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7. The opinions of factory owners varied according to their interests. Some were in favour of an endeavour to arrange for an area of the Colony to be placed within the Chinese Customs Tariff Barrier while others, who were mainly concerned with exporting their produce to markets other than China, were inclined to be in- different to such an arrangement. The general evidence we have heard, however, has been weighted on the side of some kind of a Tariff agreement which, while some- what facilitating the marketing of Hong Kong products in China would also enable Hong Kong to help the Chinese Government in the prevention of smuggling, and would generally be co-operative. This question has been dealt with in Chapter V of this Report, and the question of marketing Hong Kong products in other parts of the British Empire has been discussed in Chapter VI. (These are both matters in which external factors play a deciding part.)

8. There yet remains to be considered the value of Hong Kong as a Manufactur- ing Centre for foreign markets. Ideally situated as a free port, having every facility for cheap freight and transport, and possessing above all an abundance of cheap and efficient labour, there seems no valid reason why Hong Kong should not establish for itself an ascendancy in certain specialized lines of manufacture, particularly in hosiery, rubber shoes, torchlights, firecrackers and other cheap goods-possibly toys. Finally there is to be considered the value to Hong Kong herself of her indus- tries and whether Hong Kong can take any action to foster those industries and main- tain them as a definite asset.

9. From the Chinese manufacturers collectively we have received representa- tions to the effect that they suffer under the necessity of observing stringent factory regulations, restriction of hours of labour, difficulties at times with regard to the provision of water and strict rules governing the sinking of wells. Complaints have also been made regarding the lack of security of tenure of rented factory premises. There have also been complaints regarding the necessity of obtaining auditors certi- ficates and government certificates for which fees have to be paid, thereby imposing an additional burden on industry.)

10. While many of these complaints may be met with adequate replies showing that the burdens are legitimate charges and unavoidable, and, while it is right and fitting that Hong Kong should keep abreast of the movement towards healthier and better conditions of labour, still it should always be remembered that Hong Kong has to compete with neighbours whose factory standards and industrial level are not high. For this reason, the introduction of legislation for the betterment of work- ing conditions should be cautious and not over-ambitious, lest it defeat itself. The too stringent enforcement of such laws may cause industries to close down and to. throw their employees out of work. We are of the opinion that at the present time when all countries are taking a supervisory interest in their industries a careful inves- tigation into the conditions of each industry established in the Colony with a view to affording all possible assistance thereto would not be amiss. In coming to this conclusion we have had in mind the fact that industry has during the last few years become a not unimportant activity in the Colony and that its welfare must have some considerable effect on the general welfare of the Colony. That this must be so should be obvious from the fact (which we have quoted elsewhere in this Report) that one out of every four persons gainfully occupied in the Colony obtains his living from Industry. We do not propose that uneconomic activities should be artifically maintained but, where investigation shows that some measure of assistance in present times of difficulty may result in the survival of a factory on a sound basis, such assistance should be afforded.

11. Without going into details regarding this matter we would point out that a Chinese Manufacturers' Union has recently been formed, and we feel that with the aid of this body a closer study of the industry of the Colony may be possible. Elsewhere in this Report we have made the suggestion that a Special Committee should be formed for the purpose of having continuously under review the economic welfare of the Colony. If such a body were to be formed the maximum benefit possible to industry might be assured; at least there could be no complaint that the industrial situation of the Colony received no attention and scant sympathy.

12. While having thus recorded our opinion that the industry of the Colony should receive careful consideration and that all reasonable and possible relief should