De-industrialization was Hong Kong’s Biggest Mistake
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- เผยแพร่เมื่อ 12 มี.ค. 2022
- A while ago, I did a video about Hong Kong's loss of its electronics manufacturing industry. Decent video. Did decently well. But the single loudest thing that people screamed at me in the comments section was:
"Well the manufacturing went over to Shenzhen. And now Hong Kong can focus on providing services, which it's way better at! Why are you complaining!?"
But I am making it clear here that de-manufacturing the Hong Kong economy was a mistake. Perhaps, even its biggest. In this video, we will look at what happens when an entire economy loses its ability to make things that people want.
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I think the big takeaway is that not all types of GDP growth are equal, and growth due to rent seeking/real estate speculation is absolute bottom tier, as it has a negative effect on standard of living and other industries.
Yep exactly and there are people in the comments section that do not get that!
The growth does not come from real estate, that's just where the money goes to die.
The same argument could ne made for farming 200 years ago in the deagriculture transition. It doesn't mean farming is better than factory work. Just like it doesn't mean factory work is better than services. Nobody wants to be blue collar because the pay is better in white collar. Nobody wants to be a farmer because the pay is the lowest and the work is the hardest.
@@NathansHVAC No, farming is far better than rent-seeking behavior. The question Asianometry posed was on how bad does it get when an economy is no longer able to make things that people want?
Agriculture is still making things that people want (food).
@@evannibbe9375 but I think the issue is that they do not have enough space for grow. HK can be at the edge of space availability.
Cannot agree more. The covid pandemic has yet proven this when it was the manufacturing industries (biomedical, pharmaceutical and semiconductor) that saved Singapore economy when the service industries (retail, F&B, construction and tourism) were down in dumps..
This is why you need to have a strong diversified economy. LKY was right to crack down on housing speculation after the 1980 recession.
@@ChairmanMo LKY is a legend in the world of politicians, his thoughts are some of the most advanced in his time. Furthermore, he was able to absorb all the good aspects from his British Education and Chinese culture, throwing away all the bad aspects and finding new innovate way to govern. Not many leaders have the same ideology in purely improving the life of the city/country. Furthermore, even if leaders do have similar ideologies of LKY, but lack the strong actions to make ideas come to fruit.
Service produce nothing
meanwhile nothing special came out of tech because they don't believe and support entrepreneurs in singapore
manufacturing is a loser's game though,it is a race to the bottom,the struggle to be the cheapest,the thinnest margins,the assurance that ur people will always be low value,low productivity and low income workers....the only thing worse than a nation of manufacturing workers is a nation of mcdonald's workers and maids.
if u are thinking of that manufacturing dream where u get paid $20 an hour just to do simple blue collar work like in western nations keep dreaming,even america could not keep that manufacturing fantasy going beyond the 80s and 90s.....american manufacturing was more or less dead in the 70s when japan became the next cheaper better faster.
besides manufacturing is only useful when u have a large population of disposable slaves.....who only dream of working 14 hours a day in ur sweatshop factories while basking in the glory of ur chairman mao.
dont forget the other curse of manufacturing,the middle income trap.....how many countries are stuck in the middle income trap, taiwan, malaysia even singapore back in the 90s and 00s.....in fact im not even sure if singapore has truly escaped the middle income trap.....our gdp per cap looks fking shiok on paper but the truth is most singaporeans and sinkie workers are middle and low income coolie and peasants at best......
17:44 "And now Hong Kong doesn't produce things that other people want, so as a result it turned everything it once had -- its public goods, and even its people -- into investable assets or cash flow streams, at considerable cost to its majority poor, who now see no way out."
I tip my hat sir, to the most succinct summary of HK's economic woes I've come across.
If you think Hong Kong has no public goods, you need to look at an aerial photograph of the border.
The Hong Kong side of the clearly visible line is all parks and forest land. The, uh, "Peoples'" side is trashy housing and broken-down commercial sites.
As for all the people puking and mewling about the service industry, you simply need to thin a bit more about what goes on inside a factory: every factory I've ever worked in has had aisles full of fork-lift trucks providing transportation services between locations where workers provided labour services at machines which dod punching, drilling, folding, bending, and other such-like services. Upsstairs there were always rooms full of people in whirts and ties. They provide financial and planning services, sales and warehousing services. Hell, even coffee and snack services.
@@TheDavidlloydjones lol, your idea of public good is funny. If it were truly like you said, hongkongers wouldn't have called for golf courses to be converted to public housing.
Look up land hoarding.
You can sell manufactured goods around the world but services not so much.
You are right.In Hong Kong A shopping mall, a condos block , a school a office block , a shopping street are all investable asset in Hk . All means rental number in tycoon and institutional investors’ eyes. We don’t produce anything except speculation
"Financial services were the only growth industry." Sounds like microcosm of Britain.
That was my immediate thought - dumped all the heavy manufacturing and concentrated on "the city". Now we are paying the price.
Well same thought but in general de-industrialization is a huge problem for the west so many jobs were lost through it and the confidence in the so called elites is mostly eroded.
@@Fiercesoulking Not in Germany it isn't. Or even all that much in France. The US should probably be more industrialized than it is at present, but it still makes a good deal. De-industralization is a problem for places like the UK, Spain, Italy, etc. (dunno about eastern Europe), not the west as a whole. And finance addiction seems to be a very Anglosphere orientation, the main exceptions only being the resource addicts Canada and Australia.
@@ArawnOfAnnwn Well I life in Germany while there is still a lot of car and machine production 95% of electronic stuff went to Asia roughly 1 million jobs direct and indirect . Privatization of communication also a few 100k jobs. Cutting spending on infrastructure under what it needed to maintain it during the 90's and early 2000s another 600k to 1 mio jobs or 70-80% of the whole construction business sector.
Britain like Switzerland hosts a financial fraud industry, never leave out the middle part it’s essential. To protect the illegal activities, Britain left the EU and killed off the rest of its sizeable manufacturing business.
Eastern Europe functions like Europe’s Mexico. Lots of manufacturing jobs, but they all depend on wages being and staying a good chunk lower than in the West.
Investments in East Germany by Tesla and Intel show the wage gap to Poland isn’t that steep anymore. And going further East to Ukraine in search for cheaper workers turned out to be too risky thanks to Putin.
Good video as always. A few points from a HKer:
- As HK's policy-making was heavily influenced by British & American free market economics of less Govt intervention and profit maximization for firms (see Milton Friedman's love for HK), the manufacturing sector was outsourced to cheaper areas of production, not so dissimilar to the Rust Belt in the US, or former Industrial cities in the UK like Manchester and Birmingham. This is very different from the more hands on approach by govts in Japan, SK, Taiwan, Singapore who had an export-oriented mindset.
- The malaise in HK's economy comes down to land. High land prices drives up labour costs, and also office costs. No one in the right mind would start a startup in HK, the costs of an office and hiring are sky high, and as most startups fail, making the cost of failure is very high. Much better if they stick to a conservative job as a Corporate banker where they can work their way up, which means there is less and less dynamism in the economy.
The most entrepreneurial places for technology started off on cheap farmland (see Silicon Valley and Shenzhen), where people could experiment with very low costs of failure. I have high skepticism of HK Govt's attempt of building a tech hub unless they solve their land issue (via land reclamation like SG, and re-zoning rural areas for residential high-rises and factories).
Hong Kong has more unused land than developed land. They don't need to reclaim any land.
@@JinFX The unused land is occupied by landowners with rights. Any attempt of forceful obtainment of land will run into lengthy legal battles, unless they would like to take a page out of the Communist playbook and expropriate the lands, which wouldn't look good optically these days, would it? It is clear that reclamation and re-zoning is both necessary.
@@Kaif08610 A real government has many ways of forcing landowners to put their land to use. Otherwise why not just buy the reclaimed land and sit on it too?
HKers own a lot of property in Shenzhen and those just don't sit around.
@@Kaif08610 Hong Kong doesn't have eminent domain laws? That's hardly a communist thing - nations all over the world have them, from France to Finland to Germany to Greece to US to UK to Canada to Chile to Netherlands to Norway to Italy to India to Spain to Sweden to Singapore to Poland to Portugal to Philippines to Panama...
