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6 Special Report on the State of Business in South China
sion of both product quality and prices in order to bet- establish venture capital enterprises, private equity invest-
ter protect consumer interests. ment funds and invest in enterprises within the province.
• Promote integration of PRD’s economy and improve • Establish proper commercial dispute resolution mech-
its competitiveness. This includes integrating the trans- anisms and improve legal systems to create a fair and
portation systems, infrastructure, urban and rural plan- orderly environment for market competition, condu-
ning, industry layout, environmental protection and cive to the internationalization of the economy.
public services in the region.
• Strengthen environmental protection through increas- The Outline of Guangdong’s 13th Five Year Plan is currently
ing water pollution control, improving air quality and under discussion, but has not yet been released.
improving the standards for safe disposal and treat-
ment of solid waste. Spotlight on Shenzhen Government Innovation
• Promote low-carbon development in the province and Shenzhen’s government has taken the lead on a number of
improve its mechanism for controlling emissions of
greenhouse gases. new initiatives to become the national leader in innovation and
• Optimize the province’s high-efficiency information private enterprise growth. The city has experienced rapid pri-
network system. The Plan aims to achieve the standards vate economic growth, spawning about 450,000 private com-
of a mid-level developed country in terms of IT infra- panies, including international giantssuch as Huawei Technolo-
structure throughout the entire province by 2015. This gies Co Ltd, Tencent Holdings Ltd, China Vanke Co Ltd and
includes reaching an internet penetration rate of 70 per- BYD. Available incentives include a recent VAT and business
cent by 2015. tax exemption policy for small and micro-sized enterprises. The
• Adjust income inequality by expanding the ratio of government has also adopted specific measures in terms of equi-
mid-income residents and raising the minimum wages ty investment incentives, e-commerce promotion and the intro-
in various cities in the PRD to above 40 percent of the duction of electric vehicles. Lastly, as part of a pilot program to
local average salaries by 2015. curb emissions of key pollutants and clean up the environment,
• Improve the social insurance system and medical ser- foreign investors are now permitted to trade carbon permits in
vice standards in the province. Shenzhen.
• Improve internationalization of education by inviting
several internationally reputed schools to Guangzhou, Equity Investment Incentives
Shenzhen, Zhuhai, Dongguan, Foshan and other cities Private equity (PE) investment has emerged as one of the
to jointly establish higher education institutions. most important capital-raising avenues for small and medium-
• Deepen cooperation with Hong Kong and Macau sized enterprises. Recognizing this, the Shenzhen government
under the CEPA. In finance, efforts will involve build- has become one of several coastal city administrations to offer
ing a hub for financial cooperation to be led by Hong further incentives to equity investment enterprises. The city has
Kong and with PRD cities providing support through established a PE Development Fund (PEDF) and clarified op-
their own financial resources and services. To further eration procedures for PE funds that intend to apply for finan-
enhance services industry cooperation and growth be- cial support from the PEDF. Incentives offered to PE funds in-
tween Hong Kong and Mainland China, the two signed clude: rewards for local financial contributions, office purchase
the Tenth Supplement to the Mainland and Hong Kong and rental subsidies, one-time settlement rewards, and one-time
Closer Economic Partnership Arrangement (CEPA), ef- rewards for investment withdrawal.
fective January 2013.
• Internationalize the province’s economy and optimize E-Commerce Promotion
its structure of FDI utilization. Foreign investment is In September 2009, Shenzhen was approved by China’s
encouraged in the following industries: high-end manu- NDRC and Ministry of Commerce (MOFCOM) to become
facturing, high- and new-technology, modern services, China’s first “e-commerce model city”. In addition to streamlin-
new energy, and energy efficiency and environmental ing registration processes for e-commerce companies, the city has
protection. The key focus will be on attracting investment made other efforts to promote the development of e-commerce.
from Global Fortune 500 companies and leading enter- One example is the building of dedicated industrial parks, such as
prises in various industries, and strengthening coopera- Futian International E-commerce Industrial Park, which opened
tion with developed countries such as the U.S., Japan and in 2009 and houses more than 150 internet and e-commerce
European countries in terms of business, trading, technol- companies.
ogy and culture. Foreign investors are also encouraged to One state-level project being developed in Shenzhen is the
Qianhai Shenzhen-Hong Kong Modern Services Cooperation
54
sion of both product quality and prices in order to bet- establish venture capital enterprises, private equity invest-
ter protect consumer interests. ment funds and invest in enterprises within the province.
