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Megacity 2020: The Pearl River Delta’s Astonishing Growth
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In the late 1970s, the fertile river delta to the north of Hong Kong’s territory was primarily agricultural land. Shenzhen was an unassuming town of 30,000 people – with only one functioning taxi – and China was still very much a communist, rural country.
As the visualization above, by Time Out Hong Kong, demonstrates, the sleepy Pearl River Delta was on the cusp of an unprecedented growth spurt that would see cities expand and merge to become the largest contiguous urban region in the world.
A trickle becomes a flood
In 1979, the Chinese government – led by Deng Xiaoping – created four Special Economic Zones (SEZ) with the intention of attracting foreign direct investment and encouraging private enterprise.
The designation of Shenzhen and Zhuhai as SEZs was a strategic move to act as an “overflow” for businesses in Hong Kong, and the impact on the Pearl River Delta was profound and immediate.
A number of factors also helped contribute to the meteoric rise of the region: proximity to Hong Kong’s financial sector, a world-class seaport, a huge and inexpensive labor pool, cheap and abundant land, and few regulatory impediments to rapidly growing companies.
In the two decades after Deng Xiaoping’s market reforms, the GDP of the region grow by more than 10x and urbanization – bolstered by large-scale infrastructure projects – began in earnest.
To put the scale of this population clustering into perspective, here are the populations of cities within the Pearl River Delta in 2020 compared with modern-day metropolitan areas in North America and Europe:
Today, this compact region has a GDP equivalent to that of South Korea.
Megalopolis at the Gates
The explosive growth the Pearl River Delta has upended the regional balance of power.
At the close of the 20th century, Hong Kong was the undisputed economic powerhouse of the region. In fact, just prior to the handover from the United Kingdom to China, the city’s economic output was equal to a quarter of China’s entire GDP.
Today, the situation is markedly different. Hong Kong is no longer a separate entity, and its GDP represents a mere 3% of China’s.
This shift in the regional dynamic is causing trepidation in Hong Kong, where over 90% of the millennial population identifies as “Hong Konger” as opposed to “Chinese”. Although the government has agreed in spirit to maintain the city’s autonomy until 2047, recent actions suggest an eagerness to integrate the entire region into a seamless megacity.
The blurring of the lines appears to be well underway, as more than half a million people from the city now reside in Mainland China, up from approximately 150,000 a decade ago.
One physical manifestation of Mainland China’s push for an integrated region is the Hong Kong–Zhuhai–Macau Bridge. This colossal infrastructure project is a 31 mile (50 km) connection that includes bridges, tunnels, and three man-made islands.
In China, where each project is more ambitious than the next, it’s only fitting that the world’s largest urban area will be connected by the world’s largest sea crossing.
A Timeline of U-Turns from the Chinese Market
It’s hard to ignore the massive economic opportunities available in the Chinese market, but it’s also notoriously difficult to succeed in.
China’s economic surge is one of the biggest stories of the 21st century.
Hundreds of millions of people have been lifted out of poverty, and China’s swelling middle class has attracted the interest of Western companies.
As many American companies have discovered, doing business in China is far from straightforward. Recent history is littered with examples of companies that entered the Chinese market to great fanfare, only to retreat a few years later.
Calling Off The Offensive
Today’s infographic highlights 11 companies that ended up tapping the brakes on their ambitious forays on the other side of the Pacific.
Then, we take a look at the factors that influenced these strategic withdrawals.
Here are some high profile examples of corporate u-turns by American companies operating in the Chinese market:
When Google China’s search engine was launched in 2006, the company had made the controversial decision to censor search results within the country. Google publicly displayed a disclaimer indicating that some results were removed, which created tensions with the Chinese government.
For a while, things seemed to be going well. Even though a domestic company, Baidu, had captured the majority of the Chinese search market, Google did have a respectable market share of about 30%.
Google China’s fortune took a turn for the worse in 2010 after a major hack – Operation Aurora – exposed user data as well as intellectual property. The hack, which originated from within China, was the last straw for Google’s executive team. After one last ditch effort to provide unfiltered search results within China, the company retreated beyond the firewall.
Amazon was an early entrant into the Chinese market. In 2004, the company acquired Joyo – an online shopping site – which was eventually rebranded to Amazon China in 2011.
