【Local】Hong Kong on its Reindustrialization Way to Diversify Growth
The economy of Hong Kong, an international financial center, has been dominated by its services sector that accounts for more than 90 percent of the city’s gross domestic product (GDP), while the government is promoting reindustrialization on hopes to diversify its economic development.
However, “Hong Kong government still focuses more on developing property industry instead of reindustrialization. They need to put more effort on high technology industry such as making more appealing policy to attract professional staff, provide free-facilities for high-tech companies to use,” said Dr. Monique Wan, associate professor of economics in Hong Kong Baptist University.
“Reindustrialization in Hong Kong still has not been really implemented. Policies should be taken into action from the government,” she added.
The government has provided a total of HK$8.2 billion funding to Hong Kong Science and Technology Parks Corporation (“HKSTP”) to build a data technology hub and develop an advanced manufacturing center in Tseung Kwan O Industrial Estate , as Financial Secretary Paul Chan reiterated the plan in the Budget 2017-2018.
“The structure of Hong Kong’s economy is simple and reindustrialization can increase its real economy,” said Jimmy Ng Wing-ka, member of Hong Kong’s Legislative Council.
Manufacturing industries only accounted for 1.2 percent of Hong Kong’s GDP in 2015, down from 2.7 percent in 2006, according to government data. This sector contributed almost 30% to Hong Kong‘s economy in 1970s before most local factories relocated to mainland China for cheap land and labour.
Reindustrialization would Diversify Economic Growth
Re-industralisation is a direction which enables diversification of current economic structure, creates new industries; brings forth new careers and ultimately re-positions Hong Kong from a service-oriented economy to an advanced innovation and manufacturing hub, HKSTP said in an e-mail reply.
As former Obama administration economist Gene Sperling said, the increase of one manufacturing job can bring 1.6 jobs in other industries. With the setting up of new technology companies, people who are good at technology, industry design, engineering would be in great demand.
“High skilled manufacturing should be led by professionals in technology and science fields,” said the science park executive. “The government’s policy is good for companies to make profits. Hong Kong respects intellectual property, and has a stable financial market extremely suitable for trial production in a small scale.”
Challenges for Fresh Tech Companies
Although the advantages of reindustrialization are obvious, there are still obstacles for small enterprise and new set-ups to expand. “Though the government subsidized a part of our renting fees, we still need to pay a lot,” said Lv Shuyan, PR practitioner in the Realmax Technology Ltd, producer of augmented reality products and Apps in Hong Kong
Realmax is currently facing with high cost. “The rent and advertising cost are really expensive. The investing environment is also tough for technology companies to survive,” said Lv. “Investors still mainly focus on traditional industries and hesitate when considering new industries investment.”
Besides those existing problems, Ng said that “how to allocate talented people, optimize policies and put resources reasonably in order to reduce the cost of reindustrialization” are things that government needs to think seriously about.
Hong Kong Science Park expansion programme has officially begun in November 2016 to erect two buildings of 14 and 15 storeys. HKSTP will also develop smart manufacturing buildings by retrofitting currently available vacant factory plants in Tai Po, so that users can quickly set up Smart Factories for smart manufacturing.
“Reindustrialization is a way that Hong Kong government must take. With the slow recovery of global economy, developed countries are in favor of protectionism,” said Ng. “Hong Kong’s businessmen need to make good use of mainland’s resources and mainland market.”
“In addition, Hong Kong government needs to follow one belt, one road policy, lending a hand to these countries. Reindustrialization is a global trend, and Hong Kong needs to fit in. How to diversify our local economy? That is one of the most concerns for us,” he concluded.
《The Young Financial Post 新報人財經》
The Young Financial Post (TYFP) is a news portal that presents the works of HKBU financial journalism students on Hong Kong and China financial news via text, picture and video.
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