EY forum discovers potential of data,finance,ESG interconnection

September 07, 2022 06:00

EY Synergize GBA Forum discovers the potential of data, finance and ESG interconnection

The Guangdong-Hong Kong-Macao Greater Bay Area (GBA) is one of China’s major economic development strategies. As a member city and armed with the “one country, two systems” advantage, Hong Kong plays a vital role in the GBA’s development.

EY, along with Invest Hong Kong and Shenzhen Foundation for International Exchange and Cooperation (SFIEC) jointly organized the EY Synergize GBA Forum earlier. Themed “Igniting GBA opportunities through embracing resilience", the Forum shared the latest trends and insights on the GBA’s development, how Hong Kong can continue to leverage on its advantages, strive for excellence and achievements, and strengthen the development momentum of the regional economy.

(From left to right) Mr. Stephen Phillips, Director-General of Investment Promotion, Invest Hong Kong, the Government of the Hong Kong Special Administrative Region; Ms. Agnes Chan, EY Greater China Region Senior Advisor to Chairman Office; Mr. Michael Wong, Deputy Financial Secretary, the Government of the Hong Kong Special Administrative Region; Ms. Jasmine Lee, EY Hong Kong and Macau Managing Partner; Mr. William Huang, EY China South Managing Partner; Mr. Huang Xiaopeng, Deputy Secretary of CPC Work Committee of Qianhai Cooperation Zone, First Deputy Director-general of Qianhai Authority; Mr. Jack Chan, EY China Chairman and Greater China Regional Managing Partner; Mr. Jiang Likun, Director General of the Leading Group Office for Development of Guangdong-Hong Kong-Macao Greater Bay Area of CPC Shenzhen Municipal Committee (Hong Kong & Macao Affairs Office of Shenzhen Municipal People’s Government) and Ms. Grace Li, Secretary General, Shenzhen Foundation for International Exchange and Cooperation.

 

As one of the world’s leading providers of professional services in assurance, consulting, tax, strategy and transactions, EY will soon be entering its 55th year of serving Greater China. In addition to constantly publishing “Insights” reports that cover a range of industries and sharing professional experiences, knowledge and skills, EY teams have been, through organizing forums, promoting the interconnection of professional talent and resources to offer clients high-quality services that bring together global perspectives and solutions addressing local GBA development needs.

This is the second year in a row for EY to organize the Synergize GBA Forum, which is also an event for the celebration of the 25th anniversary of the establishment of the Hong Kong Special Administrative Region (HKSAR).

The Forum has invited Jiang Likun, Director General of the Leading Group Office for Development of Guangdong-Hong Kong-Macao Greater Bay Area of CPC Shenzhen Municipal Committee (Hong Kong & Macao Affairs Office of Shenzhen Municipal People’s Government); Huang Xiaopeng, Deputy Secretary of CPC Work Committee of Qianhai Cooperation Zone, First Deputy Director-general of Qianhai Authority; Michael Wong, Deputy Financial Secretary, HKSAR Government; Stephen Phillips, Director-General of Investment Promotion, Invest Hong Kong, HKSAR Government and representatives from numerous GBA research institutes, academies and corporates to discuss the development opportunities and prospects in the GBA, specifically in areas including finance, technology, health industry, infrastructure, talent and ESG.

Striving to realize connectivity across the GBA

Jack Chan, EY China Chairman and Greater China Regional Managing Partner said that EY is honored to co-organize the Forum with Invest Hong Kong and SFIEC, and receive the support from more than ten professional organizations to exchange ideas on how the GBA can seize the opportunities in an era of accelerating adjustment of the global economy and industries, as well as channeling more resources for innovation, advanced concepts and ideas into the GBA to empower the region’s high quality development. Chan is confident that this year’s Forum will spark more new ideas and uncover greater development opportunities.

Chan added that the GBA’s development is a major national strategy which serves as an important stronghold for building a new development paradigm. Particularly since the release of the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area, the overall strength of the GBA has been markedly enhanced, the cooperation among Guangdong, Hong Kong and Macau has deepened, making the GBA one of the most open and economically powerful regions in the country.

2022 is a crucial year for the 14th five-year plan, and it’s also the 25th anniversary of Hong Kong’s return to the motherland. The eleven GBA cities will jointly develop an integrated, high-standard system to open up to the outside world and explore new growth drivers.

