FHKI Releases "Made by Hong Kong – The Way Forward for HK Industries" Research Report

Advocating for "Made by Hong Kong" and Producer Services Development to usher in the New Era for Hong Kong Industries

Federation of Hong Kong Industries ("FHKI") organises "Made by Hong Kong – The Way Forward for Hong Kong Industries" ("Research") Research Report Presentation and Knowledge Exchange Forum ("Forum") today (14 July 2021). Funded by the Trade and Industrial Organisation Support Fund under the Trade and Industry Department and conducted by the research team from the Hong Kong Centre for Economic Research under the University of Hong Kong ("HKU"), the Research is a project in celebration of the 60^th Anniversary of FHKI which aims to review Hong Kong-invested manufacturers' current operations and business strategies in local and global contexts. At the Forum, representatives of FHKI presented major research findings and policy recommendations for the future industrial development of Hong Kong. Speakers from the industry and academia were invited to share their expert views on Hong Kong’s industrial policies and the development pathways for Hong Kong-invested manufacturers.

Mr Paul Chan, the Financial Secretary of the HKSAR Government, addressed in his opening remarks, "The Hong Kong industries evolved vigorously in the past 40 years, where the traditional light manufacturing has been transformed into much more diversified and high value-added industries. Hong Kong manufacturers have gradually relocated their production base to the Mainland or other areas, taking the ‘Made in Hong Kong’ to the higher level of ‘Made by Hong Kong’. The Research revealed that many Hong Kong manufacturers deployed the ‘China-Plus-One’ by setting up new production lines in ASEAN economies to cope with trading challenges arising from international political dymamics. This strategy demonstrates the vision and agility of Hong Kong manufacturers and reflects that Government supportive measures align with market needs. The Research conducted by FHKI brings together invaluable insights from trade associations, scholars and enterprises, providing useful references for the Government to formulate up-and-coming industrial policies. I hope to continue drawing on the collective wisdom from all sectors to promote ‘Made by Hong Kong’ products to the world."

Dr Daniel Yip, Chairman of FHKI said in the welcoming address, "FHKI has been working hand-in-hand with the industry over the decades. We study the operations of Hong Kong-invested manufacturers regularly so that the Government and stakeholders could have a more comprehensive understanding on the needs of manufacturing sector. This Research examines the current conditions, challenges and opportunities of Hong Kong industries and provides important reference for formulating forward-looking policies to propel the development of manufacturing sector and producer services. Coupling with the high-tech transformation of global manufacturing activities and co-ordinated regional advancement in the Asia, Hong Kong is fully ready to usher in the new era of industrial development."

The Forum invited renowned economist, Professor Richard Wong, Provost and Deputy Vice-Chancellor of HKU to share his scholar views on the transformation of Hong Kong’s industrial structure. He emphasised that it is now the opportune time for Hong Kong manufacturers to capitalise on the opportunities brought forth by industrial transformation and develop innovation-driven industries in the Greater Bay Area and nearby regions. Meanwhile, representatives from industry and academia institutes, including Professor Tao Zhigang, Director, Institute for China and Global Development at HKU; Mr Chang Ka-mun, Managing Director of Fung Business Intelligence Centre; Mr Stephen Wong, Senior Vice President and Executive Director of Public Policy Institute of Our Hong Kong Foundation; and Mr Stanley Tsui, Group Chief Operating Officer of ASM Pacific Technology Limited, were invited for an intellectual discussion on the future development pathways of and policy facilitation for Hong Kong’s manufacturing sector, with regard to national industrial strategy, regional advancement, nurturing of local talent pool and status of advanced manufacturing sectors.

According to the Research, ever since Hong Kong manufacturers moved northward in the 1980s, the production activities of Hong Kong-invested manufacturers in the Mainland have driven the demand of local producer services, shifting Hong Kong towards a service industry-oriented economy. It is estimated that in 2019, Hong Kong-invested manufacturers generated HK$680.1 billion worth of profit in the Mainland China, equivalent to nearly one-fourth (23.7%) of Hong Kong’s GDP. If the service industry is split into sub-categories, producer services in Hong Kong is on a continuous rise to reach 42.2% of GDP in 2019, which provides evidence for the economic contribution of offshore manufacturing activities to Hong Kong. Based on the current conditions and business strategies of Hong Kong-invested manufacturers and global trends, FHKI summarised three major advocacies to the Government for formulating specific and long-term industrial policy with Hong Kong's advantages and industrial foundation to create more diverse economy and employment in Hong Kong.

Ø  Advocacy 1: Developing local “re-industrialisation” of selected industries to build core technological competence

Despite the fact that large-scale mass production is difficult in Hong Kong due to land constraints, certain most competitive and high value-added manufacturing activities should be selected for local “re-industrialisation” where policy incentives are offered to encourage local production, including advanced electronics, food technology and food processing, recycling and environmental industry and biotechnology. With focused investments into developing core technology and manufacturing talent pool, these industries will become new pillars of Hong Kong’s economy.

