As the home of the world’s second-largest GDP, China constantly commands the attention of international investors. However, prudent planning and targeted investment in specific cities and industries are imperative in order to achieve results and capitalize on the opportunities China’s dynamic economy presents.
Despite setbacks experienced during the Covid-19 pandemic as well as new challenges that have arisen thereafter, China’s economy is still forecasted to experience growth. China’s advanced technology and infrastructure sets it up to be a leader on the world stage in terms of commerce, so it is important for businesses and investors to identify opportunities ahead of their competitors.
This article looks at some of the most popular cities for enterprise and investment, by providing an overview of the business climate in each location.
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Shanghai
Situated on the east-central coast of China, Shanghai stands as a testament to the nation’s extensive history of foreign economic exchange, strategically located at the mouth of the Yangtze River.
Shanghai is widely regarded as China’s commercial hub, thanks to its vast population of over 24 million residents and thriving business scene. It is coined as China’s most international city.
Boasting the largest GDP of all of China’s major cities, Shanghai claims the top spot with RMB 4.32 trillion (approximately 593bn USD).
Key Industries in Shanghai
Shanghai is home to the largest seaport in the world, The Port of Shanghai, which is known as one of the most important ports in the continent – a hub for trade.
Despite the significant commerce facilitated by its port, Shanghai is home to other major industries less reliant on physical imports and exports. The Chinese city is also a global center for finance, science, technology, and tourism.
Investment Opportunities in Shanghai
According to the Vice-Mayor of Shanghai, Xie Dong, the city is focused on green growth and digitalization. So, major investment opportunities lie in artificial intelligence, healthcare, automobiles, and biomedicine amongst others.
Shanghai shares common growth interests with London and the UK, especially focusing on technological growth and green finance.
The growing identification of investment opportunities in Shanghai is coupled with the timely reduction of corporate income tax for the tech sector, and the introduction of incentives for foreign funded R&D.
Beijing
The Capital of the People’s Republic of China, Beijing, was once called Peking and is famous as the political and cultural center of China’s major cities.
With a GDP of RMB 4.16 trillion (571bn USD), and a population of 21.89 million, Beijing offers a sought-after economic landscape for foreign investment. Its staggering population of nearly 22 million residents gives Beijing the status of the world’s most populous national capital city.
Key Industries in Beijing
Beijing is ranked as the number one city for having the most Fortune 500 headquarters, with over 55 companies establishing their head offices in the region. Additionally, 15% of revenue generated by the Global 500 can be attributed to companies headquartered in Beijing.
The service sector forms more than 80% of Beijing’s GDP, encompassing a host of financial and technological services, which are considered as highly developed regarding global industry standards.
The manufacturing sector accounts for much of the rest of Beijing’s GDP, which is home to major manufacturers, such as BOE Technology Group and Sinochem Group.
Investment Opportunities in Beijing
Beijing is not a hidden gem for foreign investment and is quite popular – with 736 foreign -funded technology firms in the city between 2020 and 2021. It is largely down to the strong momentum and growth of Beijing’s high-tech industries that foreign investment continues to flow to the region.
Beijing has many investment incentives and initiatives available for foreign investors to directly engage in growing Chinese service and manufacturing sectors without barriers. Improved market access and investment opportunities can be found in the science, tech, and financial service sectors.
Shenzhen
Despite its relatively short history, dating back to the 1970s, Shenzhen has quickly grown to become one of the best investment opportunities across China’s major cities.
Every year, Shenzhen’s focus on investment and growth catches the eyes of investors across the globe, and everyone from migrant workers to entrepreneur’s flock to the city to take advantage of the city’s futuristic approach.
Soaring past the RMB 3 trillion mark (412bn USD) in 2022, Shenzhen’s GDP is now China’s third largest and Shenzhen also boasts the largest GDP per capita of China’s major cities, with RMB 173,663 (23,850 USD).
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Key Industries in Shenzhen
Shenzhen is commonly referred to as China’s Silicon Valley, and it is a vital region for the growth and development of the nation.
The vibrant city is built on the foundations of a strong technology industry, which acts as the figurehead for China’s digital economy; it is home to the biggest players – ZTE, Huawei, BYD and more.
Manufacturing also contributes to the significant growth of Shenzhen’s economy, with the new energy vehicle sector experiencing 173% annual growth in 2021.
Investment Opportunities in Shenzhen
With intentions of growing the city’s presence on the global stage, Shenzhen has a set of growth targets that pose lucrative opportunities to potential investors.
Shenzhen aims to be the leading example of capital & innovation in China by 2035, which signals the region’s desire to boost the technology, construction, and finance sectors.
Additionally, the city’s education and healthcare industries are set to grow, with world-class universities and medical institutions ready to be built to further accelerate Shenzhen’s rise to international prominence.
Guangzhou
Guangzhou is considered to be the southern gate of mainland China and is a part of the Greater Bay Area. Its strong political and economic history presents Guangzhou as an exceptional opportunity for investors to research China’s major cities.
Guangzhou’s GDP of RMB 2.8 billion (384m USD) is predicted to grow by 8.3 percent annually, due vibrant trade sector and growing science and technology innovation.
