The role of Hong Kong as a global city : a case study on the transnational corporation's development in the Greater Pearl River Delta region

Abstract

Hong Kong has long been regarded as a global city and the regional service provider in the Greater Pearl River Delta (GPRD) region, with the provision of an opened and accountable economic and legal system, support of high-quality infrastructure and policies, and being the gateway to enter the Chinese market. This can be reflected by its consistently high score in different global competitiveness ranking index. A lot of Transnational Corporations (TNCs) are attracted by this reputable global city development of the city, establishing their headquarters and other tertiary services in Hong Kong. Other cities in the GPRD region tend to specialize in factory production with their comparative advantage in lower production cost in terms of labour, looser regulations and industrial agglomeration. The functional division in the GPRD region is well defined spatially which can be explained by the traditional "Front office, back factory" model.

However, this settings has been changing as many PRD cities like Shenzhen, Guangzhou and Zhuhai have transformed their city's vision towards a global city currently. These cities have initiated economic restructuring and industrial upgrading towards modern servicing industries, and gradually force out the original factories and production base to less developed PRD cities or other locations beyond the GPRD region. New incentives are offered by the central and municipal government in attracting TNCs to invest in high value-added producer services, establishing Research and Development (R&D) base and headquarters in these PRD cities under urban entrepreneurialism. The dominant role of Hong Kong as a global city and regional service provider is challenged under rapid inter-city competition with these cities. This results in a new spatial dynamics and functional specialization settings for the GPRD region that cannot be explained by the traditional model.

This study will examine the existing and potential role of global city development in Hong Kong and other PRD cities with reference to the investment choices of TNCs in the GPRD region. Through a comparative analysis with Guangzhou, the major strengths, weaknesses, and other factors required for global city development of Hong Kong and PRD cities will be identified. In addition, the latest locational settings of different functions will be explored in the case study analysis of TNCs in modern servicing and financing industry, manufacturing industry, and information and high-tech industry. The analysis will assist in identifying potential development opportunities, weaknesses of Hong Kong and PRD cities in attracting further investments from TNCs. Recommendations will be offered at the end of the study to enhance the overall competitiveness of Hong Kong and the GPRD region, through "co-opetition" incentives, fostering the development of GPRD mega-city region under the network city concept, and formulating an updated version of "Front office, back factory" model.