| Market Profiles on Chinese Cities and Provinces |
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12.2007 PRD Economic ProfileGeneral 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.
Source: http://www.hydrocarbons-technology.com/projects/guangdong/guangdong5.html PRD in Numbers PRD is one of the most vibrant economic regions. In 2006,
Major Economic Indicators (2006)
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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%. In 2006, mobiles produced in Shenzhen alone accounted for more than 1/8 of the global market. Other leading products include footwear, lighting fixtures, furniture etc, to name but a few. In short, PRD has formed a diversified industry profile featuring 9 pillar industries: Performance of the 9 Pillar Industries in 2006
Note: In recent years, when private enterprises are formally allowed and recognized in China, private enterprises mushroomed in the PRD. For instance, taking Guangdong as a whole, from 2000 through 2006, private enterprise exports skyrocketed from US$614 million to US$47.3 billion. Industrial Clusters Clusters in PRD Cities
*Panyu is a district of Guangzhou. Chencun, Nanhai and Shunde are districts of Foshan To attract more FDI, PRD has set up several special purpose zones where foreign enterprises enjoy tax deductions and exemptions. Now 4 Economic and Technological Development Zones, 6 New- and High-tech Development Zones, 6 Tariff Free Zones and 2 Export Processing Zones exist in this area. 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 2006. 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. In 2005, its annual capacity of cars ranked 2nd in China, only after Shanghai. And its capacity of cars was above 540,000 in 2006. 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. In 2006, the gross industrial value of auto parts in Guangzhou amounts to RMB17 billion (engine excluded), up 71.0% from 20051. Moreover, 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 just been finished at Daya Bay in Huizhou. Once completed, 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. This is not the only petrochemical plant being constructed. Five oil refining plants, five petrochemical plants and five ethylene plants listed in the "Plan of 9 Industries in Guangdong Province during 2006-2010" will be given great weight. Among them, 4 spread in Huizhou and Guangzhou. 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 2006, PRD enjoys a per capita GDP of RMB47,094, three times of the national average of RMB 15,973. With 3.3% of China's total population, the region accounted for 8.7% of the nation's total retail sales of consumer goods. Retail sales of consumer goods in the region reached RMB668.2 billion in 2006, grew by 15.3% from 2005. Major consumer markets are in Guangzhou and Shenzhen, accounting for 32% and 25% of PRD's retail sales respectively. In Guangdong, as in other parts of China, there has been a shift in the consumption pattern towards higher level needs e.g. accommodation and traveling. In 2006, the following categories grew mostly rapidly in sales: household electric appliances & audio / visual equipment, autos, mobile phones & telecom equipment and building & decoration materials. The retail sector has been developing quickly. In 2006, 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 2007 Major Tertiary Industry GDP in PRD Cities, 2006
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