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

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7 GDP of China, India, and HK

HK-China: Economic Aspects, KV Patri 8 GDP of USA

HK-China: Economic Aspects, KV Patri 9 HK: Per Capita GDP in HK$ at Constant 1990 Market Prices

HK-China: Economic Aspects, KV Patri 10 Per Capita GDP Ranking, 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

HK-China: Economic Aspects, KV Patri 12 % Share of Mfg in HK Employment

HK-China: Economic Aspects, KV Patri 13 Gross Output of HK Mfg Sector HK$ Billion

HK-China: Economic Aspects, KV Patri 14 Value Added Per Person (HK$)

HK-China: Economic Aspects, KV Patri : Hong Kong Manufacturing Index (1986=100)

HK-China: Economic Aspects, KV Patri 16 HK: Production-based GDP in Billions of HK$

HK-China: Economic Aspects, KV Patri 17 HK’s Domestic Manufacturing: % GDP

HK-China: Economic Aspects, KV Patri 18 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 P roductivity Q uality I nnovation Industrial Progress

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 essential Because 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?