© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? 3Changing industrial location – How and why does it change over space and time?

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? 3.1 Where were manufacturing industries in Hong Kong mainly located in the past? Where are they now?

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What is industry? Secondary industry Primary industry Use materials found in nature Types of industry Process raw materials or semi- finished products into valuable products Provide services to other industries and to people Concentrated with information, its application, manipulation and transmission Tertiary industry Quaternary industry Mining Textile industry TransportResearch Can you name three more examples for each type of industry?

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What is manufacturing? In a narrow sense, industry is confined to those activities in which raw materials are fabricated, assembled or transformed into more valuable products. This process is called manufacturing. Which type of industry is manufacturing?

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What is a manufacturing system? Inputs Processes Outputs Market Cash Waste Useful outputs

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Different stages of industrial development in Hong Kong Before 1949: Along both sides of _______________ Victoria Harbour 1950s: Further expansion along Victoria Harbour 1960s and 1970s: Along both sides of Victoria Harbour, extending from ___________ to Tsuen Wan in Kowloon, from Chai Wan to Western District in Hong Kong Island Kwun Tong

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What has happened to our manufacturing industry since the 1980s? Throughout the 1960s and 1970s, the number of manufacturing workers grew continuously. Source: Census and Statistics Department What is the trend in the number of manufacturing workers since the 1980s?

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Let’s look at the trend in the share of GDP by manufacturing industry sector in Hong Kong. In conclusion, the importance of the manufacturing sector has been ( decreasing / increasing ) in Hong Kong. Source: Census and Statistics Department What has happened to our manufacturing industry since the 1980s?

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What has happened to our manufacturing industry since the 1980s? Besides changing in importance, the location of manufacturing industries has also changed since the 1980s. Taking advantage of low production costs in China, many manufacturing firms in Hong Kong have relocated their factories to the southern parts of China, especially to the ________ _____________. Zhujiang Hong Kong Shenzhen Huizhou Dongguan Guangzhou Foshan Zhongshan Zhuhai Jiangmen The major manufacturing centres in the Zhujiang Delta Region Delta Region

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What manufacturing activities have been relocated to the Zhujiang Delta Region? What activity do most firms prefer to locate in Guangdong rather than Hong Kong? Why do the firms move their production operations to the Zhujiang Delta Region? Source: Made in PRD Study (2007), Federation of Hong Kong Industries

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What are the reasons for moving production operations to the Zhujiang Delta Region? The Zhujiang Delta Region possesses many pull factors attracting industrialists to relocate their factories there, while Hong Kong possesses many push factors, which do not favour production. Push factors ( Low / High ) wages ( Low / High ) land rent ( Extensive / Limited ) flat land ( Less strict / Strict ) government controls on pollution Push factors Low wages Low land rent Extensive flat land Less strict control on pollution Favourable conditions are given to Hong Kong manufacturers Near to Hong Kong Industrialists know the place and have good connections

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What are the reasons for keeping company headquarters in Hong Kong? Why are there many companies keeping their headquarters in Hong Kong? (Credit: Liang Wing Hang Yanchap) Central, Hong Kong The basic functions of headquarters are to monitor operations and develop long- term business strategies. These activities involve exchange of information, requiring easy and frequent communications with other organizations

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Efficient support services and telecommunication s facilities Politically stable and secure, well- established legal system The advantages of keeping company headquarters in Hong Kong are What are the reasons for keeping company headquarters in Hong Kong? Efficient transport network Good supply of high quality managers, accountants, engineers and technicians

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Is industrial relocation happening in other industrial regions? HeadquartersSales and marketing Research and development IT management Purchase of materials Financial management Logistics Production As the business environment of the Zhujiang Delta Region improves further, most of the industrial activities will be relocated there someday. This is a logical response to the changing location factors over _______. When the advantages in the ________ of a firm has ( increased / diminished ), or when there are changes in the importance of location factors, industrial relocation will take place. time location

