Some Contemporary Economic Concerns of Hong Kong

HK-China: Economic Aspects, KV Patri

2

Maslow’s Theory of Human Needs

Physiological Needs

Safety Needs

Belonging and Love Needs

Esteem Needs

Self-Actualization

Needs

HK-China: Economic Aspects, KV Patri

3

Human Needs: Maslow’s Theory

• Physiological needs, Safety needs, Belonging and love needs, Esteem needs, and Needs for self-actualization.

• Esteem needs prompt users to move to new products quickly - you buy a new shirt you like even if you already have too many shirts.

• Modern customers are demanding more product variety and more innovative products.

HK-China: Economic Aspects, KV Patri

4

Value of Life: What is important (Japan) [M. Takahashi, 1999]

0

10

20

30

40

50

60

%

MaterialAbundancePsychologicalAbundance

HK-China: Economic Aspects, KV Patri

5

Relationship between human beings and nature (Japan) [M. Takahashi, 1999]

01020304050

%Use itFollow itConquer it

HK-China: Economic Aspects, KV Patri

6

GDP of Guangdong Province

0

200

400

600

800

1975 1980 1985 1990 1995 Year

GD

P b

illia

n yu

an

(200

0 va

lue)

HK-China: Economic Aspects, KV Patri

7

0

200

400

600

800

1000

1990 1995 2000

Bill

ions

of 1

990

US

$

China

India

HK

GDP of China, India, and HK

HK-China: Economic Aspects, KV Patri

8

0

2000

4000

6000

8000

10000

1990 1992 1994 1996 1998 2000

Bill

ions

of 1

990

US

$GDP of USA

HK-China: Economic Aspects, KV Patri

9

110000

115000

120000

125000

130000

135000

140000

1990 1992 1994 1996 1998 2000 2002

HK: Per Capita GDP in HK$ at Constant 1990 Market Prices

HK-China: Economic Aspects, KV Patri

10

Per Capita GDP Ranking, 1997

1. Luxembourg

2. USA

3. Switzerland

4. Kuwait

5. Hong Kong (US$26,400)Ref: 1st Report of Chief Executive’s Commission on Innovation and

Technology, September 1998.

HK-China: Economic Aspects, KV Patri

11

% Share of Mfg in HK GDP

0

5

10

15

20

25

30

1975 1980 1985 1990 1995 2000

HK-China: Economic Aspects, KV Patri

12

% Share of Mfg in HK Employment

0

10

20

30

40

50

60

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000

HK-China: Economic Aspects, KV Patri

13

Gross Output of HK Mfg SectorHK$ Billion

0

50

100

150

200

250

300

350

1978 1980 1982 1984 1986 1988 1990 1992 1994 1996

HK-China: Economic Aspects, KV Patri

14

Value Added Per Person (HK$)

0

100000

200000

300000

400000

500000

600000

700000

1982 1984 1986 1988 1990 1992 1994 1996

MFG

Fin. & Real Estate

Poly. (Fin. & RealEstate)

Poly. (MFG)

HK-China: Economic Aspects, KV Patri

15

0

20

40

60

80

100

120

140

1994 1996 1998 2000 2002

Man

ufac

turin

g in

dex

1996-2001: Hong Kong Manufacturing Index(1986=100)

HK-China: Economic Aspects, KV Patri

16

0200400600

800100012001400

1995 1996 1997 1998 1999 2000 2001

HK: Production-based GDP in Billions of HK$

HK-China: Economic Aspects, KV Patri

17

0

2

4

6

8

1995 1996 1997 1998 1999 2000 2001

HK’s Domestic Manufacturing: % GDP

HK-China: Economic Aspects, KV Patri

18

0

2

4

6

8

1996 1997 1998 1999 2000 2001 2002

HK: % Unemployment

HK-China: Economic Aspects, KV Patri

19

Is Hong Kong hollowing out ?Or,

Is there an industrial transformation?

HK-China: Economic Aspects, KV Patri

20

Transformation: Mfg Moves to the Mainland To Lower Costs

• Over 4M workers in the mainland

• 1995: HK exports to mainland up by 20%

• 1995: 71% of domestic exports and 40% of re-exports attributed to outward processing activities in the mainland

• 1995: 74% of imports and 82% re-exports of mainland origin

HK-China: Economic Aspects, KV Patri

21

A quote from the second report (1999) of HKSAR Chief Executive’s Commission on

Innovation and Technology “There is strong competition [to HKSAR] from

neighboring economies for Hong Kong’s regional role in trade, finance, transportation and communications. With respect to manufacturing, Hong Kong must strive to support and further develop high-value activities. Hong Kong is also facing stiff competition from low-cost economies. A fundamental challenge is how Hong Kong should position itself in the knowledge-based, global economy of the 21st century.”

HK-China: Economic Aspects, KV Patri

22

Productivity

Quality

InnovationIndustrialProgress

HK-China: Economic Aspects, KV Patri

23

Innovation is not easy

Although innovation is increasingly seen as a powerful way of obtaining competitive advantage and more secure approach to defending strategic positions, success is not guaranteed. After all, innovation is by its nature a risky business. And we need to remember that there is a great deal of uncertainty in innovation, made up of technical, market, social, political and other factors.

HK-China: Economic Aspects, KV Patri

24

Innovation is essentialBecause the innovation process is so uncertain,

it sounds that it is forgivable for many organizations to decide not to innovate. But, the approach of doing nothing is rarely an option, especially in the rapid change of the technology and the economics.

HK-China: Economic Aspects, KV Patri

25

We have no option but to learn to manage innovation

So the question is not one of whether or not to innovate but rather of how to do so successfully. What lessons can we learn from research and experience, and is there any pattern to these which might be used to guide actions?