This year also marks the 55th anniversary of the EY Greater China Region. For over half a century, EY has always been following national development strategies, addressing the needs of the society and the government, creating long term value for the society and endeavoring to build itself into a professional organization.

Since the implementation of the GBA plan, EY has strategically positioned for the development of the region, set up the EY Greater Bay Area Center of Excellence, increased investments into six major areas, and strengthened EY’s servicing capabilities across Guangdong, Hong Kong and Macau to deliver smart solutions to help promote the interconnection across the GBA and support a new paradigm that embraces inclusiveness and synergetic development.

EY has long been promoting innovation in the GBA and has signed a memorandum of cooperation with Guangzhou Emissions Exchange. EY also joined hands with Qianhai International Talent Hub to offer a 2022 senior management training course, in order to cultivate GBA talent together.

Participating in GBA’s development in multiple aspects

Keynote speaker Deputy Financial Secretary Michael Wong shared Hong Kong’s measures and experiences on participation in the GBA’s development. Referring to President Xi’s speech in Hong Kong during his visit on July 1, who urged Hong Kong to keep creating strong impetus for growth, and pointed out in particular that Hong Kong should stick to national strategies including the “14th five-year plan”, GBA development and “One Belt One Road”, Wong said the HKSAR Government is fully aware that to capitalize on national development opportunities, Hong Kong must proactively draw on its strengths and join forces with Shenzhen and other GBA cities to cultivate the international market, deepen Hong Kong’s role in attracting foreign investment and going global, further integrate into China’s overall development and make contributions to the country.

Wong said first of all, in the area of new technology, Hong Kong has achieved remarkable results in fundamental research, but to put those research findings into application, Hong Kong still has a lot to do. In this aspect, Shenzhen has done a very good job, the two cities can form a strong alliance.

Apart from cooperating in the Loop, when planning the Northern Metropolis, the government has set aside land at San Tin next to the Loop, forming a combined area of more than 100 hectares, which is 16.5 times the current size of the Science Park, the government is therefore very optimistic about technology development in Hong Kong.

Wong further elaborated on the current status of Hong Kong’s involvement in the GBA’s development in finance, infrastructure, aviation service, shipping, professional service and trade and investment. Taking note of President Xi’s emphasis in his July 1 speech that “Hong Kong's close connection with the world market and strong support from the motherland are its distinctive advantages,” Wong said the HKSAR Government will endeavor to consolidate and give full play to such advantages, and continue to implement measures conducive to the GBA’s development. Wong said he hopes everyone can get prepared to capture the huge opportunities offered by the GBA and create prosperity together.

William Huang, EY China South Managing Partner, shared in the Forum that, the GBA is the only city cluster characterized by “one country, two systems, three customs territories, three currencies, three legal systems and four core cities”. Under China’s new development pattern, the GBA should make use of such institutional advantages and lead the country toward a higher level of opening-up and higher quality development. Guangdong, Hong Kong and Macau should further integrate and align the systems and regulations to accelerate regional market integration.

Meanwhile, the governments, academies and corporates should work together to build a talent system embodying both international perspective and local experience and create more favorable conditions to enable the free flow of talent across Guangdong, Hong Kong and Macau.

As an active supporter and participant in the development of the GBA, EY teams will particularly leverage on the GBA’s advantages in technological innovation, finance and green development, and work with cities and corporate clients in the GBA to realize together the vision of a GBA new era.

Regarding how the business community can contribute to a better GBA tomorrow, Jasmine Lee, EY Hong Kong and Macau Managing Partner gave four recommendations. Firstly, to embark on cooperation in the development of the GBA in full force. Secondly, to embrace changes and challenges, and gather new momentum amid uncertainty. Thirdly, to engage. Particularly for corporates investing in the GBA, they should closely monitor the industry trend and at the same time consolidate internal strengths to help promote high quality overall development in the GBA. Lastly, to share experiences. Not only can we learn from each others’ experiences, such sharing is often very inspiring too. This is also the intention of the Forum.

She also said that looking forward, with more precise regional strategic planning, streamlined policy coordination and optimized industry distribution, EY believes that cities inside the GBA will definitely be able to capitalize on their own strengths while also becoming more complementary to one another. By accelerating the overall integration of the region and combining the strengths of all member cities, the GBA will become a significant driver for the country’s dual circulation development paradigm.

