| Hong Kong is the 424 sq mi gateway to Chinese | | | | sectors in 2002 (The Economist, 2004). |
| Market with 7 Million people living within the territory | | | | With the government averse to regulation, Hong Kong |
| now defined as the "Special Administrative Region" | | | | has traditionally lacked the legislative and institutional |
| (SAR) of the People's Republic of China. Many | | | | measures that are used elsewhere to encourage |
| businesses in Hong Kong have their manufacturing in | | | | competition. Partly because of this, there has been |
| Guandong province. Hong Kong's strengths are in | | | | criticism that the domestic economy is monopolized by |
| high-tech sectors and well capitalized banking sector. | | | | a few powerful local conglomerates. For instance, just |
| Hong Kong reverted to Chinese rule in 1997. During | | | | two chains-Wellcome and Park 'n Shop-dominate the |
| that year, Hong Kong experienced a major economic | | | | supermarket industry. These two firms are in turn |
| disruption. In the two decades since that time, Hong | | | | owned by conglomerates, Jardine Matheson and |
| Kong has remained a vibrant economy with a | | | | Hutchison Whampoa respectively, which have a range |
| relatively high standard of living. Although the population | | | | of other interests in Hong Kong, owning, for example, |
| is small, businessmen and women are used to western | | | | major land developers. |
| business practices. | | | | The government has taken some steps to increase |
| Whereas Hong Kong, Singapore, Taiwan and South | | | | corporate competition in recent years, although its |
| Korea all started out as low-cost, labor-intensive | | | | efforts have so far been limited largely to those areas |
| manufacturing bases, Singapore, Taiwan and South | | | | over which it exerts a direct influence. New products |
| Korea have all developed high-technology industries, | | | | can and do gain market share very quickly. |
| whereas Hong Kong has become a services center | | | | However, the composition of trade within Hong Kong |
| for companies (foreign as well as those from Hong | | | | has changed over the past 10 years. Hong Kong used |
| Kong) doing business in China. The structure of the | | | | to be an important intermediary for China's trade with |
| economy has therefore changed dramatically over the | | | | the rest of the world. Now that China has increasingly |
| past decade: the manufacturing sector contributed just | | | | direct access to world markets, less of this trade goes |
| 5% of GDP in 2001, compared with 14.4% in 1991, and | | | | through Hong Kong (The Economist, 2004). Instead, |
| in 2002 employed only 9% of the labor force. The | | | | Honk Kong is getting a larger share of "offshore" trade |
| manufacturing sector has been replaced by a rapidly | | | | that takes advantage of Hong Kong's superior logistical |
| expanded services sector. Wholesale, retail and import | | | | services. But the value added component of this sort |
| export trades, and community, social, and personal | | | | of trade is much lower. |
| services are Hong Kong's two largest services | | | | |