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Thread: Document: Shanghai-YangZi River Delta vs. HongKong-Pearl River Delta

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[quote=MARRIE,364929]Whilst it is true that Shanghai is also investing heavily into becoming a trade, finance, and logistics hub which, on the face of it, should imply direct competition with Hong Kong, I would challenge this inevitability and advance that Hong Kong and Shanghai do not and will not directly compete with each other.  The reasons are evident:

Firstly, each city has its own hinterland.  Pearl River Delta companies are most likely to continue to use Hong Kong as their primary resource centre regardless of developments in Shanghai.  This is true in reverse for Yangtze River Delta companies.  In other words, the customer bases of the two cities are different and therefore discourage direct competition.  Indeed, Hong Kong cannot replace Shanghai as a hub for Yangtze River Delta Companies, and Shanghai certainly cannot replace Hong Kong position as leader of Southern China.  Even in the areas of financial services, Shanghai’s role as center for domestic capital markets and Hong Kong’s more international role will not overlap in the foreseeable future.

Secondly, whilst Hong Kong boasts an economy dominated by the service sector, it is unlikely that Shanghai will abandon its entire industrial base.  The Shanghai government recently announced the six pillar industries for Shanghai.  While their emphasis on financial services, logistic services, and information technology may mirror those of Hong Kong, they have also retained automobile manufacturing and industrial machinery and equipment manufacturing as two of the pillars.  It is evident that Shanghai will keep a degree of manufacturing and industrial roles for the city going forward.

Thirdly, due to the fact that Hong Kong and Shanghai today possess different skill sets and areas of expertise, the two cities in fact possess a potentially powerful partnership that will be of mutual benefit.  The Hong Kong businessman is bringing valuable international business experience to the manufacturing and consumer sector in Shanghai, while Shanghai-based companies continue to come to Hong Kong for more sophisticated financial structuring and capital raising exercises.  Indeed, the development of Shanghai is being partly fuelled by investments from Hong Kong. Hong Kong not only serves as Shanghai’s largest investor accounting for some 30% of FDI into China, but also supplies Shanghai with its management expertise and business experience.
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