3.

1 Where were manufacturing industries in Hong

Kong mainly located in the past? Where are they
now?
A What is manufacturing? What is industry?
1 Complete Table 1 to show the four sectors of industry.
Table 1

Sector of industry Descriptions Example

Primary industry Uses materials found in nature. Farming, fishing,

mining,

lumbering, etc.

Secondary industry Industries that make things from Manufacturing,

____raw materials______ or semi- construction, etc.

finished products into ____more

valuable______ products by processes

such as assembling, fabricating, etc.

Tertiary industry Industries that provide services to other Administration,

industries and to people retailing,

transport, other

commercial

activities, etc.

Quaternary industry

1
 Industries that are concentrated with Research,

_____information_____, its software

application, ___manipulation___ and development,

transmission. media, etc.

B What is a manufacturing system?

2 Complete the flow chart below to show the manufacturing system of a printing factory.

Inputs Manufacturing
processes
Physical inputs Cultural inputs
Such as paper
___Raw materials_____ ___Labour_____ 4 ____Market____ cutting, printing,
such as paper, printing ink, packaging, etc.
____Capital____ 5 Power supply
etc.
____Land_____ ___Transport___ 6 Government policies

Outputs
Cash
___Useful___ outputs _____Waste_____

Market Such as books, printed Such as waste paper,

matter, etc. waste, etc.

3 How can we classify manufacturing industries into different types? Complete Table 2 to show
the classification of manufacturing industries.
Table 2

Criteria Type Characteristics Examples

By ___weight___ • Heavy and bulky raw materials are used Iron and steel,
Heavy
shipbuilding, etc.
• Heavy products are produced
and amount of
Textiles, electronics,
raw materials and • Light raw materials are used
Light etc.
• Light products are produced
products
Garment, watch-
Labour-intensive • Much labour is used in production
making, etc.

2
By inputs of Petrochemical, car-
manufacturing, etc.
____capital____ Capital-intensive • Much capital is used in production

and labour

By level of • Little investment and labour are put into Matches, traditional
handicraft, etc.
Low-technology R&D
___technology__
• Traditional ways of production are used
and research and
• Much investment and labour are put into Genetic engineering,
development computer and chips,
High-technology R&D
(R&D) etc.
• Advanced technology is used

C What were the changes of manufacturing industries in Hong Kong

from the 1950s to the 1970s in terms of location and types?
4 Figure 1 shows the different stages of industrial development in Hong Kong.

Figure 1 Distribution of manufacturing industries during different industrial

development stages in Hong Kong

a Listen to the recording provided in the IT resources website.

b Refer to Figure 1 and the information given in the recording, complete the descriptions of
each stage of industrial development in Hong Kong.

3
 Before 1949
• Location: on the ____northern____ part of Hong Kong Island near Victoria
Harbour
• Types of industries: related to ____port____ activities such as shipbuilding
and repairing and some light industries such as food processing and
furniture
• Importance to Hong Kong’s economy: _______not significant_______

In the 1950s
• Location: extended along the two sides of Victoria Harbour
• Types of industries: _____textile and other light industries such as
plastics, wigs and food processing______________________________
• Importance to Hong Kong’s economy: textile industry was a major
source of income and employed the greatest number of workers

1960s to 1970s
• Location: along the two sides of Victoria Harbour, from Kwun Tong to
Tsuen Wan in Kowloon and from Chai Wan to Sai Wan on Hong Kong
Island
• Types of industries: manufacturing became more diversified but textile was
still the most important
• Importance to Hong Kong’s economy: manufacturing became the largest
employer and contributed most to the economy______________________

c What were the location factors favourable to the development of manufacturing in

Hong Kong in the 1950s and between the 1960s and 1970s? Tick () the
appropriate answers.

In the 1950s

4
  Free port policy  Rich natural resources  Sufficient and cheap
skilled-labour supply
 Large piece of flat land  Capital and technology
available
 Politically stable
 Good port facilities

1960s–1970s

 Free port policy  Large local market  Good legal system

 Good transport  Low tax rates and no  Abundant supply of

infrastructure exchange controls high quality
professionals
 Good technical backup  Good
services and support telecommunication
industries and postal facilities

D What have been the changes in the number of manufacturing firms,

workers and share of GDP by manufacturing industry sector since
the 1980s?

5 Figure 2 shows the number of manufacturing firms in Hong Kong from 1960 to 2008. Figure 3
shows the share of total working population by manufacturing workers from 1961 to 2008.
Figure 4 shows the share of GDP by manufacturing industry sector from 1961 to 2007.

Figure 2 Number of manufacturing firms in Figure 3 Percentage share of total working

Hong Kong from 1960 to 2008 population by manufacturing workers from 1961

5
 to 2008

Figure 4 Share of GDP by manufacturing industry Source of figures 2 to 4: Census and Statistics
sector from 1961 to 2007 Department

a Refer to Figures 2 to 4, briefly describe the changes of the manufacturing industry since
the 1980s in the following aspects:

i Number of manufacturing firms

The number of manufacturing firms continued to ( increase / decrease ) in the 1980s,

but it _____dropped_____ greatly since 1990.

ii Share of total working population by manufacturing workers

• The number of manufacturing workers shared about __42__% of the total

working population in 1980 and the manufacturing industry has reached its

peak at that time.

• Since then, its share has _____dropped_____ greatly and only shares about

___5___ % of the total working population in 2008.

iii Share of GDP by manufacturing industry sector

The share of GDP by manufacturing industry sector has ____dropped____

drastically since 1980 and it only accounted for about ___2.5___ % share in 2007.

6
 b What can you notice about the importance of the manufacturing industry sector in Hong
Kong since 1980?

Its importance is declining.

E How has the location of manufacturing industries in Hong Kong

changed since the 1980s? What manufacturing activities have been
relocated?
6 Besides importance, the location of manufacturing industries has also changed since the
1980s.
a Where did most of the Hong Kong manufacturing firms relocate their factories?
They relocated their factories to the southern parts of China, especially to the Zhujiang
Delta Region.
b Figure 5 (p. 7) shows the major manufacturing centres that developed in the area you
mentioned in Question a. Name these centres.

