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6 White Paper on the Business Environment in China
3.7 Macau Special Administrative Region
The Orient’s Las Vegas nues grew by an average of 29 percent a year between 2008 and
2012. Casino revenue increased 31.7% in October year-on-year
A former Portuguese colony situated at the entrance to the to 36.48 billion patacas ($4.6 billion), more than six times the
Pearl River Delta only forty miles from Hong Kong, Macau is revenue of the Las Vegas Strip. However, this over-reliance on
the smaller of China’s two special administrative regions – at the gaming industry has made the Chinese central government
only 1/40th the size of Hong Kong, with approximately half prioritize diversification of the region’s economy.
a million residents (not many more than Luxembourg) and a
total of 33 casinos. The region’s top trade partners are mainland China, Hong
Kong, Japan, the E.U., Taiwan and the United States. The re-
Spotlight on Macau over Time gion’s exports include clothing, textiles, footwear, toys, elec-
Under British rule and with the deep port of Victoria Har- tronics, machinery and parts; while imports include raw materi-
als and semi-manufactured goods, consumer goods (foodstuffs,
bor, Hong Kong quickly gained importance as a major trade beverages, tobacco), capital goods, mineral fuels and oils.
center, overshadowing the commercial importance of Portu-
guese-ruled Macau. The key exception to Hong Kong’s com- Due to Macau’s increasing operational costs, it is no longer
mercial superiority over Macau was during World War II when suited for labor-intensive industries, and accordingly, textile and
Macau experienced brief economic prosperity as the only neu- garment exports are likely to shrink further in years to come. Yet
tral port in South China, after the Japanese occupied Canton the region continues to develop as one of the top gambling and
and Hong Kong. From 1943 to August 1945, Japan created a tourist destinations in the world. Growth areas include finance,
virtual protectorate over Macau, assuming control of its affairs. insurance, construction, real estate and manufacturing. Macau’s
gambling industry still accounts for an estimated 40 percent of
In 1974, the Portuguese government granted independence its GDP.
to all overseas colonies and recognized Macau as part of China’s
territory. The Chinese government did not take over admin- Macau’s currency, the pataca (MOP), is closely tied to the
istration of the territory until February 8, 1979, when China Hong Kong dollar, which is freely accepted in Macau. Hong
acknowledged Macau as a Chinese territory under Portuguese Kong’s links with Macau’s gambling industry are extensive, espe-
administration. cially through three of the six companies with gaming licenses in
Macau: STDM, Galaxy, and Melco. STDM’s gaming subsidiary,
On April 13, 1987, “The Joint Declaration on the Question SJM, and Galaxy are listed on the Hong Kong Stock Exchange, as
of Macau” was signed between China and Portugal to agree that are two other license holders, Wynn Macau and Las Vegas Sands’
Macau would revert to Chinese rule on December 20, 1999 Macau operations.
also under the “One Country, Two Systems” policy. As per the
Hong Kong SAR, the Chinese government promised that the Having surpassed Las Vegas in gambling revenue, the city is
Macau SAR will enjoy a high degree of autonomy in all matters now looking to broaden its economic base by keeping tourists
except foreign and defense affairs for 50 years. in town for longer periods of time. While casino earnings con-
stitute nearly all of Macau’s earnings, in Las Vegas they make
Economy up only about 40 percent of tourist-related revenue, suggesting
that tourists in Macau tend to stay for only a day or two, gam-
As a free port (where goods are received and shipped free of bling and quickly leaving. The region is hoping to change that
customs duties), Macau is best known for its gambling indus- by cashing in on the lucrative convention trade with new ex-
try and is the only place in China where gambling is legal. The hibition centers and significant growth in the number of hotel
majority of the population speaks Cantonese, but Portuguese rooms available.
remains an official language and English is widely used in trade,
tourism and commerce. Since the liberalization of its gaming The first exhibition to take advantage of the added space
sector in 2002, Macau’s economy has expanded rapidly with was Mega Macau, the first-ever trade exhibition of its kind in
significant investment in new hotels, casinos and convention the SAR. Running between the two phases of the Canton Fair
facilities by developers from Hong Kong, Australia, and the in Guangzhou, the event was held in the Venetian Convention
United States. and Exhibition Center (part of the Venetian Macau mega resort
complex and featuring 100,000 square meters of conference
The city now represents the world’s largest gaming capital, and exhibition space, 70,000 square meters of which is dedicat-
having surpassed Las Vegas in 2006. Macau’s gambling reve- ed to exhibitions and can accommodate up to 5,000 booths at
a time).
