Chinese Manufactures

Early Hong Kong industries were characterized by large manufactories that employed machanized production and dominated by foreign capital. Chinese focused on businesses that adopted traditional techniques, including making preserved ginger, fruits, lard, paper, rattan furniture, leather or mercuric sulfide. In the early 20th century, Chinese began engaging in modern light industries. These small scale manufactories required little start-up capital, and adopts semi-mechanized operation. Such workshops were often set up in tenement houses mixed with residences. Later Chinese-capital manufactories adopted modern technology and management, built their own factories, and engaged in such large scale productions as knitting, plastic shoes, paints, candy and biscuits, ice-creams and soft drinks, cosmetics, flashlights and batteries, pharmaceuticals, printing, packaging and canning.

Chinese-capital industries could be analyzed according to their capital nature, organization, source of raw materials, and condition of exports. In terms of capital, Chinese-capital industries could be categorized into Mainland Chinese Manufactories, Hong Kong Chinese Manufactories, and overseas Chinese Manufactories. Mainland Chinese Manufactories were mostly from Guangdong, with some from Shanghai and Fujian. In terms of organization, they were dominated by family businesses with some established as joint-capital or share-holding companies; some were joint ventures. Some were Hong Kong companies that have established factories on the Mainland; others were factory branches founded by Canton, Shanghai and Fujian companies. Joint ventures were formed mostly between Hong Kong and Canton businesses and were found in all industries, for example I-Feng Enamelling Company; some were joint ventures between multiple companies such as Nanyang Tobacco Company (a Hong Kong-Shanghai-Fujian venture) and Amoy Food Ltd (a Hong Kong – Fujian venture). Raw materials were mostly imported from China or overseas, and its products were exported to China, Nanyang, Thailand, the Phillippines, Europe and the US, and Australia.

Pre-war industries in Hong Kong were deeply affected by the political situation in China and Europe. With the wars in China and World War I in the 1910s, certain industries that relied on the China market and Western European market were seriously affected. Production plummeted and factories closed down. After the revolution of 1911 up till the 1920s, wars broke out among different warlords in China, and Chinese manufactories on the Mainland relocated their factories to Hong Kong; as a result the number of factories soared, while light industries of handicraft nature gradually became automated. As the war settled, Mainland businesses returned to China and Hong Kong industries shrunk. At the end of the 1930s, with the Japanese invasion of China, a great number of Mainland manufactories transferred their capital to Hong Kong between 1938 and 1941, further promoting industrial development in Hong Kong.

The development of Chinese-capital industries was closely related to the patriotic campaigns. Many Hong Kong industrialists responded to the call of “saving the nation by industries”. Many products advertisements were marked with such slogans as “Promote national products”, “Buy local products to save the nation”, “Our factory is Chinese-funded and Chinese-staffed”. Fung Keong Rubber Manufactory, for example, named their product “Patriotic Shoes” as a promotional tactic. Before the Second Sino-Japanese War, the Chinese Manufacturers' Association of Hong Kong (CMA) organized expo fairs using the slogan “Love the nation, use national goods” and accepted only Chinese-capital exhibitors, naming the fair “Chinese Products Expo Fair”. Some Chinese industries produced military products during the War of Resistance (WWII), for example Hong Kong rubber manufactories produced rubber military boots; Hong Kong metal factories produced military water canisters, steel helmets, gas masks, and flashlights.

The tariff policy imposed by importing countries in the 1930s affected Chinese-capital industries in multiple aspects. In the early 1930s, China imposed heavy customs duties on imported goods, industries reliant on the China market, for example the textiles and clothing industries, suffered severe impact and many factories closed down. Some Hong Kong companies opened factories in China to cut down the import cost, while others turned to overseas markets. On the other hand, some industries benefited from the Imperial Preference and bloomed as a result, including rubber shoes industry, flashlights and batteries, and quality cotton products. These industries imported raw materials from the Commonwealth regions, for example rubber from Malacca, cotton from India and copper from the UK. Riding on the benefits of preference duties, they were able to export their products in large scale to markets in England and the Commonwealth nations.

In 1941 just before the fall of Hong Kong, China-capital industries reached its peak. According to Tai Kung Pao (21 October 1940), factories in China that had relocated to Hong Kong due to the Japanese invasion numbered 432, including registered and unregistered businesses. In 1940, Hong Kong Blue Book revealed a total of 1143 registered manufactories in Hong Kong, compared to 520 in 1932 when the Industrial Ordinance was first implemented. The number doubled in a short period of 8 years. According to the Hongkong and Macao Business Classified Directory published in 1940, the number of registered and unregistered factories was total 7,500, indicating that Hong Kong’s industry vigorously developed in the early 1940s.

From 1941 to 1945 during the Japanese occupation of Hong Kong, all western-capital industries ceased operations and foreigners were confined in prison camps. The majority of Chinese manufactories ceased operation but to cater to the needs of the military and governance; some factories were allowed to run or resume operations to produce military products or daily necessities. These factories took up 3% of all pre-war factories. The 3 factories opened in 1942 and 1943 were all rubber manufactories, for example South China Rubber Manufacturer; partly operating factories including paint, textiles, hat, brush, cases and leather ware, cosmetics, candy, canned food and sauces; a few of the manufacturers were fully operational including Island Paint Company, Hong Kong Canton San Francisco Knitting Factory, Tang Yan Kee Toothbrush Manufactory, Union Rubber Manufactory, and Hong Kong Malt and Alcohol Workshop.