A Shenzhen

B Zhongshan

C Foshan

D Guangzhou

E Dongguan

F Huizhou

Figure 5

7 Figure 6 shows the choice of location for different manufacturing activities. Refer to Figure 6
and fill in Table 3 to show the type of manufacturing activities that most firms prefer to locate
in Hong Kong and Guangdong respectively.
Table 3

7
 Manufacturing activities that
most firms prefer to locate in
Hong Kong

• regional headquarters

• sales and marketing

• research and development

• IT management

Manufacturing activities that

most firms prefer to locate in
Guangdong

Source: Made in PRD Study (2007), Federation of Hong Kong Industries

• production
Figure 6 Choice of location for different manufacturing
activities • logistics

F What are the reasons for moving production operations to the

Zhujiang Delta Region?
8 Complete Table 4 to shows the factors causing the relocation of production operations.
Table 4

_____Push_____ factors of Hong Kong _____Pull_____ factors of the

Zhujiang Delta Region

Labour

• Most of the manufacturing industries are • ____Low____ labour costs in the

____labour___-intensive, the Region greatly reduces the production

____high_____ labour costs in Hong costs of labour-intensive industry. This

Kong raises production costs and lowers helps increase the ____profit____ of

revenue of the firm. the firm.

A Land price

8
Land
• ___High___ land price  ___High___ • ___Low___ land price  ( Raises /

production costs Reduces ) production costs

B Land availability

• ( Plenty / Shortage ) of flat land forces • ( Extensive / Limited ) flat land with

firms to carry out production operations basic facilities and ___infrastructure__

in ____flatted____ factories. such as electricity, water supply, etc.

• This ( hinders / favours ) expansion and attract industrialists to set up factories

( raises / lowers ) production efficiency. here.

Government policies

• ( Strict / Loose ) environmental protection • Costs to comply with environmental

laws increases production costs and protection laws only accounts for a

lowers profit. ____small____ proportion of the

production costs.

• Local governments offer

____favourable terms_______ to

foreign investors, such as tax

concession. This helps ( increase /

reduce ) production costs.

Proximity to Hong Kong

• It is easy for industrialists to monitor the

production operations because

factories are ( near to / far from ) Hong

Kong.
-----
• Firms can make use of the advanced and

efficient ____transport____ facilities

in Hong Kong to export their products

and import raw materials.

9
G What are the reasons for keeping company headquarters in Hong
Kong?
9 Which of the following are location advantages for setting up headquarters in Hong Kong? Tick
() the correct answers.

Monitor operations Develop long-term Exchange information,

business strategies negotiation and bargaining

Functions

Headquarters

Location advantages in Hong Kong

 Politically stable and secure  Support services available

 Cheap land rent  Well-established legal system

 Efficient transport network  Supply of high-quality

professionals

 Efficient telecommunication facilities  Strict environmental regulations

10
3.2 Where should manufacturing activities be
located?
A How does a manufacturing firm make location decisions?

1 Below shows a simple formula on how a firm make a profit.

Profit = Revenue – Production costs

a What is the most important aim of a firm?

To make a profit.
b Refer to the formula. How can a firm earn more profit?
A firm can earn more profit either by ( raising / lowering ) revenue or ( raising /

lowering ) production costs.

c If you want to set up a firm, which place will you choose from below? Why?

Location A Location B
Land rent: $100,000 per month Land rent: $62, 000 per month
Labour costs: $450,000 per month Labour costs: $200,000 per month

I will choose Location ( A / B ) because land rent and labour costs are lower. This
helps cut production costs and maximize profits.

B What are single-plant firms and multi-plant firms?

2 Figures 1a and b show the operation of two manufacturing firms.

Figure 1a Operation of Firm A

11
Figure 1b Operation of Firm B

a Refer to the operation of Firm A.

i Where do all the manufacturing activities take place?

They all take place in a plant/factory in a city of Country X.

ii What do we call such mode of production?

Single-point production.
iii Where are the markets? Are they local markets or overseas markets?

Cities of Country X. They are local markets.

b Refer to the operation of Firm B.

i Does Firm B have all the manufacturing activities located in one plant? How does it
operate?
No. Firm B has its manufacturing activities carried out in a number of plants.

ii What can you notice about the location of the plants?

They are located in different countries.
iii What do we call such mode of production?
Multi-point/Multinational production.
iv Where are the markets of Firm B?
Global markets.

12
 v What is the advantage of such mode of production?
It enables the firm to take advantage of the benefits of different sites so as to
lower production costs and increase profits.

vi Name ONE enterprise that has adopted the same production mode as Firm B.
Nike, IBM, Nokia, Sony, Toyota or any reasonable answers

C What location factors matter?

3 Complete Table 1 to show the location factors of manufacturing industries.
Table 1
Site factors

They refer to the geographical characteristics of a site which have an effect on the
development of the industry.

• ______Land attributes_______ • _____Communication systems_____

Location factors of manufacturing industries

Operation factors

These factors are related to a particular location in a region which makes it possible
for manufacturing activities to benefit from easy access to raw materials, power,
labour, markets, management and clients.

• Access to _____raw materials_____ • Access to ______labour________

• Access to clients • Access to ______markets_______

• Access to ____management_______ • Access to power

Socio-economic factors

They refer to the socio-economic quality in a region or a country. It explains how the
business environment is formed.

• _________Capital___________ • ____Technology and innovation____

• _______Agglomeration_______ • Government policies

13
Site factors

4 a How land attributes affect the location of manufacturing industries? Complete Table 2 to
show how heavy and light industries require specific land attributes.
Table 2
Heavy industry Light industry

Iron and steel industry, car-

Electronics industry, textile
Examples manufacturing industry, oil
and clothing industry
refining industry

Land area ( Larger / Smaller ) ( Larger / Smaller )

Land price ( Higher / Lower ) Can afford higher land price

Flat land but manufacturing

Relief Extensive flat land activities can be carried out in
flatted factories

Importance of land
( Important / Less important ) ( Important / Less important )
attributes to the industry

b Where do high-tech industry likely to be found? What are the specific site conditions
required by such industry?
It is likely to be found in suburban industrial parks. Site conditions include lower land
price, room for expansion, good basic facilities and amenities.

