Survey Finds Hong Kong vs Shanghai Competitiveness No Zero Sum Game

A “City Competitiveness: Shanghai and Hong Kong” survey shows that at this point in time Hong Kong is still ahead of Shanghai in terms of many competitiveness indicators, and is overall a more competitive international city.

The survey, conducted by the Committee on China Research & Development of The Chinese University of Hong Kong with assistance of The Better Hong Kong Foundation, also shows that Shanghai leads Hong Kong in certain areas, and that the “Base for Sustainable Economic Growth” of the two cities are narrowing.

Mr. George Yuen, Chief Executive of the Foundation said, “Present indicators are that both Hong Kong and Shanghai are equipped for being an international city. They both have their advantages to attract investment from multi-national corporations, which is very beneficial to China’s economic development. With its established competitive edges, Hong Kong will be able to continue its position as a leading international city in the Asia Pacific Region.”

The survey was conducted in Hong Kong and Shanghai between December 2000 and January 2001. The 193 respondents included chief executive officers of multi-national companies in both cities, and professionals and senior managers in Hong Kong. They were asked to rate the achievements of Hong Kong and Shanghai on 32 indicators on international city’s competitiveness.

The 32 indicators were adopted and modified from the ‘Indicators Systems for National Competitiveness’ developed in 1999 by the World Economic Forum and International Institute for Management Development. Respondents were requested to score from 5 (best) to 1 (worst) on three basic dimensions: the “Base for Sustainable Economic Growth”, “Investment Environment” and “Image of Globalization”; and 6 major components with 14 factors in measuring city competitiveness including “Production Factors”, “Policy for Social-Economic Development”, “Environment for Business Operations”, “Environment for Living” and “Investment Policy”.

The results showed that Hong Kong led Shanghai in all three basic dimensions and other factors, and was, in general, more competitive as an international city. The general score for Hong Kong is 3.75, whilst Shanghai scores 2.96 (5 is the full score).

Despite Hong Kong was generally perceived as more competitive, the survey indicated that the two cities had equal advantage on “Technology Base”, where Hong Kong was rated 3.226 lagging behind Shanghai with a rating of 3.294.

Amongst the three factors in “Technology Base”, the two cites’ performances were similar in terms of “close linkages amongst local universities and other research institutions in research and development activities”. However, Shanghai was shown to have significant advantages over Hong Kong on the item of “commercialization of local research and development achievements”, and vice versa on “prospective in local e-commerce/internet information technology”.

Hong Kong had the best score in “Environment for Business Operations”. All 4 measuring factors were significantly ahead of Shanghai, namely: “Rule of Law” (Hong Kong: 4.134, Shanghai: 2.503), “Administration of Economic Affairs” (Hong Kong 3.902, Shanghai: 2.269), Market Openness (Hong Kong: 4.170, Shanghai: 2.338), Labour (Staff Cost, Industrial Relations etc.): (Hong Kong 3.704, Shanghai: 3.339)

The research team leader, Professor Tuan Chyau of the Committee on China Research & Development of The Chinese University of Hong Kong, said, “Despite Hong Kong is leading Shanghai in a wide range of indicators, we must make allowance that Shanghai has only been opened for 20 years, its performance as reflected by some of the figures in its socio-economic status worths our appreciation. Hong Kong has a lot to learn from Shanghai.”

The survey also found that the rise in average price levels in Shanghai was more than doubled that of Hong Kong because of a long period of speedy growth. Researchers believed this factor might affect Shanghai’s costs competitiveness in a longer term.

Professor Tuan added that “More importantly, the basic dimension of “Base for Sustainable Economic Growth” between the two cities has closed up to 10.7%. Researchers consider this, in the long run, will have material influence on the competitiveness of the two cities.

Researchers reckoned, as Hong Kong is located at Pearl River Delta in Southern China; and Shanghai located at Yangtze River estuary in Eastern China, both serve two main river regions, and act as the gateway to the world for China. Their fundamental development strategy, apart from strengthening their bases for sustainable economic growth, is to integrate economic ties with neighbouring regions of developed cites, so as to expand their economic influence.

The Foundation’s Chief Executive, Mr. George Yuen, remarked, “At present, Hong Kong capitalize on the advantages of having a free market economy, ‘the one country two systems’, and a positive international image. As we face more challenges from other cities and regions, Hong Kong should review its policy on strengthening local economic sustainable growth, and provide more effective measures to enhance competitiveness.

Pyramid of City Competitiveness (PCC)

A Conceptual Model of An International City’s Competitiveness

 

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The Better Hong Kong Foundation is a privately funded, non-profit, non-political organization, formed by leading Hong Kong business people to reinforce Hong Kong’s role as the leading regional, financial, shipping, trading, communication and technology center. The Foundation also serves to enhance greater international understanding between East and West by facilitating communications between Hong Kong, China and the international community.