Data speeds up industrial upgrade; new business opportunities in cross-boundary data flows

GBA has witnessed the flourishing of smart manufacturing and the region is also becoming increasingly important in some of the international exhibitions.

At the fireside chat “Data empowerment-opportunities and challenges of digital economy and industrial upgrade in Greater Bay Area”, Zhang Xiao-Ping, Chair Professor, Data Science and Information Technology at Shenzhen International Graduate School of Tsinghua University and Tsinghua-Berkeley Shenzhen Institute pointed out that compared with other bay areas in the world, the GBA is distinctively young. The GBA can therefore take advantage of this to exploit all the possibilities and ample room for planning, and develop a complete system and ecological environment to attract talent.

On using data to drive industrial upgrade, Zhang believes that, since the cost of research and development is high for individual small and medium enterprises (SMEs), industrial upgrade must start from the perspective of the overall industry, integrate digital standards and capabilities, and build a complete set of solutions through data empowerment. Currently, data security typically relies on legal protection, Zhang and his team is conducting a research study on how to balance data usage and privacy protection using secure computation technology.

Photo caption: Ms. Grace Li,Secretary General, Shenzhen Foundation for International Exchange and Cooperation (left) and Dr. Zhang Xiao-Ping, Chair Professor, Data Science and Information Technology, Shenzhen International Graduate School of Tsinghua University and Tsinghua-Berkeley Shenzhen Institute at the fireside chat “Data empowerment-opportunities and challenges of digital economy and industrial upgrade in Greater Bay Area”.

 

At another fireside chat “New business opportunities empowered | Cross-boundary data going live in GBA and beyond”, King Leung, Head of Fintech, Invest Hong Kong, and Samuel Ho, Chief Executive Officer at Nova Credit Limited discussed about the actual situation of cross boundary data flows and how to operate legally.

Samuel Ho began working with the mainland two to three years ago to build up a mutual recognition information platform, and it’s already in operation. He has also built platforms with mainland partners that facilitate information flows. Presently, the focus is on helping banks to use related information to facilitate remote account opening and other services. In the future, such verification technology can also be adopted by insurance companies and securities firms etc. to confirm whether information provided by the applicants is true. The HKSAR Government very much encourages Hong Kong people to live in the GBA, such verification technology can help solve their daily life problems.

Photo: Mr. King Leung, Head of Fintech, Invest Hong Kong, the HKSAR Government (left) and Mr. Samuel Ho, Chief Executive Officer at Nova Credit Limited at fireside chat “New business opportunities empowered | Cross-boundary data going live in GBA and beyond”.

 

Fostering the development of the GBA-Finance and ESG go hand in hand

In a panel discussion session, Judy Li, EY Greater China Financial Services Sustainability Services Partner, and Jeff Tang, EY Greater China & ASEAN Financial Services People Advisory Services Partner, talked about green finance with the guests.

Photo: (From left to right) Ms. Judy Li, EY Greater China Financial Services Sustainability Services Partner; Ms. Meng Meng, General Manager, Guangzhou Emissions Exchange Co., Ltd.; Ms. Joy Gao, Deputy Secretary General, Shenzhen Supply Chain Finance Association; Mr. Jeff Tang, EY Greater China & ASEAN Financial Services People Advisory Services Partner,; Mr. Eddie Wu, Senior Director–Strategy, Portfolio Management and Partnership of CLPe and Mr. Arnold Chow, Deputy General Manager, Personal Digital Banking Product Department, Bank of China (Hong Kong) joined the panel discussion “Driving GBA development - ESG and sustainable finance”.

 

Meng Meng, General Manager, Guangzhou Emissions Exchange started off the discussion session by sharing that the proportion of coal in the GBA’s energy mix is around 30%, rather low compared with the national average of 60%. But compared with the 20% level of renowned bay areas overseas, the GBA’s level is still on the high side. In respect of carbon emission intensity, the GBA is about 0.4, relatively high compared to 0.2 of other bay areas. Therefore the GBA still has certain room for improvement in green development.

Arnold Chow, Deputy General Manager, Personal Digital Banking Product Department, Bank of China (Hong Kong) believes that the future development of ESG will become much broader in the GBA. He noted that the 14th five-year plan has put a lot of emphasis on the promotion of green development. Every corporate has a chance to get involved in ESG in the future, especially in financing, fund raising and investing. As an international financial hub, Hong Kong has an advantage in platform, services, products, innovation and experience to drive the development of green finance.

