CONFIDENTIAL
FM BTC HONG KONG
TO PRIORITY
F C O
TELNO 7
CONFIDENTIAL
076710
MDLIAN 9284
R+Rp's
ト
127/2
TOP Q DIST ?
OF 09090OZ JANUARY 91
AND TO PRIORITY HONG KONG
(13) +14/+hxc 121/3
YOUR TELNO 2445: PROMOTION OF INWARD INVESTMENT FROM HONG KONG
1. I WOULD WELCOME A RELAXATION OF THE CURRENT COP GUIDELINES ON PROMOTING INWARD INVESTMENT AND AM HAPPY WITH THE PROPOSED RECOMMENDATION TO COP. MY VIEWS REMAIN SUBSTANTIALLY AS IN MY
TELNO 57 OF 27 FEBRUARY.
45/45C17115
2. COMPARED WITH THE RICH VEINS OF POTENTIAL AWARD INVESTORS IN JAPAN, TAIWAN AND KOREA, OPPORTUNITIES IN HONG KONG ARE LIMITED AND WILL PROBABLY REMAIN SO REGARDLESS OF OUR GUIDELINES. HONG KONG'S INDUSTRIAL STRENGTH LIES WITH LOW PRODUCTION COSTS, AND ITS OVERSEAS INVESTMENTS REFLECT THIS WITH MOST MANUFACTURERS LOOKING TOWARDS CHINA AND SOUTH EAST ASIA WHERE CHEAP LABOUR IS PLENTIFUL. BUT COSTS HAVE RISEN HERE, ESPECIALLY LABOUR AND RENT, AND THERE IS A CONSEQUENT TREND TO TRY TO MOVE TO MORE UP-MARKET PRODUCTION. BUT THE RESULTS ARE NOT VERY APPARENT YET.
3. ACCORDINGLY, REGIONAL DEVELOPMENT AGENCIES, AWARE OF THIS, CONCENTRATE THEIR EFFORTS ON TAIWAN AND KOREA. THEY ARE IN HONG KONG LARGELY FOR ADMINISTRATIVE REASONS AND REGARD SUCCESS WITH LOCAL COMPANIES AS ICING ON THE CAKE.
4. THERE ARE INDICATIONS THAT SOME OF THE AGENCIES ARE FINDING IT INCREASINGLY DIFFICULT TO JUSTIFY A FULL-TIME PRESENCE IN HONG KONG. IN ADDITION TO THE WITHDRAWAL OF THE WELSH REPRESENTATIVE, I HAVE BEEN TOLD IDB NORTHERN IRELAND ARE PLANNING TO CLOSE DOWN AND THAT THEIR UK-BASED OFFICER WILL TRANSFER TO SEOUL. THIS INFORMATION WAS PROVIDED IN THE VERY STRICTEST OF CONFIDENCE AND EVEN THEIR LOCALLY ENGAGED REGIONAL DIRECTOR HAS NOT YET BEEN TOLD. THE SITUATION IS NOT RESTRICTED TO UK AGENCIES. THE SITUATION IS NOT RESTRICTED TO UK AGENCIES. THE PREVIOUS IDA IRELAND REPRESENTATIVE RELOCATED TO TAIWAN SOME TIME AGO. FROM EUROPE, AFTER THE UK, IRELAND AND MALTA HAVE BEEN MOST SUCCESSFUL IN ATTRACTING HONG KONG INVESTMENT WITH FOUR MANUFACTURERS EACH.
5.
NEVERTHELESS 1992 COULD ACT AS A CATALYST FOR MORE
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CONFIDENTIAL
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