ENG-1990 — Page 27

SHAPING UP FOR THE 21ST CENTURY

present trend is to move labour-intensive operations from Hong Kong into China and, to a less extent, to Thailand, Malaysia and Indonesia. Not all of the less interesting and lowly paid work can be transferred to China. In particular the construction industry cannot move to China, because the buildings have to be here, nor can the hotel business nor domestic service. The demand for domestic service has been satisfied by allowing Filipina girls to come on contract. The demand for additional labour by the construction industry is being resisted by the unions and the authorities but this resistance is being eroded and will have to be modified to allow public works to be done on time. Hotels just pay more. Other countries take in foreign workers when wages go through the roof but Hong Kong has been reluctant to do so and this has resulted in a bigger slice of the cake for labourers.

The move of manufacturing industry into the delta area is creating new wealth. This is not the wealth dreamt of by traders hoping to sell oil for the lamps of China. It is wealth created by making things that people in richer countries want to buy. Part of the operation stays in Hong Kong. Design, programming, marketing, finance and some quality control are often retained in Hong Kong when processing is moved to China. In time more of these supporting services will also move and original enterprises will spring up.

This must lead to a more relaxed relationship across the border. At present a free release of Hong Kong's vehicles into China and China's people into Hong Kong would cause great problems. The Chinese government has said in the Joint Declaration that entry into Hong Kong shall continue to be regulated. Such controls will always be necessary, but as the relationship develops there will inevitably be more contacts between people on either side of the border.

Five years ago employment in the manufacturing industry was almost twice that in trade, restaurants and hotels. In 1990, those service industries employed slightly more than the manufacturing industry. In the same period employment in financial and business related services, though at a level of about one third of the two bigger areas of employ- ment, has grown by over 50 per cent.

The growth in finance related services is significant, Hong Kong is developing into the hub financial centre for Asia. The national capital of China will be at Beijing but financial services, stock and commodity exchanges, media headquarters, advertising and other business services now in Hong Kong would come to serve not only the region but also China. On average, some 59 regional headquarters have been established in Hong Kong per annum between 1985-9. These, in turn, attract more even from Japan. There were more foreign exchange dealers here at the end of 1989 than a year before. All the big American names are here and some 45 Japanese securities firms have operations in Hong Kong. This new development has followed the lifting of the moratorium on foreign banks in Hong Kong 10 years ago in time to take advantage of the growth of international financial services. These have followed deregulation and the removal of exchange controls elsewhere and the explosion of information technology and telecommunications. Physical commu- nications here are better than Tokyo. Work on our airport moves ahead while in Tokyo the farmers are preventing an expansion. Rents here are high third in the world after Tokyo and London but they are half those of Tokyo. There is a large expatriate com- munity of many nationalities which attracts more of these nationalities who all use English for much of their business. The press feels free to praise and damn what it wants. This is an important tonic not only for the government and politicians but also for business. The atmosphere of regulation here is less stifling than in Singapore. Telecommunications,

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