diamonds and pearls
Hong Kong’s unique identity as a meeting of East and West masks an ever-increasing integration with the Pearl River Delta (PRD) region of South China. The PRD is the top performer in a national economy with a GDP that is growing in double digits year on year. Covering 80% of the 179,750 square kilometre Guangdong province (population 85 million), it has the highest industrial output, the largest export volume, the most active retail sales sector and the highest per capita income of any region in China. It also attracts more than 25% of all foreign direct investment in the People’s Republic of China.
The process isn’t new. Hong Kong companies began manufacturing across the border as long ago as 1978, taking advantage of cheaper land and labour costs. Official sanction arrived when the Beijing government reversed its attitude to wealth creation under Deng Xiaoping, who famously mapped the road to the future with the exhortation: “Poverty is not socialism. To be rich is glorious,” in 1992.
The relatively long period of growth this region has seen has generated a manufacturing sector that leads the world in the production of electronics and communications products. A large proportion of the firms involved are owned or capitalised by Hong Kong-based companies that export electronics, plastics, household items, gifts, toys, watches, clocks, garments and accessories all over the world. A formidable infrastructure developed in tandem which delivers the goods to container shipping ports and then delivers them to market.
Hong Kong’s pivotal position in the arrangement relies on its international reputation as a business environment where the rule of law is enforced and respected, and as a source of investment and expertise. The willingness to invest, even in times of political uncertainty, is paying greater dividends to the former British colony, which now welcomes the majority of its tourists from China, with the bulk originating from Guangdong. Out-going Chinese tourism is set to increase as the authorities in Beijing incrementally relax travel restrictions.
The new element in the equation is Macau, the former Portuguese enclave 60kms west of Hong Kong on the South China coast. Macau returned to Chinese sovereignty in 1999, two years after Hong Kong, and has grown faster in the past six years than during almost 450 years of colonial occupation. That growth is focused on the gambling and entertainment industry, and the development is attracting billions of US dollars in capital as casino operators from Las Vegas compete with local entrepreneurs to build the most impressive gambling and entertainment emporiums. These developers’ operating prospectuses focus on one fact: more than half the world’s population lives within five hours’ travel of the international airport.