5 Below is a map showing three locations for industrial activities.

14
Figure 2

15
 a If you were a manufacturer and want to set up a factory in the area shown in Figure 2 on
p.13, which location, A, B or C will you choose? Why?
Location C. It is because location C has a better transport network. It can be accessed
by road, railway and sea. This enables efficient import of raw materials and export of
products. In addition, it helps lower transport cost.

b Table 3 shows the infrastructure of telecommunications of locations A, B and C.

Table 3
Location A Location B Location C
Access to the
Poor Average Excellent
Internet
Telephone lines Average Good Many
Satellite services Poor Good Excellent
Television services Good Good Excellent

If you were to locate the headquarters of your manufacturing firm, which location would
you choose? Why?
Location C. It is because it has efficient infrastructure of telecommunications. This
enables efficient information exchange with branch offices and production plants.

Operation factors

6 Refer to Figure 3 below.

Figure 3

a Compare with the weight of raw material, does the product lose weight or gain weight
after manufacturing processes?
It loses weight after manufacturing processes.

16
 b Where will you locate the sugar mill, near the source of raw material or near the market?
Why?
I will locate the sugar mill near the source of raw material. This is because the raw
material/sugar cane is bulky and heavy. The transport cost of raw material is higher
than the product. To locate the sugar mill near the source of raw material helps save
transport cost and therefore increase profits.

c What do we call the industries that need to be located near the source of raw materials?
Raw material-oriented industries.
d Some food processing industries such as canned fruits manufacturing are also located
near the source of raw materials. Why?
They are located near the source of raw materials because fruits/the raw materials are

( perishable / non-perishable ). By locating the industries near the raw materials, it can

prevent loss.

7 Figure 4 shows the labour characteristics of places A and B.

Place A Place B
Labour supply: Abundant Labour supply: Abundant
Labour costs: Low Labour costs: High
Skill level of labour: Low Skill level of labour: High

Figure 4

a Which location will the industry listed below choose to locate? Why?
i Toy industry will choose to locate in Place ( A / B ) because

• this industry demands a ( large / small ) amount of labour

• the abundant supply and ( low / high ) labour costs in the place help cut

production costs

ii High-tech industry will choose to locate in Place ( A / B ) because

• this industry demands ( skilled / unskilled ) labour
• the quality of labour is ( less / more ) important than labour costs

b What do we call the industries that demand for a lot of workers?

17
 Labour-intensive industries.

c Besides the cost, quantity and quality of labour, the presence of unions and number of
strikes are also important considerations when locating an industry. Explain.
Strong labour unions and frequent strikes will ( enhance / delay ) production and

therefore result in ( lower / higher ) production costs.

8 Figure 5 shows the location factors of aluminium smelting. (Hints: Size of the circle indicates
the importance of the location factor.)

Figure 5

a What is the most important location factor for aluminium smelting?

Power
b Where will aluminium smelting likely to locate? Why?
Near sources of power. This can reduce transport costs and therefore lower production
costs.
c What do we call the industries that need to be located near the place you mentioned in
Question b?
Power-oriented industries.

9 a Match the following industries with their characteristics by putting the number of the
industries in the correct boxes.

i Dairy products iii Bulky and heavy

ii Glass manufacturing i Perishable

iii Car-manufacturing iv Easy to be out-of-date

iv Newspaper printing ii Fragile

18
 b Where do you think the above industries should be located?
They should be located near the market.

c What do we call the industries that need to be located near the place you mentioned in
Question b?
Market-oriented industries.

10 What is the benefit of locating the headquarters of the manufacturing firm near its clients?

By locating the headquarters near its clients, the firm can have face-to-face contact with its
suppliers and customers. The information collected can be provided to production plants for
improvement.

11 Why some firms place the access to a good management team the most important location
factor of all?
It is because a good management team is able to choose the ( low-cost / high-cost ) location

and formulates strategies to expand its market. This helps ( lower / raise) production costs,

promote growth and raises profits.

Socio-economic factors

12 a Heavy industries normally require a large amount of capital to start. What are the TWO
types of capital involve?
Financial capital, i.e. money and fixed capital, i.e. plants and machineries.
b What do we call this type of industries?
Capital-intensive industries.
c There is another type of capital which high-tech manufacturing seeks? What is it?
Venture capital.
d What are the characteristics of the type of capital you mentioned in Question c? Tick ()
the correct answers.

 It is a kind of private equity.  Its investments are usually high risk.

 It is used to finance new, growth  It is provided by professionals and outside
businesses. investors.
 Its investment offers low returns.  It is normally provided by banks.

19
 e Where do you think the type of capital you mentioned in Question c is readily available,
in large cities or small villages?
In large cities.

13 Which of the following government policies favour the development of industries? Tick ()
the correct answers.
 Tightens strict pollution controls  Improves infrastructure and facilities

 Reduces land rent  Provides tax cuts

 Provides loan with low interest rates  Protect the patent of inventions

 Restricts industrial land use in some  Restricts the extraction of natural

areas resources

14 Technology has a great impact on the location of modern industries.

a How do technological advancements make the role of the following location factors less
important?
i Transport

With technological advancements, transport cost of bulky and heavy raw

materials and products can be lowered. Large cargo ships can be used to transport

bulky and heavy raw materials, such as coal or iron ore.

ii Raw materials

With technological advancements, fewer raw materials are needed. Substitutes

can be used. The transport costs of moving the raw materials from source places

to industrial location can be lowered.

iii Labour

With technological advancements, factories can adopt automation, such as using

robots and machines in the production processes. This reduces the demand for

labour.
iv Power

With technological advancements, less coal is needed for generating power in the

20
 production processes. The improvement in electricity transmission technologies,

such as electricity can be transmitted by cables over a long distance, has also

lowered the importance of power as a location factor.

b Refer to Figure 6 which shows the distribution of high-tech industries in the UK.

