Movement of Goods and Freedom of Establishment Policies

Movement of Goods and Freedom of Establishment Policies INTRODUCTION In an examination of the various freedoms that are protected by the European Convention (EC), there are two that have provoked at different times praise and criticism, champions and conquerors. This paper will analyse that the roadmap that has been followed by the European Court of Justice[1] while interpreting EC Article 28[2] and EC A43[3]. Before splitting the discussion between free movement of goods and establishment, it is important to lay the foundation by an overview of the federalism debate that is natural to the EC and to Europe in general. The federalism question concerns the division of jurisdiction, power, and authority, between the central body (in this case the EC) and the individual states that are part of the central body. As the EC has developed, various autonomies have diminished. The ECJ is acknowledged as supreme, and Woods[4] notes that the court has expanded the Treaty into areas that were not envisaged originally, for example in Commission v Council[5]. The purpose of this paper then is to analyse the relationship between establishing a common market and respecting the autonomy and policies of individual states in the context of movement of goods and freedom of establishment. LEGISLATION? Craig[6] raises and interesting point with regards to the litigation on these points. In an effort to get true harmony, the simple solution would have been to issue Commission legislation which would have compelled the states to harmonise their laws. Craig blames the lack of speed in the Community for this failure, a situation which raises the question of the effectiveness of the courts as an adjudicator in this battle. While the ECJ do have jurisdiction, the decisions which will be examined presently have fluctuated as different times bring different concerns. The case-by-case approach is one that should surely be addressed by a legislative rather than a judicial body. Regardless of the lines that the courts have developed, there is surely a strong argument that they were not the right body for this job. It is important to understand what the individuals would be interested in gaining from the relationship. It is fair to say that the goals enumerated in the EC Treaty indicate that the Commission would want the maximum control in order to establish a common market, free of barriers. For the state, it cannot be expected that they will retain full autonomy; that would have been a sacrifice made when signing the treaty. The ideal situation though would be sufficient autonomy to be able to regulate so as to protect the interests of their constituency. WPJ Wils[7] summed this up in his article as â€Å"partial integration† which was described by him as the â€Å"pragmatic approach reconciling the desire for integration with the desire for government intervention†. The best alternative would be a clear and concise set of rules from the ECJ which would enable them to know for certain what they are and are not permitted to do; though this would be a poor substitute for the previous scenario. FREE MOVEMENT OF GOODS The EC Treaty is based in a large part around the development of a concept of a common market. A crucial aspect of this is the free movement of goods, with the apex being a market where there are no barriers and goods are sold in exactly the same conditions and situations in states a, b, and c. On the other hand, the states argue that to further the individual causes of their state, the national government must have the power to regulate, at least to a certain degree, the movement of goods. This section will deal first with Article 28 which sets out the boundaries of the intervention; it will then proceed to deal with Article 30 which addresses the interests of the member states. Intervention of the federal government. Article 28 states that: Quantative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States. By itself this Article poses more questions than it answers; as such the interpretation of the ECJ is crucial. The attitude of the ECJ has been inconsistent when drawing the federalist line, although on certain points they have remained consistently pro central governance. The limited consistencies In Geddo v Ente Nazionale Risi[8] the ECJ took a broad view as to the nature of a quantative restriction, including â€Å"measures which amount to a total or partial restraint† of trade. Since Geddo[9], this has not been questioned, and it remains a firm foundation against the influence of national governance. Likewise, it has never been seriously doubted that the second part of Article 28 addressed measures that had equivalent results (MEQRs) and that national intervention could be struck down if the court deemed them to be an MEQR. The only question has been what constitutes an MEQR and this was largely resolved by Directive 70/50 which in Article 2 outlined the possible legislation that might constitute an MEQR. Discriminatory measures: national intervention rejected. On one point, it can be stated that the ECJ has awarded an overwhelming victory to the central government. This is where the restriction has a discriminatory element to it; for example in Commission v Italy[10] imported cars were compelled to go through a rigorous registration procedure. This was struck down as being a discriminatory restraint of trade. Likewise the court has struck down attempts by a state to promote domestic goods or efforts at price fixing. Indeed this analysis of the strict application to discrimination is included for three purposes only. First, to emphasise the first victory against state intervention. Second because of Commission v Ireland[11] where the court were content to ignore the prima facie pleadings of Ireland and examine the substantive result of their self interest promotions. Craig[12] points out that this is the theme which the ECJ have followed. The third reason is the indication that, not content with giving the central government a points decision, the ECJ have attempted to land a knockout punch. In Openbaar Ministere v Van Tiggele[13] the ECJ said that if a non-discriminatory attempt to fix prices affected even a single product adversely, the law would breach Article 28. The effect of this case is to throw down the gauntlet to states and make the dedication to an open market even more convincing. There is one way for the state to save a measure; by utilising Article 30. This provides that prohibitions can be saved on the grounds of public morality, public policy, public security, health and life, protection of national treasures, and protection of industrial and commercial property. On the face of this article, it seems to belay the earlier statement of victory for the common market. States have found though that utilising the article has major difficulties. Firstly, the courts have declared that the state has the burden of proof (Openbaar[14]). Secondly, as a general principle the list is exhaustive and cannot be added to over time Non-discriminatory measures In reality, it is hardly surprising that the ECJ has reacted strongly against discriminatory measures; the real battle ground has been measures that are applicable to both domestic and foreign goods. While A28 makes no mention of any requirement of discrimination, the Dassonville case obiter noted in paragraph 5 that there should be no need for discrimination in order to be caught by A28. Far from being simple, this field has been where the battle has been most fiercely fought. Cassis de Dijon In Rewe-Zentrale AG v Bundesmonopolverwaltung fur Branntwein[15] Germany invoked a rule that liqueurs were required to have a certain alcoholic content (regardless of nationality). The ECJ developed the Dassonville obiter to apply A28 to national rules that do not discriminate. Fundamentally, the ECJ summed up the approach in paragraph 14(4) by stating the principle of mutual recognition. Once a good is lawfully marketed in state x, it should be lawful to market it in any state in the bloc. This is a huge leap from Dassonville, a leap which on its face renders a national power helpless in the face of potential consequences. Craig notes[16] that in one step the ECJ places the states â€Å"on the defensive†. It can even be stated, and this paper contends, that this does not reflect the extreme state of affairs. An analogy can be drawn with company law in the United States. With no federal control, the states engaged in a race to attract companies to their shores. Delaware prevailed by offering such laws as provide minimum governance and convenient laws. The result has been that the companies have flocked to Delaware. The result of Cassis is that were one state to create a lenient set of laws, any product that passes muster should be accepted in every other member state. This ‘Cassis control’ leaves states not on the defensive, rather defenceless. Is there no limit to the ‘Cassis control’? This bleak state of affairs is not though one of total disaster. Cassis applies only so far as the ECJ rules that the boundary extends. The crucial term is what â€Å"affects the free movement of goods†? Weatherill and Beaumont[17] emphasised the potential for domination by listing a number of hypothetical situations where irrelevant regulations could be viewed as having a marginal effect on trade. The path the court has taken has been to draw a distinction between dual-burden rules where a product has to satisfy the rules of both state a and b, and equal-burden rules which apply to all goods after they have entered the country and so would