Some small and medium-sized Hong Kong firms operating out of the Pearl River Delta region are said to be contemplating a closure of their factories as the businesses have dipped into the red for the first time in many years.
Lackluster market demand and rising costs in China are being blamed for the manufacturers’ woes.
In recent years, big corporations like Taiwan’s Foxconn relocated some of their operations from coastal cities to China’s inland provinces.
But for small and medium enterprises, relocation is not an easy option as the costs can run into millions of dollars.
Also, moving to a cheaper part of China is no guarantee that all the problems will be solved. At a new place, top executives will have to start all over again to build relationships with local government officials.
The Hong Kong entrepreneurs, most of whom are in the late fifties or sixties now, are now at a crossroads with regard to their mainland operations.
Not only is the operating environment getting tough, there are also doubts whether the next generation would want to continue with the businesses across the border.
It’s no secret that many youngsters nowadays aren’t too enamored about the prospect of running factories in China.
All this means that the challenges facing Hong Kong entrepreneurs will only get harder.
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