I am a Hong Konger, I completely agree with this statement. Now, our government only seeks to expand the service industry by catering to the mainland as a "financial centre", further destroying HK's competitiveness and forcing us to rely on foreign sources for a huge portion of our economy.
That's just more money in the pockets of the big four and all the foreign investors.
As opposed to when HK was manufacturing, and they had all their raw resources in the enclave?
Disagree, the only way for HK to GDP per high capita is to shift to service industry. Singapore did the same as they move away from low value and medium added industry and signing AFTA free trade agreement. Malaysia is no China, Asianometry assessment is wrong.
@@Al-ng2wn I might have to disagree with you. Singapore has sizeable electronic industry along a host of other industry. While service made a chuck of their economy, it is not the only one.
@@Al-ng2wn maybe your right (idk) but if the average Hong Konger can't afford their own real estate.. They definitely went wrong somewhere
Incredibly good eye/ear opener!
If you contrast HK with Singapore, the highlights are even clearer.
I highly recommend this video and of course, this channel.
Wait a minute.... this video was released today... how come you wrote that comment 2 months ago?
@@MrPlaneCrashers great question! WTH?
I think when Singapore people look at HK now, they will be smile from the bottom of their hearts.
@@MrPlaneCrashers He subbed into asianometry's patreon. It has early access to these videos I think.
Singapore was pursuing the same path just like HK. Pushing into service industry and de- emphasis manufacturing in 90s when China become too strong a competitor. I forgot when did Spore did a U-turn, we found ourselves producing engineers again to fill factories again.
This channel is so good.
SOOO GOOD!!!
I agree
Very detailed and clear
You meant to say its too good?
It's been said by economist and data scientist Vaclav Smil that manufacturing is the base for everything else. Another study has found that above a certain finance to GDP ratio (and the USA is well above this, as is Hong Kong), finance actually hurts the economy. "Liquidity" that disappears during stressful times, which is modern finance, is parasitic and does more harm than help. At one point 33% to 50% of Princeton engineers ended up working on Wall Street.
It's more because there's no finance major and no business school at Princeton, only a "financial engineering" major. Many ambitious Tigers dreamt of working for Goldman Sachs only to realise it would have been much easier had they gone to Penn instead
@@adeafningsilence Nice 'insider' opinion, thanks. A quick review of the internet proves that Princeton and Brown indeed have no business schools.
You know what Finland, New Zealand and Princeton Buisness School have in common?
Theyre all figments of our imagination
@@AmanKumarPadhy I've never been to Finland or NZ, or the moon, but I think they exist outside my mind. The Rev Berkeley (the CA uni is named after him) might agree.
Including a certain princeton grad named Jeff Bezos
Hong Kong's biggest mistake was no affordable housing.
Yep!
Arguably also the biggest mistake of the countries outsourcing to begin with, and moving the politically unpalatable problems & realities of industrialisation far away & out of sight rather than the more expensive option of resolving them.
A "service economy" seems like an utterly dependent economy.
Yeps, workers been complaining and hurting ever since the globalist movement. It has completely ruined us.
Yep. We're seeing the consequences of this now in the west
tbf its not really countries as a whole that make that decision, its the owners and investors of industrial firms. because from their perspective it makes perfect sense to do so.
@@latlatko see this is the problem, private firms long term interest and the long term interest of a nation is not the same. that is why we are starting to see the Chinese model starting to get the better of the American model, because china uses its adminstive power to force firms work to the interest of that nation.
IMO Shenzhen and Guangzhou is much much better situated for these kind of enterprise (e.g. flatter compared to Hong Kong's hilly terrain, plenty of available land, better connected to inland transportation, better access to source of raw material, lower labor cost, etc).
If HK govt subsidized electronic manufacturers, they would still not be able to compete with Shenzhen in the long run anyway.
The same can slowly be said of the United Kingdom. The service economy makes up 80% of countries' GDP, and it's a travesty. Our imports vs exports have exploded since 2015, with our trade deficit being 16 billion just the January; the largest in living memory. We're left to the whims of the other countries that grew their manufacturing infrastructure at our expense and front the cost of that as consumers in our groceries, bills, repair costs, and other purchases. Although not as severe and as systematic as Hong Kong, our housing market is also sky-rocketing through similar wealth inequalities.
Half of England is now owned by 1% of its population and growing. Traditionally it was aristocrats and the gentry, but now oligarchs and city bankers are eating up what's left and charging people up to 60% of a person's take-home salary in rent. Luckily we still have parts of the country that are affordable, but these places are often impoverished, dilapidated, and lacking any jobs or prospects unless you're happy to commute 2+ hours a day to the local city. I doubt that will last long though, with funds buying up all the affordable homes in order to rent them out at ludicrous prices.
Prior to the Thatcher era, even if you had little to no education or wealth you could climb the socio-economic ladder. Now, I'm not so sure I'll ever be able to make the same climb that my parents did, or their parents before them, unless I decide like many of my other peers to up and quit engineering to go chase the golden goose.
Basically the entire western world, thanks to the globalists.
Kind a like 👍 Ppsn I think
Same in California...
If there was no Tetcher, you ll live in a mud, but not a country. It’s so funny to see comments from ones who doesn’t even live in some periods but talking like they are experts
@@redakteur3613 You're welcome to have this same conversation with anyone who lived through that era that wasn't Oxbridge educated or a wealthy aristocrat. You'll get the same opinion of her. I distinctly remember the song "Ding Dong the Witch is Dead" reaching number one on the music charts the day she died. They have to have security 24/7 around her tombstone due to the processions of people who visit to spit on her grave. I've met very few people who think she did the right thing for British industry if any. She's despised by the vast majority of the British public, young and old, and only loved by those who like to be counter-culture, or who read the Telegraph like it's the modern age Bible.
It's funny the irony of your comment. You're not even British, so I'm not sure what leg you have to stand on. I might not have been of that era, but I've dealt with the consequences of her actions every time I take the train and it's 5x the price of the rest of Europe, get my bills that are 2x it, or am forced to purchase something from abroad despite the fact we were once world leaders in almost every commercial area, be it automotive, clothing, electronics, or whatever else. Her brand of Neo-Liberalism led the country to capitalist serfdom to a few Eton-educated billionaires.
If you have been to average Hong Kong restaurants, you would have experienced high prices and mediocre services first hand. Hong Kong and service don't go well together.
"Stocks are a way to stay rich , not get rich."
_"And I don't actually see [high wage inequality] as a major problem so long as there also exists a ladder for everyone else to rise up on"_
But that's impossible, isn't it? _Somebody_ has to do all those poorly-paid jobs in a high wage inequality economy, so most people can never be allowed to rise up even if they're all working their asses off. Shuffling around the individuals filling the handful of well-paid positions doesn't address the problem that most positions are poorly-paid.
Unless 1 day some of the lower-pay jobs are combined with higher-paying ones (e.g. if office staff end up having a duty roster to take turns to sweep the office floor), which I imagine might happen 1 day when more people are educated including those in developing countries that get more developed in the future, & thus less of them migrate to take on lower-wage jobs) & eventually it becomes impossible to hire any 1 for a lower-pay job
There is a strong negative correlation between inequality and mobility, so yes it is.
I knew some of the refugees-turned-middlemen who made most of their money in the 90s as go-betweens between investors and the opening China. Their work dried up in the 00s as Western companies felt more comfortable dealing directly with manufacturers and more companies were sending people to live and work on the mainland to directly oversee operations.
Hong Kong is a good example of a "rentier state", obviously it would be terrible in a country, but Hong Kong isn't a country. Any such conceits were long gone when they allowed the giant land developers take over all the economic narrative and decisions.
