The Great Bay Area (GBA) is one of the most financially vibrant regions in China, which benefits from a complete industrial structure with a particular cluster advantage and strong economic complementarity, drawing numerous Hong Kong companies to the area to invest and expand their businesses. In this blog article, we will discuss some of the major opportunities and challenges that Hong Kong companies face when they enter the GBA market, as well as how our SD-WAN solution will assist them in overcoming these difficulties.
What are the initiatives and opportunities in the GBA market?
Originally introduced in 2015, the GBA initiative involves promoting integration between Hong Kong, Macau, and Guangdong provinces in a variety of areas, including legislation, work permits, taxes, visas, and infrastructure. The GBA provides a wide array of business-friendly measures to Hong Kong enterprises in order to foster cooperation between mainland Chinese and Hong Kong businesses, while consolidating Hong Kong’s position as Asia’s premier financial hub.
For Hong Kong residents, for example, they are not required to pay Individual Income Tax if the income is derived from sources other than China, and they are exempt from the requirement to obtain a work permit to work in GBA. Furthermore, housing schemes, tax reductions, allowances, and other perks are also available to Hong Kong businesses operating in the GBA, which helps local start-ups and young entrepreneurs to venture into the market with lower costs.
With a massive population of over 86 million people and an astonishing GDP of over 1.7 trillion USD, the GBA market presents an enormous economic potential for both Hong Kong start-ups and established businesses. In recent years, many start-ups are already seeing excellent returns. According to the Hong Kong Trade Development Council, 71% of the start-up companies expect an increase in annual revenue of more than 25% in the next 3 years, while 18% of them anticipate doubling their revenue.
Top Challenges when Hong Kong businesses expands in the GBA market
Nevertheless, despite the fact that the GBA market offers a whirlwind of opportunities for Hong Kong enterprises, many are still faced with specific difficulties that would thwart their expansion aspirations. In order to successfully enter and thrive in the GBA market, Hong Kong businesses must adhere to local policies, ensure that their communication channels comply with local regulations, and guarantee a secure interconnection between branches across Hong Kong and China. To accomplish this, companies will need to undergo a digital transformation (DX) in order to link users and devices across all points of interaction via SD-WAN (Software-Defined Wide Area Network) . However, Hong Kong and China have vastly different policies when it comes to data transfer and technological regulations. For example, China's Cybersecurity Law places a great emphasis on the nation's collective security and interest, while Hong Kong has a much stricter stance on data privacy of individual users. This stark contrast will continue to be a prominent challenge for Hong Kong businesses that are looking to expand into the GBA market as they will have to abide by both sets of rules.
Additionally, setting up SD-WAN can be a time-consuming and challenging process as it requires extensive knowledge of the technology, its applications, and its implications for the business. As such, companies intending to enter the GBA market would have trouble hiring experienced professionals who understand the complexities of this technology, as well as the technical regulations of both China and Hong Kong. This would demand a huge time and financial investment, which can be a significant roadblock for companies trying to expand swiftly.
Perhaps more importantly, the gap in institutional systems between Hong Kong and China will be a bigger worry for local enterprises. According to the survey, 39% of respondents expressed concern about the opaque market information since they believed that policies could change at any time. For start-up businesses in particular, they might find it difficult to put additional effort comprehending and adhering to Chinese regulations and practices due to a lack of funding and manpower.
What is SD-WAN?
SD-WAN (Software-Defined Wide Area Network) is a virtual WAN architecture that enables businesses to connect and extend their networks over large geographical distances 10 times faster and 3 times more cost-efficiently, which helps companies rapidly expand their network infrastructure to support new locations, partners, and customers. A robust SD-WAN can steer traffic to the cloud via local internet breakout, so companies can connect and analyze the data from anywhere, while simplifying the process of orchestrating network traffic simultaneously.
5 reasons why SD-WAN is important for businesses entering the Greater Bay Area (GBA) market
1. Secure remote access
Businesses can grow their operations in the Greater Bay Area (GBA), but secure connectivity is also necessary for employees who work remotely. Employees in the GBA region can securely access resources and applications thanks to SD-WAN's dependable and secure connection to the company's private network. It accomplishes this by protecting sensitive data and communications through encryption, authentication, and other security measures.
2. Support migration to multi-cloud
Many companies that are entering the GBA market may use multiple cloud service providers. By offering a consistent and secure network infrastructure, SD-WAN makes connecting to various cloud platforms easier. It gives companies the ability to effectively manage various cloud connections from a centralized platform and optimize their cloud resources, which reduces complexity and boosts overall operational effectiveness.
3. Reduce network latency
Network performance is important for businesses because of the GBA market's high-tech industries and fast-paced environment. With SD-WAN, traffic is intelligently routed based on the requirements of the application and the network environment by utilizing a variety of network connections, including broadband, MPLS, and 5G. As a result of SD-WAN's ability to dynamically choose the best path for data transmission, critical applications and services run smoothly and users in the GBA region experience the fewest delays possible.
4. Improved IT agility
The business needs and market conditions on the GBA market are constantly changing. Businesses can easily adapt to shifting requirements thanks to SD-WAN's scalable and adaptable network architecture. It makes network service deployment and management simple, making it easier to provision new locations, add or remove network resources, and change bandwidth as necessary. Businesses can respond quickly to market demands, optimize their network infrastructure, and maintain competitiveness in the GBA market thanks to this agility.
5. Lower operational cost
Due to the intricate and varied network architecture in the area, doing business in the GBA market can be expensive in terms of network infrastructure. By streamlining networks and increasing bandwidth utilization, SD-WAN can help reduce these costs. Businesses can optimize their network resources and cut costs associated with traditional MPLS circuits or leased lines by using intelligent traffic management and cost-effective network connections. Because they streamline network administration and eliminate the need for manual configuration and troubleshooting, SD-WAN's centralized management and automation capabilities also help organizations cut operational costs.
HKT SD-WAN service for your GBA business expansion
HKT is the first Hong Kong service provider, has received the SD-WAN Ready 1.0 and 2.0 certifications, as well as the "SD-WAN+Cloud Convergence Service Excellence Award" from the CAICT — a scientific research institution directly under China's Ministry of Industry and Information Technology (MIIT).These accomplishments demonstrate that HKT is in compliance with China's most recent SD-WAN standards and regulations, enabling business clients to secure their networks with the approval of the Chinese authorities.
Client’s story: Chaw Tai Fook
Over the years, HKT has successfully helped Chaw Tai Fook to accelerate digital transformation and enabled them to quickly expand their businesses in the GBA market. This collaboration covers all 6,000 branches of the group across mainland China, providing a reliable and secure network infrastructure. For example, HKT worked with the Chow Tai Fook Jewelry Group to develop a customized SD-WAN solution and implementing cloud computing for smart retail applications. The 6,000 branches of the group across mainland China are all covered by this collaboration. <Learn More>