Without a doubt, the link between Hong Kong and China will become more intertwined than ever. As a result, we need to analyze the weaknesses and strengths of Hong Kong by comparing Hong Kong’s and China’s standing in the global economy.
Observation 1:
Hong Kong operates
under a Basic Law that was created in preparation of Hong Kong’s reunification
with China in 1997. The law gives the city 50 years of life as the Hong
Kong Special Administrative Region (HKSAR), with an independent judiciary,
elective government, capitalist market system, and 177,000 English-speaking
civil servants. (51) China operates under a Chinese
law, political system, and governance that are not quite compatible with
operations and expectations of Western businesses. Nevertheless, Western
business often cannot ignore the immense potentials of the Chinese market.
Weakness:
In the long term,
Hong Kong cannot compete with the potentials and capacity of the Chinese
market. The growth potentials of IT in China will outstrip Hong Kong in
the long term.
Strength:
Hong Kong will
function as China’s financial center, the world’s largest market for global
manufacturers’ products. Chinese companies strive to achieve dual listings
in Hong Kong and New York stock exchange, rather than the conventional
preference in London and New York. For established companies overseas,
Hong Kong is a preferable place from which to launch their eventual mainland
presence. The immensity and coastal-orientated nature of the Chinese economy
mean Hong Kong will function as a global economic center for China in different
capacity in the foreseeable future. Moreover, the IT market in Hong Kong
is thoroughly deregulated; a well-developed legal system champions intellectual
property rights and promotes the growth of e-commerce.
Observation 2:
Hong Kong’s businesses
employ around 6 million people in factories in Shenzhen alone, effectively
making the delta region a collective manufacturing plant for the businesses
based in Hong Kong. In China, a university-educated programmer currently
receives a monthly salary of USD 450. (52)
Weakness:
Hong Kong cannot
compete on low wages. Moreover, the education system in Mainland China
has the absolute and comparative advantages of producing more graduates
in the technology field.
Strength:
Hong Kong businesses
can attract talents from Mainland China in a cost effective manner. Concentrating
on R&D, applications specialized in manufacturing productivity, and
multimedia development locally, Hong Kong companies can further leverage
their comparative advantage by capturing the low cost base available and
utilizing their investment expertise in China. Meanwhile, the Hong Kong
Government should encourage extensive partnerships among the local universities,
science parks and the Cyberport because of their geographic proximity to
each other
Observatio 3:
The Hong Kong
Trade Development Council (HKTDC) report, The Two Cities: Shanghai and
Hong Kong, notes that 70 percent of the Pearl River Delta region’s
FDI comes from Hong Kong, as does 40 percent of Shanghai’s. (53)
Hong Kong is better thought of as a financial center.
Weakness:
A great deal
of FDI might be just transited through Hong Kong.
Strength:
Foreign firm’s
can tap into Hong Kong’s investment experience in China. Hong Kong business
best understand the characteristics of the business climates than anyone
else in the world. Hong Kong operates the most extensive telecommunication
infrastructure to link China with the rest of the world. Meanwhile, Hong
Kong operates a well-developed captial market. Moreover, the future strategic
partnerships among the Cyberport, science parks and local universities
should attract a healthy amount of IT FDI.
Observation 4:
After the peaceful
return of Hong Kong and accession to WTO, China desires to assume a greater
role in world affairs with a very aggressively nationalistic strategy.
In a word, the strategy will entail projects to propel China with planned
economy tactics and occasionally initiatives that conflict with international
legal conventions. The country will continue to control access to knowledge
by building contents that bypass any English-based programs and websites.
The success of all projects is determined how assertive China can become
in the international community. The Chinese Government will continue having
an upper hand over private sectors. China will insist on holding onto “guanxi”
mechanism as long as possible in order maintain its advantage over foreign
interests. Therefore, Chinese venture capitalists still cannot deliver
a track record of funding companies mainly based on ideas.
Weakness:
China will sure
grow its economy by decreasing its dependence on Hong Kong.
Strength:
Hong Kong has
the second biggest venture capital market in the Asia Pacific region. Hong
Kong features a more friendly and cosmopolitan business environment because
of factors such as the time-honored laissze-faire policy, education system,
historical ties with the global economy, etc. Most importantly, Hong Kong
businesses have extensive ties in China, and Hong Kong and China share
the trust based on cultural ties cannot be easily duplicated by foreign
businesses. Consequently, Hong Kong can offer a “guanxi” package of China
to the world with emphasis on its sophisticated banking and financial systems
highly value by the Western business community. In a word, China will still
need to partner with Hong Kong on IT for the city's sophisticated captial
market. In return, Hong Kong can draw on the expertise and comparative
advantage China maintains in IT to further develop the city's IT industry
through the partnership.
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