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Advantages of Hong Kong over Shanghai:|
HK is a deep sea port, allowing huge container ships to come in and out of Hong Kong very fast.
China is an export economy. Most products are exported by sea. International shipping law is based on English law and maritime insurance and finance is based in London. Hong Kong is very accustomed to English law (which still applies to business law in HK) and shipping/maritime.
Civil law enforcement in Hong Kong is very transparent and governed still by English law, the oldest and most established legal system in the world. It is the preferred choice of business law for many countries around the world, including in the Middle East, South East Asia and America. Most judges are still very experienced English judges.
HK allows all currencies to be freely traded in and out of the territory. Compare that to the strict rules in Shanghai.
HK is a major transportation hub for the world. More airlines fly into and out of HK than almost any other airport in the world.
Tax is low in Hong Kong.
Anybody anywhere in the world can establish a business in HK very easily.
Excellent health care, education, infrastructure and technology.
It is easier for the factories in Guangdong to ship their products out of HK than out of Shanghai.
DIsadvatnages of Hong Kong over Shanghai
Hurricanes and bad weather during the summer.
Advantages of Shanghai over HK
Access to very low cost labour and materials from all over the mainland.
Shipping to the West Coast of the USA is faster.
Disadvatnages of Shanghai over HK
Government controls almost everything including currency trading, business licenses, high registered capital requirements, strict employment laws, high taxation.
Unpredictable legal system.
Too much guanxi and corruption, but govt is trying to stop it.
For these reasons HK will always be better than SHanghai. For the Chinese govt to make Shanghai work, it would need to make it into a SAR type region with complete autonomy, reduce taxes, allow free trading of currencies in and out of Shanghai, improved health care. The biggest problem is free trading of finance from SHanghai. This would require the RMB to be traded freely. If that happened, the RMB would probably rise by about 33% at least. THis would massively harm exports before China has become a consumer economy. This would then result in mass unemployment.
I live in Shanghai.....I have also worked in HK. Even though HK is better in all respects, I prefer the mainland because the people are MUCH NICER in the maindland. The Chinese people in HK seem to have a superiority complex over mainland Chinese, and an inferiority complex over Westerners. I much prefer the good old down to earth smiley happy mainland man over the White-wannabes in HK!!!
[ Last edited by Shanghey at 2009-7-7 04:04 PM ]