Joy Gao, Deputy Secretary General, Shenzhen Supply Chain Finance Association mentioned that the SMEs have always been faced with difficulties of obtaining financing, but their understanding is typically confined to traditional financing, and have limited knowledge about supply chain finance. If green finance is included, then there is even more to be digested. The need for common language and a platform to link up everything is one of the major pain points of green finance development.

Adding to Gao’s point, Meng said that the GBA involves two social systems and three customs territories, and the pace of development of member cities vary, which is why the path to low- carbon development has been relatively complex. Yet, such complexity could lead to a greater diversity of application scenarios for green finance. Meng is convinced there will be a vibrant future for the development of green finance in the GBA.

Analyzing from the energy perspective, Eddie Wu, Senior Director – Strategy, Portfolio Management and Partnership, CLPe said that it takes a huge amount of capital for energy infrastructure investment, green finance is therefore a critical tool. By using differentiated financing terms to encourage corporates to switch from traditional energy to renewable energy, and lower the cost of low-carbon energy at the same time, more low-carbon projects can be supported and launched.

Developing the health industry ecosystem in the GBA: Landscape, innovation and corporate strategy

Apart from green finance, the Forum also explored the topic of building an ecosystem for the health industry in the GBA. Susanna Feng, EY China South Assurance Partner, and Chris Chan, EY Strategy and Transactions Partner, together with the guests provided some ideas for the integration and innovation of the GBA.

Han Zhongxue, Researcher of Chinese Academy of Sciences Professor of Economics and Finance, College of Management, Shenzhen University, said that the health industry is a broad term, which covers a number of industrial chains, including medicine (Western medicine, biopharmaceuticals, Chinese herbal medicine, proprietary Chinese medicine), medical equipment, medical supplies, among others. Currently, the production value of the health industry in the GBA is only about 36.2 billion renminbi, or 1% of the GBA’s GDP (3 trillion renminbi), indicating that the room for growth is unlimited.

Leslie Lu, Executive Director and Co-CEO, EC Healthcare also shared his observations of the health industry development in the GBA. For starters, the market is faced with immense challenge from inflation, but rigid demand for medical care keeps growing. Secondly, it can be foreseen that when the border opens, there would be more frequent cross-boundary exchange of personnel, Hong Kong people would spend more time in the GBA, and they would want to have access to medical-care services up to Hong Kong’s standard. Adding similar demand from mainland citizens for this kind of quality health care, there is huge room for expansion. Finally, the central and regional governments have put tremendous effort into integrating different healthcare segments, which would be beneficial to the development of the industry.

Xu Qian, Deputy General Manager, Board Secretary, General Counsel, BGI Genomics Co., Ltd. noted that in addition to its core business, BGI also invests in different companies in the upstream and downstream of the industry, facilitating cooperation along the whole value chain to advance the development of health industry ecosystem in the GBA.

From an investment point of view, David Wang, Executive Director, Greater Bay Area Development Fund Management Limited, provided his take on the health industry. The past five years have been the golden period of the development of China’s health industry, Wang pointed out. Consequently, health industry has become a main investment direction for funds. From the second half of 2020 to the first half of 2021, the amount of related financing in the domestic market reached a peak level. Wang believes the sentiment of the capital market is likely to stay positive in the second half of 2022. Concerning the outlook for China’s overall healthcare picture, it is believed that as the pace of population ageing accelerates, cancer incidences will increase, investors are expected to put the focus on pan-cancer diagnoses that offer stability and reasonable prices, which is also in line with the policy direction.

Photo: (from left to right) Ms. Susanna Feng, EY China South Assurance Partner; Dr. Han Zhongxue, Researcher of Chinese Academy of Sciences Professor of Economics and Finance, College of Management, Shenzhen University; Ms. Xu Qian, Deputy General Manager, Board Secretary, General Counsel, BGI Genomics Co., Ltd.; Mr. Chris Chan, EY Strategy and Transactions Partner; Mr. David Wang, Executive Director, Greater Bay Area Development Fund Management Limited and Mr. Leslie Lu, Executive Director and Co-CEO, EC Healthcare joined the panel discussion “Developing the health industry ecosystem in the GBA: landscape, innovation and entrepreneurship”.

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