The city is famous for hosting The China Import and Export Fair twice a year, which is China’s largest trade fair that attracts over 200,000 visitors from over 200 countries.
Key Industries in Guangzhou
Over 50 percent of Guangzhou’s GDP consists of the automobile, electronic, and petrochemical sectors.
Guangzhou’s recent investment in new energy vehicles has contributed to the significant growth of the city’s automobile output to RMB 538.3 billion (73bn USD).
Additionally, the city’s electronic and IT industry has led China’s development of communication networks, intelligent terminals, and more, for 29 years.
Investment Opportunities in Guangzhou
Recent government announcements have laid out Guangzhou’s plans to host 650 major construction projects to strengthen its status as a global trade and transportation hub.
Guangzhou predicts an annual expenditure of RMB 345.2 billion (47bn USD) on this project, which presents significant infrastructure investment opportunities for foreign investors.
Chongqing
With more than 30 million residents, Chongqing is a populous city with a large consumer market and advanced infrastructure and integral supply chains. Situated at the junction of the Yangtze and Jialing rivers, Chongqing provides easy access to major markets in China as well as Southeast Asia.
For investors looking at China’s major cities, a place that is not overlooked is the city of Chongqing which is considered crucial for connecting China’s underdeveloped west and developed east. The city also has unique administrative status as a directly controlled municipality which allows for it to implement preferential business policies.
In 2015, the Chinese Communist Party committed to nationwide economic reform, which involved the upgrade of Chongqing’s economy. Its GDP of RMB 2.5 trillion (343bn USD) is forecasted to steadily grow at a yearly rate of 3.7% over the next decade.
Key Industries in Chongqing
Chongqing is China’s largest automobile manufacturing base, and it is manufacturing of this type, known as heavy industry, that forms the bulk of the city’s industrial output.
Additionally, recent growth in the electronics sector has seen Chongqing emerge as a competitive manufacturer of electronics and telecommunication equipment as well as a growing chemical industry.
Investment Opportunities in Chongqing
As the global remote-working culture grows, the demand for personal electronics will only rise, and as Chongqing produces one-third of the global laptop supply, investors are quickly becoming aware of the opportunities to get involved.
Alternatively, Chongqing seeks to become a global leader in the production of new energy vehicles, with China’s top electric car manufacturer, BYD, basing production of their cutting-edge BYD Blade Battery in Chongqing.
Chengdu
Though it’s the last city on the list, it is certainly not the least. The economic powerhouse, Chengdu, is the logistics, commerce, and finance center connecting China’s major cities in the West.
For decades, Chengdu has been referred to as a benchmark city for investment in China – it is an engine for Chinese development and urbanization. In 2019, the Milken Institute named Chengdu as China’s best-performing city economy.
Chengdu is China’s seventh wealthiest city with a GDP of RMP 1.7 trillion (233bn USD), and a is home to the Chengdu Hi-tech Industrial Development Zone (CDHT). Committing significant investment to independent innovation, the CDHT registered a 26.2% yearly growth rate in early 2020.
Chengdu’s Key Industries
Chengdu is a major global technology and electronics exporter – more than one-third of the world’s iPads are assembled in the Chinese city.
However, it is not just consumer electronics that Chengdu produces – the city is a manufacturing hub of Asia. Chengdu manufactures transportation equipment, biotech, life science R&D, and more.
Investment Opportunities in Chengdu
Since receiving the award for the ‘Most Attractive City for Investment’ in 2020, Chengdu has experienced significant growth and continues to facilitate lucrative investment opportunities for investors.
Despite ambitious growth planning, Chengdu has experienced a recent shortage in talent and enterprise to grow itself to be a bigger name on the world stage of trade.
China’s Municipal Government has announced policies and financial incentives for investors and businesses that can boost Chengdu’s energy conservation, shale gas, information security, aviation gas turbines, and new energy vehicle sectors.
Why Should You Consider Investing in China?
Investing in China’s prominent cities gives companies and investors access to one of the world’s largest and fastest-growing consumer markets. Cities like the ones mentioned above boast populations in the tens of millions, presenting a vast customer base for a wide range of industries. This market potential is further bolstered by a rising middle class with increasing purchasing power.
Additionally, these cities serve as crucial hubs for trade and commerce, with well-established logistics and transportation networks that facilitate the movement of goods not only within China but also to neighboring Asian markets.
Moreover, China’s prominent cities are at the forefront of technological innovation and industry advancement. They are home to leading research institutions, tech parks, and innovation zones, fostering an ecosystem conducive to cutting-edge research and development. Companies that invest in these cities can tap into a rich pool of talent, benefit from collaborations with local universities, and stay at the forefront of technological trends.
Furthermore, the presence of established industry clusters in sectors like finance, manufacturing, and information technology provides opportunities for networking, partnerships, and knowledge-sharing, enabling businesses to thrive in a competitive global landscape. Overall, investing in China’s prominent cities provides a gateway to a dynamic market, a hotbed of innovation, and a platform for global business expansion.
How Can Companies Achieve Success in China?
The first step is to have a partner who can assist you with all the necessary steps to get your entity set up and operational with little administrative headache. This will allow you to focus on your business and work towards success. For more than a decade, we have been helping foreign companies and investors with all their company formation, accounting, tax, and payroll needs.