not have been applied to the goods before. Cassis clearly governs the former; the crucial question is whether it also applies to the latter, for if it does then the national legislatures may as well take a white flag to the next European summit for their battle will be truly lost. The difficulty is that the court has been ambivalent on the issue with the court in Obel[18] stating that the cases were outside A28, while in Cinetheque SA v Federation Natioanle des Cinemas Francais[19] the court ruled that such a regulation could be within A28. The court it seems has resolved the matter in Criminal Proceedings against Keck and Mithouard[20]. The ECJ followed the initial article by E White[21], who contended that under the application of the article and to retain needed autonomy for the national legislatures, all equal-burden regulations should be outside the ambit of A28. On the face of it, this appears to be a boost for the states. Indeed, this would appear to grant back to the states the freedom and autonomy to regulate in this area, so long as the regulation applies to the characteristics of the goods and is not a regulation of the type that the goods would have had to satisfy in their original state. This though is not the complete story. The first point is that the decision in Keck[22] received a great deal of criticism, from scholars, practitioners and judges alike. While this doesn’t affect the decision, it has led to uncertainty in applying Keck[23]. The result has been that a new question has been raised as to what the courts meant when permitting regulation as to sale arrangements. A typical example comes from Societe d’Importation Edouard Leclerc-Siplec v TFI Publicite SA[24] where advertising was seen as a method of sales promotion and so outside the article. Meanwhile, in Vereinigte Familiapress Zeitungsverlags- und Vertreibs GmbH v Heinrich Bauer Verlag[25] the court held that because there was an effect on the product, it was within the ambit of A28. The opening section considered the range of scenarios from the perspective of the state, from ideal to least desirable. It is clear that the current jurisprudence provides the tae with neither the autonomy that it needs to protect the interests of the state, nor the certainty which would be needed in order to determine what the state may and may not regulate. Conclusion In conclusion what can be said about the line drawn by the courts? There is no doubt that the courts have used Dassonville as a launching pad for an assault on the autonomy of the member states. The only beacons of light for the state are the Keck authority, which has already been weakened by Gourmet and by academic criticism, and the policy exemptions which as has been discussed above will be interpreted strictly by the courts. The overwhelming conclusion must be that the line has been drawn in favour of the common market. FREEDOM OF ESTABLISHMENT The second element of the EC Treaty is the section concerning the freedom of establishment pursuant to Article 43. This goes hand in hand with freedom of movement, with the distinction that it applies to the right of individuals to maintain a permanent or settled place of business. Once again, the dispute at issue here is the battle between policies and a common market. It is conceivable that individual states may have concerns about allowing free establishment. Issues such as promotion of domestic small businesses and potential concerns about lack of qualifications are all issues which states may wish to regulate. This section will determine how the ECJ has reconciled these rights with the goal of a common market. In many regards there are parallels with free movement of goods and A28, as the crucial battle lines have been drawn over measures and regulations that are non-discriminatory. However, as before, the starting point must be those regulations that discriminate against new arrivals. Discriminatory tactics: any point at all? Unlike free movement of goods, the answer to this question is implicit within A43. The second paragraph clearly and explicitly states that an individual has the right of establishment â€Å"under the conditions laid down†. This was confirmed by the General Programme[26] which detailed the requirement that restrictive laws be removed. The point therefore is clear; the state may not discriminate against individuals entering the state for the purpose of to establish themselves as a company or in self-employment. Non-discriminatory measures? On a first reading of the article, the implication seems to be that non-discriminatory measures will pass muster. Indeed, the second paragraph states that the right must be acknowledged â€Å"under the conditions laid down for its own nationals†. Given the strict approach that the courts have taken in other cases though, it is worth examining whether they have held true to this definition or have developed it, much as they did with Dassonville in the area of free movement of goods. The early authorities appeared to bode well for the national authorities; in Commission v Belgium[27] the Advocate General stated that there was no need to analyse the question of proportionality because the law was non-discriminatory. A close analysis of this decision is not needed to iterate the importance of it. As long as a state could convince the ECJ that their law applied to everyone, they would still be able to control the establishment within their country. While they would be restricted, they would at least have a wide range of options open to them, and could exercise these options while retaining their autonomy and moulding them based on the needs of their constituency. The fight however, soon began to turn, at least with regards to the initial intervention of the ECJ. In Ordre des Avocats v Klopp[28] the court struck down a French law which applied to nationals and non-nationals alike. This could be excused, as the French law prevented the lawyer from holding a second office within the Community, which provided another ground to strike the law down. Nonetheless, the decision would have been troubling for the defenders of states rights and policies. The volte face was confirmed in Gullung v Conseil de l’Ordre des Avocats[29] when the ECJ ruled that a non-discriminatory law could be struck down if not sufficiently objective. Just as the Belgium case was significant for the states, so this was for the common market. Regardless of the overall result following a determining of objectivity and state policy, the decision meant that the court would investigate the reasons for the regulation. This by itself was a strike against the states autonomy and ability to self-govern. The hits just keep on coming for state’s rights. In the next section, there will be a discussion on the defences that a state can raise, indeed they are similar to those discussed for free movement of goods. Before that though, the ECJ has provided one last marker to further encroach on the states right to regulate. In Van Binsbergen v Bestuur van de Bedrijfsverenigning voor de Metaalnijverheif[30] the court ruled that upon finding a non-discriminatory restriction to fall within A43/59 (the test was originally used in the context of free movement of services but has been extended to establishment) the state will have to show that it can be objectively justified in pursuance of a public interest. On the one hand this is a positive step for the states as the ECJ is recognising their right to regulate under certain circumstances. The difficulty is that not only is an objective standard required, a standard that will judge the state not merely on what is best for that state, but also that the ECJ was prepared in Van Binsbergen[31] to hold that the measure was not sufficiently tailored to the particular aim of the regulation. For a state attempting to hold on to autonomy, this is arguably the worst possible result, to have the ECJ making recommendations about internal legislative functions. The other complication with this proportionality test arises from the complications for a state in assessing the likelihood of prevailing at the ECJ. Even on the question of what constitutes proportionality, the case law has mushroomed into a determination of the various factors that need to be taken into account. In Criminal Proceedings against Webb[32] the court made a list of factors that would be taken into account, including whether or not a similar test existed in the individuals home state. The re-claiming of territory lost As with free movement of goods, there are exceptions which the states can attempt to fit their regulations into. Once again, the enumeration of these in the Treaty (Articles 46 and 56) is both a blessing and a curse. On the one hand the court can at worse apply them strictly; they cannot remove the right to a defence from the members. On the other hand, the ECJ have used the enumeration to state that the at least for discriminatory measures, only those enumerated defences may be utilised (Bond van Adverteerders v Netherlands([33]. There is one area that the ECJ has deemed sacrosanct. A55 states that the rules on establishment are null and void when related to â€Å"the exercise of official authority†. In Reyners v Belgium[34] the ECJ held that this had to be related to sovereignty and† majesty† of the States. Unsurprisingly the states have seized on this to try and hit a metaphorical home run by forcing as many measures through this loop-hole. It is possibly because of Luxembourg’s wide ranging approach to the Reynors[35] case that the ECJ drew the narrowest possible interpretation emphasising that simply because a