Macau, while also a Special Administrative Region of China that shares many structural similarities with its close neighbor, Hong Kong, offers U.S. suppliers a market with distinct characteristics and opportunities. In this Guide, Macau is treated under each chapter following Hong Kong, with emphasis placed on those areas where the business climate diverges.
Macau enjoys significant autonomy: Formerly a Portuguese colony, Macau became a Special Administrative Region (SAR) of the People's Republic of China (PRC) upon reversion to China on December 20, 1999. Macau maintains a high degree of autonomy except in foreign affairs and defense, and retains its own currency, laws, and border controls. Macau does not use common law, but uses code law patterned on the Portuguese system.
Macau’s GDP grew by 21.1 percent (quarter-to-quarter) in the third quarter of 2011. Like Hong Kong, Macau is a free port with low taxation. Since liberalizing the gaming industry in 2002, industry experts calculate that Macau has received US$8.4 billion in U.S. foreign direct investment in the gaming industry (through 2011), spurring visitors and consumption. Other recent growth areas include finance, insurance, construction, real estate, and retail. Macau’s exports include textiles, garments, toys, electronics, and footwear. The main export market is the United States, while imports originate primarily from mainland China and Hong Kong.
Macau’s huge gaming sector dominates the economy: Gaming revenues held up well during the recent economic downturn and, mainly due to gaming capacity increases, are expected to increase significantly over the next several years. Taxes on gaming revenues accounted for over 84 percent of the Government of Macau’s (GOM) revenues in 2011, generating a significant budget surplus.
Macau’s Key Characteristics: Rapid growth in tourism and inbound investment.
Macau enjoys a Closer Economic Partnership Arrangement (CEPA) with mainland China: Macau’s 2003 agreement with mainland China – largely parallel to the arrangement Hong Kong enjoys with the mainland – has enhanced its economic integration with the PRC.
Gaming and tourism eclipse other sectors: In 2011, Macau’s gross gaming revenue topped US$33.5 billion, significantly exceeding the combined revenues of Nevada and Atlantic City combined. However, many U.S. firms are overlooking opportunities in other sectors. Though small, Macau offers companies a good foothold for reaching markets in Asia.
Periodic visa restrictions cloud growth trajectory: In late 2008, the PRC restricted the availability of visas for its citizens to visit Macau. These restrictions led to a significant slowdown in tourist arrivals and reduced the pace of economic growth. However, a gradual easing of those restrictions began in the latter half of 2009. By 2011, PRC citizens accounted for 57 percent of all international visitors to Macau. Overall visitors to Macau increased by 12.2 percent compared to the same period in 2010.
Finding local talent can be challenging: Macau’s explosive growth has led to stiff competition among firms in identifying and retaining high-caliber local managers and staff. Although PRC visa restrictions and resultant slower economic growth eased local staffing constraints near the end of 2009, this challenge will endure due to Macau’s relatively small local population.
U.S. exports to Macau: In the first 11 months of 2011, U.S. capital goods, fuel and lubricants, and consumer goods exports rose (in comparison with the same period in 2010) by 121.4 percent, 69.7 percent and 23.8 percent, respectively. However, U.S. exports of raw materials and semi-finished products decreased 39.1 percent.
Specific U.S. export opportunities: The recent expansion of Macau’s hospitality sector has created demand for food/beverage products and services and related hospitality consumables. Other opportunities include: gaming equipment; architectural services; energy-efficient lighting, HVAC systems, and “smart building” systems; recreational and sports equipment; security equipment; hotel, restaurant, and resort management training services; computer and financial software; and meetings, incentives, conventions, and exhibitions (MICE) services such as exhibition and event planning.
Major projects: Among the leading private and public projects are the Cotai Strip development, (where Las Vegas Sands will be adding 5,800 additional rooms in three new hotels, scheduled for completion by 2013; and neighboring competitor, Hong Kong-based Galaxy Entertainment will be expanding its still-new facilities), the Pac On (maritime) Terminal; a new Light Rail Transit System; and the Hong Kong-Macau-Zhuhai Bridge.
Hengqin Island and Regional Development in Zhuhai, PRC. Hengqin Island in Zhuhai, adjacent to Macau’s Taipa and Coloane islands, is being developed by several investors who are also currently building projects in Macau. A number of planned projects have been reported in the press, including resorts, hotels, integrated retail and convention centers, luxury villas, education facilities and other services areas in Hengqin and elsewhere in Zhuhai. Notably, these projects will not include gaming facilities. The GOM will relocate the University of Macau to Hengqin Island. With focused planning and support from Beijing, Hengqin could help diversify Macau’s own development beyond gaming.
Macau- and Hong Kong-based agents and distributors can increase sales in Macau. Many major gaming and hotel operators in Macau maintain procurement or purchasing offices in Hong Kong.
The U.S. Commercial Service Office in Hong Kong provides customized market research and business facilitation services in Macau.
The American Chamber of Commerce in Macau can provide U.S. newcomers with orientation and various types of member support, including entre to Macau’s leading trade shows.