Qinzhou area poised to be hub for development

South China industrial park well positioned to tap huge potential of regional economic pact

Huang Liting, 32, prodded the intricately laced, palm-sized pod with a penlike device.

She deftly picked out any impurities, looking out especially for flecks of feather.

In 10 minutes, a glistening, translucent piece of edible bird's nest emerged from her hands.

"It is hard, meticulous work," Huang said. "I used to spend a whole hour on just one nest when I started out, but after three months of appropriate training and preparation, I can go through up to 50 nests a day."

Huang is one of more than 30 workers at the processing facility of Sabah Bird's Nest, a company in the China-Malaysia Qinzhou Industrial Park in South China's Guangxi Zhuang autonomous region, where the raw, unprocessed nests are imported from Malaysia.

Edible bird's nests, highly valued by Chinese consumers for their nutritional and other health benefits, are made up of solidified swiftlet saliva. The birds producing the edible nests are mostly of species found in Southeast Asian countries such as Malaysia and Indonesia.

Bird's nests are luxury products. Each nest built by Malaysian swiftlets can sell for more than 3,000 yuan ($460) per 100 grams, with whole nests usually processed, dried and packed before being cooked and served as soups or other delicacies.

The processing of bird's nests reflects the strong economic cooperation and links that have been formed in the industrial park since it was set up nine years ago. The latest investments and development point to the coastal area's significant role in expanding ties between China and members of the Association of Southeast Asian Nations through the recently signed Regional Comprehensive Economic Partnership free trade agreement.

Bird's nests have "always been prized by ethnic Chinese everywhere," said Malaysian businessman Simon Teo Yoke Hua, who heads Sabah Bird's Nest in the park.

"Chinese consumers are increasingly affluent. The nests shipped from Malaysia can now be checked, certified and processed here in Qinzhou for the Chinese market. It's a good fit."

The China-Malaysia industrial park is within the Qinzhou Port Area of the China (Guangxi) Pilot Free Trade Zone, one of six such zones approved by the State Council in August 2019. Qinzhou's waterfront development area, which boasts the trade, logistics and technology sectors, covers more than 260 square kilometers.

Mo Fuwen, deputy director-general of the administrative committee of the Qinzhou Port Area, said the China-Malaysia model allows both countries to work together closely at one site. The China-Malaysia industrial park in Qinzhou has its Malaysian counterpart in the Malaysia-China Kuantan Industrial Park in Pahang state.

"Since its launch in 2012, the China-Malaysia Qinzhou Industrial Park has made positive contributions to promoting bilateral economic and trade cooperation and the development of the comprehensive strategic partnership between the two countries," he said.

This has further enriched China-ASEAN economic and trade cooperation "by jointly opening up a new model of international cooperation between the two countries, focusing on the strategic positioning of a flagship project of China-Malaysia investment cooperation, and demonstrating China-ASEAN cooperation via innovative channels to achieve remarkable results", Mo added.

Trade in specialty commodities between China and Malaysia has increased. For example, last year's imports of the shelled fruit durian, another Malaysian product that is popular among Chinese consumers, totaled more than 660 metric tons, with a value of about 32.9 million yuan. This pushed Malaysia's total durian exports to 1,032.2 tons, Mo said.

Similarly, imports of bird's nest products going through the zone totaled about 54.64 million yuan, and the industrial output value of the bird's nest industry hit about 43.2 million yuan, he said, adding that industrial chains in important sectors such as palm oil and pharmaceuticals are also being promoted.

Azlimi Zakaria, consul general of Malaysia in Nanning, the capital of the Guangxi region, said, "Just like its counterpart in Qinzhou, the Malaysia-China Kuantan Industrial Park has shown impressive growth over the years."

The government of Pahang state has agreed to expand the area of the Kuantan industrial park "in order to make full use of the park as a comprehensive and internationally recognized trade and investment destination", he said.

"That aside, the Kuantan Port itself is undergoing a major upgrade to gear itself as an international and competitive port to accommodate the growth of (the Kuantan industrial park) and the growing international trade activities within the region and beyond."

Mo, the Qinzhou Port Area deputy director, said growth in Qinzhou's port area itself has also been impressive. Last year, deals for at least 75 related projects with a total investment of close to 230 billion yuan were signed and $260 million in foreign capital was injected, accounting for 70 percent of the total in China (Guangxi) Pilot Free Trade Zone, he said. The port also recorded total import and export volume of 17 billion yuan, a year-on-year increase of 4.3 percent, while annual port throughput hit 136 million tons and container throughput reached 4 million TEUs (20-foot equivalent units) of cargo－increases of 14.4 percent and 31 percent, respectively.

Qinzhou's growth has helped power the wider Beibu Gulf area that includes China's southwestern coastal region. The Beibu Gulf-PSA International Container Terminal group, a major port player, recorded container throughput of 3.95 million TEUs last year, a year-on-year increase of 30.98 percent, contributing significantly to the development of a leading "gateway port for international land-sea trade", said Silas Png, the company's deputy general manager.

The trade, logistics and economic links place Guangxi in a crucial position for the country to tap opportunities from the RCEP, which includes China, Japan, South Korea, Australia, New Zealand and the 10 ASEAN members. The RCEP－the world's largest free trade agreement, covering one-third of the global population and 30 percent of global GDP－is set to be ratified before the end of this year, according to China's Ministry of Commerce.

