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5 Special Report on the State of Business in South China
7. Macau Special Administrative Region
The Orient’s Las Vegas e city now represents the world’s largest gaming capital,
having surpassed Las Vegas in 2006. Macau’s gambling rev-
A former Portuguese colony situated at the entrance to the enues grew by an average of 29 percent a year between 2008
Pearl River Delta only forty miles from Hong Kong, Macau is and 2012. Casino revenue increased 31.7% in October year-
the smaller of China’s two special administrative regions – at on-year to 36.48 billion patacas ($4.6 billion), more than six
only 1/40th the size of Hong Kong, with approximately half times the revenue of the Las Vegas Strip. However, this over-
a million residents (not many more than Luxembourg) and a reliance on the gaming industry has made the Chinese central
total of 33 casinos. government prioritize diversi cation of the region’s economy.
Spotlight on Macau over Time e region’s top trade partners are mainland China, Hong
Under British rule and with the deep port of Victoria Kong, Japan, the E.U., Taiwan and the United States. e
region’s exports include clothing, textiles, footwear, toys,
Harbor, Hong Kong quickly gained importance as a major electronics, machinery and parts; while imports include raw
trade center, overshadowing the commercial importance of materials and semi-manufactured goods, consumer goods
Portuguese-ruled Macau. e key exception to Hong Kong’s (foodstu s, beverages, tobacco), capital goods, mineral fuels
commercial superiority over Macau was during World War and oils.
II when Macau experienced brief economic prosperity as the
only neutral port in South China, after the Japanese occupied Due to Macau’s increasing operational costs, it is no longer
Canton and Hong Kong. From 1943 to August 1945, Japan suited for labor-intensive industries, and accordingly, textile
created a virtual protectorate over Macau, assuming control and garment exports are likely to shrink further in years to
of its a airs. come. Yet the region continues to develop as one of the top
gambling and tourist destinations in the world. Growth ar-
In 1974, the Portuguese government granted indepen- eas include nance, insurance, construction, real estate and
dence to all overseas colonies and recognized Macau as part of manufacturing. Macau’s gambling industry still accounts for
China’s territory. e Chinese government did not take over an estimated 40 percent of its GDP.
administration of the territory until February 8, 1979, when
China acknowledged Macau as a Chinese territory under Por- Macau’s currency, the pataca, is closely tied to the Hong
tuguese administration. Kong dollar, which is freely accepted in Macau. Hong Kong’s
links with Macau’s gambling industry are extensive, especially
On April 13, 1987, “ e Joint Declaration on the Ques- through three of the six companies with gaming licenses in
tion of Macau” was signed between China and Portugal to Macau: STDM, Galaxy, and Melco. STDM’s gaming subsid-
agree that Macau would revert to Chinese rule on Decem- iary, SJM, and Galaxy are listed on the Hong Kong Stock
ber 20, 1999 also under the “One Country, Two Systems” Exchange, as are two other license holders, Wynn Macau and
policy. As per the Hong Kong SAR, the Chinese government Las Vegas Sands’ Macau operations.
promised that the Macau SAR will enjoy a high degree of
autonomy in all matters except foreign and defense a airs for Having surpassed Las Vegas in gambling revenue, the city is
50 years. now looking to broaden its economic base by keeping tourists
in town for longer periods of time. While casino earnings
Economy constitute nearly all of Macau’s earnings, in Las Vegas they
make up only about 40 percent of tourist-related revenue,
As a free port (where goods are received and shipped free of suggesting that tourists in Macau tend to stay for only a day
customs duties), Macau is best known for its gambling indus- or two, gambling and quickly leaving. e region is hoping to
try and is the only place in China where gambling is legal. e change that by cashing in on the lucrative convention trade
majority of the population speaks Cantonese, but Portuguese with new exhibition centers and signi cant growth in the
remains an o cial language and English is widely used in trade, number of hotel rooms available.
