his article forms part of a joint study conducted by HKTDC Research and UOB: “GBA Supply Chain Diversity: Enhancing Connectivity Among ASEAN, Hong Kong and Mainland China”.

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Driving supply chain diversification, expanding into new markets – especially the much‑coveted ASEAN region – and practising green and sustainable development have essentially become the consensus among many of the enterprises participating in the 2024 survey. In many ways, all of these topics can be seen as interrelated and complementary. Following on from the 2023 survey studies [1] of the latter two topics, HKTDC Research and UOB Hong Kong worked together again in the third quarter of 2024 to track the green and sustainable development process of Greater Bay Area (GBA) enterprises, as well as their investment intentions. They also examined how GBA enterprises, against a backdrop of establishing diversified supply chains domestically and overseas, are adjusting their business strategies, as well as their trading and investment interactions with ASEAN countries.

For the current study, a questionnaire survey of 600 enterprises in Hong Kong and five mainland GBA cities (Guangzhou, Shenzhen, Foshan, Dongguan and Zhongshan) was conducted. For comprehensive analysis purposes, the survey findings were compared with the results of two studies conducted in 2023: Navigating Connectivity – Exploring ASEAN Opportunities for the Greater Bay Area [2] and Sustainability in the GBA: Unlocking Opportunities and Empowering Growth [3].

ASEAN the Number One Choice for Strengthening Overseas Supply Chains

More than 90% of the surveyed GBA enterprises are undertaking or have completed their supply chain strengthening, restructuring and diversification initiatives. Even those enterprises that have not yet commenced such a programme are expected to implement related plans in the next two years. In line with this, strengthening and diversifying supply chains can be seen as a common priority for many enterprises.

Overall, in terms of strengthening and restructuring supply chains, sourcing (87%) was the area that most enterprises intended to restructure, followed by transportation (82%) and production (82%).

The fact that enterprises are driving supply chain strengthening and diversification does not necessarily mean that production capacity will be relocated overseas. The mainland (outside of the GBA) is the most important location for GBA enterprises looking to strengthen their supply chains. Overall, the surveyed enterprises have a very positive view of GBA supply chains, with the majority of respondents (60%) agreeing that GBA supply chains have a high level of innovation, with a wealth of smart, digital solutions and highend technology, as well as a substantial supply of logistics services solutions targeting nonASEAN overseas countries (52%). In terms of overseas markets, ASEAN is the most important choice for GBA enterprises.

Production or Sourcing Activities in ASEAN Will Increase Sharply Within Three Years

The results of the survey indicate that, in the next three years, the production/sourcing activities of GBA enterprises will increase sharply. In line with this, 84% of the surveyed enterprises plan to maintain or expand their production/sourcing operations in the ASEAN region, representing an increase of more than 50 percentage points from the 31% recorded for 2023. It was also apparent that, despite the majority of GBA enterprises carrying out or having completed their supply chain restructuring, strengthening the resilience of overseas supply chains will remain the top priority in the coming years.

The results of the 2023 survey indicated that GBA enterprises generally saw expanding into the ASEAN market as their business priority for the next three years. From the current survey, GBA enterprises are still actively expanding into ASEAN as a sales market, with 73% of surveyed enterprises saying they will maintain or expand their current market sales activities. This, however, is a decrease of 12 percentage points compared to the 85% recorded for 2023.

GBA Enterprises Consider a Positive China-ASEAN Partnership to Be Essential

In the 2024 study, the surveyed GBA enterprises placed an increased emphasis on partnerships, while also valuing the synergies derived from regional economic agreements such as the Regional Comprehensive Economic Partnership (RCEP) and the Belt and Road Initiative(BRI). The survey also saw strong trade ties between China and ASEAN (39%) ranked as one of ASEAN’s most compelling qualities, followed by trade and investment deals between the ASEAN countries and major markets other than China (37%) and improving intraASEAN cooperation (37%).

Among the surveyed enterprises that have already entered the ASEAN market, Singapore, Malaysia and Indonesia are considered the primary choices for doing business. Overall, their development plans for the next three years appear to be in line with the current geographical distribution of their businesses. Beyond that, however, the results of the most recent survey indicate that interest in six other ASEAN countries – Thailand, Vietnam, the Philippines, Cambodia, Laos and Brunei – seems to have evened out among participating enterprises.

Meanwhile, with the ASEAN bloc having become a focus for trading and investment on the part of many multinationals, many of the participating enterprises now consider finding suitable/capable local service providers as their biggest challenge (32%). In addition, there were concerns over data security (25%) and the difficulty in finding talents with the required expertise (25%).