Figure 6

i What can you notice about the location of high-tech industries in the UK?
They are located near the universities.
ii Why the high-tech industries have to locate near the place you mentioned in
Question bi?
• High-tech industries are _______research and development________-intensive,

located near _____universities_____ can have a good access to technical

support of research and development.

• They can also gain access to _____innovations_____ and new ideas.

• In addition, university graduates provide abundant supply of ( skilled /

unskilled ) labour to the industries.

21
15 Figure 7 shows the changes in the number of industries in Place X in 2000 and 2009.

In 2000, there were only a few In 2009, there are many

industries set up in Place X. industries cluster in Place X.
Figure 7

a What do we call the concentration of industries in a particular place?

Industrial cluster/Industrial agglomeration.

b Why do industries cluster?

By clustering together, the industries can enjoy agglomeration economies_____________

which help _____cut____ costs and ____increase____ profits.

c Which of the following are the benefits that agglomeration offers? Tick () the correct
answers.

 Share sources of innovation

 Share supporting services and facilities

 Share common markets

 Enjoy an already well-established linkages with local manufacturers

 Attract skilled labour

 Lower transport costs

 Lower production costs

 Enjoy an already well-developed infrastructure

22
D Will manufacturing activities remain at the present location?
16 Figure 8 shows the location of two iron and steel plants, A and B, in 1970 and 2009.

1970 2009

Figure 8

a i Where did plants A and B locate in 1970?

They were located near coalfields.

ii What were the location advantages for plants A and B being located near the place
you mentioned in Question ai?
A ( small / large ) amount of coal was needed in the production of iron and steel. As

coal is ____heavy_____ and _____bulky_____, iron and steel plants located near

the ____coalfields_____ can help save transport cost.

b i What do you notice about the location of plants A and B in 2009?

Plant ( A / B ) moved to the ( inland / coastal ) region while Plant ( A / B ) remained

in the same location.

ii Based on the information given in Figure 8, what are the reasons for the relocation
of Plant B?
• The ____coalfields_____ has diminished, the favourable location factor no

longer exists.

• Coastal location favours ____imports____ of coal from overseas, this helps

save transport cost.

23
 • Technological advancements has ___reduced____ the importance of coal as

___power____ and _________raw materials_________ in iron and steel

production.

iii Plant B has relocated, Plant A has chosen to remain in the existing location. What do
we call such phenomenon?
Industrial inertia.

iv List FOUR reasons for causing the phenomenon you have mentioned in Question
biii.
• manufacturer’s personal preferences
• buildings and machines are difficult to move
• relocation involves very high cost
• skilled labour is available in the existing location
• linkages with other business sectors have been set up in the existing location
• agglomeration economies in the existing location
• well-developed infrastructure in the existing location
• local markets available in the existing location
(any 4 reasons)

24
3.3 How has the location of the iron and steel industry
in China changed over time?
A What are the factors affecting the location of the iron and steel
industry?
1 a Complete Figure 1 to show the factors affecting the location of an iron and steel plant.

E O
Government Labour
� Offering grants and ___subsidies___ � (Skilled / Unskilled ) labour

O E
Power Technology
� A ( large / small) amount � Automation and
of _____coal_____ ( advanced / backward )
technology

S
Land O
� A ( large / small) area of Market
flat land � ____Large cities and
industrial centres_________

E An iron and steel plant

Agglomeration S
� Benefit from Communication systems
__agglomeration___ � By ____rail____ or by sea
_____economies____

O
Raw materials
� ____Iron ore______ or scrap
E iron and steel, ___coal____
Capital and limestone
� A ( large / small) amount Management O

Figure 1

b Which group do the above factors belong to? Site, socio-economic or operation? Mark
appropriate letters in the boxes above. ‘S’ for site factors; ‘E’ for socio-economic factors;
and ‘O’ for operation factors.

25
 c Figure 2 shows the raw materials required to produce pig iron.

1.2 tonnes of iron ore

0.5 tonnes of coke

An iron and steel plant 1 tonne of pig iorn
Less than 0.2 tonnes
of limestone
Note: Coke is the charcoal made from coal.
Pig iron is the molten iron produced from the smelting of iron ore with coke and limestone in a furnace.
It is an important material for making steel.
Figure 2
i What are the characteristics of the raw materials?
Heavy and bulky.
ii Does the product lose weight or gain weight after manufacturing processes?

The product loses weight after manufacturing processes.

iii According to the characteristics you mentioned in Question bi and ii, what kind of
industry does the iron and steel industry belong to? Tick () the correct answers.

 Power-oriented industry  Heavy industry

 Raw material-oriented industry  Light industry

B How important is the iron and steel industry in China?

2 Complete Table 1 to show the importance of the iron and steel industry in China.
Table 1

Note: North America Free Trade Area includes Canada, USA and Mexico
Source: International Iron and Steel Institute

Figure 3 Share of world crude steel Figure 4 Share of world crude steel
production by country/region in 2007 consumption by country/region in 2007

26
 Status of China’s crude steel
China was the world’s ______top______ crude steel
production and consumption
producer and consumer.
in the world

Source: China Statistical Yearbooks

Figure 5 Crude steel production in
China, 1955–2007
Before the 1980s After the 1980s
Pattern of
crude steel The growth of the production of The growth of the production of
production
crude steel was very ( slow / fast ). crude steel was very ( slow / fast ).

The economy of China has been growing ( slowly / rapidly ) after the 1980s.

Reasons for The demand for iron and steel has greatly ( increased / decreased ) as a lot of
the changes
iron and steel consumption industries such as construction, automobile,

shipbuilding industries, etc. have developed rapidly.

C What is the spatial distribution of the iron and steel industry in

China?
3 Figure 6 shows major iron and steel centres in China in 2001. Label the FIVE major iron and
steel centres on Figure 6.

27
 Source: 2006《《《 《 《《《《《
Figure 6 Major iron and steel centres and some large iron and steel firms in China, 2001

D How has the location of China’s iron and steel industry changed
over time?
4 Figures 7 and 8 show the location of major iron and steel works in China during the 1950s and
1970s.

