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It may cause some consternation among those worried it is a Trojan Horse for subverting the delicate political formulae that conjoin Hong Kong and Macau to the People's Republic of China, but the Greater Bay Area initiative also carries Beijing's hopes for a more high-tech economic future.
First mooted in 2016, this week finally saw the publication of a blueprint, which runs to 10 chapters and covers an array of different ways that the Chinese government wants to better integrate the two former colonies with its hinterland between now and 2035.
The broad aim is to create a Chinese Silicon Valley by facilitating improved supply lines of talent and greater intra-regional collaboration.
Although the exact details remain sketchy, the implication is a slashing of the red tape and taxes that currently characterise the flow of goods, people and even capital between Hong Kong and Macao and neighbouring Guangdong province.
And for budding Chinese and Hong Kong startups, that could yet represent a major opportunity.
“[The Greater Bay Area] will definitely benefit startups as we will see frequent bidirectional talent flow between Hong Kong and the Chinese mainland,” Lavina Tien, General Manager for incubator Entrepreneur First, told FinanceAsia.
Hong Kong's universities, in particular, have a deserved reputation for nursing talent. Drone maker DJI and the artificial intelligence unicorn SenseTime, for example, were started on the Chinese mainland by Hong Kong university graduates.
But Hong Kong's expensive housing market means a lot of potential young talent is stifled or even driven away. So one aim is to improve the infrastructure and facilitate more traffic between Hong Kong, Macau and the Chinese mainland to encourage more people to stay.
SUPPLY CHAINS
Another potential benefit for startups in the region is that the blueprint promises to provide companies in Hong Kong and Macao with greater access to Chinese supply chains.
The Greater Bay Area has developed sophisticated supply chains in recent decades, especially in Guangdong province. As a result, what might take three months to manufacture elsewhere, can take just three weeks. This is particularly beneficial for young companies involved in the design and production of internet-of-things goods, high-tech devices, and advanced manufacturing, as it means they have a greater chance of making products at a reasonable price.
“It is clearly an advantage for startups to have quick access to the supply chain, and this is how startups in the Greater Bay Area differentiate [themselves] from others,” Tien said.
On the flipside, startups in the wider region will also be able to make better use of Hong Kong’s expertise in financial services and exploit the broader fintech opportunities.
“What the Chinese government is doing is to push the integration between Chinese manufacturing power and the credible financial services in Hong Kong,” said chief economist Shen Jiangusang of JD Digits, a digital tech subsidiary of e-commerce giant JD.com.
It is an attempt to increase the efficiency of the economy and generate fresh momentum, he said.
In response, family office and some overseas funds have already started to look for investment opportunities in the wider region.
The new blueprint also encourages the setup of funds to focus on investment in startups in the Greater Bay Area.
“The ultimate goal is to eliminate capital controls and improve financial service integration in Guangdong-Hong Kong-Macau Greater Bay Area,” Shen said.
