1978-07-07 — Page 48

THE ROLE OF OVERSEAS INVESTMENT IN HONG KONG'S INDUSTRY

contribution to Wah Kiu Yat Po Supplement by Jimmy McGregor, Director of

The Hong Kong General Chamber of Commerce

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Hong Kong's growth from an economic backwater to one of the world's major exporting territories in the space of less than three decades must rank among one of the miracles of the modern age. Perhaps miracle is the wrong word though, since this growth owed nothing to magic and little to good fortune, but a great deal to a combination of hard work and entrepreneurial skill of the people and sensible economic policies on the part of the Hong Kong Government.

Hong Kong's phenomenal export growth has been based almost entirely on the growth of manufacturing industries. We have no natural resources, no raw materials nor energy sources of our own Just a fine harbour, a good geographical location and above all, people of the right kind. Textiles was the first industry to be established in Hong Kong at the beginning of the 1950s, with the help of skilled entrepreneurs from Shanghai; but spinning and weaving were quickly followed by garments and then by other industries — toys, transistor radios, metal goods, wigs, electrical appliances, and so on. Diversification is a much-used term these days, but it should be remembered that the process of developing new industries and new products has been going on in Hong Kong for at least 20 years, wherever opportunity existed.

At present, out of a population of four and a half million nearly 800,000, or 40 per cent of the labour force, is engaged directly In manufacturing and many thousands more indirectly, It has been estimated that, directly or indirectly, some 80-85 per cent of everything manufactured in Hong Kong is exported. As far as I know no other territory in the world depends on exports to this extent. Last year Hong Kong's domestic exports amounted to more than $35,000 milllan, or over $46,000 for each member of the manufacturing workforce. That is probably the highest per capita export figure in the world except for the O.P.E.C. countries.

In recent years Hong Kong has become known as a leading International financial centre. This has led some people to refer to us as 'the Switzerland of the East'. But one should never forget the Importance of manufacturing industry to the Hong Kong economy. If trade and commerce are the lifeblood of our economy, manufacturing is the throbbing heart. It is vitally important that our industry should remain at all times competitive In the fierce struggle for the world's markets. This means, Increasingly, that Hong Kong cannot afford to overlook any opportunity to introduce advanced technology, to upgrade product quality and design and adopt the most up-to-date marketing techniques. Hong Kong is itself a leader among developing territories in a number of Industrial fields, but we, in turn, must go all out to attract new ideas and new technology from abroad, if we are to maintain our competitive position.

Foreign Investment and technology have played an essential role in Hong Kong's Industrial development and will continue to do so. Hong Kong's Industrialists and entrepreneurs recognise the powerful and lucrative Incentives of technology and markets which Overseas manufacturers can contribute, while the Hong Kong Government, for its part, has geared its policies towards encouraging foreign participation in our Industry. As the Governor, Sir Murray MacLehose, has pointed out, foreign participation in our industry helps Hong Kong to provide its population with the improved living standards, social progress and better environment which they have justifiably come to expect.

The foreign company is welcomed to Hong Kong. It is granted no special privileges, no ‘tax holidays", it is subject to the same rules and regulations and the same level of taxation as the domestic manufacturer. But rules and regulations are few and the low level. of taxation is in itself regarded as an Incentive. The overseas manufacturer and his Hong Kong counterpart have exactly the same opportunities for business, and each must depend on his own resources and Initiative to be a success. That is a good basis for harmony and cooperator also for efficiency based on fair competition.

Why are overseas companies attracted to Hong Kong? What do we have to offer that is so special? There is no single answer to this question. Each company is different and each has its own criteria for deciding the right location for a new plant. For an industry which is labour Intensive, such as garments, or electronics, the cost of labour is a prime consideration. For an industry like ship- building or heavy engineering the cost and availability of land is obviously a key factor. Some companies might be planning to manufacture solely for the Hong Kong market. Others might see Hong Kong as a base for exporting to the regional market, or back to their own domestic markets or to world market's at large.

When a company decides to look into the feasibility of establishing a plant overseas it will naturally make a thorough study of number of potential locations. It will probably ask more than a hundred specific questions relating to the economic, financial, political, legal, geographical, and social circumstances of each territory, ranging from the size of its Gross National Product to the svaliability of schooling for expatriate children or clubs for its expatriate employees.

There are many reasons why overseas companies should choose to locate their plant in Hong Kong rather than some other country In the region. Our transportation, communications and banking facilities are among the best In the world. We have a strong and stable currency, an excellent geographical situation, an intelligent and Industrious workforce, vitality, confidence and adaptability Our political outlook is stable and relations with Chine are better than they have ever been...

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