Dongguan offers sweeter deal for HK capitalists
Change leaves firms at crossroads
Dongguan, a key production base on the Pearl River Delta, will soon introduce policies to retain Hong Kong capitalists stranded at the crossroads of the country's economic transformation, according to vice-mayor Leng Xiaoming.
Chasing sustainable development, Dongguan planned to push Hong Kong manufacturers to invest in high-technology and high-value-added products and services, software development and research, as well as innovative industries, the sectors in which 53 per cent of Dongguan's 17,000 foreign investors specialised, Mr Leng said yesterday.
Although he declined to reveal details of the planned policies, some trade unions said government subsidies would be offered for research and development and to high-technology industries, while legal procedures would be simplified to help Hong Kong exporters increase sales on the mainland market.
'Some factories have shut down and some have moved out, which is market behaviour,' Mr Leng said at a trade fair. 'Challenges arising from the economic transformation provide a driving force to upgrade our industry structure.'
Dongguan aims to get Hong Kong investors to stay rather than move their factories, which powered the city's economic growth to 9 per cent last year and its revenue to 315 billion yuan (HK$357.78 billion).
'Today's Dongguan represents the successful co-operation between the city and Hong Kong,' Mr Leng said. 'We need Hong Kong investors and expect the co-operation will be extended.'
He said Hong Kong capitalists were invested in about 9,000 businesses, compared with about 10,000 at the end of last year.
Analysts attributed the decrease to the state's policy of weeding out labour-intensive, resource-driven and polluting industries.
The decline also was hastened by mounting raw material costs and fuel prices, stringent environmental controls, the yuan's strength and a looming recession in the United States.
During the trade fair, Mr Leng said Hong Kong firms were among a group of investors who committed to participate in 22 projects worth 13 billion yuan in Dongguan's Song Shan Lake industrial park, which occupies 72 square kilometres, an area slightly larger than Hong Kong Island.
He said toymaker Lung Cheong International Holdings would set up a robot technology institute at the park while Excel Technology International Holdings would establish a software development centre to serve about 1,000 financial firms.
The city is battling Shenzhen and Guangzhou for investments in financial, accounting and legal services, design and innovative development and outsourcing services.
'Dongguan is relatively friendly to Hong Kong investors who are at a crossroads,' said Stanley Lau Chin-ho, the deputy chairman of the Federation of Hong Kong Industries.
'But those in labour-intensive, energy-consuming and environmentally unfriendly industries will not escape the fate of either migrating or upgrading their technology.'
