Former British colony adapts to life in China's shadow

HONG KONG — Victoria Park is a large expanse of green framed by a spectacular skyline. Great cities usually have great parks, and Hong Kong is no exception. Victoria Park is a kaleidoscope of plants and people.

On a recent morning, as a soft mist fell, a businessman practiced the martial art of kung fu with his umbrella. Nearby, dozens of people practiced t'ai chi. One elderly man moved with incredible precision and balance, while a woman next to him undulated like a reed in the wind.

T'ai chi is all about balance, focus and flexibility, a fitting metaphor for Hong Kong's economic transformation during the last decade. Hong Kong's experience also offers important lessons for South Carolina and other places in America that have seen an exodus of manufacturing jobs to mainland China.

It was 10 years ago that the British handed over their colony to the People's Republic of China. Today, Hong Kong is considered a "special administrative region" of China. It operates under the banner of "One country, two systems."

Hong Kong has its own police force, legal system and currency. Its top government leader is appointed by Beijing, but voters also have a say in various government functions. Its newspapers report aggressively on environmental and political issues, both in Hong Kong and on the mainland.

"It's the freest press in Asia," said Michael Cze, a prominent business leader. "They don't give two hoots what the Chinese government thinks, but they also don't move around China freely."

During the changeover, Hong Kong already was in the midst of an economic metamorphosis, forced by equally massive changes happening across the Pearl River Delta in mainland China.

For years, Hong Kong was a major global manufacturing center. Then, in 1980, Deng Xiaoping declared the fishing village of Shenzhen, an hour from Hong Kong, a special economic zone where companies would be allowed to follow capitalist policies.

Today, Shenzhen has a wall of skyscrapers lining the Pearl River coastline, and more than 7 million migrant workers work in factories behind them. One of the thousands of employers drawn there is Goose Greek-based lighting manufacturer and importer Quoizel.

But many of the jobs in Shenzhen once were in Hong Kong. In fact, during the last two decades, Hong Kong has seen its manufacturing base shrivel, losing nine out of 10 jobs.

It survived by positioning itself as a global financial and trade center, and as a facilitator for companies interested in tapping into mainland China's factory base, said Christopher Jackson, director of the Hong Kong Trade Development Council.

As a result, Hong Kong continues to thrive, though its growth is not nearly as explosive as China's heady 10-plus percent annual expansion rate.

Hong Kong's unemployment rate hovers around 4 percent, and even though its population is just 7 million, it still accounts for a significant portion of China's overall gross domestic product.

Hong Kong has succeeded despite a severe recession in the late 1990s and the SARS scare three years ago, which may have caused the most economic pain.

"We were cut off and isolated to some extent," said Edward Leung, chief economist for the Hong Kong Trade Development Council. "We are always facing something."

Indeed, Jackson said, the elements of ta'i chi that define Hong Kong — the balance, the focus, the flexibility — offer important lessons to businesses in America that are trying to adapt to and compete in an increasingly global economy. Between 2000 and 2003, more than 8,200 people in South Carolina lost jobs making textiles, electronics, chemicals and other items, a federal study found.

"Here's what I would do. I would take the head of the labor unions to China on a trip," he said.

"I'd say, 'Listen guys, this is what's happening here. The factory conditions aren't bad anymore. Factory owners are very keen to retain workers, and the people are very keen to work. You're not going to get them on human rights anymore. This economy is going to get bigger and bigger — in China, Vietnam and India.

" 'This is not going to go away, so the question is: How is the Carolina guy going to tackle that challenge?' "

Reach Tony Bartelme at 937-5554 or tbartelme@postandcourier.com.