The Economist Intelligence Unit made some worthwhile observations in its latest ranking table of the world's best business locations. In downgrading Hong Kong it argues the lack of decisive government, refusal to adopt a competition law and skills shortages are retarding the territory. It also rehashes a traditional lament of falling English standards and lost purpose in light of China's full economic opening with scant analytical backing. As a commentary the report ranks as an interesting opinion. Judged as a rigorous comparative analysis it predictably lacks substance. The EIU argues that Singapore has outdone Hong Kong in forming policy towards private enterprise and competition. It also cites Singapore's stronger fiscal position. While the city state has moved ahead of Hong Kong in a number of nuts and bolts policy areas, we would contend its findings. Singapore's typically low-value-added manufacturing industries face accelerating hollowing-out pressures. Despite a dramatic depreciation of its currency, deflation remains embedded. Low economy-wide returns on capital suggest a future funding crisis of pensions and welfare payments while opaque government accounts means its true fiscal position is difficult to gauge. Development of service industries lags Hong Kong by a mile and entrepreneurship remains weak. The point is not to disparage Singapore. However the EIU comparison takes on more than point-scoring significance because many in the SAR want Hong Kong to embrace similar policies. As a result, understanding what makes this economy fundamentally strong, and why the Singapore model is past its sell-by-date, is important. Hong Kong and Singapore share common problems of a painful unwinding from a government-sponsored property bubble. They differ in the way they allocate capital across the rest of their economies. Hong Kong is far down the road to restructuring from a manufacturing to services based economy. While less physical goods will inevitably flow through the SAR, that does not mean the value-creating activity backing such trade is lost. London and New York are good examples. Hong Kong firms are China's best firms. Many remain low key but are quietly building efficient operations across the mainland. The SAR faces many socio-political challenges, but fretting over lost competitiveness is an unjustified distraction.