MARKET ASSESSMENT
Attitude to Market
Whilst its long term future will always be subject to China's attitude a favourable view is taken of Hong Kong.
Political
Crown Colony. The Crown Colony was ceded by China to Great Britain in 1841. By a further gonvention signed in Peking in 1898 a small area of immediately adjacent mainland China known as the "New Territories" was leased to Britain for 99 years. The colony is administered by the Hong Kong Government headed by a Governor, with the assistance of an Executive and legislative Council. The present Chinese leadership do not officially recognise the lease arrangements and could impose themselves at will on the Colony. However it is believed that the Chinese are satisfied with the economic benefits of the present arrangements, eg China has large deposits in Hong Kong banks. These would seem to outweigh any benefit that may be obtained through the devouring of the Colony's industries through economic. or political methods. China's policy towards Hong Kong will be the key factor governing confidence in Hong Kong's prosperity but there is no reason to suppose. that China's present policy and attitude will not be maintained.
Economic
It has a
The Hong Kong economy is based on free trade and free enterprise. sophisticated transport system and favourable geographic location giving easy access to the major markets for the products of Hong Kong's export orientated industries; textiles, electronics, toys etc. The economy is expanding though there is evidence of too rapid growth with labour shortages appearing and a sharp increase in imports for domestic consumption. However the economy is flexible and there seems no reason why it should not continue to develop. The 1979-80 budget implemented various measures to help slow down the growth rate of demand in Hong Kong and these are having some effect but a buoyant demand for Hong Kong exports makes domestic demand difficult to control.
Agriculture
Arable land forms only 7.8% of area of the colony, the main crops are vegetables, flowers, fruit and rice. Whilst it is Government policy to foster the development of the agricultural industry the colony remains heavily dependent upon imported food. In 1979 domestic crop production was HK$448m, total crop imports were HK$1.9bn.
Industry
Textiles and clothing remain the colony's largest industry employing 42% of the industrial work force and 43% by value of domestic exports.. In spite of the restrictive terms of Hong Kong's bilateral textile agreements with the EEC and US textile and clothing exports increased from HK$18.5bn in 1978 to HK$24.11bn in 1979. The electronics industry is the second largest manufacturing industry in the colony. It produces a wide range of products mainly for export. There is also a plastics industry which managed to increase sales in spite of the effects of oil price increases. Hong Kong is the world's largest producer of toys which represented the bulk of the plastics industry output. Watches and clock sales expanded during 1979 with exports increasing from HK$3.5bn in 1978 to HK$4.6bh in 1979.
There are no indigenous raw materials, all have to be imported.
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