The Economic Transformation of Hong Kong

Three stages of economic development in HK:

a. Entrepot

B. Industrial City

c. Industrial Financial Centre

 

Economic activities involved in entrepot trade

- Goods shipped via HK:

From China to Europe: Silk, porcelain, tea

From India to China: Opium

- Shipping industry

Since late 19^th century

Shipping services between Europe, HK and China

- Other local industries

E.g. Ship building, ship repairing (dockyards)

 

Major industries in the stage of industrialization

- Textiles

- Clothing

- Plastics

- Toys

- Electronics

- Clocks

- Watches

- Other fast growing industries: electronics, watches and clocks, and toys.

LIGHT INDUSTRY

Light industry (features)

- Requires some technology

- Labour intensive/ involved lots of manpower

- Required low-skilled labour

- Could be produced in small-scale factories

- Export-oriented

- Imported -> Processed in HK -> turned the raw materials into semi-finished goods or final products

 

Economic diversification

- It refers to the extension of economic base

- There are more economic sectors and they are becoming more important than the secondary industry in 1970s.

- Examples: Instead of just making things, they open up hotels

 

Factors prompting economic diversification in Hong Kong and facilitated HK to become a financial centre:

a. Rising living standards

- Higher education level (compulsory in 1978) + Economic success

                - Rise of middle class

                - Increasing local consumption (buying luxurious items)

                - More tertiary industries

b. Competitions from Tai Wan and South Korea

- Because of higher production cost -> shifting of light industries to other areas of China

c. Strategies of investment

- Because of China’s reform and opening up policy

                - Increasing foreign investments

                - Industries moved northward

d. Business networks and experience

- Well-established business networks

- Availability of professional and supporting services

e. Hong Kong Government’s Role

- Employing the policy of positive non-intervention and allowing free market

- No foreign exchange control

- Simple and low tax policy

*Hong Kong developed into an international financial centre.

 

Four Pillar Industries in HK

a. Financial Services

b. Tourism

c. Trading and Logistics

d. Producer and Professional Services

 

Recent development -> Knowledge-based economy

It requires

- Labour with professional skills, good educational background, and rich working experience

- High level of technology (emphasis) and creativity