XN000022-1985-04-23 — Page 4

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TUESDAY, APRIL 23, 1985

OF TOTAL FOREIGN INVESTMENT IN HONG KONG'S INDUSTRY, 36 PER CENT IS IN ELECTRONICS, 10 PER CENT IS IN TEXTILES AND GARMENTS, AND EIGHT PER CENT IN ELECTRICAL PRODUCTS.

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IN MONEY TERMS, U.S. INVESTMENT IN HONG KONG'S MANUFACTURING INDUSTRY HAS MORE THAN DOUBLED IN THE PAST FOUR YEARS TO

$6 240 MILLION, WHILE OVERALL FOREIGN INVESTMENT HAS INCREASED 63 PER CENT.

+MANUFACTURING IS IMPORTANT FOR HONG KONG. WE EXPORT ABOUT 98 PER CENT OF WHAT WE PRODUCE, MR YAXLEY SAID.

HE ADDED THAT HONG KONG'S INDUSTRY WAS BECOMING MORE AND MORE CAPITAL INTENSIVE, PARTICULARLY IN THOSE AREAS WITH HIGH FOREIGN INVESTMENT. +THE MAJOR ATTRACTION OF HONG KONG IS NO LONGER CHEAP LABOUR.+

MR YAXLEY SAID HONG KONG NOW HAD THE SECOND HIGHEST LABOUR COSTS IN ASIA AFTER JAPAN, MEANING THERE IS MUCH MORE EMPHASIS ON AUTOMATION AND QUALITY CONTROL THAN IN THE PAST.

+A SIDE EFFECT OF THIS IS THAT MANY LOW-SKILL PROCESSES ARE NOW CARRIED OUT IN CHINA, WITH FINISHING OFF BEING DONE IN HONG HONG. MR YAXLEY GAVE THE EXAMPLE OF CABBAGE PATCH DOLLS, WHICH WERE MADE IN CHINA BUT WERE CHECKED AND PACKAGED IN HONG KONG. SEVERAL HUNDRED THOUSAND OF THE DOLLS ARE STILL BEING MADE IN THE REGION EVERY WEEK, HE SAID.

CHINA IS ALSO GAINING SKILLS AND TECHNOLOGY THROUGH ITS OWNERSHIP OF FACTORIES IN HONG KONG. SUCH CHINESE INVESTMENT IS ESTIMATED TO BE WORTH MORE THAN $3 900 MILLION.

MR YAXLEY SAID HONG KONG WAS A NATURAL GO-BETWEEN FOR CHINA AND THE OUTSIDE WORLD. WITH CHINA'S INCREASING OVERSEAS CONTACTS, HONG KONG IS NOT BEING SQUEEZED OUT, BUT RATHER IS ASSUMING A MAJOR ROLE IN CHINA'S DEVELOPMENT.

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