XN000022-1995-09-26 — Page 4

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"Taking advantage of China's open door policy in the late seventies, manufacturers in Hong Kong have moved the cost-sensitive production activities across the border to southern China, thereby releasing the resources in Hong Kong for higher technology and higher value-added operations, such as product design, research and development, material and component sourcing, product testing and quality control, management, financing, marketing, and packaging," she said.

Mrs Ip said the complementary or the strategic fit between Hong Kong and China had contributed towards the continued improvement in Hong Kong's industrial productivity and growing product sophistication, in addition to enhancing its competitiveness in the world markets.

"For example, with only half the size of the manufacturing workforce ten years ago, Hong Kong produced 44 per cent more in real terms in 1994 when compared to the situation in 1985. During the same period, productivity has increased by 11 per cent per annum," she said.

She called on those investors who wish to exploit the vast market potential in China to emulate the successful partnership between Hong Kong and China by locating their cost-sensitive operations in China and controlling these operations from Hong Kong to capitalise on its technology capability, efficient management and marketing flair.

"Furthermore, Hong Kong manufacturers, with their close ties to world markets and high productivity, are among the world's most reliable OEM (original equipment manufacture) and ODM (original design manufacture) partners," she said.

The Director-General of Industry said Hong Kong's attractions were well recognised by overseas investors. Hong Kong has received substantial investments from Japan, the United States and China in its manufacturing sector.

The size of overseas direct investment has increased steadily at an average annual growth rate of 15 per cent in the past nine years. Japan has become the largest investor in Hong Kong's manufacturing industries, accounting for about one-third of the total US$5.2 billion at the end of 1993.

"Reflecting the recognition of Hong Kong's growing strengths in technology, the majority of these investments are in the sectors of electronics, electrical products, textiles and high-quality clothing.

"In addition, some 1,850 overseas companies have chosen Hong Kong as their regional headquarters and offices. Among them, 348 are Japanese companies," she said.