Amazon China achieved some early success hitting a market share of around 15%, but today, that market share has eroded to less than 1%. Facing nearly insurmountable competition from domestic e-commerce platforms like JD and Taobao, the company recently announced it would be exiting the Chinese market.
After arriving fashionably late for the ride-hailing party in 2014, it quickly became clear that Uber was facing an uphill battle against well-funded domestic rivals. After only two years, Uber elected to u-turn out of the Chinese market.
Though Uber’s tactical exit from China is often viewed as a failure, the company has earned upwards of $8B through its sale to competitor Didi Chuxing.
A Two-Way Street
Now that red-hot growth at home is beginning to taper off, a number of Chinese companies have begun their push into other markets around the world. Much like their American counterparts, brands pushing beyond China’s borders are seeing varied success in their expansion efforts.
One high-profile example is Huawei. The telecommunications giant has been making inroads in countries around the world – particularly in emerging markets – but has seen pushback and scrutiny in a number of developed economies. Huawei has become a lightning rod for growing concerns over government surveillance and China’s growing influence over the global communications network.
Already, Australia has blocked the company from participating in its 5G network, and in the United States, government agencies are banned from buying Huawei gear.
If negative sentiment continues to build, it remains to be seen whether Huawei and other Chinese companies will follow the playbook of American brands in China, and turn the car around.
The Best and Worst Performing Wealth Markets in the Last 10 Years
This telling chart shows how national wealth markets have changed over the past decade, highlighting the biggest winners and losers.
The Best and Worst Performing Wealth Markets
A lot can change in a decade.
Ten years ago, the collapse of Lehman Brothers sent the world’s financial markets into a tailspin, a catalyst for years of economic uncertainty.
At the same time, China’s robust GDP growth was reaching a fever pitch. The country was turning into a wealth creation machine, creating millions of newly-minted millionaires who would end up having a huge impact on wealth markets around the world.
The Ups and Downs of Wealth Markets (2008-2018)
Today’s graphic, using data from the Global Wealth Migration Review, looks at national wealth markets, and how they’ve changed since 2008.
Each wealth market is calculated from the sum of individual assets within the jurisdiction, accounting for the value of cash, property, equity, and business interests owned by people in the country. Just like other kinds of markets, wealth can grow or shrink over time.
Here are a few countries and regions that stand out in the report:
Developing Asian Economies
In terms of sheer wealth growth, nothing comes close to countries like China and India. The size of these markets, combined with rapid economic growth, have resulted in triple-digit gains over the last 10 years.
For the world’s two most populous countries, it’s a trend that is expected to continue into the next decade, despite the fact that many millionaire residents are migrating to different jurisdictions.
European nations saw very little growth over the past decade, but the Mediterranean region was particularly hard-hit. In fact, eight of the 20 worst performing wealth markets over the last decade are located along the Mediterranean coast:
|Rank (Out of 90)||Country||% Growth (2008-2018)|
European Bright Spots
There were some bright spots in Europe during this same time period. Malta, Ireland, and Monaco all achieved positive wealth growth at rates higher than 30% over the last 10 years.
While it’s expected to see rapidly-growing economies as prolific producers of wealth, it is much more surprising when mature markets perform so strongly. Singapore and New Zealand fall under that category, as does Australia, which was already a large, mature wealth market.
Australia recently surpassed both Canada and France to become the seventh largest wealth market in the world, and last year alone, over 12,000 millionaires migrated there.
The long-term economic slide of Venezuela has been well documented, and it comes as no surprise that the country saw extreme contraction of wealth over the last decade. Since war-torn countries are not included in the report, Venezuela ranked 90th, which is dead-last on a global basis.
Short Term, Long Term
In 2018, global wealth actually slumped by 5%, dropping from $215 trillion to $204 trillion.
All 90 countries tracked by the report experienced negative growth in wealth, as global stock and property markets dipped. Here’s a look at the wealth markets that were the hardest hit over the past year:
|Wealth Market||Wealth growth (2017 -2018)|
The future outlook is rosier. Global wealth is expected to rise by 43% over the next decade, reaching $291 trillion by 2028. If current trends play out as expected, Vietnam could likely top this list a decade from now with a staggering 200% growth rate.
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