Figure 7 Location of major iron and steel Figure 8 Location of major iron and steel works
works in China in the 1950s in China in the 1970s
a Describe the distribution patterns of the iron and steel industry in China in the 1950s and
1970s.
In the 1950s: Most of the iron and steel works were located in the north-eastern
part of China.

28
 In the 1970s: Many iron and steel works were found in inland locations, such as
Wuhan, Panzhihua and Baotou.

b What can you notice about the changes in the distribution patterns of the iron and steel
industry in China between the 1950s and 1970s?
Between the 1950s and 1970s, there had been an ( inland / coastal ) shift of the iron and

steel industry.

c Complete Table 2 (p. 27) to show the factors affecting the location of the iron and steel
industry in China between the early 1950s and late 1970s.

29
 Table 2
Between the early 1950s and late 1970s: Inland shift of industries

• ________Government policies________ played a major role on the inland shift of the iron

and steel industry. According to several Five-year Plans, iron and steel works were

established in the inland areas.

Strategic reasons

• During wars, factories in the ( inland / coastal ) areas could be easily attacked by enemies.

• Adopted the policy of ‘_____moving industries into the inland_____________________’

to safeguard its industries.

Economic reasons

Figure 9 Distribution of
coalfields, coal mines and iron
ore in China

30
 • Compare Figure 9 with Figures 7 and 8. What can you notice about the relationship

between the location of iron and steel works and the sources of raw material and power?

Iron and steel works were located near the sources of raw material and power._________

______________________________________________________________________

• Explain why the iron and steel works have such location pattern.

It is because the raw materials and power resources are _____bulky_____ and

_____heavy______. Locate near the sources of raw material and power can help

( increase / reduce ) transport costs. In addition, transport of raw materials and power

resources to the coastal regions was difficult because transport links were ( well / poorly )

developed.

• Level of economic development and living standard of the people in the inland regions

was ( high / low ).

Social reasons

• Moving factories to ( coastal / inland ) regions helped develop the economy and raise the

living standard of the people there.

• This helped to achieve a more ____balanced____ economic development throughout the

whole country and relieve the problem of _____overpopulation______ in the coastal

regions.

6 Figure 10 shows the location of major iron and steel works in the early 2000s.

31
 Figure 10 Location of major iron and steel works in China in the early 2000s

a Compare the locations of major iron and steel works in the 1970s (Figure 8 on p. 26 ) and
the early 2000s (Figure 10). What can you notice about the changes in the distribution
patterns of the iron and steel industry in China during that period?
During that period, there had been a coastal shift of the iron and steel industry.

b Complete Table 3 (p. 29) to show the reasons for the coastal shift of the iron and steel
industry from the 1980s to the early 2000s.

Table 3
From the 1980s to the early 2000s (Economic reform period): Coastal shift of industries

Open policy Overseas investors were

encouraged
Government policies

encouraged to invest in the

____coastal___ regions Industrial
development in the
‘Having some ___Coastal____ regions
regions developed ___coastal__
first’ have been chosen for this
regions
purpose

32
 • New furnaces are able to use ____scrap iron and steel____________ to

produce new steel  ( Reduces / Increases) the demand for iron ore
Technological advancements

Raw materials
• Iron and steel works tend to locate near ____coastal_____ cities where

the supply of scrap iron and steel is ( insufficient / sufficient )

• Use of bulk carriers and advancements in railway transport 

Transport ( increases / reduces ) carrying capacity  ( raises / lowers ) transport

costs of coal and iron ore

Due to technological advancements, iron and steel industry ( is not / is ) necessarily tied to the

sources of raw materials and power.

Well-developed ___Import___ of iron

Coastal infrastructure easy ore and coal
Well-developed regions
infrastructure Good port
Favourable location factors in coastal regions

facilities ___Export___ of steel

products

Coastal regions
are locations of

Existence of
Important industrial centres Big cities
industrial
centres favours
• Big ___markets____ for steel products
Agglomeration
economies • Abundant supply of ___skilled workers____

Extensive flat • If necessary, more flat land can be obtained through ___reclamation___
land and
sufficient supply • Coastal areas provide extensive ______flat land_______ for the iron and
of cooling water
steel industry and ______cooling water______
Problems
of inland

Which of the following are problems of inland areas that hinder the development of the iron and

steel industry? Tick () the correct answers.

33
  Far away from major markets  Poor quality of coal and iron ore

 Low accessibility  Lack of capital

areas

 Rugged relief  Mild climate

 Lack of skilled labour  Backward technology

E Why do some iron and steel plants remain in their original

locations?
7 Figure 11 shows the location of Angang (a major iron and steel maker in China) and the
distribution of major coal mines and iron ore in Liaoning.

Figure 11

a What were the favourable location factors for Angang to be located in Liaoning?
Liaoning was rich in coal and iron ore. Being located near the sources of raw materials,
Angang can reduce transport costs.

34
 b After decades of development, iron and steel production in Liaoning has become less
economical because of nearly diminished coal mines and iron ore, outdated machinery
and overburdened transport. However, Angang continues to operate in its original
location.
i What do we call such phenomenon?
Industrial inertia.
ii Why does Angang remain in its original location?
• Relocation involves ( high / low ) costs.

• It is ( economical / uneconomical ) to shut down the plant as investment in the

plant and related infrastructure is ___huge___.

• Closing down the plant would reduce jobs which would cause

_____unemployment______ and other social problems.

• Closing down the plant would ( raise / lower ) tax revenue for the local

government.

• Closing down the plant would adversely affect other industries, especially iron

and steel consuming industries_____________________________.

F Will there be further changes in the location factors?

8 We understand that location factors in a certain area will change with time. This will affect the
choice of industrial location. Will location factors change in China in the twenty-first century?
a Will government policy still an important location factor?
• Government control on industrial polices and planning has been ( increased /

reduced ) in recent years. The influence of _______economic market_______ has

become more important.

• Local governments have tried to attract iron and steel works to set up in their regions

by providing ______favourable policies_________ to iron and steel enterprises.

b Will the location of local sources of raw materials and power an important factor?
• Local iron ore is of a ____low____ grade.