profession exercised some official duties, the entire profession could not be exempt. The official purpose exception may still be invoked but it will be an exception rather than the rule. In passing it should also be noted that the states do have some rights reserved to the. Under A43 there is express mention of the non-appliance of the article to citizens of that nation. Although the ECJ have wavered on this point, in Ministere Public v Auer[36] the ECJ held that the ‘foreign’ qualification was crucial. Thus there is nothing to prevent state a denying rights to their own citizens that to any other states citizen would be in breach of the article. This is likely to be a pyrrhic victory given that few states will have any desire to hinder their own citizens. Last chance saloon The final chance for the national authorities to claim some of the territory in this battle is with the ability to derogate that is contained in A46(1). The texts, in particular Barnard and Craig, set out the individual case law for each of the exceptions. This section simply focuses on the general approach in an effort to ascertain how helpful the derogation powers are to the national authorities. The first benefit that the states have is that it is not merely the ECJ who have commented on the derogations. Directive 64/221 Article 2 sets out the guidelines that must be followed. While the states may have hoped for more sympathy from the Commission than they received from the ECJ, they will have been disappointed. The articles merely set out a number of restrictions, including the point that the states cannot use it merely to further their own economic agendas. Indeed, the situation for the States is so unappealing that Craig emphasises (at788) that there is â€Å"little scope for manoeuvre†¦by the Member States†. Possibly the most illustrative case in this area is Van Duyn v Home Office[37] where the UK convinced the ECJ that they should be allowed to derogate in the case of an individual who was entering to work for the Church of Scientology. The ECJ ruled that it was irrelevant that the practice of this religion was not universally condemned. While this might encourage states, they would have been concerned by a later part of the judgement where the court emphasised that had she merely been a member the derogation would not have been permitted. In many ways this was typical of the ECJ’s approach to these case; advancing the cause of the States one step and with the same movement moving them two steps back. Equally illustrative was Bonsignore v Oberstadtdirektor der Stadt Koln[38] where the court took the sizeable stride of stating that past criminal convictions may not be enough to derogate from the articles. It I fair to say that this would frustrate any official in a State who would find that their hands were being tied, not on n integral international level, but on the basic and fundamental needs of national security. CONCLUSION The first conclusion is, and has to be that no definite answer can be given. As long as the federalism debate is answered by the ECJ and not the Commission, the answer will depend on the date of the cases and the environment at that particular time. It can be said though that regarding both free movement of goods and freedom of establishment, any regulations that are deemed to be discriminatory will be prima facie void and that it will be exceedingly difficult to persuade the court of the need for the regulation. Regarding non-discriminatory regulations, the situation also looks bleak for national policies with Cassis in particular emphasising central dominance. There are chinks of light within the Treaty itself and within parts of the ECJ jurisprudence. Overall though the path that the ECJ is taking leads in one direction only, and either they or the Commission will eventually minimise national policies to the point of virtual insignificance. Possibly the most clinical analysis can be found in Usher at 83 when he writes: It can hardly be denied that the Community now exercises considerable substantive powers which the Member States no longer exercise or lay claim to exercise- the exceptional cases being so infrequent as to be regarded as a major crises. BIBLIOGRAPHY BOOKS Barnard C‘The Substantive Law of the EU’ The Four Freedoms 1st Edition Published by Oxford Press Burrows F‘Free Movement in EC Law’ Published by Oxford Press Craig P /De Burca C‘EU Law, Text, Cases, and Materials’ 2nd Edition Published by Oxford Press Levasseur A‘The Law o the EU, A new Constitutional Order’ Published by Carolina Academic Press Rometsch D (edited)‘The EU and member states. Towards institutional fusion?’ Published by European Policy Research Unit Series Usher J‘EC Law and National Law. The Irreversible Transfer?’ Published by George Allen Woods L‘Free Movement of Goods and Services within the EC’ Published by European Business Law Library ARTICLES- GOODS Dirks K‘The Market Citizen: Economic Integration and Citizenship in the European Union’ Columbia University, 2005, http://www.columbia.edu/cu/polisci/pdf-files/dirks.pdf Gormley LW ‘Cassis de Dijon and the Communication from the Commission’ (1981) 6 ELev 454 Pitiyasak S‘Free Movement of Goods Within EU’ (17/12/2005) http://members.tripod.com/asialaw/articles/saravuth.html Steiner J‘Drawing the Line: Uses and Abuses of Article 30 EEC’ (1992) 29 CMLRev 749 Weatherill S‘After Keck: Some Thoughts on how to Clarify the Clarification’ (1996) 33 CML Rev 885 White E‘In Search of the Limits to Article 30 of the EEC Treaty’ (1989) 26 CMLRev 235 Wils WPJ‘The Search for the Rule in Article 30 EEC: Much Ado About Nothing?’ (1993) 18 ELRev. 475 ARTICLES- ESTABLISHMENT Lonbay J‘Picking over the bones: Rights of Establishment Reviewed’ (1991) 16 ELRev 507 The General Programme (1961) OJ Spec. Ed. Second Series IX O’Keefe D‘Practical Difficulties in the Application of Article 48 of the EEC Treaty’ (1982) 19 CMLRev 35 CASES- GOODS Case 22/70 Commission v Council [1971] ECR 263 Case 2/73 Geddo v Ente Nazionale Risi (1973) ECR 865 Case 154/85 Commission v Italy (1987) ECR 2717 Case 249/81 Commission v Ireland (1982) ECR 2717 Case 82/77 Openbaar Ministere v Van Tiggele (1978) ECR 25 Case 120/78, Rewe-Zentrale AG v Bundesmonopolverwaltung fur Branntwein (1979) ECR 649 Case 155/80 Obel (1981) ECR 1993 Cases 60 and 61/84 Cinetheque SA v Federation Natioanle des Cinemas Francais (1986) ECR 2605 Cases C-267 and 268/91- Criminal Proceedings against Keck and Mithouard (1993) ECR I-6097 Case 412/93, Societe d’Importation Edouard Leclerc-Siplec v TFI Publicite SA (1995) ECR I-179 Case C-368/95, Vereinigte Familiapress Zeitungsverlags- und Vertreibs GmbH v Heinrich Bauer Verlag (1997) 3 CMLR 1329 CASES- ESTABLISHMENT Case 352/85, Bond van Adverteerders v Netherlands (1988) ECR 2085 Case 2/74, Reyners v Belgium (1974) ECR 631 Case 221/85, Commission v Belgium (1987) ECR 719 Case 107/83, Ordre des Avocats v Klopp (1984) ECR 2971 Case 292/86, Gullung v Conseil de l’Ordre des Avocats (1988) ECR 111 Case 136/78, Ministere Public v Auer (1979) ECR 437 Case 33/74, Van Binsbergen v Bestuur van de Bedrijfsverenigning voor de Metaalnijverheif (1974) ECR 1299 Case 279/80 Criminal Proceedings against Webb (1981) ECR 3305 Case 41/74, Van Duyn v Home Office (1974) ECR 1337 Case 67/74, Bonsignore v Oberstadtdirektor der Stadt Koln (1975) ECR 297 1 Footnotes [1] ECJ [2] Formerly A30 [3] Formerly A52 [4] ‘Free Movement of Goods and Services within the EC’ at 2 [5] Case 22/70 [1971] [6] ‘EU Law, Text, Cases, and Materials’ at 582 [7] ‘The Search for the Rule in Article 30 EEC: Much Ado About Nothing? [8] Case 2/73 (1973) [9] ibid [10] Case 154/85 (1987) [11] Case 249/81 (1982) [12] ibid n4 at 588 [13] Case 82/77 (1978) [14] ibid [15] Case 120/78 (1979) [16] ibid n4 at 607 [17] ‘After Keck: Some Thoughts on how to Clarify the Clarification’ [18] Case 155/80 (1981) [19] Cases 60 and 61.94 (1986) [20] Cases C-267 and 268/91 (1993) [21] ‘In Search of the Limits to Article 30 of the EEC Treaty’ [22] ibid n20 [23] ibid [24] Case 412/93 (1995) [25] Case C-368/95 (1997) [26] (1961) [27] Case 221/85 (1987)

Analysis of Hong Kong Economy During Financial Crisis

 ·808 · Proceedings of the 7th International Conference on Innovation & Management An Analysis of the Hong Kong Economy after the Financial Crisis Cao Hongliu School of Management, Guangdong University of Technology, Guangdong, P. R. China, 510520 (E-mail: [email  protected] com) Abstract This paper analyzes the current economic development and the status of leading industries in Hong Kong. It shows that Hong Kong economy, which is mainly comprised of the service industry in particular, facing with both opportunities and challenges after the financial crisis.Hong Kong economy has a wide range of needs in information technology, electrical and electronic technology, and manufacturing technology. Development in these areas has great significance to ensure sustained development of Hong Kong economy. Key words Hong Kong economy status; Leading industry; Service industry 1 Introduction Hong Kong’s a small and open economy system and international financial center, its economi c development face many new challenges because of the impact of the global financial crisis.Therefore, a comprehensive analysis of the Hong Kong’s economic development and their leading industry status becomes an important issue. 2 Overview of Hong Kong Economy 2. 1 The services sector is a leading industry in Hong Kong From Table 1, we can see that the services industry is a leading industry of Hong Kong economy. During the decade from 1997 to 2006, services sector in the Hong Kong economy has gained greater prominence. This change has already been reflected in the share of contribution of the services sector to the local GDP.The contribution of the services sector to GDP increased from 85. 