7.14.
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Overseas investors fully or partly owned 545 manufacturing companies at the end of 1990. These companies are a significant segment of the manufacturing sector. At the end of 1990 they employed 12.6% of the total manufacturing workforce and in 1990 their share of domestic exports was 20%. The electronic, textiles and clothing, and electrical products industries received the highest level of overseas investment. In general, overseas investors in Hong Kong pay more attention to product innovation than their local counterparts. 64.3% of the value of their sales in 1990 was of proprietary products, namely T products designed and produced by the manufacturer. Product research and development undertaken in 448 of the manufacturing companies in 1990 was influenced by the overseas investors concerned.
7.15.
Innovation in recent years has increased and is likely to become more widespread in the manufacturing sector in future. Together with an increase in productivity and an improvement in the quality of products, innovation is one of the industrial development themes emphasized by Government. Developments such as the Industry and Technology Development Council, the Hong Kong Plastics Technology Centre, the Provisional Hong Kong Industrial Technology Centre Co. Ltd., the Applied Research and Development Scheme, the Hong Kong Design Innovation Company and the Hong Kong University of Science and Technology will assist in creating a climate in which the importance of innovation is appreciated.
7.16.
However, increasing numbers of manufacturers are sub-contracting labour-intensive processes to China. This trend may constrain investment in product design and development because the reserve of cheap labour enables Hong Kong to continue to produce competitively priced, simple products by labour-intensive methods.
Economic and trade advantages of a strong patent system
7.17.
A consideration of trade issues leads us to consider that a modern and efficient regime for the protection of patentable inventions in Hong Kong is essential. Our view is based upon consideration of trade policy, the need to promote local industry and inward investment and the educational benefits. We take each of these topics in turn in the rest of this chapter.
Trade policy
7.18.
In recent years, the developed countries have attached ever greater importance to the international protection of intellectual property rights. There are various reasons for this. First, the volume of trade in goods protected by intellectual property is increasing significantly. Secondly, the recent trade imbalances have encouraged countries suffering from them to look at ways to redress the problems and to look critically at the intellectual property regimes of their trade partners. Thirdly, failure to provide adequate intellectual property protection discourages investors from entering markets where their goods are unprotected. Fourthly, the failure to protect rights encourages the manufacture and export of copied goods from those markets.
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