And in 1994, mainlanders displaced Taiwan people as the biggest group of visitors to Hong Kong, averaging over 6,000 arrivals daily by last year. Their per-capita spending was lower than that by visitors from the U.S. but higher than that from European tourists. The driving forces behind such dramatic growth are simple. Hong Kong manufacturers make use of the low land and labor costs in China to produce goods more inexpensively so they can be sold more competitively to larger markets. In the past ten years, Hong Kong's domestic exports to the top eight foreign markets outside China and the U.S. exactly doubled.
Recent developments point to even more promising synergies.
Hong Kong entrepreneurs now combine their capital, managerial skills and knowledge of overseas markets with manufacturing capabilities in China to undertake entirely new production activities. Typically these involve heavy engineering, requiring expertise Hong Kong never possessed and plants it is too crowded to accommodate. Besides the traditional toys, garments, watches and electronics, the territory is now making refrigerators, air-conditioners, furniture, rubber tires and pharmaceuticals for export. Dairy and fish farming as well as market gardening all hold exciting promise. The benefits of such joint efforts are obvious.