China Market Guide

Shenzhen
(Guangdong Province)

Proximity to Hong Kong
  • The only mainland city bordering on Hong Kong
  • Over 600,000 immigrant professionals and technical experts
    Located in the southern tip of Guangdong province, Shenzhen is the only mainland city that borders on Hong Kong, giving it a unique geographical advantage. Shenzhen was founded in 1979 and became the first Special Economic Zone (SEZ) in China in the following year. The permanent resident population in Shenzhen in 1980 was only 300,000. But according to a census conducted by China in 2000, Shenzhen's total population (including transient population) reached 7 million, reflecting the significance and attractiveness of the city as a manufacturing and transportation base.

    Infrastructure

  • Container port: 2nd largest in China and 6th largest in the world
  • 4th busiest international airport in China Between 1995 and 2002, the port of Shenzhen grew at an average of 60% in container throughput per annum. In 2002, it handled 7.62 million TEUs and became the 6th largest container port in the world. From 1995 to 2002, the Shenzhen airport maintained an average increase of 12.4% in passengers per annum.

    Shenzhen's roads, expressways, and railways are interconnected forming an extensive network. The SEZ is the first city in the country that operates pre-high-speed trains. Two major railway lines in China, the Beijing-Guangzhou Line and the Beijing-Kowloon Railway, converge in Shenzhen. Its highway network connects it to all major cities in the PRD. Shenzhen already has a city-wide optical fibre communication network and cable network.

    Fast Growing Economy

  • Per capita GDP highest among Chinese cities
  • GDP 4th highest among Chinese cities
  • Foreign trade export largest among Chinese cities
    Shenzhen is economically one of the fastest growing cities in China, with an average annual increase of 14.5% from 1997 to 2002, higher than Guangdong's 10.4% and the national average of 7.9%. Its per capita GDP registered an average annual growth of 8.7% over the last five years reaching Rmb46,388 in 2002, the highest among all Chinese cities.

    Shenzhen is a manufacturing and export base with total industrial output ranking first among all cities in Guangdong. In 2002 Shenzhen's exports accounted for 14.3% of the national total, ranking first among Chinese cities in nine consecutive years, reflecting the SEZ's export-oriented economy. In fact, of the top 100 Chinese export enterprises in 2002, 19 were in Shenzhen.

    As at the end of 2002, Shenzhen's cumulative utilised amount of foreign direct investment (FDI) reached US$21.6 billion, representing 17.3% of Gugandong's total and 4.8% of the national total. Over 90% of the FDI is in manufacturing, reflecting the advantages of Shenzhen as an industrial base. In 2002, the industrial output of foreign-invested enterprises accounted for 78% of the city's total. Shenzhen is also an important base of export-processing trade, the annual amount of processing trade related exports account for up over 80% of the city's total exports.

    New and High-Tech Industries

  • New and high-tech products account for 47% of the city's total industrial output, ranking first among Chinese cities
  • Exports account for about 80% of the city's new and high-tech products
    While Shenzhen is a manufacturing base for a number of traditional industries, new and high-tech industries development has been designated as one of the focuses of the city's economic construction since the mid 90s. The total output of Shenzhen's new and high-tech products increased from Rmb2.3 billion in 1991 to Rmb171 billion in 2002. The SEZ's exports of new and high-tech products account for 23.2% of the national total, higher than other major Chinese cities.

    Electronics and telecommunications equipment account for over 90% of the total output of Shenzhen's new and high-tech industries. In fact, electronics and telecommunications equipment are pillar industries contributing to 57.8% of the city's total industrial output, or 18.6% of the national total. Multinational corporations such as IBM, Intel, Siemens, Samsung and Hitachi have all established production lines in Shenzhen. The SEZ is also a major software development base. In 2002, among China's top 100 software companies, 10 were in Shenzhen.

    Apart from industrial development, efforts have also been made by Shenzhen in recent years to upgrade the capability and standard of its logistics sector, and to establish itself as a sourcing centre for multinational companies. Proximity to suppliers, low operating costs and the complementarity in logistics services between the SEZ and Hong Kong are Shenzhen's advantages in developing into a sourcing centre.

    Advantages and Opportunities

    Shenzhen's expenditure on R&D amounted to Rmb6.8 billion in 2001, the highest in Guangdong. It represented 3% of the SEZ's GDP, higher than the national average of 1% and surpassing cities in the Yangtze River Delta such as Shanghai and Suzhou. Both local enterprises like Huawei and ZTE, and multinational corporations like Lucent, Oracle, Du Pont and Alcatel, have established R&D centres in Shenzhen.

    Currently, great efforts are being made by Shenzhen to strengthen ties with higher education institutions. It is cooperating with more than 200 universities in conducting research and commercialising research results. As an immigrant city, Shenzhen offers good opportunities which attract a large number of talents from other parts of China, providing a strong support for its industrial development and innovative advancement. The growth of its new and high-tech industries can also be attributed to government policy and financial support, such as the formulation of relevant laws and regulations and the establishment of the High and New Technology Investment Service Company. The development of Shenzhen's new and high-tech industries has created a huge demand for upstream parts and components. There is also a demand for new technologies by traditional industries such as watch and clock, and toys. Meanwhile, the small and medium-sized enterprises in Shenzhen are also in need of foreign capital and market sense to commercialise the technologies that they develop.

    Hong Kong as a Service Support Centre

    Proximity to Hong Kong, an international service centre, is one of the advantages of Shenzhen. As a manufacturing base for a wide range of industries, Shenzhen can use Hong Kong as a trade platform to expand the global market. On the other hand, foreign enterprises can supply industrial products to Shenzhen through Hong Kong.

    As major foreign investors in Shenzhen, Hong Kong companies can form strategic partnership with multinational companies. With their mainland experience, international exposure and business acumen, Hong Kong companies and personnel are capable of helping foreign companies to reduce their investment and management risks in Shenzhen. Hong Kong's financial sector provides fund raising channels, such as venture capital and the Growth Enterprise Market, for Shenzhen's new and hi-tech industries. Hong Kong's highly efficient international transport and logistics services can also meet the export requirement of the SEZ's new and high-tech products for just-in-time delivery.