25th anniversary of the return. Industry | Reconstructing the regional competition and cooperation relationship to break the industrial predicament

"I graduated from college in 1997, and I was in the United States at the time." Huang Yuanshan, senior vice president of the United Hong Kong Foundation and member of the Legislative Council Election Committee, recalled the changes in Hong Kong since the handover. "At that time, the financial volume of the United States and Hong Kong was completely different. A lot." In the past 25 years, Hong Kong has become a well-deserved "international financial center", not only thanks to the efforts of Hong Kong citizens, but also to the country's reform and opening up, accession to the World Trade Organization (WTO), and promotion to the world's second largest economy. The background of the times has made the pillar industries expand from "serving the local" to "serving the country".

However, while the economy continues to prosper, development has been uneven.

With the dominance of pillar industries such as the financial industry and professional service industry, and the fact that Hong Kong has not re-established a regional competition and cooperation relationship, Hong Kong has also experienced a single industry, low-end employment, high living costs, serious wealth disparity and income from upper channels. Various social problems such as narrowness are weakening Hong Kong's long-term competitiveness and driving away batches of talents who should have settled down on this small island.

In the 50-year-old midfield of "One Country, Two Systems", how should the team of Chief Executive-designate Li Jiachao inject new vitality into Hong Kong's economy?

"25th Anniversary of Return" in-depth report series

File photo: Photo by O Jiale

From serving Hong Kong to serving the country

"Economic development has logic and historical factors." Huang Yuanshan pointed out that the financial industry, professional service industry, trade and logistics industry are all closely related to the prosperity of the local manufacturing industry in the 1960s and 1970s. , but at that time, the import and export business of Hong Kong's industry had a lot of financing needs, as well as trade and logistics needs."

By the 1990s, when the manufacturing industry moved northward, the three pillar industries continued to provide services beyond the production link for Hong Kong-owned factories that moved to the mainland -- Huang Yuanshan called it "offshore manufacture".

The research report "Made in Hong Kong: A New Chapter for Hong Kong Industry", a research report by the Federation of Hong Kong Industries, refers to such industries providing services to factories as "producer service industries", as opposed to industries that provide services for daily life, namely "Life Services".

The report pointed out that from 1980 to 2019, the GDP of the manufacturing industry dropped sharply from 10.4% to 1.03%, while the service industry increased from 78% to 93%; if the service industry is subdivided, the producer service industry has been rising over the same period. trend, accounting for 42.2% of real GDP in 2019.

In addition, the report surveyed 231 Hong Kong-funded enterprises and found that among the interviewed enterprises, the functions of their branches in Hong Kong were mainly in the service industries such as marketing, financial accounting, and administrative management; Manufacturing, engineering technology, technical support and other industries are mainly (below).

"Made in Hong Kong: A New Chapter for Hong Kong's Industry" surveyed 231 Hong Kong-funded enterprises and found that among the interviewed enterprises, the functions of their branches in Hong Kong are mainly marketing, financial accounting, administrative management and other service industries; The company's functions are mainly manufacturing, engineering technology, technical support and other industries.

(Hong Kong 01 cartography)

"As there are not many local production activities, we can reasonably infer that Hong Kong-owned manufacturing enterprises in the Mainland have created a strong demand for Hong Kong's local producer services, which have always been an important part of Hong Kong's economy," the report said. ”

In addition to "offshore manufacturing", there is also "offshore trading".

The country started "reform and opening up" in 1978 and joined the World Trade Organization in 2001.

Due to the low cost of production, the country has become an important processing and distribution center in the world, known as the "world's factory", and the development of light industry in the Pearl River Delta region has provided huge business opportunities for Hong Kong's entrepot trade, and also created the myth of "the port brother".

However, when business opportunities abounded, Hong Kong did not introduce technology to strengthen its infrastructure, thus weakening its competitiveness in disguise. Therefore, with the relaxation of "coastal transportation rights" in the mainland, coastal cities have built large modern terminals one after another. Hong Kong's infrastructure is backward and expensive. The competitiveness of the terminal is no longer, and the port throughput has dropped to ninth in the world (below), losing to Shanghai, Ningbo, Zhoushan, Shenzhen, Guangzhou and other major mainland ports.

