Despite the slowing demand and rising labor costs that hit global automobile manufacturers in 2015, GAC Toyota Motor Co Ltd is spending heavily on a new production line in South China’s Guangzhou.
The company’s executives believe the 406-million-US dollar new plant in the city’s Nansha, one of three areas within the Guangdong Free Trade Zone (FTZ), was not a reckless decision.
The manufacturer, a joint venture between Toyota Motor and China’s GAC Group, will introduce the latest automation technology in the new line, which is expected to be in use by the end of 2017, Kazuhiro Kobayashi, president of GAC Toyota, said on Aug 26 at a seminar attended by multinational CEOs in the Guangdong FTZ.
“Infrastructure is key for us to have a good operation. I believe that with Nansha’s development, we can enjoy better infrastructure,” Kobayashi said.
With a market-oriented business environment, broader access for foreign investment, and favorable policies to facilitate innovation, the Guangdong FTZ, established in April 2015, is attracting an increasing number of multinationals to set up businesses.
So far, 34 Fortune 500 companies have invested in 51 enterprises in the Guangdong FTZ. For many multinationals, the innovations within the FTZ are in line with their own goals.
HSBC, for example, became one of the first foreign banks to experiment with cross-border yuan settlement business for retail customers in the Guangdong FTZ.
“Speeding up financial innovation is one of the priorities for Guangdong FTZ, and HSBC has been an active part of it,” said Helen Wong, chief executive of HSBC China.
Eaton, a power management firm, also sees opportunities arising from the FTZ’s promises for green development. In June 2016, Eaton and China Southern Power Grid signed a memorandum to jointly build a clean energy project in Nansha, which will address power outage problems through the use of renewable energy such as wind and solar.
“We believe the development of the pilot free trade zone will provide more business opportunities for Eaton to explore,” said Brian Brickhouse, Eaton’s president of the electrical sector for the Asia Pacific. “We have had very strong growth historically in China and we will project that to continue and accelerate.”
Green development is also bringing business for HSBC. According to Wong, green finance championed by the Guangdong FTZ is expected to be a key part of Guangdong-Hong Kong financial cooperation in the future.
“We hope Hong Kong and Guangdong can build a green finance system together, with green bonds as its core,” Wong said.
Institutional investors don’t want to miss out on the growth potential. Mungo Park, chairman of Innovator Capital, a London-based investment bank specializing in clean technology and life sciences, said he considers the environment in the Guangdong FTZ very beneficial for developing innovative technology.
“The idea is to bring global technology here so it can be developed for the local market. It may very well be that some of the technology companies could move here completely or be bought by Chinese companies,” Park said.
“China will become an exporter of technology rather than an importer. I think it will be very promising,” he said.
Earth Capital Partners, a fund management firm specializing in sustainable tech investments, said it has been discussing cooperating with the local government to work with startups in the Guangdong FTZ.
“For us, it is a very clever policy for the Guangdong government to bring businesses in. It is very likely that we will work with them,” said Ben Cotton, partner of Earth Capital Partners.