Hong Kong is poised to take advantage of Greater Bay Area
Updated 13:45, 19-Feb-2019
Chen Jiahe
Editor's note: Chen Jiahe is the chief strategist at Cinda Securities. The article reflects the author's opinion, and not necessarily the views of CGTN.
On February 18, the grand plan for the development of the Guangdong-Hong Kong-Macao Greater Bay Area was released by the State Council, China's cabinet. It aims to make the area a global financial and technological hub that matches up to the bay areas in New York and San Francisco.
According to the plan, the Greater Bay Area is designed to be a region of coordinated innovation that seeks to bring economic, technological and environmental benefits.  
The plan won't diminish Hong Kong's autonomy based upon The Basic Law of the Hong Kong Special Administrative Region of the People's Republic of China. Instead it will strengthen Hong Kong's political status by opening up more opportunities to certain industries.
As China is conducting the economic strategy of constructing the Greater Bay Area, which includes Hong Kong, Macao, and Guangdong, Hong Kong should utilize its advantages in certain industries in order to gain economic superiority in the coming era of closer cooperation and intensive competition.
There are two economic rules that I shall recite before analysing the details of industries.
First, a bigger market brings more prosperity, as well as more economic competition. Second, in order to gain economic superiority in a big market, an economic entity must specialize in certain areas in order to gain comparative advantages in severe competition that can be brought by a large market. It is only specialization, rather than a full-scale economic layout, that can bring prosperity.
Hong Kong's sunset view. /VCG Photo

Hong Kong's sunset view. /VCG Photo

So what industries does Hong Kong possess comparative advantages in the Greater Bay Area? Well, I think you should at least consider the following sectors. Hong Kong should utilize the advantages that these industries possess and if they are well utilized then the investment returns of the industries can flourish in the future.
University education
Hong Kong has excellent universities which rank high in the world. Most of them teach in English. This means their students will face a little obstacle in the global market after their graduation. None of the other cities in the Greater Bay Area can match Hong Kong with the quality of university education.
Finance, especially asset management
Hong Kong is one of the major international financial centers in Asia, with the other three being Tokyo, Singapore, and Shanghai. Its financial industry is unmatched in the Greater Bay Area.
If you compare the profitability of finance and other industries, such as manufacturing, you can easily find that the former is much more lucrative. The same amount of labor and land devoted to the financial industry can generate a much more economic return.
Passengers use a self-service ticketing machine to purchase shuttle bus tickets at the Passenger Clearance Building of the Hong Kong-Zhuhai-Macau Bridge in Hong Kong, China, October 24, 2018. /VCG Photo 

Passengers use a self-service ticketing machine to purchase shuttle bus tickets at the Passenger Clearance Building of the Hong Kong-Zhuhai-Macau Bridge in Hong Kong, China, October 24, 2018. /VCG Photo 

Within the financial industry, asset management is one of the most attractive sectors. Compare with other sub-sectors, such as banking and accounting, asset management generates a much higher per capita return. As Hong Kong has already got a headstart with its financial industry, it should do everything it can to keep it that way.
Law industry
As China is now the world's second-largest economy, more and more Chinese companies are operating global businesses. However, due to the linguistic difference and other troublesome issues, Chinese companies frequently stumble with legal matters.
Hong Kong has English as its working language and it also has an international legal framework. As a result, Hong Kong has superiority with its law industry that other cities in the Greater Bay Area do not possess.
Retail of luxury goods
In the past few years, the traditional retail industry across the globe has been under the challenge of online shops. This situation is particularly serious in China, whose online shops have enjoyed spectacular growth.
However, for luxury goods, the impact of online shops is much less. After all, it is very hard to please a customer with a bottle of perfume bought from the internet that costs him or her a large chunk of money.
As Hong Kong has first-class shopping centres for luxury goods, it should utilize this traditional industry efficiently and gain a comparative advantage that other cities can hardly match.
Creative industries, such as art and film
Many mainland cities in the Greater Bay Area are competitive with their labor-intensive industries, but not Hong Kong because of the high cost of its workforce and world-famous expensive land.
However, with a high price there usually comes good quality. Hong Kong's labor force is much more educated and creative. Its comparative advantages in industries such as art and film are historical, obvious and superb. Films produced in Hong Kong occupy a large market share of China's film industry, while its art galleries and auction houses enjoy a global reputation.
While Hong Kong might lose in its competition with other cities in the Greater Bay Area in the fields of labor-intensive industries, it certainly has a great advantage with industries that require creativity.
(If you want to contribute and have specific expertise, please contact us at opinions@cgtn.com.)