small and medium size enterprises (SMEs) to form industry clusters, and
the provision of better financial support are two main recommendations
to government on how to enhance productivity and growth in the Hong Kong-Pearl
River Delta region.
Details of the recommendations are being finalised
by academics at The Chinese University of Hong Kong following more than
five years of research into factors that result in growth and increased
The research dispels conventional thinking that development
comes directly from foreign direct investment (FDI). The finding is significant
in view of the phasing out of FDI preferential treatment for Hong Kong
under Chinas WTO membership.
under Principal Investigators Prof Chyau Tuan and Linda F Y Ng say they
have proved that sustainable growth in industrial productivity in the
Hong Kong-Pearl River Delta region is the result of factors which include:
of FDI due to the formation of a core-periphery system where Hong Kong
has been the core since the mid-1980s.
of agglomeration economies; cost savings resulting from enterprises
and activities locating near each other.
clustering effect which becomes the major competition base for SMEs.
specifically, said Prof Tuan, agglomeration economies can
be observed via industries and firms own chains of suppliers,
customers, and service centres with competencies complementary to the
He added: Relationships within the cluster are
more permanent and stable than in an outsourcing or sub-contracting arrangement
which can be just one off. Factors that keep the relationships stable
include distance and travel time, social networking, availability of technical
expertise, and government assistance. The recommendations will be
made to Hong Kongs Trade and Industry Department, and the Hong Kong-Guangdong
Cooperation Coordination Unit, said Prof Tuan.
On the clustering of SMEs, Prof Tuan said: If
the government can help Hong Kong manufacturers to form and to facilitate
clustering so they can better network with each other, we believe productivity
and prosperity will be enhanced.
On the second recommendation of providing financial
support in the form of credit guarantees and loans, he said: We
believe much more can be done in this area.
Prof Chyau Tuan: firstname.lastname@example.org
Prof Linda F Y Ng: email@example.com