9% in 1997 to 91. 2% in 2006. Based on the industry definition of Hong Kong Census and Statistics Department, The services sector includes wholesale, retail and import and export trades, restaurants and hotels; transport, storage and communications; financing, insurance, real estate and b usiness services; and community, social and personal services. Table 1 Gross Domestic Product (GDP) by Economic Activity (at Current Prices) GDP by Economic Activity(2004-2007) 2004 2005 2006 2007Economic activity Agriculture and fishing Mining and quarrying Manufacturing Electricity, gas and water Construction GDP 886 72 44455 39726 40376 ratio 0. 1 * 3. 6 3. 2 3. 2 GDP 847 100 45547 39924 38538 ratio 0. 1 * 3. 4 3 2. 9 GDP 849 93 45761 40364 38688 ratio 0. 1 * 3. 2 2. 8 2. 7 GDP 895 114 39282 39426 40154 ratio 0. 1 * 2. 5 2. 5 2. 6 Services 1119304 89. 9 1207873 90. 6 1297545 91. 2 1429293 92. 3 Note: Data is from Hong Kong Annual Digest of Statistics (2004-2008 Edition) edited by Hong Kong Census and Statistics Department. Data unit is in million terms and ratio unit is %.Besides, * represents the comparison had less than 0. 05% is in the total economy The services sector becomes the principal source of employment. The employment share of the services sector in total employment h as increased moderately over the past decade, from 79. 8% in 1997 to 86. 6% in 2007. In 2007, the services sector as a whole engaged 3. 03 million persons out of the 3. 5 million overall employments. The services sector plays a significant role in supporting the growth of our external trade. In 2007, the value of exports of services reached $652 billion, representing an average annual growth rate ofProceedings of the 7th International Conference on Innovation & Management  ·809 · 8. 6% over 1997. In 2007, merchant and other trade-related services was the most important major service group, contributing 30. 9% to the value of total exports of services. It was followed by transportation services and travel services, contributing 28. 6% and 16. 5% respectively to the value of total exports of services in 2007. In 1997, the respective percentage shares of these three major service groups in the value of total exports of services were 25. 6%, 30. % and 20. 8%. 2. 2 The structure of H ong Kong’s services industry sector Among the economic activities in the services sector, wholesale, retail and import and export trades, restaurants and hotels together contributed 27. 9% of the GDP in 2006, followed by financing, insurance, real estate and business services (25. 0%), community, social and personal services (18. 0%) and transport, storage and communications (9. 6%). Among them, financial services, trading, tourism and professional services are key industries in the Hong Kong economy.They have been the driving force of Hong Kong’s economic growth, providing impetus to growth of other sectors and creating employment. (1) Import and export trade . The import and export trade is the most important industries in Hong Kong’s service industry, has been playing an important role in the development of Hong Kong economy. The import and export trade produced a net output of HK$305. 1 billion in 2006, representing an increase of 39% over 1997. The ratio is the highest among all service industry. In 2007, there were 98 000 import and export trading establishments in Hong Kong, with 520 000 persons.At the same time, import and export trade sector is also directly promoting the development of other industries, such as logistics, transportation, business services and other services. Hong Kong’s import and export trade, including the visible trade and invisible trade two parts. The visible trade refers to the traditional commodity trade. In 2007, the value of Hong Kong imported and exported goods was $5,556 billion, representing an increase of 9. 8% compared to 2006. Hong Kong’s total exports of goods (comprising domestic exports and re-exports) in 2007 amounted to $2,688 billion, or increased by 9. % when compared with 2006. The value of imports increased by 10. 3% to $2,868 billion in 2007. With the value of total exports being less than that of imports, a merchandise trade deficit of $180 billion was recorded in 2007. In the import and export trade, the largest proportion of re-exports. This was largely attributable to the relocation of many local manufacturing activities to the mainland of China. Quite a large amount of the goods produced in the mainland of China through the outward processing arrangement were sent back to Hong Kong and re-exported to other countries/territories.During 1997 to 2007, the value of re-exports increased by 107%, while a decline of 48% was observed in the value of domestic exports. In 2007 the re-export trade to the mainland continued to grow rapidly. The invisible trade services are export and import trade of commercial services and financial services. While these services could be exported or imported by the import/export firms or companies in other sectors, most of the merchant and other trade-related services were exported or imported by import/export firms . In 2007, Hong Kong’s exports and imports of services valued at $652 billion and $322 billion respecti vely.Compared to 2006, exports and imports of services increased by 15. 4% and 11. 7% respectively. Net exports of services in 2007 amounted to $330 billion, this makes Hong Kong’s overall trade surplus of $150 billion. (2) Finance. Hong Kong is recognized as an international financial center, many multinational banks and financial institutions gathered here. The financial business is classified in detail, covering all aspects of the financial industry. Hong Kong three-tier system of deposit-taking institutions, namely licensed banks, restricted licensed banks and deposit-taking companies, known collectively as the authorized institutions.At the end of 2007, the number of authorized institutions stood at 200, comprising 142 licensed banks, 29 restricted license banks and 29 deposit-taking companies. 68 of them were incorporated in Hong Kong and 132 were incorporated outside Hong Kong. In addition, there were 79 representative offices of foreign banks coming from 27 economies/ regions. As at end December 2007, 152 of the largest 500 banks in the world had a presence in Hong Kong. The value added generated by the banking industry amounted to $136. 5 billion, or 9. 6% of Hong Kong’s Gross Domestic Product (GDP) in 2006, representing an increase of 41. % compared with 1997. The development of the banking sector also promotes the development of other financial industries. In 2007, some 2 940 establishments and about 32 400 persons were engaged in the business. These included stock and share companies; commodity futures, gold bullion and foreign exchange brokers/dealers; stock, bullion and commodity exchanges; fund management companies; investment advisory companies; and firms providing other various financial services. The financial markets and asset management industry generated value added of about $59. billion, contributing to 4. 1% of Hong Kong’s GDP in 2006.  ·810 · Proceedings of the 7th International Conference on Innovation & Managem ent Hong Kong is also the Securities and Exchange Center and an important place for the mainland enterprises to raise funds. At the end of 2007, 1 048 companies were listed on the Main Board of the Hong Kong Exchanges and Clearing Limited (HKEx), with a total market capitalization of $20,536 billion. Despite an increase of only 7. 5% in the number of listed companies, market capitalization was observed to rise 55. 0% over 2006.Since July 1993 when the first Chinese state owned company was listed on the HKEx through issuance of H shares, the role of Hong Kong as a major fund-raising centre for the mainland of China had become increasingly important. By the end of 2007, there were 146 H shares listed on the HKEx, with market capitalization of $5,080 billion. In addition, there were also 93 â€Å"Red Chips† companies and 200 private enterprises listed on HKEx. Hong Kong is one of the most active and liberal debt markets and a leading asset management centre in Asia. (3) Tourism . In 2007, 51 900 persons were engaged in industries closely related o tourism, such as hotels and travel agents and 315 300 persons in industries partly related to tourism such as restaurants, retailers, transport operators and other service providers serving visitors. In terms of economic contribution, inbound tourism and outbound tourism together generated $45. 3 billion value added and 176 300 job opportunities in 2006, or 3. 2% of total GDP and 5. 2% of total employment of Hong Kong respectively. The number of incoming visitors in 2007 reached 28. 2 million, increased by 11. 6% as compared with 25. 3 million in 2006 and set the highest record for visitor arrivals in history.The mainland of China remained the major source market of visitors to Hong Kong since 1994. Visitor arrivals from the mainland of China reached 15. 5 million in 2007, accounted for 55. 0% of the total visitor arrivals, followed by South and Southeast Asia (10. 3%) and Taiwan (7. 9%). In addition, Hong Kong i s Asia’s major trade exhibition and business conference center. A total of 218 conventions and 78 exhibitions with international participation were held in Hong Kong in 2006. (4) Professional service . The professional service is Hong Kong’s fourth-largest service industry.The professional services industry generated $40 billion of value added, or 2. 