A Poorer Cousin Is Catching Up With Hong Kong

HONG KONG — These are unsettling times for Hong Kong, whose success has been closely tied for nearly a quarter of a century to its role as the undisputed gateway to the vast markets of mainland China.

China’s entry into the World Trade Organization, a move that has brought new competition from mainland ports, is just one problem.

Hong Kong’s recently reinstalled political leader, Tung Chee-hwa, is widely perceived as weak and ineffectual, the independence of the Chinese territory’s judicial system is in question, and its economy is struggling.

Then there’s Shanghai.

As Hong Kong struggles to find its balance and redefine its place in a fast-changing world, its longtime civic competitor 750 miles to the north has steadily grown in importance as a business and high-tech manufacturing center.

Admittedly, Shanghai has a long way to go. Hong Kong authorities claim that even at its current high growth rate, Shanghai would need 15 years to equal the size of Hong Kong’s economy and more than that to match its levels of per-capita income.

Still, many are convinced that it’s just a matter of time before Shanghai eclipses Hong Kong as a financial center and eventually emerges as East Asia’s premier city--its Big Apple.

This weekend, Shanghai’s government hopes to accelerate this process when it opens a job fair here with one central purpose: raiding Hong Kong’s much-prized pool of cosmopolitan, English-speaking managerial talent. Such people are in short supply nearly everywhere in mainland China after decades of Communist rule, and they are vital to the country’s transition to a more open economy.

Fair organizers predict that many here will make the jump.

“There’s a lot of interest,” said Joyce Lam, associate director of BM Intelligence International, the Hong Kong-based company organizing the fair. “We’re optimistic.

“Professional people in Hong Kong see what’s happening on the mainland, and they want to go to Shanghai or Pudong,” the high-tech manufacturing district east of the city center, Lam said. “There are more opportunities there.”

Lam said about 100 Shanghai-based companies, ranging from banks and law firms to electronic-component manufacturers, plan to offer about 700 jobs at the fair.

She said salaries for the posts, ranging from $19,000 to $250,000 annually, had generated Web site queries and phone calls from overseas Chinese as well, many of them in the United States.

“Of course, we welcome them to come to the fair too,” she said.

For Hong Kongers, whose feelings toward Shanghai are somewhat akin to the rivalry between Angelenos and San Franciscans, the job fair is both a galling bit of chutzpah and extremely worrisome.

The workers Shanghai hopes to attract are exactly what Hong Kong needs to hold on to in order to breathe new life into its economic base.

Hong Kong’s competitiveness has noticeably deteriorated since 1997, when the territory reverted from British to Chinese rule. Almost immediately after that transfer, authorities in the Cantonese-speaking region replaced English with the mainland’s dominant Mandarin as the first foreign language.

“Hong Kong’s integration with China poses more problems than solutions because China is competing for the same manpower and skills,” said Hong Kong University political scientist Sonny Lo, who has tracked the region’s transition to Chinese sovereignty.

Lo listed poor management of Hong Kong’s human resources as a major government weakness and said he sees no hope for short-term improvement.

“In a way, Hong Kong is sandwiched between [mainland] China and its own human resources problem,” he said.

A survey assessing Hong Kong’s future business environment published last week by the Economist Intelligence Unit appeared to confirm Lo’s gloomy assessment.

“The quality of the work force ... remains a major worry,” the study concluded.

The document also carried other bad news for Hong Kong--news that will only add to its image as a region struggling to find a new niche.

Paul Cavey, the EIU’s senior economist for greater China, noted that among the nations or regions surveyed, Hong Kong was one of only three where the business environment is expected to decline over the next five years. The other two were Argentina and Malaysia.

Cavey also cited evidence of decline in Hong Kong’s role as a trade gateway to mainland China. Cavey noted that although China’s overall exports rose by about 8% during the first three months this year, reexports from Hong Kong actually fell.