• China’s dependence on ____imported_____ iron ore and coal has increased rapidly.

35
c How would the factor of transport affect the location of the iron and steel industry in the
coming years?
• The development of the railway network is ( faster / slower ) than the development

of the iron and steel industry. The low railway capacity has delayed the deliver of

imported iron ore.

• All the five major iron and steel centres are located ____north____ of the Chang

Jiang. The economic development south of the Chang Jiang is very ____fast____.

Transporting iron and steel products from the north to the south requires

____high____ transport costs.

d Will the market of iron and steel products be in the East only?
When the economic development in the Central and West increases, demand for iron

and steel products will ( increase / decrease ).

e Figure 12 shows the present and new location of production plants of Shougang. Why did
Shougang move to Caofeidian?

• Burning coal in the production

of iron and steel releases
carbon dioxides, sulphur
dioxide, and nitrogen oxides.
These pollutants will intensify
_________greenhouse
effect_________, reduce
visibility and lead to
_____smog_____ and
_____acid rain_____.
Figure 12
• The iron and steel industry is the most serious source of _____air____, water and
_____solid waste__________ pollution.
• In order to reduce the pollution caused by the iron and steel industry, Shougang have
relocated in areas which are ( near to / further away from ) populous city.

36
3.4 What are the location factors of the IT industry?

A What is the information technology (IT) industry? Where is the IT

industry in the USA?
1 Which of the following descriptions about the IT industry are correct? Tick () the correct
answers.

 It is a kind of raw material-oriented industries.

 It manufactures computers, related electronic products and communication equipment,

etc.

 It develops computer software and various related services.

 It is a type of high-tech industry.

 It requires little investment.

2 Refer to Figure 1, briefly describe the distribution pattern of the IT industries in the USA.

Figure 1 Distribution of the IT industries and large cities in the USA

In the USA, the IT industries form ____clusters____ in a ( concentrated / dispersed )

pattern. They are located in the suburbs of ( small / large ) cities.

37
B What are the characteristics of the IT industry?
3 Figure 2 shows the manufacturing system of the IT industry.

Inputs
Manufacturing processes Outputs
Raw materials
such as design, research such as
and development, computers,
Power supply manufacturing, MP3, PDAs,
assembling and packaging etc.

Skilled and semi-

skilled labour

Technology

Capital ____Global____
Cash markets

Figure 2 The manufacturing system of the IT industry

a Complete Figure 2.
b Which TWO are the most important inputs to the IT industry?
Capital and technology.
c Explain your answer in Question b.
The IT industry has to use the latest technologies to produce ( low-value / high-value )

products. To design a product, IT firms have to invest a large amount of capital on

___________research and development (R&D)____________. Therefore, the IT industry

depends heavily on the inputs of ____technology____ and ______capital______.

d Which type of industry does the IT industry belong? Tick () the correct answers.
 Capital-intensive

 Research and development-intensive

 Technology-intensive

38
4 Figure 3 shows the product life-cycle model for IT products.

Figure 3

Describe the life-cycle of IT products.

The life-cycle of IT products is ( long / short ). It may take only a few years from the

development stage to the decline stage.

5 Figure 4 shows the distribution of the headquarters, regional headquarters and manufacturing
plants of a famous US IT firm.

Figure 4

39
 a i Where did headquarters, regional headquarters and manufacturing plants of the IT
firm locate respectively?
• Headquarters and regional headquarters: Mostly located in ( less / more )

developed countries.

• Manufacturing plants: Mostly located in ( less / more ) developed countries.

ii Which mode of production does the IT firm adopt?

Multinational and multi-point production.
b The mode of production of the IT industry is closely related to its production
requirements at different stage. Complete Table 1 to show the production requirements at
different stage.
Table 1
Stage of Location of
Production requirements
production production

• The IT industry in development stage is ____research In headquarters

Stage 1:
Development and development_____________________-intensive. located in high-

• A ( small / large ) number of scientists and engineers to wage, more

carry out research and development and ( unskilled / developed

Stage 2:
Growth semi-skilled / skilled ) workers to produce the products. countries.

• Efficient management and shared basic infrastructure

Stage 3: • The IT industry in these stages is __labour__-intensive. In manufacturing

Maturity • Abundant ____cheap____ and ( skilled / semi-skilled ) plants located in

workers to carry out standardized production processes. low-wage, less

Stage 4:
Decline developed

countries.

6 Complete Figure 5 (p. 37) to show the distribution pattern of the IT industry in the R&D stage
and standardized production stage and the benefits brought by such distribution pattern.

40
 In the R&D stage In the standardized production stage

Distribution
Concentration in _____clusters______
pattern

Enjoy _____agglomeration____

economies

• Induces _____innovation_____ • Shares basic social facilities and

• Facilitates exchange of __market__ _____infrastructure_____

and ___technical____ information • Helps cut costs and increases

• Provides technical, financial and _____competitiveness_____

Benefits ____networking____ services • Attracts ____labour____

brought by
• Establishes ____business contacts • Enjoys ____low____ rents provided
cluster
pattern ___________ by the local government

• Creates a distinct ___innovative__

culture and business climate

• Attracts further __agglomeration__

of IT firms
Figure 5

7 Explain why global markets are important to the IT industry.

The IT industry invests a ____large____ amount of capital on _____research_____ and

development to produce a product. The products are sold in global markets so as to bring ( less

/ more ) profit to cover the huge amounts of money spent on research and development.

8 Figure 6 (p. 38) shows an IT industrial landscape.

41
Figure 6

a What do we call such industrial landscape?

Green field site.

b Briefly describe the industrial landscape in the following aspects.