• Promote integration of PRD’s economy and improve • Establish proper commercial dispute resolution mech-
its competitiveness. This includes integrating the trans- anisms and improve legal systems to create a fair and
portation systems, infrastructure, urban and rural plan- orderly environment for market competition, condu-
ning, industry layout, environmental protection and cive to the internationalization of the economy.
public services in the region.
• Strengthen environmental protection through increas- The Outline of Guangdong’s 13th Five Year Plan is currently
ing water pollution control, improving air quality and under discussion, but has not yet been released.
improving the standards for safe disposal and treat-
ment of solid waste. Spotlight on Shenzhen Government Innovation
• Promote low-carbon development in the province and Shenzhen’s government has taken the lead on a number of
improve its mechanism for controlling emissions of
greenhouse gases. new initiatives to become the national leader in innovation and
• Optimize the province’s high-efficiency information private enterprise growth. The city has experienced rapid pri-
network system. The Plan aims to achieve the standards vate economic growth, spawning about 450,000 private com-
of a mid-level developed country in terms of IT infra- panies, including international giantssuch as Huawei Technolo-
structure throughout the entire province by 2015. This gies Co Ltd, Tencent Holdings Ltd, China Vanke Co Ltd and
includes reaching an internet penetration rate of 70 per- BYD. Available incentives include a recent VAT and business
cent by 2015. tax exemption policy for small and micro-sized enterprises. The
• Adjust income inequality by expanding the ratio of government has also adopted specific measures in terms of equi-
mid-income residents and raising the minimum wages ty investment incentives, e-commerce promotion and the intro-
in various cities in the PRD to above 40 percent of the duction of electric vehicles. Lastly, as part of a pilot program to
local average salaries by 2015. curb emissions of key pollutants and clean up the environment,
• Improve the social insurance system and medical ser- foreign investors are now permitted to trade carbon permits in
vice standards in the province. Shenzhen.
• Improve internationalization of education by inviting
several internationally reputed schools to Guangzhou, Equity Investment Incentives
Shenzhen, Zhuhai, Dongguan, Foshan and other cities Private equity (PE) investment has emerged as one of the
to jointly establish higher education institutions. most important capital-raising avenues for small and medium-
• Deepen cooperation with Hong Kong and Macau sized enterprises. Recognizing this, the Shenzhen government
under the CEPA. In finance, efforts will involve build- has become one of several coastal city administrations to offer
ing a hub for financial cooperation to be led by Hong further incentives to equity investment enterprises. The city has
Kong and with PRD cities providing support through established a PE Development Fund (PEDF) and clarified op-
their own financial resources and services. To further eration procedures for PE funds that intend to apply for finan-
enhance services industry cooperation and growth be- cial support from the PEDF. Incentives offered to PE funds in-
tween Hong Kong and Mainland China, the two signed clude: rewards for local financial contributions, office purchase
the Tenth Supplement to the Mainland and Hong Kong and rental subsidies, one-time settlement rewards, and one-time
Closer Economic Partnership Arrangement (CEPA), ef- rewards for investment withdrawal.
fective January 2013.
• Internationalize the province’s economy and optimize E-Commerce Promotion
its structure of FDI utilization. Foreign investment is In September 2009, Shenzhen was approved by China’s
encouraged in the following industries: high-end manu- NDRC and Ministry of Commerce (MOFCOM) to become
facturing, high- and new-technology, modern services, China’s first “e-commerce model city”. In addition to streamlin-
new energy, and energy efficiency and environmental ing registration processes for e-commerce companies, the city has
protection. The key focus will be on attracting investment made other efforts to promote the development of e-commerce.
from Global Fortune 500 companies and leading enter- One example is the building of dedicated industrial parks, such as
prises in various industries, and strengthening coopera- Futian International E-commerce Industrial Park, which opened
tion with developed countries such as the U.S., Japan and in 2009 and houses more than 150 internet and e-commerce
European countries in terms of business, trading, technol- companies.
ogy and culture. Foreign investors are also encouraged to One state-level project being developed in Shenzhen is the
Qianhai Shenzhen-Hong Kong Modern Services Cooperation
54