Hong Kong's port throughput dropped to ninth in the world, losing to major mainland ports such as Shanghai, Ningbo, Zhoushan, Shenzhen and Guangzhou.

(Hong Kong 01 cartography)

At present, the competitiveness of Hong Kong's shipping logistics is reflected in high-end shipping services, such as marine insurance, shipping finance, maritime law and arbitration.

"A box of goods produced in the mainland can be shipped from Shanghai to California, and even logistics does not require Hong Kong. But the company is in Hong Kong, financing is in Hong Kong, and all documents are in Hong Kong." Huang Yuanshan explained the concept of "offshore trade".

The expansion of offshore trade reflects the institutional advantages of Hong Kong's duty-free port and free port, but it also further solidifies Hong Kong's industrial structure dominated by the service industry.

The development of Hong Kong over the past 25 years has shifted from "serving the local" to "serving the mainland". Among them, the most obvious and Hong Kong's own benefit is "offshore finance".

Huang Yuanshan pointed out that in the 1990s, the financial industry and the banking sector were all serving Hong Kong's local economic activities.

With the reform and opening up of the mainland, the embrace of the "market economy" and the reform of a large number of state-owned enterprises, "China Life, PetroChina and other companies in the mainland need to find a place to raise funds, and the small nest of Hong Kong has suddenly become larger." Huang Yuanshan said, "Our In economic transformation, ignoring the needs of serving local enterprises and instead serving the international financing needs of the entire mainland real economy, the cake will be much bigger.”

The rise of the financial industry has led to the rise of professional services such as accounting and law, making Hong Kong an "international financial center" in the true sense.

"When I graduated, it was very difficult for a student from a local university in Hong Kong to enter an investment bank at the level of JPMorgan Chase. At that time, there were no local students around me who could enter such a company, at least in an American university. You can only enter after graduation.” Huang Yuanshan compared, “It’s not what it used to be. Hong Kong has many branches of international investment banks, and local university graduates also have the opportunity to enter big banks and compete for high-level labor positions, not to mention the resulting compliance. , operations, etc.”

Hong Kong’s ports, which have backward infrastructure and high prices, are no longer competitive. The throughput of Hong Kong’s port has dropped to ninth in the world, losing to major mainland ports such as Shanghai, Ningbo, Zhoushan, Shenzhen and Guangzhou.

(Photo by O Jiale)

Divisional thinking controls the new economy

"From the absence of such a story to the existence of such a story, for some people, the opportunity is great. That is of course Hong Kong's progress." Huang Yuanshan continued, "But if you are very smart, you have no interest in doing it. What about people who work in finance?”

"We went from Made in Hong Kong (made in Hong Kong) in the 1970s and 1980s to Made by Hong Kong (made in Hong Kong) after the 1990s. Logically speaking, we should keep the high value-added part of the industry in Hong Kong, But we didn’t do it.” Huang Yuanshan explained, “Made by Hong Kong” means that Hong Kong companies disperse their supply chains and industrial chains to different places. The specific production bases and even trade may not necessarily be carried out in Hong Kong, but Hong Kong can play a coordinating role. .

For example, after the industry moved northward, Hong Kong should switch from the OEM model to upstream technology research and development, so as to build a research and development center, brand center and design center similar to Silicon Valley in the United States, but Hong Kong obviously missed the opportunity for upgrading and transformation.

The "Silicon Harbor" project is an example of Hong Kong's missed upgrade and transformation.

Hong Kong has accumulated a large number of electronic engineering talents and R&D resources. According to the report of the US congressional delegation, Motorola Semiconductor Hong Kong Co., Ltd. was established in 1967 and is the center of the semiconductor sector in the Asia-Pacific region.

In the next 30 years, Motorola built laboratories, design, testing centers and other upstream and downstream facilities for the chip industry in Hong Kong.

In 1990, the "Silicon Harbor Center" was built, which was the second largest semiconductor test and assembly plant in Asia at the beginning of the 21st century, capable of testing 5.2 million wafers per week.

