The BGEZ: A Springboard for Zhejiang Merchants to ASEAN

written by Li Min，Chen Libing / translated by Ma Jinyu

The BGEZ: A Springboard for Zhejiang Merchants to ASEAN

written by Li Min，Chen Libing / translated by Ma Jinyu

From the upgraded version of the China-ASEAN Free Trade Area (CAFTA), to a new strategic pivot for opening-up and development in southwest China and central south China and to a new gateway and pivot for building the 21st Century “Maritime Silk Road”, Guangxi Beibu Gulf Economic Zone (BGEZ) is a place that enjoys multiple preferential policies. Under the new development strategies, it ushered in a new round of development. Backed by the market, the BGEZ grasps the opportunity and takes concrete actions to go global.

Zhejiang is a major province for private economy in Chinese market. With keen insights on marketing, its merchants have set up a good model and foundation for doing business in Guangxi. Therefore, BGEZ led a delegation to Zhejiang to seek cooperation in the end of 2014, which is the need of development and the choice selected by market.

Cooperation Comes at the Right Time

It has a long history for Zhejiang merchants to do business in Guangxi. According to Li Yanqiang, Executive Deputy Director of Beibu Gulf Economic Zone & Cooperation with ASEAN Office of Guangxi Zhuang Autonomous Region, the year 2000 was the first climax for Zhejiang merchants to do business in Guangxi when China's Western Development Strategy was implemented. During the period from 2001 to 2004, 304 projects in bilateral economic and trade cooperation were inked by Guangxi and Zhejiang, with a total investment of 11.3 billion yuan and 10.6 billion yuan introduced from Zhejiang. As the completion of the CAFTA, Zhejiang merchants quickened their pace, signed strategic framework agreements with Guangxi and became active in such fields as e-commerce and processing trade. In the three years between 2012 and 2014, Zhejiang merchants in Guangxi signed 1,041 projects, with a total investment of 132.5 billion yuan.

Based on the sound foundation, bilateralinvestment and cooperation enjoy new opportunities like the upgraded version of the CAFTA and the building of the 21st Century “Maritime Silk Road”.

The BGEZ, as the gateway of development of Guangxi, has outstanding advantages in location, policies, resources and opening-up.

Firstly, Guangxi is the only region linked by land and sea with ASEAN in China. Being the forefront and bridge to ASEAN, the BGEZ has geographical advantages of neighboring sea, border and river. Secondly, it is a place that enjoys multiple preferential policies. Under the new situation of developing “One Belt and One Road”, preferential policies help BGEZ’s investment conditions become more relaxed. Thirdly, the six cities within the BGEZ have abundant resources and large space for coastal line construction and land development. Finally, the BGEZ is the front door of China to link ASEAN market and a great platform for enterprises to grow stronger and enter the markets of ASEAN and Southwest China.

China announced that it would commit $40 billion to the establishment of a Silk Road Fund and provide a financing platform for countries along the “One Belt and One Road”, which may benefit the connectivity construction between ASEAN countries. The BGEZ, an ASEAN-oriented pioneer, will highlight its geographical advantage during the connectivity boom of getting through the China-ASEAN channel both on land and sea. In the end of 2014, the completion of high-speed rails between Shanghai and Kunming, Hunan and Guangxi as well as Nanning and Guilin provide Zhejiang merchants more choices to Guangxi. 10 hours’ journey, less than 3 hours’ voyage and 1 second’s network connection bring Zhejiang and Guangxi closer to each other like neighbors and offer Zhejiang merchants an easier access to ASEAN.

Meanwhile, Zhejiang merchants have solid financial base, excellent talents and advanced management experience. Their cooperation with Guangxi and ASEAN will achieve winwin results and optimal allocation of capital and resources on the basis of complementary advantages.

In 2014, BGEZ and the National Council for Zhejiang Entrepreneurs formally signed the strategic cooperation framework agreement in the 2014 (7th) Zhejiang Entrepreneurs Annual Meeting & CAFTA (Beibu Gulf) Investment Opportunity Forum, which marks that a new round of investing in BGEZ by Zhejiang merchants is kicked off.