GBA Enterprises' ESG Investment Will Increase by 25% in the Next Two Years

In terms of the implementation progress of green and sustainable practices and the investment intentions of GBA enterprises, the results of the most recent survey are encouraging, with more enterprises having initiated their green and sustainable development programmes. In the 2024 survey, 81% of enterprises said they had already adopted green and sustainable practices, 16 percentage points higher than the 65% recorded for 2023. The top three practices implemented were: environmental protection (42%), adoption of green office practices (40%) and use of green services (39%). Compared with 2023, the implementation rates of specific green practices increased significantly in 2024.

The survey results also indicated that there is a general decline in the level of the challenges encountered by enterprises when implementing their green and sustainable development initiatives. Overall, lack of experience (49%), lack of talents (44%) and cost pressures (43%) were identified as the three most substantial obstacles. For most of the identified challenges, however, the percentage of respondents singling them out was lower than in 2023.

With ESG widely established as a key corporate development strategy, almost all of the GBA enterprises (99.8%) participating in the recent survey indicated their intent to incorporate such elements into their operations over the next two years, a similar figure to the 99.7% recorded for In something of a change, however, many enterprises are now considering incorporating ESG elements into a wider range of operations instead of focusing solely on production/operation processes and product/service certifications.

In addition, almost all of the surveyed enterprises (98%) plan to increase or maintain their level of ESG investment in the next two years, a four percentagepoint increase compared to 2023 (94%). Participating enterprises were also more willing to increase their level of ESG inputs. More specifically, related budget allocation for the next two years has been markedly increased, with the figure now averaging HK$462,535, almost 25% higher than the figure of HK$371,333 recorded for 2023.

GBA Enterprises Increasingly Recognise Hong Kong's Role

As far as ASEAN focused trade and investment activities are concerned, GBA enterprises are increasingly recognising the role Hong Kong plays as the GBAASEAN super connector. This sees many of them well aware of the highly relevant and proficient service support Hong Kong can provide to mainland GBA enterprises as they look to expand into the ASEAN market and seize the huge regional development opportunities on offer.

When asked to evaluate Hong Kong's connectivity with ASEAN, the surveyed enterprises accorded it an average score of 8.43 out of 10, while Hong Kong's connectivity with other GBA cities was scored at 8.46. In both cases, the outcome was higher than the corresponding figure in the 2023 survey.

In terms of sustainable business development, Hong Kong, the GBA's leading green financing and professional services platform, was widely seen as able to provide GBA enterprises with a wide range of professional service supports. It was also notable that many GBA enterprises had a high regard for Hong Kong's diverse range of green services including green applications, sustainable development consultancy services, green financing and energy transformation, according them an overall average score of 8.67 out of 10.

Hong Kong was also seen as possessing considerable advantages in terms of its range of green applications, financial products and services. In line with this, a significant proportion of GBA enterprises evidenced a strong desire to utilise and gain a more thorough understanding of Hong Kong's sustainable development services, with a higher proportion of them also inclined to increase their use of Hong Kongsourced green products and services. More specifically, more than 80% of participating GBA enterprises stated that, over the course of the next two years, they intend to increase their use of Hong Kongsourced sustainable development products and services, a 10 percentagepoint rise from the 70% stating the same intent in the 2023 survey.

[1] In Q3 2023, HKTDC Research and UOB Hong Kong collaborated in survey studies on the above two topics. In Sustainability in the GBA: Unlocking Opportunities and Empowering Growth, the focus was on gaining a deeper understanding of how GBA enterprises are implementing green and sustainable development and ESG programmes, the challenges they face, Hong Kong's positioning in the region and its development opportunities for related services. Whereas in Navigating Connectivity – Exploring ASEAN Opportunities for the Greater Bay Area, the objective was to understand the changing tendencies of GBA enterprises in developing markets across ASEAN countries and the role of Hong Kong in these areas.

[2] The surveyed parties were 671 enterprises with headquarters in Hong Kong and five mainland GBA cities (Guangzhou, Shenzhen, Foshan, Dongguan and Zhongshan).

[3] The surveyed parties were 300 enterprises with headquarters in Hong Kong, Macao and nine mainland GBA cities (Guangzhou, Shenzhen, Foshan, Dongguan, Zhongshan, Zhuhai, Jiangmen, Huizhou and Zhaoqing).