ENG-1958 — Page 16

4

HONG KONG ANNUAL REPORT

amid the Colony's growing entrepôt activities. At the outbreak of the first world war the picture was of a number of enterprises linked with the operation of the port, with some cottage industries in addition. Some impetus was given to the development of light industry by the 1914-18 war when the Colony was denied various manufactured goods from European sources and turned to making these itself-for example, vests, towels, biscuits, perfumery, and cigarettes. Later developments included a weaving factory, operat- ing thirty hand looms, established in 1922, and a flashlight factory, established in 1927. But the first really important stimulus to industry occurred in the 1930's with the immigration of factories as a result of disturbed conditions in Kwangtung and subsequently with the introduction, under the Ottawa Agreements, of Imperial Preference. These concessions encouraged local manufacturers to compete in new markets outside neighbouring areas and attracted new investment to the Colony. By 1935 knitting and weaving had become an important industry, as had also the manufacture of flashlights and rubber footwear.

The next important stimulus to development was the outbreak of the second world war when part of the demand for war materials was met in Hong Kong by the supply of locally-built ships, webbing equipment, and other military and civilian supplies for which contracts were obtained. The records of industrial produc- tion were lost during the occupation, but it is estimated that in 1941 there were about 1,200 factories in operation.

|[

POST-WAR RECONSTRUCTION

On the restoration of British rule in August 1945 immediate steps were taken to rehabilitate the Colony. Emphasis was placed on the resumption of commerce, and by 23rd November 1945, not three months after the liberation, the Colony was formally reopened for private trading. This did much to strengthen public confidence. The merchant community quickly availed itself of the regained facilities and the volume of trade increased rapidly. The market for both capital and consumer goods of all kinds in the war-torn Far East was so favourable to sellers that many new commercial enterprises grew up almost overnight. Japan in her turn was prostrate and could offer no competition in trade or industry.