The results were presented during an online session of the third meeting of the Expert Council of the Russian-Asian Union of Industrialists and Entrepreneurs (RASPP). RASPP President Vitaly Mankevich noted that the development of non-resource, non-energy exports requires investment expansion: M&A deals and the development of contract manufacturing, because otherwise high production costs hinder business growth. The Asian region and China are key markets for Russian food, cosmetics, and other non-resource products, so we decided to compile the first ranking of Chinese regions for their attractiveness to Russian companies.
How Was the Ranking Calculated?
The study was based on a unique methodology covering 39 different indicators reflecting the level of economic development in the provinces analyzed, its dynamics, the current scale and depth of interaction with Russia, the development of financial infrastructure, taxation conditions, and level of social development. The most significant group of factors was related to the dynamism of business relations with Russia, including the presence of offices of large Russian companies, subsidies for Russian exhibitors at trade fairs, costs of opening offices, the presence of special economic zones involved in cooperation with Russia, major bilateral investment projects, and the presence of Russian companies on provincial stock exchanges. The analysis was based on 2019 indicators, with results to be updated in Q2 2020 using 2020 data.
Results
How Was the Ranking Calculated?
The study was based on a unique methodology covering 39 different indicators reflecting the level of economic development in the provinces analyzed, its dynamics, the current scale and depth of interaction with Russia, the development of financial infrastructure, taxation conditions, and level of social development. The most significant group of factors was related to the dynamism of business relations with Russia, including the presence of offices of large Russian companies, subsidies for Russian exhibitors at trade fairs, costs of opening offices, the presence of special economic zones involved in cooperation with Russia, major bilateral investment projects, and the presence of Russian companies on provincial stock exchanges. The analysis was based on 2019 indicators, with results to be updated in Q2 2020 using 2020 data.
Results
According to the results of the study, Hong Kong took first place with a score of 128.42 points. Next in the ranking was Guangdong Province, with 116.16 points, and the centrally administered city of Shanghai completed the top three with 104.85 points. Beijing, Zhejiang, Jiangsu, Shandong, Heilongjiang, Anhui, and Fujian also made the top ten in descending order.
Hong Kong's leading position is due to many factors: a high level of economic development and consumer spending, its status as a financial center, a special tax system, and numerous exhibition subsidies. In addition, many Russian companies operate in Hong Kong, such as VEB, Alrosa, Aeroflot, and S7. Nevertheless, the cost of opening a representative office in Hong Kong is the highest, which limits opportunities for small and medium-sized enterprises.
According to Vitaly Mankevich, the main factors for Hong Kong's business attractiveness are its residents' high purchasing power, the region's well-developed online retail platforms (including HKTVMall), abundance of international exhibitions, convenience of company headquarters placement thanks to its status as a financial center, an advantageous tax system, and the availability of credit (including for high-risk projects) thanks to the Hong Kong Stock Exchange and the presence of investment fund offices. The program for subsidizing Russian exhibitors’ participation at certain Hong Kong trade fairs is particularly noteworthy.
Guangdong Province earned second place thanks to its high gross regional product (GRP), which, based on 2020 data, has surpassed that of Russia. Furthermore, Russian entrepreneurs are eager participants in the Canton Fair, the largest trade show in China. Before the pandemic, over 7,000 Russian business representatives consistently attended the fair, and during the lockdown, even more Russian participants joined the online sessions.
Hong Kong's leading position is due to many factors: a high level of economic development and consumer spending, its status as a financial center, a special tax system, and numerous exhibition subsidies. In addition, many Russian companies operate in Hong Kong, such as VEB, Alrosa, Aeroflot, and S7. Nevertheless, the cost of opening a representative office in Hong Kong is the highest, which limits opportunities for small and medium-sized enterprises.
According to Vitaly Mankevich, the main factors for Hong Kong's business attractiveness are its residents' high purchasing power, the region's well-developed online retail platforms (including HKTVMall), abundance of international exhibitions, convenience of company headquarters placement thanks to its status as a financial center, an advantageous tax system, and the availability of credit (including for high-risk projects) thanks to the Hong Kong Stock Exchange and the presence of investment fund offices. The program for subsidizing Russian exhibitors’ participation at certain Hong Kong trade fairs is particularly noteworthy.
Guangdong Province earned second place thanks to its high gross regional product (GRP), which, based on 2020 data, has surpassed that of Russia. Furthermore, Russian entrepreneurs are eager participants in the Canton Fair, the largest trade show in China. Before the pandemic, over 7,000 Russian business representatives consistently attended the fair, and during the lockdown, even more Russian participants joined the online sessions.
It should be noted once again that the positions of the provinces in the ranking depended primarily on the level and dynamics of economic and social development. That is why the provinces of Anhui and Heilongjiang ranked higher than their current economic potential would suggest, due to the implementation of special political programs and Russian-Chinese cooperation projects. For example, Anhui is a leader among Chinese provinces participating in the Volga-Yangtze project, while Heilongjiang has special economic zones on the border with Russia aimed exclusively at trade with Russia.
The ranking is rounded out by the Tibet Autonomous Region, Jiangxi Province, Ningxia Hui Autonomous Region, Qinghai Province, Yunnan Province, and Hainan Province.
About RASPP
The ranking is rounded out by the Tibet Autonomous Region, Jiangxi Province, Ningxia Hui Autonomous Region, Qinghai Province, Yunnan Province, and Hainan Province.
About RASPP
he Russian-Asian Union of Industrialists and Entrepreneurs (RASPP) is a public organization implementing government cooperation programs aimed at strengthening collaboration between public and business associations in Russia and Asian countries.
One of RASPP’s key objectives is to support the business communities of Russia and Asia in developing and strengthening multilateral relations, as well as attracting investment into the Russian Federation. Over 10 years of activity, RASPP has attracted more than $800 billion in direct foreign investment to Russia and increased trade turnover by more than $1 billion.
RASPP specializes in business solutions for import, export, investment attraction, and implementation of investment projects in Asian countries, as well as organizing business events and missions in these areas. RASPP also provides assistance in finding industrial equipment in China free of charge.
Advantages:
One of RASPP’s key objectives is to support the business communities of Russia and Asia in developing and strengthening multilateral relations, as well as attracting investment into the Russian Federation. Over 10 years of activity, RASPP has attracted more than $800 billion in direct foreign investment to Russia and increased trade turnover by more than $1 billion.
RASPP specializes in business solutions for import, export, investment attraction, and implementation of investment projects in Asian countries, as well as organizing business events and missions in these areas. RASPP also provides assistance in finding industrial equipment in China free of charge.
Advantages:
- Over 10 years of experience
- Russian-speaking specialists in China
- Turnkey supply organization