8% of Hong Kong’s Gross Domestic Product (GDP), in 2006 and provided job opportunities for about 106 000 persons in 2007. In 2007, there were about 13 500 professional services establishments, including 3 900 accounting, auditing and bookkeeping firms, 1 800 solicitor and barrister firms, 3 300 architectural, surveying and engineering firms and some 4 500 management consultant firms. The business receipts of professional services industry increased by 10. 7% in 2007 over a year earlier.The development of professional services industry over the past decade was quite remarkable. Number of establishments and persons en gaged increased by 35% and 23% respectively between 1997 and 2007. During the same period, the total number of registered professionals also increased remarkably, with certified public accountants increasing at the fastest rate of 7. 3% per year on average. 2. 3 Manufacturing company is the support for the Hong Kong service industry In this paper, the Hong Kong Manufacturing Company refers specifically to the Hong Kong manufacturing companies in the mainland.The rapid expansion of Hong Kong’s service industries in the past two decades benefited from the development of the Hong Kong Manufacturing Company and the sub-contracting business model. In the late 80’s, under the pressure of high land prices, high rents, high labor costs, a large number of Hong Kong manufacturers shifted their production to the Mainland, where the land and labor costs were relatively low, in particular the Pearl River Delta in Guangdong Province. And because of the changes in the business, many original manufacturing companies become the service company.These companies transferred their manufacturing factories to the Mainland, and kept the headquarters and other high value-added services such as marketing, order processing, material procurement, design, packaging, logistics business in Hong Kong. This business model is known as â€Å"shop in front and factory in back† mode. At the same time, in order to adapt to the changes in international markets and increase exports, many traditional trading companies, set up manufacturing factories in mainland, and formed a sub-contracting operation mode.In the sub-contractors mode, products manufactured in the mainland branch companies, headquarters in Hong Kong focused its efforts on trade, market and management. This mode of operation combined the mainland companies’ low-cost production advantage and the Hong Kong trading companies’ familiar with the international market advantage together, promoted the expediti ons of business of Hong Kong trade companies and improved their production efficiency. This production mode provided a strong support to the development of Hong Kong’s service industry.The financial crisis press great operating pressure to the Hong Kong Manufacturing Company. Mostly concentrated in the Pearl River Delta region, the types of these companies are sound equipment, electrical appliances, toys, clothing, footwear and other labor-intensive industries. The development of these enterprises is based on low labor and land inputs, production technology is very low. With the Proceedings of the 7th International Conference on Innovation & Management  ·811 · labor, land costs rising substantially in the Pearl River Delta region, the ompetitive advantages of the Hong Kong Manufacturing Company decreased a lot in recent years. Under the impact of the financial crisis, there has an obvious drop in experts of these labor-intensive consumer goods. Many Hong Kong Manufacturin g Companies face the problem of orders reduction, profit decline, and even bankruptcy. 3 Hong Kong’s Economic Problems under the Global Financial Crisis Table 2 1997-2007 Business Receipts Indices 1997 2002 2003 2004 2005 2006 2007 Wholesale/Retail Import and export trade Restaurants Hotels Transport Storage Communications Banking Financing (except banking) Insurance 24. 4 107. 2 104. 7 99 61. 7 157. 1 127. 1 84. 1 79. 8 38. 2 88. 3 75. 5 94. 9 73. 1 68. 8 81. 1 96. 6 86. 4 56 59. 2 85. 8 80. 4 85. 7 58. 8 69. 1 77. 4 94. 3 86. 4 65. 7 70. 5 93. 8 90. 5 94. 3 81. 9 85 90. 6 95. 1 90. 2 87. 5 86. 2 100 100 100 100 100 100 100 100 100 100 100 100 100 100 107. 4 110. 2 109. 5 113. 7 110. 6 110. 2 100. 8 119. 5 147. 9 121. 3 99. 6 119. 6 114 109. 7 120. 6 119. 1 124. 2 131. 1 122. 6 127. 8 110. 8 165. 3 249. 7 156. 2 139. 3 135. 4 135. 4 117. 1 Real estate 135. 6 71. 5 75. 9 86. 2 Business 119. 7 87. 88. 1 95. 3 services Tourism 91. 5 75. 5 70 88. 5 Computer and 53. 1 63. 7 67. 3 81. 1 information services Note: Data is from Hong Kong Annual Digest of Statistics(2008 Edition) Statistics Department. Table 3 2005 edited by Hong Kong Census and 2005-2008 the variation ratio of Business Receipts Indices 2006 2007 2007 3 quarter 9 15. 1 8. 2 15. 4 15. 7 11. 7 11. 7 9. 7 47. 7 99. 6 42. 1 27. 7 2007 4 quarter 15. 5 17. 7 7. 6 14. 8 16. 5 14. 8 10. 3 16. 2 45 82. 9 35. 4 69. 5 2008 1 quarter 9. 6 17. 5 13. 2 16 9. 9 15. 9 10. 7 11. 2 6. 32. 8 11. 7 14. 5 2008 2 quarter Wholesale/Retail Import and export trade Restaurants Hotels Transport Storage Communications Banking Financing (except banking) Insurance Real estate Business services 5. 6 6. 8 10. 6 6 22. 1 17. 8 10. 4 5. 1 10. 9 14. 3 16 16 7. 9 7. 3 10. 2 9. 5 13. 7 10. 6 10. 2 0. 8 19. 5 47. 9 21. 3 -0. 4 10. 4 12. 8 8 13. 4 15. 2 10. 8 16 10 38. 3 68. 8 28. 8 39. 8 14. 1 14. 4 14. 6 15. 3 9. 6 11 3. 5 13. 5 -6. 8 4. 7 8. 3 10 Tourism 4. 9 19. 6 13. 2 11. 8 14 11. 5 10. 3 Computer and 12. 9 14 18. 7 18. 9 25. 4 14. 14 information services Note: Data is from Hong Kong Annual Digest of Statistics (2008 Edition) edited by Hong Kong Census and Statistics Department.  ·812 · Proceedings of the 7th International Conference on Innovation & Management Table 2 shows the revenue changes of the Hong Kong’s service industry from the 1997 Asian financial crisis. In the 1997 Asian financial crisis and the subsequent 2003 epidemic of SARS, Hong Kong’s service industry was particularly hard hit. Until 2006, the industry revenue was generally restored to the level of 97. Finance, insurance, transport, trade and other business incurred the largest loss.In February 2007, the U. S. sub-loan crisis happened, and the Lehman bank filed for bankruptcy in September 2008. The U. S. financial crisis intensified and developed into a global financial crisis. From the second half of 2008, the global financial crisis began to influence Hong Kong economy. This performance is particularly evident in the service industry. Hong Kong’s financial industry has been most affected. From Table 3 it can be seen that Banking and financial services industries are in the most affected after the financial crisis. There is a rapid decline in industry revenue.In the second quarter of 2008, banking industry even has the first negative growth since the past few years. At the end of the third quarter, because a lot of major financial institutions in the United States had been threatened with a bankruptcy, the global financial crisis became even more serious. The panic selling appeared in many countries’ stock market, Hong Kong was no exception. Hong Kong’s Hang Seng index plummeted by 15% in September, and fall 22% in October. The normal operation of Hong Kong’s capital markets has been seriously affected.The growth of other financial related industries, such as insurance, real estate and business services, had a slowed down significantly from the beginning of the second quarter of 2008. Import and export trade and related industries sectors have been affected in different degrees. The merchandise exports slowed down in the third quarter and only had a small increase. Even so, this was the worst performance since the first quarter of 2002. With the increase of global financial crisis, exports to other markets also had different degrees of slowing down.As a result, the growth of related industries, such as business service, trade service, transportation and storage service also slowed down slightly. Exports of services had maintained a steady increase in the financial crisis, but the growth rate was also smaller than the second quarter. The growth of tourism also had signs of deceleration and affect the growth of related industry, such as transportation, hotels, catering services, the number of visitors from long distance market decrease a lot, particularly the tourists from Europe and the United States.To face the challenge of financial crisis, the SAR Government has been actively responding well to prevent the spread of financial risks. From the beginning of the sub-loan crisis in the United States, in order to ensure stability of the financial system, the Hong Kong Monetary Authority introduced a number of measures to alleviate the pressure on banks and provide necessary assistance to the banks. Securities and Futures Commission and the Insurance Supervisory Commission also had made action to strengthen the protection of investors and policyholders.At the same time, most Hong Kong’s local financial institutions’ participation in directly investment to the US sub-loan is limited in small scale. The local banking system remains steadily without be directly effected by the sub-loan crisis. Benefit from the economic development of the Mainland, Hong Kong’s service industries is also faced with new opportunities in the global financial crisis. For example, supported by the growth of trade in the Mainland, of fshore trade growth was still significant.Although 2008 is the â€Å"Olympic Year†, but the mainland tourists to Hong Kong remained a high-speed growth. In the third quarter of 2008, the Mainland tourists to Hong Kong wad still higher than last year, an increase of 9. 