'Hong Kong's manufacturing industry has been in decline. The Hong Kong government should study how to revitalise our industries to provide more job opportunities for the people.' Legislator Albert Chan Wai-yip WHAT PROFUNDITIES OF industrial thought reveal themselves to the mind of a career social worker when first he sees a car assembly plant in operation - wowee! Why don't we have one of these? I can understand why Mr Chan was impressed by the spectacle in Guangzhou the other day of an endless stream of cars rolling smoothly down the line with busy workers each adding a fresh component. He was, after all, taken there to be impressed. And I can understand why it then reminded him that this particular form of metal bashing has not exactly prospered in Hong Kong of late. The first chart shows you the record of the closest approximation to it among the components of our industrial production index, lamentable indeed. Or perhaps not. Despite the rocketing growth of car sales in the mainland in recent years, profit margins in car production across the border are slim and growing slimmer while the number of loss-making enterprises in the business is rising steadily. Even this assumes that the official accounts paint the true picture, which is not absolutely certain. Some people, Mr Chan possibly among them, seem to think that the point of making cars is making cars or, at best, making jobs. I always thought the point was to make money, which is a better way of making jobs. And, given that the Hong Kong economy has created about 190,000 jobs over the past two years this way, I do not see any great need of bringing in the likes of a car plant to achieve the purpose. Let me put things into further perspective. It may be old hat by now, but many people do not yet seem to appreciate that the Hong Kong economy has made a transition from manufacturing to services. The second chart shows you the scale of this change. The value of our services exports is now 3.6 times as great as the value of our domestic goods exports and the ratio can only grow bigger as domestic goods exports fall further with the demise of international garment quotas. Garments made up half of domestic goods exports until the end of last year, falsely accounted, but that is a different matter. So here is the message to Mr Chan. Our government can spend eternity studying how to revitalise our goods producing industries, but it will never happen. The time is past and only existed for a few decades anyway while communist ideology trashed the mainland's industrial prospects. Hong Kong was an entrepot economy before and now it is one again. The only thing that any attempt to revitalise such industries can bring us is money wasted on fruitless public initiatives and a consequent loss in job opportunities for the people of Hong Kong. The one inevitably introduces the other. Unemployment is a consequence of misallocation of capital. And why should it bother us that goods producing industries have left us? They left both New York and London long ago but neither suffered. Both made the natural transition to services for hinterland goods industries, exactly the transition we have made and for the same reason that clinging to the past can only mean moving backwards when the time comes to move to the next stage of development. I know it is harder to visualise what insurance agents or freight forwarders do to make us wealthier than it is to watch assembly line serfs at work, but that only tells me social workers, even if they become legislators, should restrain themselves to things they know better. It would hardly be worth commenting on in this case except that among the Hong Kong visitors looking at that car assembly line was our Chief Executive, Donald Tsang Yam-kuen, and the pictures showed him rapt at the sight. Our Donald unfortunately has a failing for big showy projects. Let us hope he appreciates that industrial ones are a delusion for Hong Kong. Don't do it, sir.