A few takeaways. It seems to me like from a macroeconomic standpoint decreasing diversification is always a bad idea due to accumulation and diminishing returns on investment. De-industrialization, though not to the same degree as HK, is also a problem in European countries like Italy and France. Covid and the great logistics macro issues of 2020 and 2021 did at least spark a small amount of debate on the issue but nothing will change most likely. Capitalism as a system seems to engender over-investment into financial and real estate sectors due to the potential of high short term returns without considering the potential fragility of these markets, proven by a 400 year history of crisis after crisis wiping out massive fortunes overnight.
Think many things in life have a trade-off between efficiency (that'd favour economies giving up manufacturing for services as they develop, since the latter might be more profitable per unit area of land needed) & resilience (that'd favour having a more diversified economy e.g. enacting gov't policies to retain some manufacturing even as the economy develops). Singapore also has a negligible primary industry e.g. a handful of vegetable, egg & fish farms as it was deemed less profitable per unit land area than other industries but didn't completely eliminate it probably for food security reasons (my teacher was saying that in case food imports get cut off, @ least we'll still remember how to produce our own food)
Manufacturing is required for a healthy economy. The same “mistake” has been made in the US with the idea being you get rid of the low tech manufacturing but the reality is you need to keep all levels of manufacturing technology to stay vertically integrated enough to supply what you need to grow your own economy otherwise external factors can affect your ability to grow.
A grand irony to me is all the crooks I mean executives sent our factories overseas and know they cry about China stealing their patents. And my thought is "Well you have to tell the factory how to make your widget and now the company that owns that contract factory knows how your widget works, Just imagine if you had your own factory in America"
Services are bad for the wealth of the masses, because productivity in services dependent on individual skills of people. In production, capital can increase productivity of the workers. In services mainly only education does the same which is usually paid by the employees not by the companies. Thus, in a service society people paid according to their individual skills what most people do not really want, because their individual skills are fairly limited and so will be their income in a service economy.
I feel like this video can apply to a huge number of cities. Fascinating stuff - revealing of the short-termist actions of so many who ought to know better.
city state: yes. normal city: not really, the balancing with nearby cities that provides free flow of people and goods would counter/compensate these extreme cases
Just like Vancouver and Victoria in BC, Canada where I live (and where a lot of mostly wealthy Chinese/HK people have immigrated) buying and selling each other over priced residential real estate and expecting great paying white collar jobs is not realistic for a society.
Its also involved sometime with the chinese mafia, does hk have their mafia or chinese mafia dominate their underworld ?
Americans are the biggest foreign housing investors in Canada.
HEY! Trudeau is a god damned saint. Bless his heart
When Tung Cheehwa was the chief executive around the low point of the Asian financial crisis, he did envision developing a high tech industry dubbed something like "digital HK" as a strategy for economic revival. But it never materialized because the dominant players such as the property developers weren't so enthusiastic about it, probably were opposed to it and anyway did not know how to actually do it. When the crisis was over, happy time seemed to return to the status quo, and nobody thought necessary for change anymore.
The army should have seized that property. In Korea, there has been the compensated confiscation policy since just before the war which resulted in the former landlords lose all social influence.
Meanwhile somehow in Singapore the big companies are either foreign or gov't founded/linked, so they aren't as influential on gov't policy. The few private large companies here e.g. Far East Org'n, CDL, BreadTalk Group, OCBC, UOB Bank meanwhile aren't as politically vocal as companies in other countries I think
He also proposed expanding the public and subsidised housing schemes, which property owners didn't like because muh investments bruh. And within the next 10-15 years the remaining residential property in Hong Kong fell into the stranglehold of global investors.
As a Chinese Indonesian, I find it shocking that this kind of video doesn't even mention the Legendary HK cinema industry that existed back from the 70s through the 90s... HK cinema had a huge presence in the entire pacific Asia region back then, it arguably had more influence than Hollywood in many countries in this part of the world, and alongside manga and anime from Japan, it was one of the few Asian culture "representation" that pacific Asians can somewhat relate to.
What does it have anything to do with this video and topic? I think surely it must count for something, doesn't it? How come it's not even considered as HK's source of economic activity anymore?
Because it died. Kinda
The movie industry moved to the mainland. A lot of Hong Kong legends are still acting.
@@JinFX aging actors
@@TheMasterofComment Yeah it's hard to be a new actor when the industry has moved away.
there's a pretty interesting video on it th-cam.com/video/eEciVs_a_dQ/w-d-xo.html
Hong-Kong is such an amazing city. Sad to see its manufacturing potential gone. Same story on a larger scale in Britain. Their industries just collapsed.
And the United States Rust Belt.
Even if Hong Kong had manufacturing much of it would have moved to China Mainland after joining together since the management can hire much cheaper workers there and expand to China domestic market as well. One export Hong Kong“manufacturing” did have that did very well overseas was making films, it was the #1 foreign language film in the USA (and other parts of western world) for a good number of years but it disappeared after joining with China because of course easily to target that huge market then overseas market.
Chinese workers are only cheaper because Hong Kong real estate is monopolized.
You can still make a ladder out of industries that are moving out. Like you have a manufacturing business, gradually it accumulates know-how and engineering acumen, and eventually, you can partition and move out most of the manufacturing and retain the more space efficient and more lucrative engineering and some critical and high tech manufacturing bits. But for that the industry must have to have been there to begin with and allowed to develop in this direction, partially naturally, partially maybe with incentives. It doesn't help if you just tear the industry down and then expect higher value jobs to just appear and stay there, there's no roots they can grow from!
@@SianaGearz Exactly!
Some area like semiconductor industry can work really well in Hong Kong, but they missed this opportunity while taiwan took it all. Because mainland China is under the NATO export restriction and cannot buy the latest generation lithography machine from the west. Hong Kong is not subject to this restriction, they really had the chance to start a TSMC equivalent, and manufacturing those semiconductors that Shenzhen's electronics manufacture industry needed. They will be very competitive against others like South Korea or taiwan, because they are literlly right next to Shenzhen.
@@qiyuxuan9437 The first ever overseas chip manufacturing plant ever built was put in Hong Kong by Fairchild Electronics (this was when they made the first ever integrated circuit).
Very good video that talked about many important points.
The housing issue has always been a problem since the days of the British. The reason the Hong Kong government can maintain low taxes is by collecting revenue from land transfers. The people who run real-estate companies (the landlords) would sell or rent properties at sky-high prices and the government collecting revenue from real-estate have no incentive to legislate rent & price control to make housing affordable. Today the majority work in the service sector. Don't expect someone working at McDonald's to be able to afford a modest apartment at US $4M.
As a policy maker in a country like Singapore, creating & keeping good jobs in the city is vital to the economy. The HK government is more inclined to integrate HK with the Chinese mainland. Their policies are less about the future of HK especially after the democracy protests 2 years ago. The 1-Country, 2-Systems policy is about allowing enough autonomy in HK within China to deal with local issues. The 50 years gap is the transition to turn HK people into patriotic citizens of China and create a national identity. The local government acting on behalf of China is not interested in creating the Chinese version of Quebec for HK & Macau which is a "nation" within a "nation" with a distinctive language & culture. They want HK people to identify themselves as Chinese first, HKer second. Good jobs moving to the mainland is inevitable. And the government is promoting greater opportunities across the border in south China (the Greater Bay Area) and other parts of the country. Instead of creating jobs locally, people should be finding opportunities on the mainland and even having families with mainlanders sort of thing.
Smart commentary, research, and summaries here - well done!
Well done! There is also a large ongoing exodus of expats from many of those high paying services jobs due to industry consolidation, more employee localization, increased geopolitical tensions, seemingly never ending COVID restrictions, and much more. It is sad. My family left HK after more than 12 wonderful years on the island. Much love to those that remain.
Couldn’t you have supported independence?
@@PoliticalWeekly independence won't solve the underlying policy issues. The mass liberalizing policy decisions advised by USA/UK policy makers brought HK to the current mess. The only thing independence will do, is to turn HK into a full blown outpost for USA/UK, for carrying out increasingly frictional strategies with China, at a significant detriment to HKs national security and economy.
