What Hong Kong Needs in Strengthening its Economic Competitiveness?
The Hong Kong economy is at a cross road. After experiencing various crises in the last decade, there is a need to restructure and upgrade the economic capacity and capability of Hong Kong. This coincides with the calls in the Chief Executive’s Policy Address, in the speech by Premier Li Keqiang in the recent National people’s Congress, and a local business tycoon who has had investments extensively in different businesses.
To widen Hong Kong’s economic base, one can start by examining the economic resources, including land, human capital and finance. Land is considerably constrained but one should have a pragmatic mindset when reviewing the land use in Hong Kong. After all, only about 25% of land is regarded as developed. A visionary land usage and deployment strategy to address the lack of land for development is definitely a plus. Indeed, it is appropriate for Hong Kong to develop industries and businesses that do not require too much land but have a high value-added content. The answer lies in the development of Research & Development and Technology. While basic research in technology and science will demand time, Hong Kong has excelled in applied technology businesses. Using existing technology on new products or different forms of automation for businesses and industries has been and will continue to be a possible alternative.
Technology development comes with the growth of industries. Manufacturing industries at one time constituted about 30% of Hong Kong’s GDP, though the share has now fallen to below 10%. One disadvantage of having a comparatively too large service sector is that many service jobs are low value-added, and often provide a short working-life to the employees. On the contrary, industrial jobs come with skills, experience and knowledge and can offer a much longer employment life and further career development.
Of course, one is not talking about the return of light manufactures in Hong Kong, but new areas of technological production lines that will bring Hong Kong closer to the world market, especially consumers in the Mainland economy. It could be the production of industrial goods and related services much needed or lacking in Mainland China. For example, various industrial testing and quality controls, biological technology and medical-related industries are instant answers.
Indeed, there can be a number of business models suitable for Hong Kong businesses. Venture capital can further be developed to cater for capital funds geared to innovative industries and related services. How local businesses can strengthen themselves through new development, or foster a new generation of business entrepreneurs who can bridge the gap between old and new industries and businesses. Professionals in technology-related industries in particular can promote Hong Kong for investment alternatives to Mainland China and other Asian economies, given Hong Kong’s geographical advantages.
There have been discussions of high costs on business in Hong Kong. This is true but not the whole truth when one is considering the size of the Mainland market, let alone the world market. The size of the market and the scale of the economy would turn the “high cost” in Hong Kong insignificant. One should therefore have a proactive attitude rather than a critical or passive mindset when it comes to broadening the economic capability of Hong Kong. It would be inward-looking and visionless if we fail to see the many business opportunities open to Hong Kong.
Dashun Policy Research Centre