Topics in this section: - 5G suppliers, handset makers to lead south China revenue growth - Guangdong ICT revenue may grow at least 15% a year - Guangdong's investment in technology tops China's - Shenzhen to attract more tech talent with tax breaks
These analyses are by Bloomberg Intelligence senior analyst Francis Chan and contributing analyst Charles Shum.
Huawei, Oppo and other information communication technology companies' revenue growth should outpace other industries in China's Greater Bay Area, driven by large national investments in technology such as 5G networks and provincial incentives to attract more talent immigration.
Guangdong ICT revenue may grow at least 15% a year
Revenue at Guangdong information communication technology (ICT) companies such as Huawei, Foxconn Industrial Internet, may grow at least 15% a year through 2023 we believe, leading sectoral growth in the province, as China accelerates 5G network construction. Provincial incentives including cutting taxes on high-tech enterprises to 15% from 25% and subsidies aim to attract over 450 billion yuan ($65 billion) of new investment to its high-tech industries in the same period.
Guangdong is China's largest production hub for mobile phones, accounting for 45% of country's total output in 2018. It's also the third largest chipset manufacturing base, producing more than 17% of China's total, and has well-established supply chains for mobile phones and 5G network equipment.
Guangdong's investment in technology tops China's
Guangdong's total research spending could double to 468 billion yuan ($68 billion) by the end of 2022 from 2017 levels if its 15% growth rate for 2017 is maintained, supporting our revenue growth estimate for the province's high-tech industry. Guangdong's proportion of spending on research and development, mostly in communication technology, exceeded China's national level in 2016 and 2017 and grew from 11-15% in 2014-17, surpassing the national average of 10-12%. Of the top 1,000 Chinese companies with most technology development capability, 19% are located in Guangdong, followed by 15.8% in Beijing, and 10.6% in Shanghai.
Shenzhen to attract more tech talent with tax breaks
This analysis is by Bloomberg Intelligence senior analyst Francis Chan and contributing analysts Anthea Lai and Sin Yee Cindy Lam.
Shenzhen will probably attract more tech professionals in the next 5 years after China offered tax breaks to top foreign talent in January to lure them amid an escalating trade war with the United States. Shenzhen is also extending favorable tax benefits to local talent in the city, announcing a slashing of personal income tax to 15% from 45%. Details have not been disclosed. Technology companies who already have R&D bases in Shenzhen, such as Huawei and ZTE, will likely be the biggest beneficiaries.
Huawei invests heavily in research with R&D employees representing 45% of its total workforce in the past 5 years.