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Overview of the Shenzhen regional market

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Introduction

Shenzhen is located along the mid-southern coastline of Guangdong Province, bordering Hong Kong's New Territories. It is a key link between Hong Kong, the specially-administered district and mainland China.

Due to the Reform and Opening Policy 1978, which turned Shenzhen into one of the first Special Economic Zones (SEZ) in China in 1980, the former tiny fishing village was quickly transformed into a vibrant and booming metropolis.

Shenzhen realized a GDP of RMB 2,442.6 billion in 2018 with GDP per capita rising to RMB 200,000. The economic environment of Shenzhen consists of four pillar industries: high-tech, modern logistics, financial services and the cultural industry.

Due to its close proximity Hong Kong, Shenzhen has strong economic ties with the specially administered region. Hong Kong is its main export destination. In 2018, export to Hong Kong was US$172 billion, accounting for 26% of Shenzhen's total export volume. Shenzhen has also managed to attract substantial amounts of foreign direct investments.

Under State direction, Shenzhen aims to focus on innovation as its dominant strategy for future development. The number of Shenzhen’s Patent Cooperation Treaty application ranked first in China over eight consecutive years.

Trading relationship with Canada

Guangdong province, with Shenzhen at its center is perhaps the most important location for Canadian business in South China. Over US$8 billion in goods were exported from Shenzhen and surrounding cities to Canada in 2018, amounting to just under quarter of China’s total exports to Canada.

Over the last year, despite an increase of 5.7% in export volume to Canada, Guangdong’s share of exports to Canada has dipped to 23%.
Imports from Canada showed impressive growth in 2018. Export value was 20% higher than a year prior with a total of US$2.78 billion. Despite this growth, Guangdong’s importance as an importer of Canadian goods decreased in relative terms falling from a share of 11% in 2017 to 10% in 2018. 

Guangdong’s gradual reduction in import and export share with Canadian business represents a steady diversification of the Chinese economy and should be expected as manufacturing shifts to more cost effective locations, Shenzhen moves up the value chain, and new members of the Chinese population join the middle class. 

Guangdong Province’s trading relationship with Canada

Trade type / description20172018(%) Change
Imports from Canada (US$ billions)2.312.7820%
Share of China’s Total Imports from Canada11%10%-13.4%
Exports to Canada (US$ billions)7.818.185.7%
Share of China’s Total Exports to Canada25%23%-7%

Source: General Administration of Customs of the People's Republic of China

Exports to Canada

Shenzhen’s exports to Canada are a mixture of consumer goods, clothing, and select raw materials. Electronics exporters, particularly those focused on telecommunications, maintain a substantial trading relationship with Canadian buyers, accounting for nearly a quarter of the city’s exports to Canada.

Toy and sports equipment exports is another industry to watch in 2019. While starting from a lower base, exports reached US$646 million in 2018, representing a 26% increase over the year prior.

Garment exports to Canada showed signs of slowing in 2018 as Shenzhen continues to consolidate its position as an electronics manufacturing hub. Growth of textiles exports fell below the growth of other industries, rising by only 7% in 2018, while exports of leather handbags and related travel goods fell by 2%.

Guangdong Province’s top exports to Canada (2017/2018)

HS codeProduct descriptionValue (US$ millions)(%) Change
20172018
85Electrical machinery & telecommunications equip1694.431938.7114%
94Furniture1028.711071.574%
84Machinery & mechanical appliances, computers896.321019.5314%
62Articles of apparel & clothing669.74715.237%
95Toys, games & sports equip514.85646.8126%
39Plastics & articles thereof364.34413.2513%
73Articles of iron or steel310.76345.0511%
42Articles of leather, travel goods, handbags223.7219.62-2%
69Ceramic products171.41215.0225%
68Articles of stone, plaster, cement, asbestos, & mica61.5386.9441%

Source: General Administration of Customs of the People's Republic of China

Imports from Canada

Guangdong’s imports from Canada showed significant volatility in 2018.

Precious metals imported from Canada, lead by strong demand for gold, saw purchases rise from US$9.16 million in 2017 to US$325 million in 2018. Aluminum demand showed similar results with purchases rising from US$21.8 million in 2017 to US$161 million in 2019.

More broadly demand for Canadian goods focuses on raw materials and intermediary goods utilized in manufacturing. Aluminum, nickel, and wood pulp are among the most sought-after Canadian products.

Shenzhen’s rising consumer base has begun to open opportunities for Canadian pharmaceutical companies. Canada is viewed to have excellent quality control by local residents and expatriates and imports rose by nearly 79% in 2019. 

Guangdong Province’s Top Imports from Canada (2017/2018)

HS codeProduct descriptionValue (US$ millions)(%) Change
20172018
85Electrical machinery & equip. & parts, telecommunications equip241.86232.81-4%
76Aluminum & articles thereof21.88161.17637%
75Nickel & articles thereof127.1493.25-27%
71Pearls, stones, prec. Metals, imitation jewelry, coins9.16325.83457%
47Pulp of wood, waste & scrap of paper383.32347.15-9%
44Wood & articles of wood, wood charcoal149.3286.76-42%
30Pharmaceutical products27.3248.979%
23Residues from food industries, animal feed28.8277.58169%
12Oil seeds / misc. grains / med. plants / straw538.91338.6-37%
10Cereals66.5123.986%

Source: General Administration of Customs of the People's Republic of China

Special industrial zones

Shenzhen has direct jurisdiction over seven districts, four of which comprise of the SEZ: Luohu, Futian, Nanshan, and Yantian. Luohu is the financial and trading centre of Shenzhen, located in the centre of the SEZ and adjacent to Hong Kong. Futian sits at the heart of the SEZ, and is where the Municipal Government resides. Nanshan is the centre for high-tech industries, while Yantian is the location of Yantian Port, the second busiest container terminal in mainland China and the 3rd largest in the world.

Notable domestic enterprises

Many of the world’s top 500 enterprises and well-known multinational companies have established their presence in Shenzhen, including many of the world’s top brands in the high-tech industries.

Market access

Canada has a number of bilateral trade and investment policy instruments in place that are helping to facilitate and support Canadian commercial engagement in the region including:

The Canadian advantage

Shenzhen’s priorities match well with Canada’s competitive advantages in ICT, environmental technology, life sciences, advanced manufacturing, education, transportation and agriculture sectors. Canada has also attracted investment from Huawei. The possibilities for Canada in high-tech, environmental technologies, and financial services are great and will be priorities for Canada’s trade office in Shenzhen. This trade office is an indication of the increasing attention Canada is paying to China and will further support Canadian interest in the region.

Canadian companies active in region:

Bombardier Transportation; Trojan; FIG; Med Mira Inc.; BreconRidge Limited; EPM (Shenzhen) Electronic Technologies Co., Ltd; GT-CTI Canada Shenzhen Office; Maximizer Asia Limited; Huskyp; Plitron Manufacturing Inc; PMC-Sierra, Inc. Shenzhen; Creation Technologies; Cansolv Technologies Inc.; Shenzhen Richway Environmental Preservation Development Co., Ltd; CN WorldWide; Dental-Wings.

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