Once the RCEP takes effect, countries are set to reduce tariffs in line with the agreement, fulfill commitments to open investment in the service sector, implement the rules in all areas of the pact, and further facilitate the integration of the regional supply chain and the setting of goods-inspection standards, with industrial chains also reinforced, according to Commerce Ministry and Customs officials.

Qinzhou's role in China-ASEAN cooperation arising from the RCEP will be innovative and wide-ranging, said Mo, the Qinzhou Port Area deputy director.

"We will build efficient and convenient logistics links, place secure and orderly information channels for connectivity, form mutually beneficial and win-win cross-border industrial chains, increase exchanges in education, science and technology and culture, and broaden communication channels and economic and trade cooperation channels," he said.

Malaysian consul general Azlimi said, "Malaysia-China cooperation will certainly gain more momentum after the ratification of the RCEP.

"The RCEP is also set to promote intraregional sourcing of raw materials, an integrated supply chain within the region, greater transparency and information sharing, recognition of international standards, as well as the protection of (intellectual property rights)."

Li Linhui, deputy director of the finance bureau for the administrative committee of the Qinzhou Port Area, said novel financial measures are already being rolled out in the zone. These include financial transactions being conducted more conveniently using China's renminbi as currency to reduce costs for stakeholders, with innovative "two-way flows" to facilitate businesses－the first of their kind in the country, he said.

"The program includes five pilot businesses, such as facilitating two-way cross-border RMB flows, cross-border RMB cross-bank financing, RMB loans for overseas projects, simplifying the offshore transfer procedures for RMB accounts, and cross-border transfer of RMB credit assets in China," Li said.

The moves are expected to further optimize the business environment in the zone and deepen the economic and trade exchanges between China and Malaysia amid the development of the RCEP, he said.

Pilot banking operations in the China-Malaysia Qinzhou Industrial Park alone total 596 million yuan, of which 420 million yuan is for nine cross-border transfers of domestic credit assets and 176 million yuan for four interbank financing businesses. Li said this has saved 1.7 million yuan in costs for enterprises.

The pilot zone will need to push ahead with strengthened coordination and promote its innovative practices throughout sectors to attract more players, he said.

Phua Lan Tat, the president of China-Malaysia Qinzhou Industrial Park (Guangxi) Development Co, said the area's development in the past few years has been encouraging.

The joint venture was established in November 2013 to help in the overall development, construction and investment cooperation of the industrial park.

"We were initially focused on developing the industrial park itself when we started out. With the subsequent free trade zone and now the RCEP, we're looking to also further leverage Malaysian businesses, integrate local e-commerce platforms, and grow cross-border trade and global logistics," Phua said.

His group reported consolidated operating income of about 416.52 million yuan for 2020, achieving a total profit of 26.24 million yuan. By the end of 2020, the joint venture had completed or planned to complete 65 investment projects with total investment of about 8.7 billion yuan, of which 49 municipal and other facilities projects amounted to 5.19 billion yuan, and 16 housing construction and other operating projects, 3.52 billion yuan. The company employs 144 people, of which 43 are its own staff and 101 are employees of subsidiaries.

"Malaysia itself has many products. We've also been exploring the opening-up, and accessing more of those opportunities. Beyond the popular durians and bird's nests, there are many other agricultural products like wood and natural resources," Phua said.

In Qinzhou, a bird's nest processing trade base is touted as the first international cooperative production capacity project of its kind. It is positioned as a benchmark project for deepening cooperation between China and Malaysia, as well as new land and maritime industry links under the Belt and Road Initiative.

Nearly 2 tons of imported bird's nest raw materials were handled in the area last year, a nearly twelve-fold year-on-year increase, with output value of 65.93 million yuan.

A national bird's nest and nutritional health food testing laboratory in the zone, affiliated with Qinzhou Customs, covers more than 3,500 square meters and has testing and other equipment worth more than 13.6 million yuan. The facility conducts scientific and technical analysis on the quality and safety of food and agricultural products imported and exported from the Qinzhou area.

He Ri'an, who heads the zone's bird's nest testing lab staff under China Customs, said their work forms a crucial line of defense for animal-related products.

"We check for safety and quality of the nests before they are allowed through our borders," he said.

The bird's nest testing is aimed at a full range of imports and products including salivary acid, protein, heavy metals, nitrites, pathogenic microorganisms and avian influenza.

The lab operates in strict accordance with global standards, aimed at establishing a quality management system in line with national accreditation, certification and food inspection agency assessments. It also functions as a university teaching and research base.

Other products tested in the area include processed food, liquor, fruits and vegetables, grain and cosmetics.

Lan Yuanqing, general manager of the company Guangxi GreenSmart Global, which processes and sells Malaysian bird's nests products in Qinzhou, said the industrial park and port area have significantly helped the industry, which has faced problems such as smuggling and irregular pricing.

"Our Chinese consumers and markets are assured of their products. The benefits for the suppliers are also clear, with the cooperation helping to adequately meet rising demand worldwide," he said.

The industry is also reaping the rewards of innovation and upgrades in Qinzhou's improving global trade and business environment.

The Glyken group, started in Singapore in 2010, has launched an advanced biotechnology facility in Qinzhou to help it extract glycoprotein peptides from bird's nests. The company, which marked its product entry into the Chinese market in late March, said the extracts are absorbed more efficiently and are more beneficial than traditional bird's nests.

Dave Yu, head of the company's global research and development, said it offers "cutting-edge research on bird's nest processing and nutrition applications".

"Glyken Group has made a major strategic decision to explore the Greater China market and brought the results of years of research to Chinese consumers," he said.