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Hong Kong Factories Not Fleeing Dongguan

HK factories not fleeing Dongguan, says official

Chloe Lai in Dongguan – Updated on Jul 24, 2008 – SCMP

The Dongguan party secretary yesterday denied the city had seen an exodus of Hong Kong factories because of the unfavourable business environment created by the yuan’s rise, a new labour law which has added to their costs, and environmental charges.

Liu Zhigeng also denied suggestions that the authorities were forcing labour intensive, low-tech and highly polluting industries to leave. He said the number of new factories and the number of those either closing or moving was consistent with previous years.

“Over the years, there are always about 4,000 new factories setting up in Dongguan and some 700 either closing down or moving out,” he said.

“The number in the first half year is consistent with previous years. It is natural, businesses moving in and out.”

Speaking to a group of Hong Kong media representatives, the party chief said Dongguan had to upgrade industries to become high-end and environmentally friendly.

However, he stressed the city would rely on economic incentives rather than administrative measures to achieve the goal. “We will do it step by step. We will experiment by implementing a pilot scheme.”

Mr Liu also said the authorities were discussing operations upgrades with low-end and labour-intensive factories. Economic incentives include using 20 billion yuan (H$22.9 billion) to set up 34 sewage treatment plants and four incinerators to reduce environmental costs for the enterprises.

Officials have been ordered to improve their communications with Hong Kong and other enterprises and to cut government charges.

The party chief also said that since most of the Hong Kong enterprises were large-scale, they had not been badly hit by the unfavourable business environment.

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