• Buildings (types, height, density, etc):
Low, modern, dispersed office-plant-laboratory buildings.
• Location characteristics:
- Availability of _____venture_____ capital
- Near major ______universities______ and research institutes
- ____Abundant____ supply of scientists and researchers
- In the _____suburbs_____ of large cities
- ( Small / Large ) green areas

42
 - Nice living environment with ( serious / less serious ) pollution

9 Complete the chart below to summarize the characteristics of the IT industry.

Short product life- Green field sites Cluster pattern

cycle

Characteristics of the
IT industry

Research and Global markets Multinational and

development-intensive multi-point production

C What are the location factors affecting the location of the IT

industry?
10 Complete Table 2 to show the location factors of the IT industry at different stages.
Table 2
Location
Development stage Maturity stage
factor

Green field site in more developed Manufacturing area in less developed

countries. countries.

43
 Table 2 (continued)

Good access to researchers, technicians Abundant supply of cheap and semi-

Labour
and scientists skilled labour

• ____Headquarters____, R&D and • Production plants are located in

pilot production activities are _______less developed________

located in ___more developed_____ countries

countries • ____Cheap____ land site in an

Site
• In the ___suburan areas/suburbs___ industrial cluster with good

of large cities with good amenities infrastructure

• Near __________universities or

research institutes____________

Access to high levels of technology Ready to receive transferred technology

Technology
from high-technology regions

Availability of venture capital Availability of capital in the form of

Capital
foreign direct investment (FDI)

Favourable government policies to Favourable government policies to

provide ____financial____ support for provide infrastructure and communal

Government
policy R&D, maintain a favourable business services

climate and an __innovative__ culture

within the community

Market Large global markets

D Does the same group of factors that affect the location of the iron
and steel industry apply to the location of the IT industry in the
USA?
11 Complete Table 3 (p. 41) to show the difference of the iron and steel industry in China and the
IT industry in the USA.

44
45
Table 3
Iron and steel industry in China IT industry in the USA
Characteristics

• ____Heavy____ industry • _____High-tech_____ industry

Type of
industry • _______Raw material______ and • ____Research____ and

____power_____-oriented ____development___-intensive

Mode of Mostly single-point production Mostly multinational and multi-point

production production

Industrial Traditional industrial landscape/Brown Green field site

landscape field site

Local Global
Market

Development stage: R&D in local

From the 1950s to 1970s: Inland shift
industrial clusters

Government policies • Technology: ( high / low )

• Labour: ( unskilled / skilled )

• Availability of ____venture____

Important capital
location factors • Site: suburbs of ____large____

cities and near universities

1980s onwards: Coastal shift Maturity stage: production overseas

Government policies and technology • Labour: abundant, ___cheap___

and ______semi-skilled_____

• Site: ____cheap____ land site

E What impact has globalization had on the location of the IT

industry?
12 In order to maximize profits, the IT industry adopted the following strategies:
I Globalization in marketing

46
II Globalization in production
III Globalization in sourcing inputs
a How does the IT industry carry out globalization in marketing? With reference to the
figures, describe each of the method.

I
Manufacture a product in
Production plant the home country and sell it
of Firm A
Manufacture in the foreign market/export.
Products
sold
Headquarters
of Firm A Home country overseas

II Headquarters Grant a license to foreign

of Firm A
Products sold in
foreign country producer to manufacture the
Grant a license
Manufacture product and sell it in the
Home country
foreign country/market.
Production plant of Foreign country
foreign producer

III
Headquarters Set up a production plant in
of Firm A
Products sold in
foreign country foreign country as ‘foreign
Set up direct investment’ and sell
Manufacture
Home country
products there.
Production plant of Foreign country
Firm A

b How does the IT industry carry out globalization in production? Which of the following
descriptions about global production strategy are correct? Tick () the correct answers.
 Headquarters is kept in home country.  Standardized production processes are
outsourced.
 R&D departments are moved to areas  Production plants are moved to areas
with low level of technology. with low production costs.

c What are the advantages of having globalization in sourcing inputs?

If an IT firm have global sourcing inputs, the firm can obtain ____cheaper____ and

_____better_____ quality components elsewhere. This can help ____cut___ costs and

47
 therefore ____increase____ profits.

3.5 What is the impact of changes in industrial

location and modes of production?
A What are the benefits of having manufacturing industries in an
area?
1 Figure 1 shows the benefits brought by industrial development to an area.

Figure 1
a Refer to Figure 1, write down how industrial development brought benefits to an area in
paragraph form.
When new industries are set up, jobs are created and people’s income will increase.
With higher income, more money can be spent in local shops and services. The local
economy starts to grow and this increases tax revenue for the local government. The
local government then have more money to improve the infrastructure. This attracts
more people to come and more new industries to set up in the area.

48
 b What do we call the effect brought by industrial development in an area?
Multiplier effect.
B Why do industries move away from an area?
2 Figure 2 shows the changes in location factors of Place A.

In the 1950s In the 2000s

 Low labour costs  High labour costs
 Low taxes  High taxes

Figure 2
a A manufacturer has set up an electronics factory in Place A in the 1950s. What were the
favourable location factors for setting up the factory there?
The labour costs and taxes were low, therefore the production costs were greatly
reduced.
b In the 2000s, the manufacturer has moved the factory away from Place A. Why?
The manufacturer has moved the factory away from Place A because the location factors

are no longer ( unfavourable / favourable ). ______Labour costs_______ and

_____taxes_____ were high which greatly _____increased_____ the production costs.

3 Figure 3 shows the locations of the headquarters and production plant of an IT firm in the
1970s and 2000s respectively.
In the 1970s: Poor telecommunication network

Headquarters Production plant

Country A

In the 2000s: Well-developed telecommunication network

Satellite

Headquarters
Production plant Note: Country A is a more
developed country and Country
B is a less developed country

Flow of information
Country A Country B

49
Figure 3
a Describe the locations of the headquarters and production plant of Firm A in the 1970s
and 2000s.

Headquarters and production plant were located in the same

In the 1970s country /Country A.

Headquarters and production plants are located in different

In the 2000s countries/Headquarters is located in Country A while production plant

is located in Country B.

b Complete the flow chart below to show the reasons for the changes in the location of
production plant of Firm A.

50
 ____Advancements____ in telecommunication technologies

Flow of information between the headquarters and production plant in

different countries is ( efficient / inefficient ) and the cost of
communications is ___low___.

Production plant can be located away from headquarters to the less

developed country to tap the advantages of _____low wage_____ and
___rents___.

