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Competitive Advantage

1.      Introduction

Competitive advantage (CA) is an advantage over the others.  Porter (1990) argues that national prosperity is created not inherited and hence, the differences in national values, culture, economic structures, institutions, and histories all contribute to competitive success.  There are often comparisons of the CA of Hong Kong versus Singapore in terms of attracting foreign direct investment (FDI).

2.      Discussion

HK has several major CA.  First of all, HK has unique position with the Mainland as hinterland and extensive links to all corners of the globe through its well-developed infrastructure.  China・s accession to the WTO signifies a rise in the status of the country that will continue to develop economically.  HK, as the main window for the Mainland, is therefore benefited to attract FDI who want to use HK as bases for approaching the Chinese market.  Secondly, HK offers favorable business environment which other economies in Asia cannot easily duplicate.  It is recognized internationally as one of the world・s freest economies.  It attracts FDI because of its open-oriented policies and institutional strengths such as robust legal system, level playing field, stringent market regulatory system, liberal foreign exchange regime, free flow of information, clean government, sound financial position and simple taxation system.  Finally, HK has a pool of world class talents and enterprises in a wide spectrum of interlinked areas including finance, trade, law, accounting and insurance.  Together, they form a highly efficient operational network adept at assimilating new knowledge and eager to innovate. 

Similar to HK, Singapore's strategic location within ASEAN with well-developed infrastructure has made it attractive for FDI.  However, this advantage is diminishing with China・s accession to WTO and the catching up of Malaysia.  In view of this threat, the Singapore government takes a hyper-active role as usual to implement policies encouraging innovative enterprise and knowledge creation to increase Singapore・s global competitiveness.  According to Singapore Infomap (2001), this includes key thrusts to provide a boost for local businesses through reducing taxes, and full incentives to help SME upgrade their operations and re-training.  Moreover, Singapore is well-plugged into the international financial system and it is the 4th largest foreign exchange trading centre in the world (Ministry of Trade and Industry of Singapore, 2002).  Other CA of Singapore includes a clean and efficient government, emphasis on education and science and technology.

3.      Conclusion

Both HK and Singapore have their CA.  However, with the emergence of China as an economic powerhouse in Asia, HK is more fortunate than Singapore for its well positioned to seize the opportunities to FDI.


Ministry of Trade and Industry (2002), .Factors Contributing to Singapore・s Success・, Ministry of Trade and Industry, Singapore, [Online, accessed 8 January 2003]

Porter, Michael E (1990), .The Competitive Advantage of Nations・, Harvard Business Review, March-April.

Singapore Infomap (2001), .Singapore in 2001: A Review・, Singapore Infomap, Ministry of Information, Communications and the Arts, Singapore, [Online, accessed 8 January 2003]

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