After the handover, the first Chief Executive Tung Chee-hwa appointed Tian Changlin, the former president of the University of California, Berkeley, as the chairman of the Hong Kong Innovation and Technology Committee, and came to Hong Kong to plan the development of Hong Kong's technology industry.

Tian Changlin invited Xu Dalin, the founder of Handing Asia Pacific, to come to Hong Kong for exchange and plan to build a chip factory in Hong Kong.

In 1999, Xu Dalin proposed the "Silicon Harbor" plan to establish six chip factories in Hong Kong, hoping to cooperate with Taiwanese semiconductor engineer Zhang Rujing to transfer the development experience of Taiwan Science Park to Hong Kong.

However, the "Silicon Port" plan was opposed by two directors of the "Three Divisions" during the promotion process.

A year later, Xu Dalin publicly stated that he would give up the implementation of "Silicon Port" in Hong Kong and would move to Shanghai for implementation.

He explained that Shanghai is willing to provide land on almost rent-free conditions, with tax exemption for the first five years and half of the tax for the next five years, but the Hong Kong government is unwilling to give it back.

The first Chief Executive, Tung Chee-hwa, appointed Tian Changlin, the former president of the University of California, Berkeley, as the chairman of the Hong Kong Innovation and Technology Committee, and came to Hong Kong to plan the development of Hong Kong's technology industry.

(Information Services Department)

"Silicon Port" was renamed "SMIC" after landing in Shanghai, and it was listed on the Hong Kong Stock Exchange and the New York and London Stock Exchange four years later.

SMIC has now grown into the only chip manufacturer in China with a 14-nanometer energy production capacity, and one of the top ten chip manufacturers in the world, with a market value of HK$207.5 billion.

More importantly, SMIC has brought a semiconductor industry cluster to Shanghai, which has driven local manufacturing jobs to high value-added.

Today, there are more than 200 well-known semiconductor companies in Shanghai, with semiconductor sales revenue of about 250 billion yuan in 2021 and more than 200,000 employees.

In 2018, the internationally renowned new energy vehicle brand Tesla chose to set up a "super factory" in Shanghai, because the city has the world's largest and most modern port with the largest throughput, as well as upstream industries such as semiconductors and steel. .

Now that the "Silicon Port" has been finalized, are "land" and "tax" really irreversible issues?

Especially in terms of "land", the "Silicon Port" requested 200 to 250 hectares of land in the past, and later ceded it to 30 hectares of land, but the Secretary still did not change his tough attitude.

Could it be that Hong Kong really lacks these 30 hectares of land?

After the handover, the Shenzhen River straightened and fell into the Lok Ma Chau Loop, an area under the jurisdiction of Hong Kong, with an area of ​​87 hectares; the planned land area in the "Northern Metropolitan Area Development Strategy" announced at the end of last year reached 300 square kilometers. Ten thousand hectares of land available for development.

It can be said that the land requirements proposed by Xu Dalin are just a drop in the bucket for the entire northern part of Hong Kong.

However, the failure of the cooperation reflects the SAR Government's serious divisional thinking, its negative attitude towards the development of the Loop and the New Territories North, and its conservative approach towards emerging technology industries, all of which are thought-provoking.

After the "Silicon Port" landed in Shanghai, it was renamed "SMIC" and listed on the Hong Kong Stock Exchange and the New York and London Stock Exchange four years later.

(Visual China)

Why do competitive advantages cut talent and keep them?

Looking back, "Silicon Port" is not an isolated case. This kind of story occurs in every local industry that has accumulated resources but has no choice but to decline due to the government's contempt.

The words "passed by", returning to the economic figures, are just a slight change in the proportion of GDP of the manufacturing and service industries.

But it falls to every Hong Konger, but it is the cruel reality that it is impossible to adapt to the new economic trend of the world, and it is difficult to "make the best use of people's talents".

Professor Deng Xiwei from the School of Economics and Business Administration of the University of Hong Kong pointed out in "Hong Kong desperately needs the third economic transformation" that local college students choose to study medicine, education or business administration for stable and high salaries, rather than science or engineering that can help drive economic growth. "An important reason is that the labor market does not provide science and engineering graduates with the opportunity to apply what they have learned."

