Mainland's toy story a tale of progress

That favourite childhood teddy bear with the 'Made in Hong Kong' tag is now just a fond memory, but its very existence represents an important phase in our city's development. Toys and other cheap manufactured goods set us firmly on the path to the prosperity we now enjoy.

Rising wages in the early 1970s as the economy shifted from manufacturing to a services-based one made producing toys in Hong Kong no longer profitable, so factories moved over the border to Guangdong, particularly the Pearl River Delta. Pay rates there are now rapidly increasing as the southern mainland economy also evolves, and soon the manufacturing plants will be on the move again, westwards where labour is cheaper or perhaps to Southeast Asian countries.

Low wages are key to the health of the toy industry. Profit margins are small compared to other economic sectors. Consumers' demands for ever-cheaper prices, Beijing's desire for hi-tech industries, and now the scandals over toys made with lead paint and too-small parts, have spelled the death knell for southern China's golden era of toymaking. As in Hong Kong more than three decades ago, factories will shut their doors and thousands of workers will lose their jobs. But for every job lost, another, higher-paying one, will most likely be found: skilled workers on the mainland are in short supply because of the developed world's demand for Chinese goods.

Toy factories will be replaced by firms involved in electronics, biotechnology, medicine and the like; Beijing's vision is for southern China to be the home of environmentally friendly industries producing top-end products. In place of simplicity will be sophistication. The lives of the people of Shenzhen and Guangdong will be similarly transformed.

There may be hiccups to the central government's plans, of course; a global economic downturn, for one, would reduce demand and, consequently, the nation's fortunes. Mainland social reforms have also to be carefully implemented to ensure stability. Without increasing openness and transparency, allowing greater media freedoms and ushering in democracy, the risk of discontent will always exist.

That what has become known as the toy factory of the world is, company by company, starting to put up the 'out of business' signs is not unfortunate but progress. Children the world over will still get their toys - just not from southern China.