278
3.7 Macau Special Administrative Region
The Orient’s Las Vegas nues grew by an average of 29 percent a year between 2008 and
2012. Casino revenue increased 31.7% in October year-on-year
A former Portuguese colony situated at the entrance to the to 36.48 billion patacas ($4.6 billion), more than six times the
Pearl River Delta only forty miles from Hong Kong, Macau is revenue of the Las Vegas Strip. However, this over-reliance on
the smaller of China’s two special administrative regions – at the gaming industry has made the Chinese central government
only 1/40th the size of Hong Kong, with approximately half prioritize diversification of the region’s economy.
a million residents (not many more than Luxembourg) and a
total of 33 casinos. The region’s top trade partners are mainland China, Hong
Kong, Japan, the E.U., Taiwan and the United States. The re-
Spotlight on Macau over Time gion’s exports include clothing, textiles, footwear, toys, elec-
Under British rule and with the deep port of Victoria Har- tronics, machinery and parts; while imports include raw materi-
als and semi-manufactured goods, consumer goods (foodstuffs,
bor, Hong Kong quickly gained importance as a major trade beverages, tobacco), capital goods, mineral fuels and oils.
center, overshadowing the commercial importance of Portu-
guese-ruled Macau. The key exception to Hong Kong’s com- Due to Macau’s increasing operational costs, it is no longer
mercial superiority over Macau was during World War II when suited for labor-intensive industries, and accordingly, textile and
Macau experienced brief economic prosperity as the only neu- garment exports are likely to shrink further in years to come. Yet
tral port in South China, after the Japanese occupied Canton the region continues to develop as one of the top gambling and
and Hong Kong. From 1943 to August 1945, Japan created a tourist destinations in the world. Growth areas include finance,
virtual protectorate over Macau, assuming control of its affairs. insurance, construction, real estate and manufacturing. Macau’s
gambling industry still accounts for an estimated 40 percent of
In 1974, the Portuguese government granted independence its GDP.
to all overseas colonies and recognized Macau as part of China’s
territory. The Chinese government did not take over admin- Macau’s currency, the pataca (MOP), is closely tied to the
istration of the territory until February 8, 1979, when China Hong Kong dollar, which is freely accepted in Macau. Hong
acknowledged Macau as a Chinese territory under Portuguese Kong’s links with Macau’s gambling industry are extensive, espe-
administration. cially through three of the six companies with gaming licenses in
Macau: STDM, Galaxy, and Melco. STDM’s gaming subsidiary,
On April 13, 1987, “The Joint Declaration on the Question SJM, and Galaxy are listed on the Hong Kong Stock Exchange, as
of Macau” was signed between China and Portugal to agree that are two other license holders, Wynn Macau and Las Vegas Sands’
Macau would revert to Chinese rule on December 20, 1999 Macau operations.
also under the “One Country, Two Systems” policy. As per the
Hong Kong SAR, the Chinese government promised that the Having surpassed Las Vegas in gambling revenue, the city is
Macau SAR will enjoy a high degree of autonomy in all matters now looking to broaden its economic base by keeping tourists
except foreign and defense affairs for 50 years. in town for longer periods of time. While casino earnings con-
stitute nearly all of Macau’s earnings, in Las Vegas they make
Economy up only about 40 percent of tourist-related revenue, suggesting
that tourists in Macau tend to stay for only a day or two, gam-
As a free port (where goods are received and shipped free of bling and quickly leaving. The region is hoping to change that
customs duties), Macau is best known for its gambling indus- by cashing in on the lucrative convention trade with new ex-
try and is the only place in China where gambling is legal. The hibition centers and significant growth in the number of hotel
majority of the population speaks Cantonese, but Portuguese rooms available.
remains an official language and English is widely used in trade,
tourism and commerce. Since the liberalization of its gaming The first exhibition to take advantage of the added space
sector in 2002, Macau’s economy has expanded rapidly with was Mega Macau, the first-ever trade exhibition of its kind in
significant investment in new hotels, casinos and convention the SAR. Running between the two phases of the Canton Fair
facilities by developers from Hong Kong, Australia, and the in Guangzhou, the event was held in the Venetian Convention
United States. and Exhibition Center (part of the Venetian Macau mega resort
complex and featuring 100,000 square meters of conference
The city now represents the world’s largest gaming capital, and exhibition space, 70,000 square meters of which is dedicat-
having surpassed Las Vegas in 2006. Macau’s gambling reve- ed to exhibitions and can accommodate up to 5,000 booths at
a time).
278
