In the first eleven months of 2005, output of Guangdong's large private enterprises grew by 26.2 percent to 147.06 billion RMB. It is estimated that the whole private sector of the province will yield an output of 600 billion RMB by the end of 2006. This figure represents 38 percent of the province's total GDP, making private businesses an essential part of the province's economic development.

According to a report on the development of China's SMEs released in January 2006, Guangdong witnesses a boom in its SMEs that were strong in R&D investment and business potentials during the "tenth five-year plan" period. Guangdong is now home to 14.77 percent of such enterprises in the country, five percentage points higher compared to the "ninth five-year plan" period. Guangdong has surpassed Shandong and Jiangsu to become the province that owns the largest share of the country's SMEs.

Erasing barriers to development

In March 2003, Guangdong government officials issued a document that identified accelerating the private sector's development as one of its top priorities and lifted some restrictions against non-state-owned enterprises. After the release of this document, the provincial government executed 12 policies in private sectors' development within six months. These policies included market exploration, land use, talent, financing, tax reduction and exemption and international exchange.

In 2004 and 2005, economic planners continued to formulate policies to make it easier for the private enterprises to assess financing, credit, land and other governmental services. Guangdong now plans to initiate the construction of a service system and a credit guarantee system for SMEs. These will help privately-run enterprises, especially SMEs, deal with problems or even bottlenecks in their development, such as expansion of their financing channels.

Gearing up foreign trade

Since 1999 when China allowed private enterprise to operate foreign trade, up to 37,000 private enterprises in Guangdong were granted import and export licenses. Last year, the province's non-state-owned enterprises (including collectively-run and private ones) booked an import and export volume of 64.52 billion USD, up 35.5 percent from 2004. The private enterprises' export rocketed 59.9 percent to 29.95 billion USD or 26.6 percent of the correspondent figure of the entire country.

Guangdong has been known as a hot spot for attracting foreign direct investment, however, its private enterprises have increased their investment in overseas markets in recent years. In 2005, Guangdong's private enterprises set up 68 businesses abroad, worth 235 million USD, with 155 million USD in investments coming from Guangdong. The sector's investment in high-tech projects saw a sharp increase. Huawei, a private-run high-tech enterprise based in Shenzhen that provides telecommunications and mobile communications system services, occupied three-quarters of the province's turnovers in overseas contracted projects.

Going Hi-tech

Many private enterprises in Guangdong are engaged in hi-tech products, R&D and manufacturing. There are currently 6,754 privately-run science and technology enterprises approved by provincial or local governments. Over half of the province's hi-tech enterprises are privately run. These companies own over 3,000 hi-tech products, which are 4/5 of the provincial total. Over 80 percent of the hi-tech industrial parks are owned by private business.

Stimulating regional development

The private sector has been a catalyst for the formation of the largest electronics and IT enterprises' cluster of China in east bank of Pearl River and a cluster of electrical appliance and machinery enterprises in west bank. As a result, the electronics and IT and the electrical appliance and machinery manufacturers have become the two largest industries in Guangdong. As a result the private sector is expected to play an important role in helping the province's mountainous areas in their industrialization within the next five years.

Development in the next five years

Guangdong government officials drafted a development plan for the next five years that includes the private sector's development as an important move for developing the domestic economy. As a result, economic planners are working to lift barriers in the fields of investment, financing, funding, taxation, land use and foreign trade. There is also growing support for the development of private-owned industrial parks and encouraging private enterprises to grow stronger and develop core competencies through corporate acquisitions and mergers.

Editor: Yan