@@the80386 Your argument would be convincing if not for the fact that liberalization started in Hong Kong BEFORE Thatcherism began. Hong Kong PIONEERED liberalization and prospered as a result. Independence would put power (especially military and foreign policy) in Government Hill rather than Zhongnanhai. WE WILL DECIDE what is good for our national security and economy. Both of which are being compromised by the Chinese government and their insistence on certain policies, despite our autonomy. Do yourself the decent thing and admit you want direct rule in all but name
@@PoliticalWeekly
I'm curious, how would HK having independent power in military and foreign policy put food on the table for 7M Hong Kongers and how can it improve your economy?
Why can't you people be receptive to work with China on the Pearl River Delta Economic Zone which is formed by 9 major cities in the Guangdong Province with a population of 220M people to be the center of advanced manufacturing, modern service industries, international shipping, logistics, trade, conferences, exhibitions and tourisms. Except for advanced manufacturing I think HK has the experience and the expertise on the rest. HK can therefore expand beyond its borders to the Economic Zone to generate income and to provide jobs for its people.
@@bldomain The GBA cannot work because there's a mass discrepancy between our system and your system. You can't integrate a free market economy with a Marxist Leninist economy without one style of regime absorbing the other. There are 8 cities that practice socialism and 2 cities that practice liberalism. There are hundreds of Chinese for every HKer. It's clear that if HK were to enter the GBA, we'd be absorbed. The people who would benefit would be mandarin rent-seekers rather than the native workers who've lost out since the handover.
To say it is a mistake, there is the assumption there is a choice. I would argue Hong Kong's de-industrialization is not a choice, but necessary realignment because Hong Kong was unable to compete with the cheap labor and aggressive business friendly policy in China to attract investment, which like how other manufacturing that moved from OECD countries to China. The missed opportunity of Hong Kong is really under investment/emphasis of technology and technology application research.
Having thought about what has been said in this video and in my discussion with a user name Al. I think there are some key points that need to be made about why HK's De-Industrialization was so bad.
'de-industrialization' does happen, don't ever get the impression that I do not know that. The whole companies moving their factories to more or less stable 3rd world countries to take advantage of cheaper labor costs for their lower end manufacturing has always happened. Hell using this as a spring board to economic development comes right out of General Park Chung Hee's play book, fucking hell even LKY the founding father of Singapore admits that he used parts of the same playbook too.
But it is not enough to just say I'm going to manufacture low end stuff or be an OEM. You have to move up the value chain, create brands, do R&D to make your products better, then become an innovator and find a niche to dominate; like Samsung, Hyuandai, TSMC, Giant. Also look at Huawei, Oppo and Xiaomi where they basically curb stomped Samsung's phone and tablet business.
Or you have to create business environments that are so good, build in such a huge first starter advantage in terms of human capital, regulations, taxes and etc. like Singapore's petro-chemicals and oil and gas services industry.
Now if you look at HK, the problem is that while HK did have manufacturing that manufacturing was not nurtured and developed further so that it can do the things that I have described in the 3rd paragraph. Now then the HKG Leadership Caste decides to 加油 onto this dumpster fire with their land policies and encourages rent-seeking behavior via real estate and focus only on financial services (not to mention the fact that HK has done next to fuck all when it comes to building schools, public housing, hospitals, old folks homes and etc.) This is why, as Asianometry 先生 has so accurately pointed out, LKS decided to enter real estate and from there everyone else followed.
As for the HK people you have a situation where you have super de-industrialization, an economy based on rent seeking, super housing inflation, growing income inequality, the cage homes and young people who have no prospects for the future. This is why Asianometry is right on the money in excoriating the De-Industrialization of HK.
Now other countries have gone through this process too. But Singapore has a diversified economy. The ROK still has a massive industrial base fuck they are now selling full blown weapons systems to NATO countries and can build weapons tech that is on par in some areas with the West. Taiwan now has a silicon shield. However where is HK? So there we have it!
A challenge I forsee for S'pore is when the countries it imports petroleum from (since we don't have any of our own reserves) develop their own refinery industry/infrastructure, which might compete with S'pore's own, which are significant economic contributors e.g. Shell's refinery has been at the offshore _Bukom_ island since the '70s. If diplomatic ties with neighbouring countries go south, our airspace, which is tiny & surrounded by theirs (e.g. we've to rent airspace from neighbouring Indonesia as the stacking pattern flown by planes landing @ our _Changi_ Airport overfly _Batam_ island ~20km south), could ended up being 'sieged' if neighbouring countries decide to close their airspace & cause a blockade. That'd be bad news for our airport too, which is significant in our economy also. Seletar Airport also had no flights for its 1st 3-4 months of opening as Malaysia, whose _Pasir Gudang_ industrial estate is just 4km north of the airport, blocked the airport from upgrading to an ILS system (by rejecting flight plans filed by airlines flying to the airport)
Exactly what happened in the uk. Hongkong should expect decline. The uk continues on by abusing the oil industries it has as well as laundering money for sanctioned countries. I love my country :(
MTRC already expanded into China. Study Chinese Metro systems and you will discover that. Regardless, you have the basic story correct, but then, Kong Kong grew as a colony led by people who made the most of the situation to get rich and the middle class only flourished a long as the property boom. Some of us in the tech sector at the time (search Silicon Harbor) tried to steer industry up the chain, but industrialists and government did not have the taste for that as long as the colonial model made them rich. As someone from SH who entered HK in 1990, I always thought HK people were a bit smug and not very ambitious, and now the shoe is on the other foot as they become the poor cousins. China is trying, but do young HK people recognize that? Not many, they are self-absorbed.
Damn right!
Thank you Jon, as always, for the immaculate insights. I'm not sure if this comment gets read, but I hope you can add some comparison analysis on peer nations such as Singapore who has been largely reliant on service sector. Cheers and have a nice one.
@@charlesmadre5568 too bad that Hong Kong has unaffordable housing for any lower wage industrial worker to survive.
Good to see expert analysis on HK, it always seemed like HK would be in trouble when they could no longer just take a rake off Chinese mainland exports, but this seemed to be a minority opinion in HK, I think they perhaps fooled themselves too.
The HK people became addicted to speculative buying and selling.
I learn so much from your valuable content. Thank you!
10:45 if there is a great wage inequality, there will be no ladder for people to ascend in the socioeconomic hierarchy. The profound inequality itself represents the abscence of possitilities for poor people to rise up.
This is why it was so easy for the George Soros, NED crew from the American Deep State to stir up the 2019 riots.
Jon,
Your comment three or four minutes in, that the British never intended Hong Kong to be more than a trading post, is spot on.
My maternal grandfather, an energetic and intelligent man and a textile manufacturer, in the English Midlands, died wealthy, a pounds multi-millionaire at a time when the UK pound was worth five US dollars. He started out poor, and the Mechanics' Handbook of his boyhood was my daily reading, a couple of pages a day in the toilet, for some years. Good sound technical reading which has helped me in my own business careers. As a teenager he invented, developed, and patented an improved way of connecting the ends of any power-take-off belt, then invested the income in his own factories, and Bob's Yer Uncle.
He had four wives and twelve children, and WWII didn't help the textile industry much, but he still managed to pay for a good deal of my education, and I'm grateful to him.
One of the memories of my childhood was my mother reporting what my uncles were worried about, all those Australian cops hired to keep down the Hong Kong textile mills. It didn't work. The last of our English mills closed in the 1970s. The Hong Kong folks who put them out of business have since had to worry about Vietnamese, Malaysian, and other Asian competitors. Some of them financed by my daughter the engineer...
One lesson is that drunken, crooked, superannuated Australian cops are not the best people to hire, even for dubious work.
A better lesson is that the parts of the family who moved onto other industries have done very well, thank you very much, and we wish honest hard-working Chinese well in everything they do.
Well said on all accounts.
I think you are hitting at something relatively true, but mixing seperate problems together that muddy your point. Hong Kong's housing affordability problems are not to do with its service industry model, and instead caused by a lack of supply due insufficient land zoned for residential development and the knock on effects of that (land hoarding, bidding wars, financialisation of housing assets...). Its obviously Hong Kong's largest problem, and without it its outlook is completely different.
