Hong Kong's manufacturing sector is growing despite a conventional view to the contrary, according to a Trade Development Council (TDC) report. But manufacturers faced some challenges if they were to remain competitive, the TDC said. The council report said Hong Kong had to start thinking of itself in business terms as a 'world city', comparing itself with London, New York and Tokyo, rather than with neighbouring nations. This required having an international outlook, and looking beyond the SAR's borders. The process of moving manufacturing out of the city had long been under way, but a perception that this meant the death of the sector remained strong. The TDC's assistant chief economist, Michael Martin, said statistics showing a decline in manufacturing tended to reinforce this view. However, Hong Kong companies still controlled a large proportion of manufacturing operations outside the SAR and was the world leader in many export-product categories. Because they had moved actual production across the mainland and into other countries - only keeping a small staff in Hong Kong - such companies had often been reclassified as service providers, contributing to the perception that manufacturing was dwindling. But estimates suggest that Hong Kong companies own and operate 400,000 factories in southern China alone, employing about five million workers. Official statistics also failed to take into account Hong Kong's offshore trade, said Mr Martin. As a world city, Hong Kong had to concentrate on acting as a services hub for its manufacturing network. Mr Martin said in order to survive, Hong Kong's manufacturers had to diversify as well as embrace new technology at a more rapid rate. Hong Kong's manufacturing sector was too focused on consumer products, largely because of historical reasons and was now vulnerable to volatile consumer trends, the report said.