4%. Individual Visit Scheme is one of the bright spots; the visitors in accordance with this scheme had a further rise in the third quarter, the ratio wad 14. 5%. These factors effectively guaranteed the smooth operation of Hong Kong’s service industries. At the same time, the ten naturalization industry plan in the mainland had already been introduced.The mainland accelerated the pace of industrial upgrading and began to support the development of high-tech industry. These policies provide a good environment for the Hong Kong companies in mainland to upgrade their technological level and achieve their own industrial upgrading. Based on the above analysis, the challenges faced by Hong Kong’s econom ic in the financial crisis can be summarized into the following three aspects: (1)financial sector’s profits decline a lot, related sector’s services business reduces. 2) The trade and service market in Western countries shrink. 3 Hong Kong Company in mainland operates difficultly. Hong Kong economy is facing the opportunity for: the steady development of the Mainland economy and the acceleration of the industrial upgrading. Therefore, in order to face the challenge of the financial crisis, it is important for Hong Kong service companies to expand business in the Mainland, and to Hong Kong companies in mainland to enhance the productivity. Proceedings of the 7th International Conference on Innovation & Management  ·813 · 4 ConclusionsThrough the above analysis, this paper can be drawn the following conclusions: (1) The a major problem of Hong Kong economy is decline in financial sector profits and trade volume with Western developed countries. (2)The expansion of d emand of the Mainland market is the most important opportunity for Hong Kong’s economic development. (3) Hong Kong economy has great demands for information technology, electrical and electronic technologies, manufacturing technology. To ensure sustainable development of Hong Kong economy, it is very important to promote scientific and technological development. References [1] Yang Xue.The Analysis of the Scientific and Technological Needs Based on Micro-macro System[J]. Social Science Frontier, 2008, (10): 241(In Chinese) [2] Guo Kasha, Wang Wenlong. Science and Technology Needs Analysis of Chinese High-Tech Industry[J]. Economic Review, 2004, (8):198(In Chinese) [3] Wu Jiapei, Wang Changsheng. Science and Technology Needs Analysis of the New Road to Industrialization[J]. Science & Technology and Economy, 2005, (4): 4(In Chinese) [4] Li Jianhua, Cheng Baoying, Yang Xue. Analysis on Demand of Science and Technology Effected by Informatization During New Industrialization[J]. Information Science, 2004, (8): 903(In Chinese) Analysis of Hong Kong Economy During Financial Crisis  ·808 · Proceedings of the 7th International Conference on Innovation & Management An Analysis of the Hong Kong Economy after the Financial Crisis Cao Hongliu School of Management, Guangdong University of Technology, Guangdong, P. R. China, 510520 (E-mail: [email  protected] com) Abstract This paper analyzes the current economic development and the status of leading industries in Hong Kong. It shows that Hong Kong economy, which is mainly comprised of the service industry in particular, facing with both opportunities and challenges after the financial crisis.Hong Kong economy has a wide range of needs in information technology, electrical and electronic technology, and manufacturing technology. Development in these areas has great significance to ensure sustained development of Hong Kong economy. Key words Hong Kong economy status; Leading industry; Service industry 1 Introduction Hong Kong’s a small and open economy system and international financial center, its economi c development face many new challenges because of the impact of the global financial crisis.Therefore, a comprehensive analysis of the Hong Kong’s economic development and their leading industry status becomes an important issue. 2 Overview of Hong Kong Economy 2. 1 The services sector is a leading industry in Hong Kong From Table 1, we can see that the services industry is a leading industry of Hong Kong economy. During the decade from 1997 to 2006, services sector in the Hong Kong economy has gained greater prominence. This change has already been reflected in the share of contribution of the services sector to the local GDP.The contribution of the services sector to GDP increased from 85. 9% in 1997 to 91. 2% in 2006. Based on the industry definition of Hong Kong Census and Statistics Department, The services sector includes wholesale, retail and import and export trades, restaurants and hotels; transport, storage and communications; financing, insurance, real estate and b usiness services; and community, social and personal services. Table 1 Gross Domestic Product (GDP) by Economic Activity (at Current Prices) GDP by Economic Activity(2004-2007) 2004 2005 2006 2007Economic activity Agriculture and fishing Mining and quarrying Manufacturing Electricity, gas and water Construction GDP 886 72 44455 39726 40376 ratio 0. 1 * 3. 6 3. 2 3. 2 GDP 847 100 45547 39924 38538 ratio 0. 1 * 3. 4 3 2. 9 GDP 849 93 45761 40364 38688 ratio 0. 1 * 3. 2 2. 8 2. 7 GDP 895 114 39282 39426 40154 ratio 0. 1 * 2. 5 2. 5 2. 6 Services 1119304 89. 9 1207873 90. 6 1297545 91. 2 1429293 92. 3 Note: Data is from Hong Kong Annual Digest of Statistics (2004-2008 Edition) edited by Hong Kong Census and Statistics Department. Data unit is in million terms and ratio unit is %.Besides, * represents the comparison had less than 0. 05% is in the total economy The services sector becomes the principal source of employment. The employment share of the services sector in total employment h as increased moderately over the past decade, from 79. 8% in 1997 to 86. 6% in 2007. In 2007, the services sector as a whole engaged 3. 03 million persons out of the 3. 5 million overall employments. The services sector plays a significant role in supporting the growth of our external trade. In 2007, the value of exports of services reached $652 billion, representing an average annual growth rate ofProceedings of the 7th International Conference on Innovation & Management  ·809 · 8. 6% over 1997. In 2007, merchant and other trade-related services was the most important major service group, contributing 30. 9% to the value of total exports of services. It was followed by transportation services and travel services, contributing 28. 6% and 16. 5% respectively to the value of total exports of services in 2007. In 1997, the respective percentage shares of these three major service groups in the value of total exports of services were 25. 6%, 30. % and 20. 8%. 2. 2 The structure of H ong Kong’s services industry sector Among the economic activities in the services sector, wholesale, retail and import and export trades, restaurants and hotels together contributed 27. 9% of the GDP in 2006, followed by financing, insurance, real estate and business services (25. 0%), community, social and personal services (18. 0%) and transport, storage and communications (9. 6%). Among them, financial services, trading, tourism and professional services are key industries in the Hong Kong economy.They have been the driving force of Hong Kong’s economic growth, providing impetus to growth of other sectors and creating employment. (1) Import and export trade . The import and export trade is the most important industries in Hong Kong’s service industry, has been playing an important role in the development of Hong Kong economy. The import and export trade produced a net output of HK$305. 1 billion in 2006, representing an increase of 39% over 1997. The ratio is the highest among all service industry. In 2007, there were 98 000 import and export trading establishments in Hong Kong, with 520 000 persons.At the same time, import and export trade sector is also directly promoting the development of other industries, such as logistics, transportation, business services and other services. Hong Kong’s import and export trade, including the visible trade and invisible trade two parts. The visible trade refers to the traditional commodity trade. In 2007, the value of Hong Kong imported and exported goods was $5,556 billion, representing an increase of 9. 8% compared to 2006. Hong Kong’s total exports of goods (comprising domestic exports and re-exports) in 2007 amounted to $2,688 billion, or increased by 9. % when compared with 2006. The value of imports increased by 10. 3% to $2,868 billion in 2007. With the value of total exports being less than that of imports, a merchandise trade deficit of $180 billion was recorded in 2007. In the import and export trade, the largest proportion of re-exports. This was largely attributable to the relocation of many local manufacturing activities to the mainland of China. Quite a large amount of the goods produced in the mainland of China through the outward processing arrangement were sent back to Hong Kong and re-exported to other countries/territories.During 1997 to 2007, the value of re-exports increased by 107%, while a decline of 48% was observed in the value of domestic exports. In 2007 the re-export trade to the mainland continued to grow rapidly. The invisible trade services are export and import trade of commercial services and financial services. While these services could be exported or imported by the import/export firms or companies in other sectors, most of the merchant and other trade-related services were exported or imported by import/export firms . In 2007, Hong Kong’s exports and imports of services valued at $652 billion and $322 billion respecti vely.Compared to 2006, exports and imports of services increased by 15. 