ENG-1990 — Page 75

THE ECONOMY

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cent in 1981, and further to 28 per cent in 1990. On the other hand, the share of the tertiary service sectors as a whole in total employment increased from 41 per cent in 1971 to 47 per cent in 1981, and further to 62 per cent in 1990.

The Manufacturing Sector

Although Hong Kong's domestic exports are still concentrated in a number of major product groups, there has been continuous upgrading of quality and diversification of items within these groups. The pressure of protectionism and growing competition from other economies have resulted in local manufacturers intensifying their efforts to diversify, in respect not only of products but also of markets. It is estimated that about 80 per cent of Hong Kong's manufacturing output is eventually exported.

Manufacturing firms in Hong Kong must be flexible and adaptable in order to cope with the frequent changes in demand patterns and to maintain their external competitiveness. The existence of a large number of small establishments providing an extensive local sub-contracting system has greatly facilitated the necessary shifts in production and has helped to increase the flexibility of the manufacturing sector. Moreover, increasing use has been made of the outward processing facilities in China for handling the relatively labour-intensive production processes. Because of the limited amount of usable land, Hong Kong's manufacturing industries are generally those which can operate successfully in multi-storey factory buildings. This, in practice, implies concentration in the production of light manufactures.

Over the past 30 years, many industries have emerged and grown, the most notable being plastics and electronics. The textiles and clothing industries remain prominent, however, Other developing industries include fabricated metal products, electrical appliances, watches and clocks, toys, jewellery, and printing and publishing.

During the period 1973 to 1988, value of net output by the manufacturing sector grew at an average annual rate of 16 per cent, while manufacturing employment grew at an average annual rate of only one per cent. There was a significant secular improvement in labour productivity, even though part of the increase in the value of net output was accounted for by increased prices.

Within the manufacturing sector, the most significant change occurred in the textiles industry. The share of this industry in the net output of manufacturing declined from 27 per cent in 1973 to 16 per cent in 1988, and its share in manufacturing employment from 21 per cent to 14 per cent. Offsetting this decline was the expansion of the clothing, electrical appliances and electronics, and watches and clocks industries. Between 1973 and 1988, their shares in the net output of manufacturing increased from 20 per cent to 21 per cent, from nine per cent to 15 per cent, and from one per cent to four per cent respectively, while their shares in manufacturing employment increased from 26 per cent to 29 per cent, from 11 per cent to 14 per cent, and from one per cent to three per cent respectively.

Domestic exports in 1990 consisted principally of wearing apparel and clothing accessories (32 per cent of the total value), electronics (26 per cent), watches and clocks (eight per cent), textiles (seven per cent), plastic products (four per cent), metal products (two per cent) and electrical household appliances (one per cent). In terms of the share in the total value of domestic exports, the most significant change over the past 10 years was the decline in the relative importance of clothing, from 36 per cent in 1979 to 32 per cent in 1990. This decline was offset by increases in the relative importance of such commodities as

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