Respective Advantages Complement Each Other

“Zhejiang and ASEAN are highly complementary in economic structure, showing different characteristics in resources structure, industrial structure and traded goods”, said Zhang Handong, Director of Zhejiang International Economic and Trade Research Center. After the completion of CAFTA, most of export commodities of Zhejiang like light textiles, mechanical and electrical products, can enter ASEAN market with zero-tariff treatment. He added, “Zhejiang has advantages in textiles, clothing, shoes, food, grains, building materials, and electrical and chemical products, while ASEAN enjoys advantages in resource products, such as logs, oil, gas, coal and natural rubber and so on. The profits would be directly increased if Zhejiang enterprises could take full advantage of the Place of Origin of CAFTA and enjoy preferential tariff treatment.”

At present, the ASEAN countries are actively promoting connectivity construction, and making every effort to carry out infrastructure construction, bringing a great demand for construction materials and hardware, etc. So, Zhejiang merchants could export their superior products to those countries that favor products “made in Zhejiang”.

“Chinese enterprises enjoy advantages in fields including mechanical and electrical products exporting, traditional laborintensive industries transfer, import-driven FDI, infrastructure, as well as other related industries when investing in the ASEAN markets”, said Mei Xinyu, researcher from the Chinese Academy of International Trade and Economic Cooperation, at the 2014 (7th) Zhejiang Entrepreneurs Annual Meeting & CAFTA (Beibu Gulf) Investment Opportunity Forum.

No Difficulty is Insurmountable if One Sets One's Mind on It

The cooperation should come at the right time to meet the supply and demand of two sides. To make it come true, “sincerity”is required for both merchants of Guangxi and Zhejiang.

To be sincere. Honesty and credibility are important principles in the market. During the investment cooperation, the government should conform to the spirit of contract and fulfill its commitments, and the investors should negotiate with real projects and sincere attitude. Both sides will achieve win-win cooperation on the basis of reciprocity and mutual trust.

To make on-the-spot investigations. With China's reform and opening up as well as the golden decade of China-ASEAN cooperation, Guangxi's economic and social development is advancing rapidly and the investment environment in BGEZ also takes a brand-new look. Seeing is believing. On-the-spot investigations are vital when investing in BGEZ and exploring the potentials of ASEAN market.

Huang Hanfeng, Deputy Director of Guangxi Nanning Municipal Development & Reform Commission said, “Compared to other coastal regions, the BGEZ has low cost in employment and enjoys demographic dividends. In the aspect of policies, the establishment of a set of effectual system mechanisms, the reduction of administrative fees, the cancellation and devolution of administrative permission have greatly improved the efficiency.” The investors will get the most intuitive sense when assessing development potential and resource advantages during on-the-spot investigations and experiencing service quality at government office.

To do practical work. Investors will consider some realistic problems like incomplete talent structure and supporting services in BGEZ. The construction of the BGEZ cannot be completed overnight. Development brings both challenge and opportunity.

Wang Xiongchang, Deputy Director of Beibu Gulf Economic Zone & Cooperation with ASEAN Office of Guangxi Zhuang Autonomous Region claimed, the government allocates funds and grants rewards and subsidies to introduce talents vigorously. Mr. Wang expected that enterprises bring both capital investment and talent resources to the BGEZ. “The supporting service in some development zones lags behind the fast economic growth of BGEZ, which remains huge business opportunities for numerous Zhejiang merchants”, he said.

Currently, China-Malaysia Qinzhou Industrial Park, Qinzhou Free Trade Port Area and Pingxiang Integrated Free Trade Zone have been completed in the BGEZ. pilot area for Dongxing development and opening-up, pilot area for border financial reform, China-Vietnam cross-border economic cooperation zone and pilot area for Beibu Gulf free trade are being built in full swing. A virgin fertile land is awaiting the cultivation of investors.

The market favors visionaries who are courageous and insightful. Based on sincere cooperation, it is believed that the BGEZ will take a new step and get closer to the dream.