As revealed in the Research, shortage of industrial talents is always a major challenge for Hong Kong manufacturers adopting various coping strategies. Therefore, FHKI recommends that the Government must reconstruct the industrial talent system to inject new blood into professions required by the high value-added manufacturing activities. More diversified applied degrees and subjects shall be introduced to cultivate competitive talents for the high value-added manufacturing industries in Hong Kong and abroad.

Ø  Advocacy 2: Strengthening Producer Services to Become the Hub of Regional Manufacturing Development

Hong Kong has always been Asia’s financial and trade centre, possessing a mature international business network and extremely favourable conditions for becoming the core of manufacturing production value chain in Asia. Using the GBA and Southeast Asia as bases for mass production, and fully utilising its advantages as a knowledge-based economy with profound manufacturing foundations, Hong Kong can provide upstream and downstream producer services as well as advanced manufacturing procedures, which are the most value-added economic activities along the production chain. This will also strengthen Hong Kong’s position as an international I&T hub in GBA for exploiting the Mainland and ASEAN markets. FHKI envisions the Government to proactively negotiate for favourable policies helping Hong Kong-invested enterprises, especially SMEs, to capture the vast opportunities across Asia, including streamlining trade procedures, aligning product standards, obtaining preferential investment terms and promoting "Made by Hong Kong" brands in emerging markets.

Ø  Advocacy 3: Review Economic Data to Reflect Industrial Development

The manufacturing sector has undergone rigorous transformation where diverse producer service sectors have been developed and become mature, forming an extended and intertwined industrial system. FHKI recommends that a broader understanding shall be adopted to fully understand the industry and its impacts, and enhance statistical methods to obtain more comprehensive economic figures for policy formulation. For instance, the Government shall consider reviewing the classification method of the service industry to disaggregate “producer services” from the others; updating industrial classifications more frequently according to latest economic development; and conducting census on the offshore production activities of Hong Kong-invested manufacturers.

Chairman Daniel Yip added, "Under the transformation in manufacturing activities and Hong Kong’s shift towards producer services, the traditionally ‘Made in Hong Kong’, which represents products manufacturers locally, should now be more broadly understood as ‘Made by Hong Kong’ covering diverse products that are researched and developed, designed and produced by Hong Kong-invested manufacturers with the intellectual and quality excellence originated from Hong Kong. We hope that the Government will look into how Hong Kong industries can reach new heights riding on the booming development in Asia and advancement of manufacturing sector, especially through the ‘re-industrialisation’ of selected industries to groom core technology and talents, as well as sustaining the growth of ‘Made by Hong Kong’.”

Mr Steve Chuang, Deputy Chairman of FHKI and the Research convenor said, "FHKI hopes this Research could help the industry, Government and other stakeholders to adopt a more holistic view of ‘industry’ as a whole, to cover multiple dimensions of manufacturing activities local and abroad,  production to producer services along the value chain, traditional and emerging manufacturing sectors, export and domestic sales markets. Such long-term planning of Hong Kong's industrial policy is critical for Hong Kong to develop high value-added manufacturing through ‘re-industrialisation’ and strengthen local producer services, leading Hong Kong to become the master mind of manufacturing industry in Asia."

Photo 1: FHKI Chairman Dr Daniel Yip (centre), Deputy Chairman Mr Sunny Tan (left) and Deputy Chairman and the project convenor Mr Steve Chuang (right) presented major research findings and policy recommendations for the future industrial development of Hong Kong.

Photo 2: Renowned economist, Professor Richard Wong, Provost and Deputy Vice-Chancellor of HKU share his scholar views on the transformation of Hong Kong’s industrial structure at the Forum.

Photo 3: Speakers from the industry and academia were invited to share their expert views on Hong Kong’s industrial policies and the development pathways for Hong Kong-invested manufacturers. Photo shows (from left) Mr Stephen Wong, Senior Vice President and Executive Director of Public Policy Institute of Our Hong Kong Foundation; Mr Chang Ka-mun, Managing Director of Fung Business Intelligence Centre; Dr Daniel Yip, Chairman of FHKI; Professor Tao Zhigang, Director, Institute for China and Global Development at HKU; and Mr Stanley Tsui, Group Chief Operating Officer of ASM Pacific Technology Limited.

Executive Summary and Research Full Report:

https://www.industryhk.org/en/info/research-reports/made-by-hong-kong-full-report/

About "Made by Hong Kong – The Way Forward for Hong Kong Industries" Research Report

"Made by Hong Kong – The Way Forward for Hong Kong Industries" Research is funded by the Trade and Industrial Organisation Support Fund under the Trade and Industry Department and conducted by research team from the Hong Kong Centre for Economic Research under HKU. The Research is supported by integrated research methods such as big data analysis, surveys, in-depth interviews, focus groups and literature research to understand the current operations of Hong Kong-invested manufacturers and their business strategies.

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