Ariel Dayan Zev Steinberg

Background Introduction Hong Kong Port (HKP) Development and Global Manufacturing Trends Impacts of emerging Global Manufacturing Trends on HKP Development Policy Discussions

Pearl River Delta (PRD) Hong Kong Port (HKP) Labor Intensive Global Manufacturing (LIGM) Gross Domestic Product (GDP)

“Port growth is a function of the production outcomes of firms in the port’s adjacent space – or of that space to which it is linked, either in landward space or in areas linked across water or ocean” (Robison, 1998) The PRD contributed US$547.7 billion, 26.73% of china’s total export in 2012, even though it only comprises 0.57% (39,380 km 2 ) of China’s total landmass (9.597 million km 2 )

1960s-70sTrend of relocating labor-intensive manufacturing from developed countries to less-developed Asian economies 1972HKP, first specialized berth for container ships Late 1970sDue to China’s open-door policy, global manufacturers in Hong Kong started to relocate to PRD sHKP became the world’s busiest container port 2000Rising competition from Shenzhen and Guangzhou ports Late 2000sLIGM started to move away from PRD

Increasing value of the Chinese currency Renminbi (RMB)  PRD more expensive for manufacturing Inland China or other Asian countries Locations nearer to the major markets Increasing oil prices  Increased shipping costs

3 Major modes of Transportation: Barging (water) $ Railway $$ Trucking $$$ The completion of the Hong Kong-Zhuhai-Macau Bridge (HZMB) and the Shenzhen-Zhongshan Bridge (SZB) will cause competition between the costs of trucking and barging

GuangzhouShenzhenHKP Northern Guangdong ✔ Eastern Guangdong ✔ Western Guangdong ✔ Northern Guangdong Eastern Guangdong Western Guangdong

If LIGM in the PRD move overseas  HKP will become transshipment hub Relocation to other lower cost Asian countries  HKP becoming useless as it is too far from those countries, ports in Vietnam and Singapore are closer Relocation nearer to major global markets  Greatly impair Asian market, and as a result HKP

HKP directly contributes 1.9% of the GDP and 113,000 jobs to Hong Kong As one of the four major industries of Hong Kong, trading and logistics services made up 25.8% of the GDP and 24.2% of total employment in 2007

Invest in Western Guangdong as long as its labor cost remains competitive Provide financial assistance to global manufacturers who relocate to Western Guangdong Negotiate favorable taxes and land incentives with local governments in Western Guangdong Make efforts to ensure the completion of the HKZMB on schedule, to help usher in an economic boom & enhance cargo movement between the Western PRD and Hong Kong

Need collaboration between governments in regard to border crossings between mainland China and Hong Kong The River Trade Terminal needs to accommodate ocean vessels to reduce congestion at Kwai Tsing Mainland Chinese trucks cannot cross to Hong Kong without switching trucks There is congestion and inefficiency in the handling of river cargoes at Kwai Tsing Terminals River Trade Terminal ineffective as only aids in river cargo not ocean vessels

High trucking costs due to border crossing If Shenzhen truck drivers were allowed to transport containers directly to HKP, the cost gap would largely disappear (though cause a major job loss ) High terminal handling charges (THC) due to high land costs - Terminal operators have to stack containers higher and require more machines, money, and time Hong Kong government should give cheaper land to HKP Need more transparency in THC

Large growth in port construction in the PRD region has caused fierce competition between ports over the last decade → slowed HKP’s development According to the trigger point mechanism (TPM) HKP not allowed to build until the demand for container handling services exceeds the supply Cannot compete with other Chinese ports who are constantly expanding Hong Kong government should rethink the TPM policy and it’s unintended consequences