ENG-1997 — Page 87

Chart 5

Wholesale, retail,

import/export trades,

restaurants and

hotels

20.0%

THE ECONOMY

Employment by major service sector

1980

Others $1.6%

Wholesale, retail, import/export trades, restaurants and hotels. 33.9%

1997⭑

Others 20.9%

Transport, storage and

commu-

nications 7.3%

Financing, insurance,

Transport, storage and

commu- nications

real estate and

Community, social

11.2%

and personal services 16.5%

business

services

4.6%

Financing. insurance,

real estate and business services 12.7%

Community, social and personal services 21.3%

Over the years, the distributive and catering trades, community, social and personal services, as well as financing, insurance, real estate and business services have become important employers in the services sector.

*Average of Q1 to Q3 1997.

The Manufacturing Sector

Manufacturing firms in Hong Kong are well known for their versatility. The existence of many small establishments, connected under an extensive local sub-contracting network, has greatly aided producers to cope with frequent changes in demand in the overseas markets. Furthermore, the increasing use of outward-processing facilities in the Mainland has enhanced the flexibility of productive capacity and helped to maintain the price competitiveness of Hong Kong's products. A predominant proportion of Hong Kong's manufacturing output is destined for exports.

Over the years, protectionism in several major markets and growing competition from other economies in East Asia have led to even greater diversification in both products and markets. This is attributable to the initiative of local manufacturers and exporters as well as their own dedicated promotion efforts. To maintain competitiveness, there has also been continuous upgrading of product quality.

In consequence, the local manufacturing sector has become more diversified. In addition to the toys and electronics industries, the textiles and clothing industries remain prominent, notwithstanding their declines in relative importance. Other important industries include printing and publishing, machinery and equipment, fabricated metal products, plastic products, watches and clocks and jewellery. In a nutshell, those manufacturing operations staying in Hong Kong are generally of higher value-added or higher-technology nature, along with continued mechanisation and wider application of computer-aided technologies in the production process.

Partly due to growing capital intensity in production, labour productivity in the manufacturing sector improved significantly over the years. During the period 1986 to 1996, the value of net output by the manufacturing sector grew by an average of 2 per cent per annum, notwithstanding that manufacturing employment declined at an average annual rate of 10 per cent. Even after taking into account the effect of price

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