Significant changes have taken place in the manufacturing industry within the Hong Kong-Pearl River Delta region in recent years. Some concern the value of products; others, the chain of manufacturing. We are witnessing an industrial transformation that will shape a new relationship between Hong Kong and the delta, and sustain the region's competitiveness.
These changes have revealed a need to strengthen the region's infrastructure - in particular in terms of human resources and the ability to develop new technology.
Historically, the delta has led the way in China in producing and exporting manufactured goods. Many delta products accounted for more than half of all exports in their category, for example phone handsets, cameras and fax machines. But, they were generally considered low-value goods. Now, the industries are gradually producing more technologically advanced products, which have higher added value, for example digital cameras.
Herein lie some lessons for the future of regional industrial development. First, there will be an increased mutual enhancement of manufacturing and service functions, providing cost efficiency and customer satisfaction.
Second, the manufacture value chain can be viewed as a two-part organisation, the 'back factory', and 'front office'. The overall economy of the delta manufacturing industry should be based on the analysis of individual components, followed by integration and optimisation.
Third, there will gradually be a move towards more added values in market analysis and design, and on-time delivery and customer service.
Understanding these new paradigms of industry will open up new opportunities. The traditional 'front office-back factory' model is likely to be replaced by a model of integrated functions. The key is not in the distinction of back or front, but in the leverage of local strengths for global competitiveness.