Strategic development of HK/China manufacturing industries
Since China adopted its Open Door policy, many of the Hong Kong low cost manufacturing activities have been relocated to China. This project analyses the strategic development of HK/China manufacturing industries in order to identify the measures necessary to preserve the role of HK for sustaining growth in HK/China manufacturing industries. The historical development of HK manufacturing industries, the economic reformation in China and the inseparable relationship of the two places have been analyzed. Previous studies in this field have concentrated on Hong Kong investments in China in aggregate. The purpose of this thesis is to take a specific look at the industrial sector in which Hong Kong has historically held international competitive advantages, i.e. its low cost light engineering manufacturing. This thesis investigates the reasons why it has been strategically beneficial for establishing Hong Kong industries with the emerging Chinese industries in the Pearl River Delta(PRD) by relocating HK production on a large scale. The benefits to each region are discussed and a future development model is derived for this sector. Strategic/operational attributes, i.e. quality, product, technology and logistics aspects, which are important to contribute to the complementary development of the industries in the two places have been studied in details through series of extensive questionnaire surveys and structured interviews. The heavy reliance on low cost approach with poor technology development so far adopted by HK manufacturers has been critically reviewed. The project concludes that the success of the current HK/China manufacturing industries is the results of the proper economic reformation policy adopted by China at the right time and in the right place. China reoriented its economic policy to "Growth through complete transfer of technology and management know how via foreign direct investment(FDI) with focus on light export-oriented manufacturing industries developed in PRD Special Economic Zone(SEZ) adjacent to HK." HK low cost manufacturing industries relocated to PRD at about the same time to resolve its ever escalating landllabour costs problems. To sustain growth and competitiveness, the quality experiences, i.e. 15O9000-CQITQM, gained in HK through the 1S09000 movement can form a good foundation for China to build up its quality capabilities. To cut costs, HK manufacturers can expand their operations beyond the major cities in PRD to other areas within PRD where logistic support has been improved. HK manufacturers need to migrate from the sole focus in low cost approach to emphasizing more new product and high technology development. Through the better utilization of the China's R&D talents and the commitment from HK manufacturers to gradually upgrade their new product and technology development, HK would be able to preserve its leading role to contribute to the development of HK/China manufacturing industries rather than being overtaken by the Chinese.