Hong Kong businesses must seek new opportunities in western China
Vincent Lo says recognising and capitalising on business opportunities on the mainland, particularly in the west, remain Hong Kong's best bet for growth. That's why the appeal of Chongqing should not be overlooked
Hong Kong has been in a long soul-searching process of redefining its identity both socially and economically since as far back as the 1997 handover. We often hear the suggestion that Hong Kong needs a new economic engine, or that we lack one. There is no single solution to this problem, but, at least in economic terms, part of the answer will rest with Hong Kong's companies' continual flexibility in capturing opportunities in mainland China.
Over the past three decades, manufacturers in Hong Kong have played a significant role in transforming the Pearl River Delta into the world's factory and acted as conduits of trade between mainland China and the world.
However, due to evolving changes in the regional economic landscape, Hong Kong enterprises operating in the Pearl River Delta have had to deal with escalating costs in all aspects.
The strengthening renminbi also affects exports. Many companies are considering relocating their manufacturing plants to places with lower costs or that are closer to the consumer markets.
Since the onset of the global financial crisis in late 2008, the recovery of the US and European economies has been slow. In contrast, the Chinese economy has continued to flourish, fuelled by ongoing urbanisation and an expanding middle class, and these trends are projected to continue in the foreseeable future.
Particularly notable has been the vast improvement in infrastructure and investment environment in China's inland areas, thanks to the national "Go West" development strategy. These changing dynamics have led many Taiwanese enterprises to relocate their production lines to western China, and many have achieved remarkable success as a result of such a move.