4% and 11. 7% respectively. Net exports of services in 2007 amounted to $330 billion, this makes Hong Kong’s overall trade surplus of $150 billion. (2) Finance. Hong Kong is recognized as an international financial center, many multinational banks and financial institutions gathered here. The financial business is classified in detail, covering all aspects of the financial industry. Hong Kong three-tier system of deposit-taking institutions, namely licensed banks, restricted licensed banks and deposit-taking companies, known collectively as the authorized institutions.At the end of 2007, the number of authorized institutions stood at 200, comprising 142 licensed banks, 29 restricted license banks and 29 deposit-taking companies. 68 of them were incorporated in Hong Kong and 132 were incorporated outside Hong Kong. In addition, there were 79 representative offices of foreign banks coming from 27 economies/ regions. As at end December 2007, 152 of the largest 500 banks in the world had a presence in Hong Kong. The value added generated by the banking industry amounted to $136. 5 billion, or 9. 6% of Hong Kong’s Gross Domestic Product (GDP) in 2006, representing an increase of 41. % compared with 1997. The development of the banking sector also promotes the development of other financial industries. In 2007, some 2 940 establishments and about 32 400 persons were engaged in the business. These included stock and share companies; commodity futures, gold bullion and foreign exchange brokers/dealers; stock, bullion and commodity exchanges; fund management companies; investment advisory companies; and firms providing other various financial services. The financial markets and asset management industry generated value added of about $59. billion, contributing to 4. 1% of Hong Kong’s GDP in 2006.  ·810 · Proceedings of the 7th International Conference on Innovation & Managem ent Hong Kong is also the Securities and Exchange Center and an important place for the mainland enterprises to raise funds. At the end of 2007, 1 048 companies were listed on the Main Board of the Hong Kong Exchanges and Clearing Limited (HKEx), with a total market capitalization of $20,536 billion. Despite an increase of only 7. 5% in the number of listed companies, market capitalization was observed to rise 55. 0% over 2006.Since July 1993 when the first Chinese state owned company was listed on the HKEx through issuance of H shares, the role of Hong Kong as a major fund-raising centre for the mainland of China had become increasingly important. By the end of 2007, there were 146 H shares listed on the HKEx, with market capitalization of $5,080 billion. In addition, there were also 93 â€Å"Red Chips† companies and 200 private enterprises listed on HKEx. Hong Kong is one of the most active and liberal debt markets and a leading asset management centre in Asia. (3) Tourism . In 2007, 51 900 persons were engaged in industries closely related o tourism, such as hotels and travel agents and 315 300 persons in industries partly related to tourism such as restaurants, retailers, transport operators and other service providers serving visitors. In terms of economic contribution, inbound tourism and outbound tourism together generated $45. 3 billion value added and 176 300 job opportunities in 2006, or 3. 2% of total GDP and 5. 2% of total employment of Hong Kong respectively. The number of incoming visitors in 2007 reached 28. 2 million, increased by 11. 6% as compared with 25. 3 million in 2006 and set the highest record for visitor arrivals in history.The mainland of China remained the major source market of visitors to Hong Kong since 1994. Visitor arrivals from the mainland of China reached 15. 5 million in 2007, accounted for 55. 0% of the total visitor arrivals, followed by South and Southeast Asia (10. 3%) and Taiwan (7. 9%). In addition, Hong Kong i s Asia’s major trade exhibition and business conference center. A total of 218 conventions and 78 exhibitions with international participation were held in Hong Kong in 2006. (4) Professional service . The professional service is Hong Kong’s fourth-largest service industry.The professional services industry generated $40 billion of value added, or 2. 8% of Hong Kong’s Gross Domestic Product (GDP), in 2006 and provided job opportunities for about 106 000 persons in 2007. In 2007, there were about 13 500 professional services establishments, including 3 900 accounting, auditing and bookkeeping firms, 1 800 solicitor and barrister firms, 3 300 architectural, surveying and engineering firms and some 4 500 management consultant firms. The business receipts of professional services industry increased by 10. 7% in 2007 over a year earlier.The development of professional services industry over the past decade was quite remarkable. Number of establishments and persons en gaged increased by 35% and 23% respectively between 1997 and 2007. During the same period, the total number of registered professionals also increased remarkably, with certified public accountants increasing at the fastest rate of 7. 3% per year on average. 2. 3 Manufacturing company is the support for the Hong Kong service industry In this paper, the Hong Kong Manufacturing Company refers specifically to the Hong Kong manufacturing companies in the mainland.The rapid expansion of Hong Kong’s service industries in the past two decades benefited from the development of the Hong Kong Manufacturing Company and the sub-contracting business model. In the late 80’s, under the pressure of high land prices, high rents, high labor costs, a large number of Hong Kong manufacturers shifted their production to the Mainland, where the land and labor costs were relatively low, in particular the Pearl River Delta in Guangdong Province. And because of the changes in the business, many original manufacturing companies become the service company.These companies transferred their manufacturing factories to the Mainland, and kept the headquarters and other high value-added services such as marketing, order processing, material procurement, design, packaging, logistics business in Hong Kong. This business model is known as â€Å"shop in front and factory in back† mode. At the same time, in order to adapt to the changes in international markets and increase exports, many traditional trading companies, set up manufacturing factories in mainland, and formed a sub-contracting operation mode.In the sub-contractors mode, products manufactured in the mainland branch companies, headquarters in Hong Kong focused its efforts on trade, market and management. This mode of operation combined the mainland companies’ low-cost production advantage and the Hong Kong trading companies’ familiar with the international market advantage together, promoted the expediti ons of business of Hong Kong trade companies and improved their production efficiency. This production mode provided a strong support to the development of Hong Kong’s service industry.The financial crisis press great operating pressure to the Hong Kong Manufacturing Company. Mostly concentrated in the Pearl River Delta region, the types of these companies are sound equipment, electrical appliances, toys, clothing, footwear and other labor-intensive industries. The development of these enterprises is based on low labor and land inputs, production technology is very low. With the Proceedings of the 7th International Conference on Innovation & Management  ·811 · labor, land costs rising substantially in the Pearl River Delta region, the ompetitive advantages of the Hong Kong Manufacturing Company decreased a lot in recent years. Under the impact of the financial crisis, there has an obvious drop in experts of these labor-intensive consumer goods. Many Hong Kong Manufacturin g Companies face the problem of orders reduction, profit decline, and even bankruptcy. 3 Hong Kong’s Economic Problems under the Global Financial Crisis Table 2 1997-2007 Business Receipts Indices 1997 2002 2003 2004 2005 2006 2007 Wholesale/Retail Import and export trade Restaurants Hotels Transport Storage Communications Banking Financing (except banking) Insurance 24. 4 107. 2 104. 7 99 61. 7 157. 1 127. 1 84. 1 79. 8 38. 2 88. 3 75. 5 94. 9 73. 1 68. 8 81. 1 96. 6 86. 4 56 59. 2 85. 8 80. 4 85. 7 58. 8 69. 1 77. 4 94. 3 86. 4 65. 7 70. 5 93. 8 90. 5 94. 3 81. 9 85 90. 6 95. 1 90. 2 87. 5 86. 2 100 100 100 100 100 100 100 100 100 100 100 100 100 100 107. 4 110. 2 109. 5 113. 7 110. 6 110. 2 100. 8 119. 5 147. 9 121. 3 99. 6 119. 6 114 109. 7 120. 6 119. 1 124. 2 131. 1 122. 6 127. 8 110. 8 165. 3 249. 7 156. 2 139. 3 135. 4 135. 4 117. 1 Real estate 135. 6 71. 5 75. 9 86. 2 Business 119. 7 87. 88. 1 95. 3 services Tourism 91. 5 75. 5 70 88. 5 Computer and 53. 1 63. 7 67. 3 81. 1 information services Note: Data is from Hong Kong Annual Digest of Statistics(2008 Edition) Statistics Department. Table 3 2005 edited by Hong Kong Census and 2005-2008 the variation ratio of Business Receipts Indices 2006 2007 2007 3 quarter 9 15. 1 8. 2 15. 4 15. 7 11. 7 11. 7 9. 7 47. 7 99. 6 42. 1 27. 7 2007 4 quarter 15. 5 17. 7 7. 6 14. 8 16. 5 14. 8 10. 3 16. 2 45 82. 9 35. 4 69. 5 2008 1 quarter 9. 6 17. 5 13. 2 16 9. 9 15. 9 10. 7 11. 2 6. 32. 8 11. 7 14. 5 2008 2 quarter Wholesale/Retail Import and export trade Restaurants Hotels Transport Storage Communications Banking Financing (except banking) Insurance Real estate Business services 5. 6 6. 8 10. 6 6 22. 1 17. 