Hong Kong's current sluggish economy has prompted suggestions that local manufacturers with investment in the mainland should "move back" to Hong Kong. But would a massive "move back" be feasible? And how would it benefit Hong Kong? This was the theme of the first lecture in the Distinguished Industrialists Lecture Series, delivered by Dr K B Chan, Chairman and Managing Director of Surface Mount Technology (Holdings) Ltd, on 3 September. The lecture series is organized by the Faculty of Science and Engineering.

Dr Chan began with a macro analysis of the global political and business environment. He pointed out that the global business environment has been adversely affected by the threat of war and the prevailing economic recession. But China maintains an enviable annual GDP growth of 8%, a magnet to overseas investors.

Meanwhile, Hong Kong manufacturers, who have been heading north ever since China opened her markets in 1979, are now the economic backbone of the mainland's southern and eastern industrial bases. The number of Hong Kong manufacturers in China now totals around 40,000. And Dr Chan believes that, with the increasing number of overseas investments and China's entry to the World Trade Organization, China will face increasing pressure to improve her legal and taxation systems to meet international standards, resulting in new opportunities for Hong Kong manufacturers.

As far as moving back is concerned, Dr Chan advised local manufacturers to carefully consider the pros and cons. While some high-tech, high value-added production processes that require intellectual property protection might be more suited to Hong Kong, labour-intensive production processes would be better off remaining in China. Hong Kong manufacturers should capitalize on their many years of experience of doing business in China in exploring new niches, for instance, providing services in dealing with customs and taxation in China, or acting as consultants to overseas investors who are new to China. "Moving back is an issue which stimulates new thought," Dr Chan said. "I regard it a catalyst that could prompt local businessmen to review their situation and to look for new opportunities.O