Stretching-out Stage

This stage started form the early 1980s and lasts till today. Since the 1980s, in order to enhance competitiveness and to capitalize on Mainland’s open-door policy, more and more Hong Kong manufacturers have relocated the labour-intensive and low-end operations to Mainland China and other cost-effective countries. At the same time, their Hong Kong operations have geared towards production-supporting and higher value-adding activities, engaged in information collection, product design, procurement, marketing, quality control and finance. During 1980s to mid-1990s, Hong Kong achieved full-tilt developments in re-export and other services sectors; it successfully underwent the third structural transformation and has become the most service-oriented economy in the world.

In the recent years, manufacturing has been on a trend of decline, as far as its contribution to the local economy is concerned. In 1999, there were 23,533 manufacturing establishments in Hong Kong, hiring 244,720 workers, which accounted for only 10.2% of the manufacturing workforce as compared to 46% in 1980. Manufacturing now accounts for less than 7% of Hong Kong’s GDP, down from 24% in early 1980s.

However, when taking cross-border production into account, the manufacturing base of Hong Kong is factually expanding rather than contracting. It is estimated that Hong Kong-based enterprises employ some five million workers in the adjacent Pearl River Delta and hundreds of thousand elsewhere in the region. Today, Hong Kong is the strategic control center for a vast production network spanning the Mainland and countries near and far.

After the outbreak of the Asian financial crisis, Hong Kong is facing another critical re-structuring so as to upgrade form a service-oriented economy to a knowledge-based, technology-driven economy. While some emerging industries, such as information technology, modern Chinese medicine, and environmental industry, are on the rise, traditional industries are making efforts to climb up the value-adding ladder through incorporating technology elements, streamlining operating process, and improving product quality. Suffice it to say Hong Kong’s industry is embarking on a re-vitalizing stage.