What does it mean that there is no "opportunity to apply what you have learned"?

At present, the eight major public institutions still retain a large number of engineering departments (below), with 4,058 (18.2%) graduates studying engineering and technology in 2019/20, but only 1,138 can become full-time engineers after graduation 8.34% of graduates with full-time employment.

This compares to 3,133 of the 4,780 students (21.4%) who studied business and management, and 3,133 entered the business profession full-time after graduation.

While only 1,134 people (5.1%) graduated from the education department, 1,743 people graduated into teaching majors, reflecting the popularity of the education industry.

Eight major public institutions still retain a large number of engineering departments, but only 8.34% of college graduates can become engineers.

(Hong Kong 01 cartography)

In short, only one in three engineering and technology graduates will become an engineer, while business graduates have a 70% chance of entering related professional industries, and the demand for teaching professions far exceeds the supply.

Huang Yuanshan criticized that the local innovation and technology ecosystem has not yet formed, so it is difficult for young talents who are admitted to engineering and cultivated through the applied education path to succeed.

"Many people say that parent education should be better promoted in terms of innovation and technology and vocational education." Huang Yuanshan changed the topic, "If there is an opportunity in the industry and people don't know about it, you tell him that it is 'propaganda'. But if there is no chance, Go to "Propaganda", those are not called propaganda!"

"Looking back, education diversification requires diversification of the way out, and diversification of the way out requires diversification of industries." Huang Yuanshan pointed out that Singapore, which used to be a "Ding-Dang Wharf" with Hong Kong, had a much more balanced development in the past.

According to the Bureau of Statistics of Singapore (below), in addition to the service industry, which accounts for 70% of GDP, Singapore also has a manufacturing industry that accounts for more than 20%.

Among the manufacturing industries, the three industries with the highest economic contribution are electronic products, chemical products and biomedical products. work position.

Thirty years ago, the combined output value of these three industries was S$180.8 billion, and today it has multiplied 41 times.

In terms of employment, the total number of practitioners in the three industries in 1980 was 83,000, and today it is 102,000.

It can be said that when Singapore transformed into a high value-added knowledge-based economy dominated by the service industry, it did not give up its talent, knowledge and technology accumulation like Hong Kong, but followed the trend of the new economy and moved towards a real economy. "Diversified Industries".

In the past 30 years, the manufacturing industries that contributed the most to Singapore's economy were electronic products, chemicals and biopharmaceuticals, with a total output value of S$180.8 billion, 41 times that of the previous year.

(Hong Kong 01 cartography)

Reconstructing the regional competition and cooperation relationship food "Sifangfan"

"Singapore has a very high sense of urgency, and the government wants a stable, diverse, harmonious and coordinated society," Huang Yuanshan said. "They know that only eating 'financial' is 'not enough', so they will develop other things. This is how history evolves, look back. Looking at their whole development is more even and strategic.”

The shortage of local talents in the new economy is not only the problem of the solidification of the industrial structure, but also the housing prices and living costs in Hong Kong are the highest in the world. The latest report from the human resources consultancy ECA International shows that Hong Kong has become the world's expatriate employees for the third consecutive year. Most expensive city.

Guan Lilian, regional director of ECA International Asia, said that the cost of living in Hong Kong is high, but the quality of life is not better than other cities.

He also said that there is a brain drain in Hong Kong, and expatriate employees choose to return to their place of origin or go to Singapore or Dubai.

Expatriate employees are all elites in the industry, at least "have a choice", but the grassroots background is "no choice", and can only be "trapped" in Hong Kong, seeing that the channels for the upper class are getting narrower and narrower, and they are suffering from stagnant salaries and increasing Decreased quality of life.

In the article "Hong Kong desperately needs the third economic transformation", Deng Xiwei pointed out that in the past two decades, Hong Kong's per capita GDP has increased by 89%, but the median household income growth in the same period is only 63%, while food prices have increased by more than 80%, and housing spending surged 306%.

It can be seen that despite the booming economy of Hong Kong in the past two decades, every Hong Kong family has less and less money at their disposal and is under pressure on food and housing.