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? (Using a furniture factory as an example) Inputs of a manufacturing system Physical inputs Land Raw Materials, e.g. hardwood Raw Materials, e.g. hardwood Cultural inputs Capital Labour Transport Power Market Government policies Government policies

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Cutting leather Cutting wood Making the structure Mounting (Using a furniture factory as an example) Other processes include… Design Purchasing Marketing Transport etc… Processes of a manufacturing system

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Useful products Waste Wood debris Leathe r debris Chair Cloth debris Such as … Table Sofa Outputs of a manufacturing system (Using a furniture factory as an example)

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Different stages of industrial development in Hong Kong Stage 1: Before 1949 Types of industriesLocation factors Importance of manufacturing to the economy Industries related to port activities, e.g. shipbuilding and repairing industries Other light industries, e.g. furniture and food processing Supported entrepôt activities Good accessibility along Victoria Harbour Local demand Free port policy Not significant to the economy

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Different stages of industrial development in Hong Kong Stage 2: In the 1950s Types of industries Location factors Importance of manufacturing to the economy Textile industry Other light industries, e.g. plastics, wigs and food processing Political unrest in the mainland Free port policy Fine natural harbour and good port facilities Immigrants provided a pool of cheap labour Industrialists from Shanghai brought in capital and technology Textile products were the major products for export Employed the greatest amount of workers A major source of income

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Different stages of industrial development in Hong Kong Stage 3: Between the 1960s and the 1970s Types of industriesLocation factors Importance of manufacturing to the economy Manufacturing became more diversified Textile was still the most important Plastics and electronics became next important Other light industries, e.g. metal parts, jewellery, photographic and optical goods, handbags, etc. Good transport infrastructure Excellent telecommunications and postal facilities Free port policy A good supply of high quality managers, accountants, engineers and technicians No exchange controls Simple tax system with low tax rates Good legal system Good technical backup service and support industries Manufacturing became the largest employer Contributed most to the economy

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? Hong Kong Guangdong 65 (1981) (2007) Daily wages of factory workers in Hong Kong and Guangdong between 1980 and 2006 Year Daily wages (HK$) What are the reasons for moving production operations to the Zhujiang Delta Region? 1Labour costs Supply of cheap labour is abundant in the Zhujiang Delta Region. The firms can raise their profit margins to move their production operations there.

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What are the reasons for moving production operations to the Zhujiang Delta Region? 2Land Flat land is limited and expensive in Hong Kong. This increases the cost of production. A factory building in Kwai Chung Due to the shortage of flat land, small firms are forced to carry out their production operation in flatted factories. It hinders expansion and reduces production efficiency. (Credit: Lee W. F.)

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What are the reasons for moving production operations to the Zhujiang Delta Region? 2Land The Zhujiang Delta Region has extensive flat land for industrial development. A factory in Dongguan A lot of farmland is converted into industrial land use. The cost of obtaining land is ( low / high ). (Credit: Lam Siu Ching)

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What are the reasons for moving production operations to the Zhujiang Delta Region? 3Government policies A sewage treatment plant in Guangdong Although the new environmental protection laws in the Zhujiang Delta Region ( decreases / increases ) the cost of production, it is still lower than Hong Kong The local governments in the Zhujiang Delta Region offer favourable terms to foreign investors (Credit: China Features)

© Oxford University Press 2009 Part 3 Changing industrial location─How and why does it change over space and time? What are the reasons for moving production operations to the Zhujiang Delta Region? 4Proximity to Hong Kong Central If I drive at 40 km/hr, how long does it take to reach Shenzhen and Dongguan from Central? 54 minutes 3 hours 5 minutes Since the major manufacturing centres of the Zhujiang Delta Region are located within one-day-travel distance, it is easier for industrialists to monitor the production operations. Being close to Hong Kong, industrialists can enjoy advanced and efficient local transport facilities and infrastructure.