There'd be far less need to make this video if the successive governments properlty planned in new residential construction to meet demand and housing was affordable for employees working the lower wage service sector jobs in retail/food services. I can see Singapore with 20% its of GDP from manufacturing having similar issues if its HDB wasn't so well ran and didn't build adequate housing supply.
You don't know this, but some of the people that is living in those public housing, should have no rights to live on it, actually.... There is a lot of overlap between the "days that the British colony period" versus the "days that HK was part of the Song dynasty, and not the Qing dynasty's decisions"... Under British rule, the government did protected some of the Song dynasty's people too. Away from Qing government's (badly dealt) decisions... and when those people were forced to move away because of potential chaos... Afterwards, the robbers came and robbed the locals of their lands, and then the infighting happened. And THAT is why... this continuous fight still continues.. And by right.. IF... there was no British intervention.. by right.. some of the people who are the "elites of HK today".. were the descendents of those robbers. I bet you did not know that, did you ? So.. now... Which side, do you think the argument should be swayed ???? Europe doesn't want to lose its soveignties, but do you think that HK should loses its original imperial families ? Or what was the remaining of.
There is a lot of reasons why Taiwan, or even Japan is thinking of an actual war... I mean... like really really...
Services for WHO? We can't take turns making salads for eachother and call it an economy.
Economies only run as fast as people can spend, and there is no category of jobs that puts more money in the hands of as many -workers- spenders as manufacturing. You just don't need to fill out that many spread sheets or to have every check-out lane open at wal-mart. But if you are shipping millions of products each year across the globe, that each have dozens of screws: that is a lot of hands you need.
Exactly! This is literally Econ 101 and yet there are morons here that don't seem to get it.
De-industrialization, by any country, is criminal in the damage it does. Sometimes called decontruction, it make a nation increasingly dependent upon others, suffer increasing inflation rates as they have to buy from others with trade deficits, and makes them vulnerable to outside control, extortion and submission. In an emergency they will be served last to those whom can provide for their own. The proper amount of industrialization is a) self sufficiency, and b) enough surplus to meet trade needs to acquire things that cannot be locally produced. Doing less leads to submissive posture. Doing more leads to depletion problems. Some of these deconstruction programs have been pushed by international orgs, such as the world bank. Their motives are not noble, but rather seek ever greater control for themselves.
Good resume
in the USA the big plague is Wall Street, its a cancer on the side of the country now. institutional investors wanting ever higher quarterly returns at rates beyond sustainability forced the total outsourcing of much of our heavy industrial base. Sadly the loss of the great mills also drove ever worse income inequality because as things shifted to a financial economy the wealth started to pool at the top. Supply Side Economics also known as "Reaganomics" only made things worse and sadly people still buy the myth that if you make things ever easier for the top of income pile it will rain jobs and high pay, 40years on people are still waiting.
The US did a similar thing too. Manufacturing in the US is still struggling to recover from the massive offshoring in the 1980s. Cities that made a name in manufacturing, like Detroit, are now at a fraction of their former influence.
Thanks for making this wonderful video! So insightful and I can't imagine how much research effort you have put into when producing this video. You made a great point about the mistakes made by the public policies, which is purely leaning towards those rich people to make them even richer. No one gives a shit to the low income group. Also, I think the innovative and technology development in the city is far behind most of the developed economies of the world. The government's claims for developing this sector is nothing more than a slogan.
You should make a podcast. Your content is great!
The manufacturing went to Shenzhen. Kind of like the entire British economy, the manufacturing went to China.
I was thinking that. It's like if London was it's own country.
At least Britain has its outer nations/regions with the remnants of industry left.
Kind of like the entire USA economy too. So much for the theory that China would become more free as it traded more with Western economies. Actually, the west has become more Communist since the advent of free trade.
@@domtweed7323 The British pride themselves on their health care system and not manufacturing like it did during the industrial revolution. As an economic power that's the equivlant of a geriatric man who's in a old-people's home, an old man who's family is waiting for him to die off.
@@jmd1743 The health care system is great tho.
On production, Britain does have a few pockets of high tech manufacturing. We also have excellent universities, both for attracting foreign students and doing fundamental scientific research (especially in health). So we're not a complete hopeless case.
But yes, financial services/the property bubble are parasites slowly killing our real economy.
Tony Blair once asked Angela Merkel why her country’s economy was so resilient. “Mr. Blair, we still make things”, she replied.
I worked in the manufacturing industry for a HK company on the HK management side and while I was paid 3 times the salary of an equivalently qualified engineer on our mainland staff, it was still a sub par wage for a Hongkonger. Did I have some advantages from overseas education? Sure, but was I producing value for the company at more than 3x of my mainland colleagues? It was hard to argue with my boss for a raise.
Economic reality is harsh, manufacturing jobs were never going to stay when such wide differences in labor costs existed.
If they at least concentrated on some industries they could get some of the benefits and much less of the problem they actually jave, i dont think they could realistically do all themselves
Thats true. I agree that deindustrialising is a mistake for Hong Kong, but at the same time I don’t see how Hong Kong could’ve gone any other way. The disparity is cost and scale with China right next door is just too great.
I just want to say, your voice is very clear and thank you for providing close caption
Another good video. Thank you.
He is correct, they lost the manufacturing industry since the British colony, in Singapore, we kept high end manufacturing for ourselves and that kept our employment more stable
So the US/UK model but without even resource extraction or a bloated weapons manufacturing industry.
Thanks for the insight. Great vid. Cheers
Hugely interesting as always. Great vid 😀
Great history and assessment. If you own property in HK, would you still be a long-term holder? Thanks for your perspectives
If you own property in HK, my best guess would be not to swap it for property in Taiwan. HK is still a very much wanted place to live and work.Taiwan market might be a bit volatile in the foreseeing future.
I probably wouldn’t. But that’s just my own personal preference.
Somewhat similar thing happened in the Central Europe around our accession to the EU. Politicians and the media were excited about our "advance" to the next age - the service economy "like all the rich western countries". Turned out they were paid by Germany, which wanted new markets for their industry without pesky local untermensh competition.
We are slowly rebuilding our manufacturing capacity, so the EU is coming up with new reasons why we shouldn't have industry. At the moment it's climate change, which doesn't affect Germany of course, only us.
Thank you very much for your very much insightful analysis of Hong Kong economic and social problems already existed for the past 20 to 30 years-- I completely agree to your viewpoints-- in fact when the service sector was for the first time bigger than the manufacturing sector in the US in late 1970s and early 1980s (General Motor annual turnover was at 109billions) I was questioning where to find good jobs for the Black and other low education labor forces in the US. . Hong Kong just followed the UK and US routes of economic development (Thatcher and Reagan economies) during this period, thus Hong Kong is sharing the same difficult problems.
Very impressive insights on Hong Kong. Thanks!
Hong Kong economy was depending on real estate, financial trading/market, tourism and service industry beginning in the 90s. These industries were also affecting one another.
Slowly, the real estate became the only money making golden egg in Hong Kong. That's what killing off the rest of the industries.
You will be making a huge income just from renting out a retail spot.
A ridiculous example: an owner of a 300 square foot retail shop at the corner of a prime retail location can separate the shop into two areas. One tiny area facing one side of the street (two feet depth and twenty feet long) and the rest of the shop facing another street. The tiny 40 sqft area can be use for selling bubble tea or fresh juice but the rents can be as high as USD $2671 per square foot per year!
Very interesting. While I was working in the R&D Services sector in Cambridge during the early 2000s I experienced HK as a low cost, low skilled competitor who killed the prices. Looks like they have that away too. Today there is no market left for that in the Pearl River Delta. If there is any supply for it, it now comes out of Shenzhen. However many companies using this here in Germany complain about difficult communications and lacklustre services, especially post-sales services. I think HK has let a lucrative market die off. But then I noticed a rapid signification after the handover to Chinese rule. It was almost like the British heritage was dropped in purpose. That lost a lot if opportunities.
