Flexible Production in Late Industrialization: The Case of Hong Kong

This paper examines how flexible production, as a major contributing factor to Hong Kong’s economic takeoff, has been organized and transformed in the territory’s industrialization process. From a three-pronged view of flexibility that encompasses government-firm, intrafirm, and interfirm relations, I explore how Hong Kong manufacturers tackled constraints in their regulatory environment, labor processes, and business transactions. Up to the mid-1970s regulatory laxity, moderate trade-off between flexible (exploitative) labor practices and productivity, and external economies involving limited mutual commitment between interdependent firms converged to form a unique edge of international competitiveness for the manufacturing sector. But changes in the socioeconomic structure subsequently weakened the conditions on which such types of flexibility were based. Manufacturers were driven to search for alternative ways of profit making, especially in the form of plant relocation to China, which represents a path-dependent extension of the rationale of the existing flexible production system to a different social space. Four existing views on Hong Kong’s economic development are examined and critiqued. Implications of major findings for the flexible specialization debate are discussed.