TNAG-1030-FCO40-1280-Proposed-visit-by-Humphrey-Atkins--Lord-Privy-Seal--to-Hong--1981 — Page 114

UNCLASSIFIED

LORD PRIVY SEAL'S VISIT TO HONG KONG : 8 TO 10 JANUARY 1982

BRIEF NO 16: INWARD INVESTMENT FROM HONG KONG

ESSENTIAL FACTS

1. Interest in investment in Britain by Hong Kong companies has been

at a low level in recent years. The tendency has been to invest in

Australia, the West Coast of the United States and, of course, in

Taiwan and the People's Republic of China. More recently, however,

there is evidence that some companies in the textile garment industry

and even the electronics industry have shown interest in European

manufacturing.

2.

Companies in the textile and garment industry have been influenced

largely by fear of increasing European protectionism and of losing

their import quotas. These factors are seen as overriding the

advantages of low wages and an abundant supply of good labour which

Hong Kong enjoys so that if, as expected, negotiations on the renewal

of the Multi-Fibre Agreement lead to additional quantitive restrictions,

there may now be opportunities for joint ventures in the more capital-

intensive end of the textile business and for collaboration between

British design companies and Hong Kong garment manufacturers.

3. The electronics sector does not look as promising. At present

the industry does not face the same problems over protectionism so

the pressure to manufacture overseas is not so great. Moreover very

few Hong Kong owned electronics companies have significant R & D

facilities and the technological benefits of any investment would be

slight.

/4.

UNCLASSIFIED