Companies complain about communications and bad services. But they are not willing to pay extras for those communications and services. If they are willing, Europe and America will be keeping their own mamufacturing. They have their best communication means and service expectation right at their own doorstep. Yet, they send their requirements all the way to the other end of the world and shipped the products back again. There is just no way that HK can complete w Shenzhen in cheap labour cost and cheap is everything companies want. Hell, China can produce a battery that explode randomly yet not one company even think to drop them as supplier. They just paper over the incident and hope it won't happen again.
@@yivunqp963 you are very right. It is ok for a project to take 3 times as long and an additional 2 design iterations, as long as it is dirt cheap.
But some companies learn their lesson. A former boss of mine said "there us nothing better than an educated customer"
Education costs money.
@@helmutzollner5496 meanwhile, low level workers get retrenched. Entire industries lost their competitivesness while the customers are still going through their iteration and coming up with new management jargons to "make things work". It is the modern day version of turning lead into gold. It is impossible, but everyone wants to believe that they can be the one to figure out how to make it work.
@@yivunqp963yeah. The same was true on Germany. The exaggerating issue in China is that everything is 5 times faster. Germany had 40 years to accommodate the Change. HK hat to to 15 years to transition.
German Polititians called it structural change and shrugged their shoulders. Notging you can to about it.
Well done. Great analysis!
So well done. Thanks for doing this.
Actually due to its limited space and resiurced,HK was able to perform a limited role in garment and light manufacturing. That role was taken over by China in the early 1980s with space availability and a massive
hardworking labor force. HK, aside from acting as a middle man and financial services, didn't have much of a chance to retain any serious manufacturing. HK just lost her edges after Chinas opening.
I am really glad I left Hong Kong many years ago. No matter how you look at it, Hong Kong is fucked. It is having a long and painful death, especially for her people. With a government like HK's, who will need an enemy? Every time people think how can the top official be more fuck up, the next one is still managed to surprise us. At this point, it might be better off to send someone from China to manage HK. After all, democracy is very dead in HK. How bad it can be, right?
Exactly! Similar family situation! A lot of Canadian Chinese from Hong Kong who having seen what Canada is like and having a broader view of the world find that they can't even stand the HK Chinese anymore.
@@ChairmanMo lol this channel isn't for wumaos
@@sciencecw There are a lot of wumaos and sexpats in this conversation and I had to roast some people. This is why you saw some of my more profane rants.
Very good analysis, thank you.
Great points and info
Hong Kong is just fulfilling it's original purpose. That being a link between China and the rest of the world. This function is fundamentally a service based activity.
First deindustrialization then the erosion of self-governance. 😢
Hopefully the city will see some major revival/renewal again within the next 50 years 🤞
*Looks at own government* They're not the only ones that need the lesson
no high hopes. the question is already how fast and deep can it fall rather than revival
@@josir1994 Unless the CCP falls, Hong Kong will have 5 to 10 years before it turns into another failed slum.
Chinese Communist Party took over
There was never erosion. They never had self governance. They just made it more obvious now. That is all.
Great insight! I agree with you provided HKG did not proceed with de-industrialization since 1970 and still retains some Core manufacturing sector, she should be able to enjoy somewhat business benefit no matter how global economic situation afterwards has been instead of merely being heavily positioned herself as the free trading port and an Asian financial hub, which can be easily overtaken or co-shared to a greater extent by Singapore or Mainland cities far later on. Also, if her Core manufacturing sector was long established I guess her Value in the PRC's top leaders' mind will be greatly enhanced. Now as her hollow manufacturing status quo they could not even manufacture as simple products as Tissue Papers for daily use, so sad.
Nice video, well researched and well said. I would say that for better or worse, how Hong Kong gets to where it is (shifts in its economy in the past) is more down to chance (outside factors), rather than any visionaries (neither local elites nor colonial gov). The fact that the city always has an uncertainty in its future (lease ends in 1997, 50 years unchanged promis) meaning the focus (of intrapreneur, ruling powers) is always on the short term; this immediately rules out really high-tech industries (semi-conductors etc) and flavours finance, service industries etc. Indeed I don't think anyone with a significant interest in Hong Kong's long-term well-being is able or has the power or know-how to make any policy change especially after the handover. However (until now) people in Hong Kong again and again shown the ability to adapt and take on, even take advantage of the changing economic and geopolitical situation. Also it seems to be a well-accepted norm that money, companies, technology, expertise just comes and goes.
Therefore the way I will view Hong Kong is (appropriately with its uncertainty of the future) from a standpoint that things aren't permanent and nothing is going to last forever; to appreciate the wonders that happened in this resource-inadequate policy support-lacking tiny piece of land, the stories of people who happen to be in this melting pot at that moment and their achievements. Pinnacles like the DragonBall in the semiconductor industry, the Kung Fu films in the entertainment industry are perhaps the best testimony of those stories in this weird little place. Even in hindsight the development in those fields may be tragic or don't make sense. (and of coz that cause all sort of social problem as outlined in the conclusion in the video)
Hong Kong's biggest mistake was being handed back to Beijing on a plate. With that went Hong Kong's greatest strengths - transparent government, rule of law and outflow of talent. This land scarce city would have eventually de-industrialised anyway, to places with lower manufacturing costs.
The main problem here is that no one is interested in building anything except housing and Ponzi schemes. All of the high-paying jobs are in finance/wealth management/tax evasion, with a few others around strange areas like education (a Humanities professor at my university was earning 300k USD/year until he was forced into retirement). Freedom of speech has been significantly curtailed though, so the education areas where high-profile international scholars are willing to be here for are becoming restricted to things like material science.
Real estate prices are absolutely insane. One area HK could really try and push for is software. You don't need a lot of space and it doesn't cause any pollution. But because the mindset is extractive (why create stuff when you can just steal from someone else), salaries for experienced engineers are absolutely pitiful, even for engineers in the finance sector. Salaries are the same as in second tier European cities, and are much lower than European capitals or the US. To get the same sized/quality flat as you could get in a second tier city here you would literally have to spend your entire salary in rent. While prices are also insane in Shenzhen, they are still less than here and salaries are higher for good engineers. Yes, you read right (though 996...).
The issue is that governments have been flooding the world economy with debt, which has all been syphoned up by the uber-wealthy, and so tax havens like HK have benefited hugely. This will have to stop at some point and when it does HK will have absolutely nothing to fall back on. Places like tax free Hainan are fast destroying any advantage HK had for tourism, and it feels like Beijing is still punishing HK for the riots, so they are not making things any easier. If Beijing ever gets serious about tax evasion and corrupt money going into HK, this place will undoubtedly crash HARD.
Beijing will always prefer dirty money going to HK than anywhere else.
@@JinFX that is a great point for sure!
FUCK YEAH! Someone who is Red Pilled about what HK is really like!
I was in Hong Kong about 15 years ago. During the 2 years that I was in Hong Kong, the Hong Kong government was pushing for more investment and expansion of the Science and Technology Park, an area that was specifically designated to encourage the growth and development of local technology companies in Hong Kong. The Science and Technology Park ran into a LOT of opposition from bean counters that criticized the costs of developing a local Silicon Valley for Hong Kong.
Regarding the MTR, I have mixed feelings about it. I love the absolute convenience and reliability of the MTR and would totally support any line extensions it has to the rest of Hong Kong so that I don't have to deal with getting on a bus just to get to an MTR station or to get to some of the more remote areas of Hong Kong (i.e. Clearwater Bay, Tai Po Tsai, Sai Kung, etc.) because waiting for a bus is pretty tedious. I think part of the problem with the MTR not wanting to expand its lines is that it has this obsession with developing a mall at each of its stations. Sure, a majority of Hong Kong's population is covered by the MTR or within 5 minutes (by minibus) of an MTR station, but that still leaves a sizable minority of the population outside of the MTR network where their only option is to get on a 15 minute minibus ride just to get to an MTR station. I mean, just consider how absurd it is that the Hong Kong University of Science and Technology doesn't have an MTR line that services it.