"Abandoning filth if you don't grow strong, why not change it?" Qu Yuan, an ancient patriotic poet, once sighed in the Chu Ci "Li Sao", exhorting the king of Chu to implement beautiful government, abandon filthy government, and reform the old system.

In Huang Yuanshan's eyes, the new SAR government led by the incoming chief executive Li Jiachao should also speed up reforms and seek to change the unbalanced economic structure.

The Hetao will be a pilot area for "in-depth cooperation" between Shenzhen and Hong Kong, and it is necessary to achieve a breakthrough in "one country, two systems" and a "win-win" between Shenzhen and Hong Kong.

(Xinhua News Agency)

Huang Yuanshan pointed out that the country's "14th Five-Year Plan" has designated eight centers for Hong Kong (International Financial Center, International Shipping Center, International Trade Center, International Legal and Dispute Resolution Service Center in the Asia-Pacific Region, International Aviation Hub Center, International Innovation and Technology Center) , a regional intellectual property trade center and a Sino-foreign cultural and artistic exchange center), Hong Kong must follow the goals of the eight centers and formulate a "top-level design".

He emphasized: "These eight centers are not created out of thin air. It is as if innovation and technology and culture and arts are completely areas where Hong Kong once had foundations and advantages, but has been neglecting development."

Huang Yuanshan believes that the breakthrough point of innovation and technology lies in the "Hetao District": "The Hetao District is specified in the "14th Five-Year Plan" and is one of the cooperation platforms for Guangdong, Hong Kong and Macao, as well as Qianhai, Hengqin and Nansha.

He went on to point out that the Hetao will be a pilot area for "in-depth cooperation" between Shenzhen and Hong Kong, and it is necessary to achieve a breakthrough in "one country, two systems" and a "win-win" between Shenzhen and Hong Kong.

He analyzed that, for Shenzhen, cooperation with Hong Kong can be used to solve the problems of internationalization of enterprises, such as intellectual property protection, product certification and overseas marketing; while for Hong Kong, it can use Shenzhen's mature industrial chain to solve scientific research achievements. The problem of difficult commercialization, "At the same time, the two places will jointly go to the international market to attract investment, and they will be very competitive in attracting talents. Enterprises can not only enjoy the advantages of Hong Kong's system and scientific research, but also enjoy access to Shenzhen, the Greater Bay Area and even the opportunities in the Chinese market.”

However, Huang Yuanshan emphasized that the two places should cooperate in depth in every link of the industrial chain, and should not simply divide labor by "research before and factory", because this will not help the two places to solve their own problems, nor can it show the system of the Hetao District Advantage.

He first took basic research as an example, "Hong Kong has advantages in research, but we cannot ignore the large investment of scientific research funds in the Mainland. The laboratory in the Hetao area should be able to obtain funds from both the mainland and Hong Kong at the same time." The next link is prototype production. , "The Hetao can also be produced in small batches, 'from one to ten' scientific research results, and then take them to the mainland market for testing and adjustment." However, he also reminded that the SAR government should speed up the construction of the northern metropolitan area and the cooperation between Shenzhen and Hong Kong. "The time is so tight. If we don't have a close cooperation, it will be another situation ten years later, and people may not be willing to cooperate with us."

Huang Yuanshan used "eating square rice" as a metaphor for Hong Kong's economic model.

"Hong Kong's financial industry is international, and it earns money from the world, so the financial industry has high income. Similarly, our innovation, branding and design should not only focus on the local market, but should aim at the international market and become globally competitive. (Global competitiveness), so that high-income jobs can be provided.” Huang Yuanshan believes that the “14th Five-Year Plan” to strengthen the functions of the “Eight Centers” is actually to strengthen Hong Kong’s ability to “eat square meals”.

"Hong Kong has many opportunities. The Guangdong-Hong Kong-Macao cooperation platform in the Greater Bay Area, the mainland market and the RCEP (Regional Comprehensive Economic Partnership), etc., the bowl of 'rice' will become bigger and bigger." Huang Yuanshan described the future of Hong Kong , "I hope that Hong Kong can eat it."

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