8 10. 4 5. 1 10. 9 14. 3 16 16 7. 9 7. 3 10. 2 9. 5 13. 7 10. 6 10. 2 0. 8 19. 5 47. 9 21. 3 -0. 4 10. 4 12. 8 8 13. 4 15. 2 10. 8 16 10 38. 3 68. 8 28. 8 39. 8 14. 1 14. 4 14. 6 15. 3 9. 6 11 3. 5 13. 5 -6. 8 4. 7 8. 3 10 Tourism 4. 9 19. 6 13. 2 11. 8 14 11. 5 10. 3 Computer and 12. 9 14 18. 7 18. 9 25. 4 14. 14 information services Note: Data is from Hong Kong Annual Digest of Statistics (2008 Edition) edited by Hong Kong Census and Statistics Department.  ·812 · Proceedings of the 7th International Conference on Innovation & Management Table 2 shows the revenue changes of the Hong Kong’s service industry from the 1997 Asian financial crisis. In the 1997 Asian financial crisis and the subsequent 2003 epidemic of SARS, Hong Kong’s service industry was particularly hard hit. Until 2006, the industry revenue was generally restored to the level of 97. Finance, insurance, transport, trade and other business incurred the largest loss.In February 2007, the U. S. sub-loan crisis happened, and the Lehman bank filed for bankruptcy in September 2008. The U. S. financial crisis intensified and developed into a global financial crisis. From the second half of 2008, the global financial crisis began to influence Hong Kong economy. This performance is particularly evident in the service industry. Hong Kong’s financial industry has been most affected. From Table 3 it can be seen that Banking and financial services industries are in the most affected after the financial crisis. There is a rapid decline in industry revenue.In the second quarter of 2008, banking industry even has the first negative growth since the past few years. At the end of the third quarter, because a lot of major financial institutions in the United States had been threatened with a bankruptcy, the global financial crisis became even more serious. The panic selling appeared in many countries’ stock market, Hong Kong was no exception. Hong Kong’s Hang Seng index plummeted by 15% in September, and fall 22% in October. The normal operation of Hong Kong’s capital markets has been seriously affected.The growth of other financial related industries, such as insurance, real estate and business services, had a slowed down significantly from the beginning of the second quarter of 2008. Import and export trade and related industries sectors have been affected in different degrees. The merchandise exports slowed down in the third quarter and only had a small increase. Even so, this was the worst performance since the first quarter of 2002. With the increase of global financial crisis, exports to other markets also had different degrees of slowing down.As a result, the growth of related industries, such as business service, trade service, transportation and storage service also slowed down slightly. Exports of services had maintained a steady increase in the financial crisis, but the growth rate was also smaller than the second quarter. The growth of tourism also had signs of deceleration and affect the growth of related industry, such as transportation, hotels, catering services, the number of visitors from long distance market decrease a lot, particularly the tourists from Europe and the United States.To face the challenge of financial crisis, the SAR Government has been actively responding well to prevent the spread of financial risks. From the beginning of the sub-loan crisis in the United States, in order to ensure stability of the financial system, the Hong Kong Monetary Authority introduced a number of measures to alleviate the pressure on banks and provide necessary assistance to the banks. Securities and Futures Commission and the Insurance Supervisory Commission also had made action to strengthen the protection of investors and policyholders.At the same time, most Hong Kong’s local financial institutions’ participation in directly investment to the US sub-loan is limited in small scale. The local banking system remains steadily without be directly effected by the sub-loan crisis. Benefit from the economic development of the Mainland, Hong Kong’s service industries is also faced with new opportunities in the global financial crisis. For example, supported by the growth of trade in the Mainland, of fshore trade growth was still significant.Although 2008 is the â€Å"Olympic Year†, but the mainland tourists to Hong Kong remained a high-speed growth. In the third quarter of 2008, the Mainland tourists to Hong Kong wad still higher than last year, an increase of 9. 4%. Individual Visit Scheme is one of the bright spots; the visitors in accordance with this scheme had a further rise in the third quarter, the ratio wad 14. 5%. These factors effectively guaranteed the smooth operation of Hong Kong’s service industries. At the same time, the ten naturalization industry plan in the mainland had already been introduced.The mainland accelerated the pace of industrial upgrading and began to support the development of high-tech industry. These policies provide a good environment for the Hong Kong companies in mainland to upgrade their technological level and achieve their own industrial upgrading. Based on the above analysis, the challenges faced by Hong Kong’s econom ic in the financial crisis can be summarized into the following three aspects: (1)financial sector’s profits decline a lot, related sector’s services business reduces. 2) The trade and service market in Western countries shrink. 3 Hong Kong Company in mainland operates difficultly. Hong Kong economy is facing the opportunity for: the steady development of the Mainland economy and the acceleration of the industrial upgrading. Therefore, in order to face the challenge of the financial crisis, it is important for Hong Kong service companies to expand business in the Mainland, and to Hong Kong companies in mainland to enhance the productivity. Proceedings of the 7th International Conference on Innovation & Management  ·813 · 4 ConclusionsThrough the above analysis, this paper can be drawn the following conclusions: (1) The a major problem of Hong Kong economy is decline in financial sector profits and trade volume with Western developed countries. (2)The expansion of d emand of the Mainland market is the most important opportunity for Hong Kong’s economic development. (3) Hong Kong economy has great demands for information technology, electrical and electronic technologies, manufacturing technology. To ensure sustainable development of Hong Kong economy, it is very important to promote scientific and technological development. References [1] Yang Xue.The Analysis of the Scientific and Technological Needs Based on Micro-macro System[J]. Social Science Frontier, 2008, (10): 241(In Chinese) [2] Guo Kasha, Wang Wenlong. Science and Technology Needs Analysis of Chinese High-Tech Industry[J]. Economic Review, 2004, (8):198(In Chinese) [3] Wu Jiapei, Wang Changsheng. Science and Technology Needs Analysis of the New Road to Industrialization[J]. Science & Technology and Economy, 2005, (4): 4(In Chinese) [4] Li Jianhua, Cheng Baoying, Yang Xue. Analysis on Demand of Science and Technology Effected by Informatization During New Industrialization[J]. Information Science, 2004, (8): 903(In Chinese)

White Privilege And Racial Discrimination - 1241 Words

Many people in our country do not enjoy the same privileges as others do. Some people have the best jobs, the best cars, and essentially the best life. Others, however, live in low income neighborhoods, do not even own a car, and are struggling every day of their life. The clear distinction between these two types of people is their skin color. People of color are at a constant disadvantage in our economy, society, and environment. This leads to different experiences that minorities face in every part of their life, including college. Our country has been built on institutionalized and systemic racism, which is why minorities as a whole have been displaced in America. In our society, white privilege effectively shows the many benefits that†¦show more content†¦One example of white privilege, even though it is miniscule, are bandages. They usually come in a â€Å"flesh† color, but this only truly matches a white person’s skin. But, white privilege is not just li mited to trivial things. 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Causes and Consequences of Systemic Financial Crisis Free Essay Example, 5000 words

Of all the types of risks to banks, the focus here is on liquidity risk, which is the inability to obtain funding to finance operations, though it may be linked to interest-rate and credit risk. Although most of the analysis covers banks, these concepts can also be applied to other financial institutions and even securities markets. Any event, however extraneous, but including runs on or insolvency of other banks can according to Diamond and Dybvig (1983), provoke such runs. Such an effect might be particularly potent for banks, which are creditors of the bank in distress. Runs are also likely when the equity of banks is a small proportion of balance-sheet totals, as depositors fears of moral hazard increase, assuming managers actions cannot be perfectly monitored (L. And, more generally, in the presence of asymmetric information, which arises from banks creation of non-marketable assets, runs may be triggered by any event that makes depositors change their beliefs about banks riski ness. These might include leading indicators of recession or a decline in net worth of a particular class of borrowers. We will write a custom essay sample on Causes and Consequences of Systemic Financial Crisis or any topic specifically for you Only $17.96 $11.86/page