Why should the HKUST have a MTR station to service it ? You are already getting to location point to point under 30 minutes. And that is NOT good enough ? Have you gone crazy ? A lot of people across the globe.. travel like around a mega whopping.. 1 hr to work. Or even in the USA, they FLY into work !!! Commuting time to be around like 15 minutes is GOOD enough already ! STOP polluting HK !!! What I want to see in HK, is the pollution to be cleaned up ? And I want to see a lot of the floated companies like cleaning companies, both manufacturing, and cleaning or servicing, to be floated on the stock exchange. I don't get why people don't see such companies as valuable... cos other countries have it. So why doesn't HK ? Their contract values are into the millions... What if there is a servicing companies that cleans all the office blocks ? Even in the USA, their NYC offices have commercial companies cleaning their windows and everything. THAT is a job. And THAT company should float on the exchange ! I don't even understand what people don't get ???
What kind of companies do I expect to see in HK's exchange ?
1 - cleaning companies.
2 - printing companies, books.
3 - education companies... which includes translation softwares, even for indigenous languages... that can be installed into various OS, and platforms and whatnots... (and we are NOT talking about just "traditional or simplified"....!!! I mean weitou, or even "-隆都話". (Long Doh)
www.youtube.com/ watch?v=DxQAT8ICZeQ&list=PLK7qCnafFFJZNBnebQCwnKH7rSOJ9S-Jk&index=7&t=20s
Or to even create softwares that can convert translations.. or something. There is a LOT of companies that can exist and it SHOULD float....
good thorough summary.
In the 80s, all my school supplies (pencils, pencil cases, rulers, erasers...) were made in Hong Kong.
And now they are made in China, Vietnam, Thailand, India....
Superior content, every single time. Please keep at it.
This is true of anywhere, when you don't have any manufacturing, there is nothing to tie a business to your city. This is being felt in US as well.
Informative video, thanks.
Hong Kong could have become like Sweden if the businessowners invested in technology and manufacturing like Korea did(now a near superpower), with FinFET semicon fabs good enough for devices, an air force base with leased Gripens at kaitak with airport relocated to lama island, 3-4 nuclear powerplants ,US carriers visiting the port, heavily guarded northern borders and...free elections. It is heavy manufacturing that made Korea the power it is now. HK even had self sufficient agriculture and mining thus much more advantages than Korea or Taiwan. Now Korea can have and make anything except for the ultimate thing.
I don't think you understand how small Hong Kong is.
If Korea or Taiwan is a size of a grape, Hong Kong is still the size of a dot.
@@porcorosso4330 Population is similar to Sweden and there was enough space to host a heavychemical complex, Kaitak could have become the air force base of leased Gripens(similar to Singapore's former international air port),a few nuclear powerplants and an electronics/semicon manufacturing complex . A lot of Korea's atomic infrastructure is in its inaccessible mountains BTW. Hong Kong was much wealthier than Korea or Taiwan in the '70s.Now another nearby Chinese city,Shenzhen, has overtaken Hong Kong and makes many digital things. My drone controller(Taranis) was made in Jiangsu, a much smaller city, and they make digital things in Donggwan as well. But I have never ever seen anything made in Hong Kong. Everything was there when Korea suffered while having nothing to eat. Now Korea is a semisuperpower while Hong Kong is now not as competitive as other similar Chinese cities.
@@porcorosso4330 Liechtenstein has Hilti and many other world known companies. Luxemburgh has Arcelo Mital.What does Hong Kong have now?
@@softmechanics3130
Korea 99,000 km², Taiwan 35,000 km², Hong Kong 1,000 km², Sweden 450,000 km²
Yes. Hong Kong was a manufacturing hub. They were also richer than both Korea and Taiwan.
However, when China enter the market, there is no way in hell Hong Kong can compete.
People in Hong Kong used to earn more in one day than what they earn in a month in the mainland.
At the time no one can out compete with that kind of cheap labor.
Today, even China is starting to suffer the same fate as Hong Kong as their wages go up and labor force saturated.
Their industries are also getting out source to South East Asia.
Some even returned to the US since the wage gap is not enough to cover the shipping cost.
I am not saying Hong Kong shouldn't build things.
But they shouldn't try to build things when the numbers don't add up.
You mentioned Shenzhen and Jiangsu.
They have workers and materials support by the entire country.
China focus their entire nation's development into a few key locations.
Just the amount of talent they can gather from the population of 1.3 billion can easily out number the entire population of Hong Kong of 7-8 million.
If 1% of that 1.3 billion are talented, that is already 13 million people. Hong Kong can't out compete even with 100% of the population talented.
You mentioned Korea being semi conductor superpower.
Korea as country made a concience effort to focus all their country's resources and talent in few companies. (Not even a industries, but individual companies.)
That is what it takes for them to compete on the world stage.
Note that they did not try to out compete other places in terms of industries that required cheap labor.
This is a gamble for them and it really paid off. (For now.)
Hong Kong on the other, it is a complete free market.
The government don't try too much to guide the industry.
This is ingrained into the culture of Hong Kong. It is actually consider pro business and pro commerce.
Unfortunately, it is very difficult for individual companies to compete with entire nation states in many levels.
@@porcorosso4330 Hong Kong is much larger than Liechtenstein and Luxemburg which have some of world known industries, with Luxemburg having the world's largest steel company. Similar sized Singapore also has something. Korea had nothing to eat in the past. It is not the land size that made the difference.Korea makes semiconductors as China can't get euv. Korea has reinvented the wheel multiple times due to geopolitical reasons and one half of all self propelled guns are made in Korea.
Who has imagined a nation’s wealth trajectory is built on the number of jobs it can provide to normal(low educated low skill) people rather than to elites; not just HK, all western nations are heading towards the same direction
With sufficiently high levels of automation, you could have all the factories build everything we need while the rest of us make video game and buy the products with our universal basic income paid out of the taxes on robots.
@@evannibbe9375 it’s a sad and bleak future where most people’s skills are not needed other than to consume and to comfort
@@GoogleUser-ee8ro why?
@@evannibbe9375 No one's going to pay you to buy stuff.
@@bozo5632 The stuff will be cheap as hell if robots are making it, so you can still buy it if you're poor.
We'll still be doing things for each other in a post-automation world, like having meaningful relationships and spending time with each other.
And we can still practise skills, like we still have running competitions in the Olympics even though running is 'automated' by cars and not needed anymore.
We will still have things to value and do for each other, we just won't have to do it in an office with paperwork for 50 years of our lives.
Is there any video on your research process? How do you do these amazing videos?!
Excellent Video.
TLDR: HK has lost primary industry, and is entirely dependent on secondary and tertiary industries.
None of the initiatives can work effectively unless there is fundamental change. Hong Kong cannot solve inequality without taxation. Once an economy develops to this scale, the governance structure needs to mature to be like other Western economies, with income tax, welfare, and social programs. And most importantly, democracy.
Great video!
In the mean time so many have immigrated to Canada and settled in the Vancouver area that Canadians who born and grew up in Vancouver cannot buy a home here and are often even priced out of the rental market. As a result, our service workers are being forced out and BC is losing that part of its economy. International students are one of our main sources now for restaurant workers and such.
Sadly most people do not care about their service workers right up until they cannot get good fast service. They will complain the store lacks cashiers but will vote against policies that could maybe make housing affordable to those people. Everyone wants fully staffed shops and restaurants but too many do not want them to have good wages and affordable housing.
Dar Asianometry, Thank you for another well researched and developed piece of work. In the final analysis, what difference does any of this make to Hong Kong for the CCP has always looked upon Hong Kong both as a spoiled difficult child, who happens at the right times to make them very wealthy. Now that the CCP has allowed ( for the time being ) the interior Chinese cities to developed more open and sophisticated economies, does the CCP even need Hong Kong anymore, or the political headaches it represented? Why not just let it diminish? Significant numbers of the highly educated supermarket workers you aptly noted are seeking ways out of Hong Kong to Australia, the US, and to Europe to find jobs and build a future, who then have been sending money back to their relatives, and this process will continue ( there is a small industry of Highly Educated Women with no family and poor job prospects seeking Foreign men to marry as a vehicle out of HK ).
Exactly JOE! You are Goddamn fucking right! You are one of the few white dudes that actually get it! God bless you!
You should have seen some of the other comments....SMH!