tourism and commerce. Since the liberalization of its gaming sec-
tor in 2002, Macau’s economy has expanded rapidly with signi - e rst exhibition to take advantage of the added space
cant investment in new hotels, casinos and convention facilities was Mega Macau, the rst-ever trade exhibition of its kind in
by developers from Hong Kong, Australia, and the United States. the SAR. Running between the two phases of the Canton Fair
in Guangzhou, the event was held in the Venetian Conven-
72 tion and Exhibition Center (part of the Venetian Macau mega
resort complex and featuring 100,000 square meters of con-
7. Macau Special Administrative Region
The Orient’s Las Vegas e city now represents the world’s largest gaming capital,
having surpassed Las Vegas in 2006. Macau’s gambling rev-
A former Portuguese colony situated at the entrance to the enues grew by an average of 29 percent a year between 2008
Pearl River Delta only forty miles from Hong Kong, Macau is and 2012. Casino revenue increased 31.7% in October year-
the smaller of China’s two special administrative regions – at on-year to 36.48 billion patacas ($4.6 billion), more than six
only 1/40th the size of Hong Kong, with approximately half times the revenue of the Las Vegas Strip. However, this over-
a million residents (not many more than Luxembourg) and a reliance on the gaming industry has made the Chinese central
total of 33 casinos. government prioritize diversi cation of the region’s economy.
Spotlight on Macau over Time e region’s top trade partners are mainland China, Hong
Under British rule and with the deep port of Victoria Kong, Japan, the E.U., Taiwan and the United States. e
region’s exports include clothing, textiles, footwear, toys,
Harbor, Hong Kong quickly gained importance as a major electronics, machinery and parts; while imports include raw
trade center, overshadowing the commercial importance of materials and semi-manufactured goods, consumer goods
Portuguese-ruled Macau. e key exception to Hong Kong’s (foodstu s, beverages, tobacco), capital goods, mineral fuels
commercial superiority over Macau was during World War and oils.
II when Macau experienced brief economic prosperity as the
only neutral port in South China, after the Japanese occupied Due to Macau’s increasing operational costs, it is no longer
Canton and Hong Kong. From 1943 to August 1945, Japan suited for labor-intensive industries, and accordingly, textile
created a virtual protectorate over Macau, assuming control and garment exports are likely to shrink further in years to
of its a airs. come. Yet the region continues to develop as one of the top
gambling and tourist destinations in the world. Growth ar-
In 1974, the Portuguese government granted indepen- eas include nance, insurance, construction, real estate and
dence to all overseas colonies and recognized Macau as part of manufacturing. Macau’s gambling industry still accounts for
China’s territory. e Chinese government did not take over an estimated 40 percent of its GDP.
administration of the territory until February 8, 1979, when
China acknowledged Macau as a Chinese territory under Por- Macau’s currency, the pataca, is closely tied to the Hong
tuguese administration. Kong dollar, which is freely accepted in Macau. Hong Kong’s
links with Macau’s gambling industry are extensive, especially
On April 13, 1987, “ e Joint Declaration on the Ques- through three of the six companies with gaming licenses in
tion of Macau” was signed between China and Portugal to Macau: STDM, Galaxy, and Melco. STDM’s gaming subsid-
agree that Macau would revert to Chinese rule on Decem- iary, SJM, and Galaxy are listed on the Hong Kong Stock
ber 20, 1999 also under the “One Country, Two Systems” Exchange, as are two other license holders, Wynn Macau and
policy. As per the Hong Kong SAR, the Chinese government Las Vegas Sands’ Macau operations.
promised that the Macau SAR will enjoy a high degree of
autonomy in all matters except foreign and defense a airs for Having surpassed Las Vegas in gambling revenue, the city is
50 years. now looking to broaden its economic base by keeping tourists
in town for longer periods of time. While casino earnings
Economy constitute nearly all of Macau’s earnings, in Las Vegas they
make up only about 40 percent of tourist-related revenue,
As a free port (where goods are received and shipped free of suggesting that tourists in Macau tend to stay for only a day
customs duties), Macau is best known for its gambling indus- or two, gambling and quickly leaving. e region is hoping to
try and is the only place in China where gambling is legal. e change that by cashing in on the lucrative convention trade
majority of the population speaks Cantonese, but Portuguese with new exhibition centers and signi cant growth in the
remains an o cial language and English is widely used in trade, number of hotel rooms available.
tourism and commerce. Since the liberalization of its gaming sec-
tor in 2002, Macau’s economy has expanded rapidly with signi - e rst exhibition to take advantage of the added space
cant investment in new hotels, casinos and convention facilities was Mega Macau, the rst-ever trade exhibition of its kind in
by developers from Hong Kong, Australia, and the United States. the SAR. Running between the two phases of the Canton Fair
in Guangzhou, the event was held in the Venetian Conven-
72 tion and Exhibition Center (part of the Venetian Macau mega
resort complex and featuring 100,000 square meters of con-
