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Guide To Investing In China’s Greater Bay Area (Part 1)

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China recently unveiled its plans to develop its own San Francisco Bay Area concept with its Greater Bay Area project. According to DBS, the Greater Bay Area (GBA), which consists of Hong Kong, Macau and 9 key cities in the Guangdong province, is a region that will become an economic powerhouse for China over the next decade.

Greater Bay Area: Propelling China’s Development Into Tech And Services

Innovation and technology will be key focus areas of the Greater Bay Area initiative. Supported by government policies, DBS expects a rising number of technology and internet companies to rise up from the Greater Bay Area. There will also be a shift in the Greater Bay Area towards greater focus on the services industry.

Greater Bay Area: Ingredients For Success

DBS believes that the Greater Bay Area has all the right ingredients to emulate San Francisco Bay Area’s success. Talent policies have already been put in place to enable the attraction of talents to the Greater Bay Area.

Talents are being offered cash awards and/or housing allowance to live in the Greater Bay Area. In addition, there is also a high density of top global universities in the Greater Bay Area, which will drive commercialisation of innovation though coordination with universities.

The sound private equity and venture capital ecosystem in the Greater Bay Area is also a key component to drive start-up development in the region. Not to forget, the Chinese government has been very involved in driving the start-up ecosystem by providing tax benefits for companies that are doing R&D for High-value and New Technology. DBS expects local governments to further strengthen the policies to provide a more favourable environment.

Investors Takeaway: Investing In China’s Greater Bay Area By DBS

According to DBS, various factors will help China attract tech companies with high value-added products/services or profitability to swarm into the Greater Bay Area. These companies will likely add to China’s development in semi-conductors, telecom, big data, artificial intelligence, robotics, electric vehicles, medical and satellites.

So, how can investors ride on the next wave of economic development in the Greater Bay Area? In this 4-part series, we will highlight DBS’ nine investment themes to invest in the Greater Bay Area.

Investment Theme 1: Education Plays In The Bay Area

According to DBS, the Greater Bay Area is expected to see a boom in public spending on education. This will lead to high CAGR growth rate driven by a growing and young population, high economic growth and income, higher penetration of private education and improvement of enrolment ratio for higher education.

Among the listed education plays, DBS recommends Wisdom Education International Holdings Company and China Education Group. DBS notes that growing student population in the area will translate to higher student enrolment for both education plays in the long term.

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