadband coverage of the city reaches 90%. About 20-50% of large and medium-sized enterprises are using different information and management software in their daily operation. The 1,300 software development companies in Guangzhou employ 25,000 professionals in technology/software development. The value of software production in Guangzhou was estimated to be around Rmb20 billion in 2002.

    Partnering with Hong Kong and Reaching Out to the World

    As China's largest internal trade and distribution centre, Guangzhou has built an enormous "internal" network. This, complemented by Hong Kong's highly efficient international transportation and logistics network, has formed a highly competitive supply chain. On the one hand, Guangzhou distributes the products manufactured in Guangdong province to all over the world; on the other hand, it distributes goods from around the globe to the rest of China. At present, about 70% of the external trade handled by the Guangzhou port is transshipped or re-exported via Hong Kong.



    The development of Guangzhou into a regional service centre can be attributed to the full range of high-quality services support provided by Hong Kong, such as international accounting, legal and financial services. As the region's leading financial centre, Hong Kong has provided various fund raising channels, such as venture capital and the Growth Enterprise Market, for the high-tech industry in Guangzhou. Meanwhile, some established enterprises in Guangzhou chose to be listed in the Stock Exchange of Hong Kong.

    A large number of multinational companies, including foreign banks, have chosen Hong Kong as their regional headquarters in Asia Pacific. Most of the international advertising agencies in Guangzhou with their eyes set on the PRD as well as China's domestic market are headquartered in Hong Kong. As the largest foreign investor in Guangzhou and southern China, Hong Kong can form strategic partnership with these multinational companies. With their mainland experience, international exposure and business acumen, Hong Kong companies and management personnel are capable of helping foreign companies to reduce their investment and management risks in Guangzhou and southern China.