Hong Kong Case

Hong Kong, as Pearl of the Orient, has undergone a significant transition from a manufacturing base to a services-based economy. Gone are the days when manufacturing industry was playing an important role in Hong Kong’s economy. Nowadays, Hong Kong becomes more service-oriented. As a regional financial centre, Hong Kong has been attracting lots of investors and entrepreneurs across the globe. They would like to explore the business opportunities here. The factors leading to Hong Kong as a regional financial centre are manifest. In terms of macroeconomics stability, High intensity in international trading and investing, and wise macroeconomics policies give rise to a high economic growth rate in Hong Kong. In terms of microeconomics environment, free and open economic policies, low operating cost, well-developed infrastructure and financial institution truly make Hong Kong to be an ideal business environment. However, there may be some challenges Hong Kong should not overlook. To some extent, these challenges would constraint its competitiveness. By comparing Hong Kong with other countries including Shanghai and Singapore in some cases, let us take a deep look at these challenges one by one.

First of all, in terms of ‘Transportation’, we could compare Shanghai with Hong Kong. Shanghai has both the ‘Pudong International Airport and ‘Hongqiao International Airport’, providing aviation and freight transport service. Shanghai also owns the largest and well-equipped cargo port in the world. It efficiently establishes linkage with other ports around the world. Operated by Shanghai Maglev Transportation Development Co., Ltd., Shanghai has the very fast and convenient ‘Maglev Train’ to provide convenient transports. Compared with Shanghai, Hong Kong has only one International Airport, which is Chek Lap Kok International Airport. On average, the flight movements rise by 6.5 percent every year. Obviously, the two existing runways are likely to be saturated by 2017. Also, the Container Terminals in Hong Kong, such as ‘Kwai Tsing Container Terminal’ mainly focus on the shipping services in Pearl River Delta but not around the world. Hong Kong has only the ‘Mass Transit Railway (MTR)’. It is relatively slower compared with ‘Maglev Train’ in Shanghai. Hong Kong’s transportation and infrastructure really puts it at a disadvantage position.

‘Ageing population’ is the second challenge that Hong Kong should not overlook. Now, one in eight persons is in the age group of 65 or above. As mentioned in the early Budget Speech released by the HKSAR, in the coming 20 years, the number of this group rises sharply in all likelihood. After 2014, the working population is expected to fall gradually. The burden on the working population might be imposed by the increasing elderly population. The elders would have to live on Comprehensive Social Security Allowance, making working people suffer more and more. Worse