@@alexroge6495 I said what I said because of the Sexpats who keep reeeee-ing about how HK is not so bad.
@@alexroge6495 Family is from HK, I'm a Canadian Chinese who is originally born in HK.
My family has a bit of a complicated history. Also we spent some very formative years in Shanghai. My mom saw that HK was going to be played out by the end of the 1980s and we immigrated.
They can marry Chinese mainland men
oh well, what's been done is already done. Doesnt matter now. Hong Kong's losses became Shenzhen's gains. Big deal. They are all part of China anyway. No big loss. Worst case - HKers may just relocate to Shenzhen if they want to work in industrial, in exchange for lower salaries, bigger houses, cheaper rights to car ownership. So why not?
Absolutely, F the peasants.
Thanks for the shoutout! We enjoy your stuff too :)
Asianometry, I don’t agree with everything you say but I appreciate your analysis.
"...the weird thing about extrapolating individually sound financial advice to a public policy for an entire society is that something sort of breaks somewhere along the way."
Neoliberalism in one sentence.
Thoughtful video. A similar process is happening in Canada, specifically BC. Many of the major industrial engines have been killed in favour of moving towards 'service' industries just as you describe the road Hong Kong has taken. The revenue associated with real estate transactions have hidden the need for the government to encourage long term growth here.
As a skilled technician for the last 40 years in both semiconductor and the energy sector, companies invest in short term goals and rarely long term, maybe due to shareholders pressure or just to make another quarterly bonus. The life and resources of companies are squandered without a long term game plan, employee training is viewed as bad investment as employee might gain skill and leave rather than employee contributes more to company. This has been in US, but world wide it seems to have been the plan. Manufacturing and skills based portion of the economy allows white collar to thrive but it is looked down on and governments outsource it to make it a problem else where. You see US and other counties finally waking up after the delicate JIT systems fail and hostile countries own their production. See how semiconductors were pushed out of US and now US is trying to revive what they have ignored for 20 years. When I started at Micron semi in early 90s it was a dynamic innovative company but after 10 years top talent was gone my last 6 years there the company outsourced equipment repair and destroyed a rewarding job area.
Hi, great work. Have you considered make a video how South East Asia is reacting to the Russia sanction?
a lesson in producing something that someone wants to buy or needs. instead of pushing paper around
Australia is pretty much HK, just we use commodity export income to gear up into housing.
very little else in the strayan economy but banking, housing, commodity exports.
the last few years it's like our luck won't quit though. who'd a thought China would want to punish us, yet continue to reward us, and then see thermal coal spot prices reach over $400 USD due to Xi's frenemy in Russia blow up the international energy market, along with likely destroying the wheat harvest and crippling cost increases in fertilisers, with a looming global recession taking away the one thing helping to prop up the Chinese economy - net export income.
that's why you guys are the lucky country
There is a solution to the lack of diversification mentioned in the video, but it is not a popular one in Hong Kong, especially among young people-that solution is much closer integration with the Greater Bay Area (GBA), a region with a population of around 80 million people, a huge, innovative tech sector and lots of diverse job opportunities. Another alternative is to go all out and re-diversify AND bring down property prices, but I don't see that happening in the neat future. The third option seems to be to just let things stagnate.
I think you missed a zero there buddy, the Bay Area only has about 8 million people, and I don't see how Hong Kong could ever benefit from integrating with California of all places. I know we have a massive Asian population, but I don't think that's enough.
@@karenwang313 :) The Greater Bay Area (when referring to Hong Kong and/or China) refers to the south Guangdong region. Shenzen just north of HK) alone has 12 million residents and 8 million temporary residents. The whole region has about 80 million people. Not everything has to be about America, buddy.
@@karenwang313 GBA is the Pearl River Delta part of Guangdong Province + Hong Kong + Macau
Great channel, very high quality content. I am scratching my head why I only found this channel today.
I worked for Motorola in the 90s, the Asia headquarter of Motorola semiconductor business was in Hong Kong. We had seasoned HK managers and engineers helping young Chinese engineers, and some of the machines in our Chinese factory were serviced by Hong Kong companies. The decline was caused by bad HK government policies, but I sensed a secondary reason was the loss of that hardworking spirit of the young generation. And they have had a very convenient excuse of blaming Chinese government for all their misfortunes.
8:37 'big four' does not constitute a 'monoloply', that is more like a 'cartel' (price-agreements, artificially controlled prices). This is where (local) government can, and should intervene.
Thank you btw John. This channel is great.
Edit:'Jon' sorry, I meant to write 'Jon', Also; subscribe to this channel, and the newsletter. It's good.
The Hong Kong government works for the big four.
@@JinFX Might it be that, for this exact reason, democracy + freedom of press could help mitigate this issue? (asking for a friend).
@@maartentoors Freedom of press just means the big four pays for all the tabloids so the people are blind to the realities of the world and think they are still living in some paradise. Democracy just means that campaign money comes from the big four.
@@JinFX I'm sorry that you have such a cynical view of (all?) media. I am a IT professional, I studied Journalism before that. I really hope that more people see/understand what goes into actual (research and checked/responsive) journalism entails.I don't mean to talk down your valid argument, however I hope that people can see my point as well..
Good piece, as always, especially your summation. Man this is a haunting video. I did not know Hong Kong made these mistakes. America made these mistake too. And the same complaint you heard about the solutions is to shift to services we hear as well, and is also BS. An area that loses its industrial diversity loses its competitiveness and increases its survival risk.
What is left pays big dividends for a short period of time for the very wealthy. With those profits, they invest in the places industrial capacity has moved, and cash in (make profits) there as well. Soon only the very wealthy, or those who work in whatever employment is left pays out most of their earnings to those that own the land, the stores, and the Government (taxes). Policy is driven by tycoons. The people lose their representative governance.
I suppose the cycle will continue and we shall see Korea, Singapore, and Taiwan end up losing someday to the same mistake of giving up industrial capacity for a service economy.
Perhaps a plan to reverse this is career planning, professional development and co-operative business ownership of a broader workforce backed by commercial/government R&D and investment plans (see th-cam.com/video/9hoAwNZoS8o/w-d-xo.html).
I love your comment! I have seen so much about how ohhhh industry is not important Neo-Liberal non-sense.
@@ChairmanMo and I have seen my home town in Pennsylvania, emptied like a bag of sugar, and turned inside out to make sure there was nothing left. looks like and in many ways is, a war zone. It was a great American city once. Much of to and the surrounding areas are now improving the quality of lives in East Asia, India, and the bank accounts, homes, vacation homes, jets, and yachts of the investment bankers.
It's already happening in Korea, Singapore and Taiwan as factories are already leaving those countries for places with cheaper labor costs including China and southeast Asian countries like Indonesia, Thailand, Vietnam
@@thomasgrabkowski8283 Yes, I Heard about Korea. As I lived for many years I saw the incredible rise from ashes, but also, sadly, as in my own country, I saw the greed, corruption, and hypocritical actions at all tiers that lead to the inevitable state Asianometry discusses in this (and many other) videos. It seems, as the Gospel says "the weeds grow alongside the wheat".
How can we? Can we ever? - break this cycle, or are we victims of our own lack of virtue and principle. Listen and read alternatively (10 minutes and two chapters) to Ray Dalio talk on the Lex Fridman TH-cam channel, and his book, "Principles"; go back and forth. I'd like to hear what people perceive, digest, and think about that conversation. I'll spare my thoughts so not to interfere wish all of yours.
Correct me if I'm wrong, but I recall Hong Kong also gets special status from the WTO which allows it to enjoy lower tariff rates from member countries for its exports. And somehow goods originating from China and elsewhere have found loopholes that allows them to be transferred and re-exported through Hong Kong to get these reduced tariff rates. Hence, how a territory with just ~3% of it's workforce engaged in manufacturing can somehow export more goods than the country of Canada in 2019.
Would rents for premises in HK for manufacturing not be cost prohibitive or are there far flung outskirts where it would be cheap enough to be competitive?
HK has enough land, it is just that all the land has been monopolized by a handful of tycoons.