Appearance of new production mode:

_____Multi-point_____ production

51
4 Figure 4 shows a simplified manufacturing system of a semiconductor chips production plant.
Table 1 shows some information about Places A and B.

Inputs Semiconductor chips

Outputs
Toxic materials such
as mercury

Figure 4

Table 1
Place A Place B
Environmental awareness of
High Low
the people

Pollution control Strict Less strict

a If you were a manufacturer of semiconductor chips, where will you set up your
production plant in terms of economic consideration only?
Place B.
b Explain your answer in a.
The production plant not only produces useful outputs, but also harmful outputs such as
toxic materials. These harmful outputs will pollute the surrounding environment.
People in Place A may protest against the set up of the plant as their environmental
awareness is high. In addition, the pollution control is strict and this increases
production costs. In contrast, it is easier to set up the plant in Place B as
environmental awareness of the people there is low and pollution control is less strict
which can lower production costs.

C What is the impact of industrial relocation and the appearance of

new modes of production?
5 Complete the flow chart on p. 47 to show how the relocation of industry affects the flow of
labour.

52
 Relocation of industry

affects

______Job opportunities______ in both old and new industrial areas

Examples

The iron and steel industry in The IT industry in the USA

China in the 1960s
 Factory workers were
encouraged to move to the
____inland____ as the
central government has
relocated the iron and steel
industry there.
 This creates an
 inter-region flow of labour
 international flow of labour
 Production plants are
relocated to less developed_
countries so as to enjoy
___lower production costs__
_______ some managerial
personnel and __specialists_
in the USA are sent to less
developed countries
 This creates an
 inter-region flow of labour
 international flow of labour
 Research and development
centres are relocated to the
____suburbs____ of large
cities  attracts scientists
and engineers to move from
____urban____ areas to
____suburban____ areas
 This creates an
 intra-urban flow of labour
 international flow of labour

6 Figure 5 shows how the relocation of industries causes the decline of local economies.

Relocation Factories are forced to close Job losses

___Less___ money to spend

New investment in local shops and services
____shrinks____
Failure in subsidiary
industry
People move Local economy declines
____Decline____ in the quality of away
infrastructure for the local community
and industrial development ___Less___ tax income
for local government

Figure 5

53
 a Complete Figure 5 on p. 47.
b Briefly describe how the relocation of industries give rise to unemployment in China and
the USA.

Iron and steel works have to adopt new modes of production in order

to be competitive. This has forced many outdated iron and steel works

In China to close or merge into larger ones. Restructuring of the iron and steel

works has caused many workers to lose their jobs.

As more and more IT firms relocate their production bases and

software services to the less developed regions, a large number of IT-

In the USA related jobs have moved overseas. Many unskilled and semi-skilled

workers have become unemployed.

c What adverse effects will unemployment cause?

Unemployment will cause social problems such as drug addiction, drunkenness and
family abuse.

7 What is the impact of the relocation of factories to the Zhujiang Delta Region on the economy
and employment structure of Hong Kong?
 Economy

_________Scale of production_________ has enlarged as firms moved their factories to

the Region. While headquarters remain in Hong Kong, businesses between the Region

and Hong Kong ( decreased / increased ). This has lead to an ( decreasing / increasing )

demand for producer services such as finance, banking, logistics, etc. and this caused a

______restructuring_____ of our economy. The land in ________old industrial

areas_______ can be used for commercial, high-tech industries, etc. and this may lead to

further change of the economy.

 Employment structure

54
 As the demand for producer services increased, more and more people work in the
tertiary sector in Hong Kong.

8 What is the impact of relocation of computer manufacturing from more developed countries to
less developed countries have on the environment?
_________Toxic chemicals_________ such as mercury are used in computer manufacturing.

When these materials are not treated or disposed of properly, it may cause serious

_________water pollution________ and ________health hazards________. As more and

more IT firms set up computer manufacturing factories in ( more / less ) developed countries,

pollution will become more serious as environmental protection laws are ( strict / not strict )

there.

The life-cycle of IT products is ___short___, many IT products become outdated within a

few years and this generates a large amount of _____e-waste_____ every year. As most of the

e-waste is shipped to ( more / less ) developed countries for ____disassembly____ and

disposal, the ____improper____ dismantling methods has caused serious environmental

problems there.

9 Complete the flow chart below to summarize the impact of industrial relocation and the
appearance of new modes of production.
Flow of labour
Socio-economic impact
 _____Intra-urban____,
inter-region and

Relocation of industries _____international_____

and appearance of new flow of labour
production modes

Unemployment
Environmental impact

Restructuring the economy

D What measures can be taken to ease problems caused by changing

55
 industrial locations and modes of production?
10 a What are the advantages of adopting the principle of eco-efficiency in production?
More goods and services can be created by using less materials and energy. This can
increase profits on one hand and reduce waste and pollution on the other hand.

b Which of the following are measures of eco-efficiency in production? Tick () the
correct answers.
 Reduce material use  Reduce energy use
 Recycle material  Extend the life-cycle of the products
 Use non-renewable resources  Increase energy-efficiency of the products
 Make products more durable  Create more demand for products

11 Table 2 shows some suggested measures to ease problems caused by industrial relocation and
the changing modes of production in Hong Kong. Figure 6 shows the advantages and
disadvantages of these measures.
Table 2
Advantages Disadvantages

Setting minimum wage D G, H

Improve social security system F B

Lower tax E, I A

Retraining programme for laid-off workers C, J B

A Reduce government revenue F Provide a safety net for the

B Increase government expenses
C Increase the competitiveness
of workers
unemployed and the poor
G Factories may move out
H Discourage new investment

D Protect worker’s income I Attract new investment

E Help to keep existing firm J Reduce unemployment rate

Figure 6
a What are the advantages and disadvantages of the measures shown in Table 2? Write

56
 down the letters in the appropriate column.
b Why is it not easy to build a sustainable economy?
It is because there are ______diversified______ interests among different social groups in

a community. _____Conflict_____ may arise as policies or programmes cannot satisfy all

social groups.

57