Overlapping Networks and Flexible Manufacturing: A Structural Analysis of Hong Kong Based Garment Industry

Flexibility, economists have repeatedly argued, is the competitive edge manifested by Hong Kong industries (Chau, 1993; Sung, 1989). Focusing on economic variables, they explain this flexibility in terms of the relative absence of government intervention and low level of capital commitment, taking for granted a self regulating, frictionless market. Sociologists studying Hong Kong agree that the Hong Kong economy thrives on flexibility but tend not to have the economists’ level of faith in the market. They propound a concept of the economy as institutionally embedded and consider social networks, rather than the market, as the source of the flexibility offered by the Hong Kong enterprises (Lui & Samuel Chiu, 1996; Hamilton, 1997; Wong, 1991).

Stable networks of personal relations based on particularistic ties, Siu lun Wong (1991) observes, mediate economic transactions in Hong Kong. Placing Hong Kong in the context of the history of Chinese capitalism, Gary Hamilton (1997) portrays Hong Kong as an example of Chinese entrepreneurial economy characterized by small family firms linked together through competitive as well as cooperative social ties. Looking more closely at industrial changes, Tai lok Lui and Stephen Chiu (1994, 1996) suggest that the comparative advantage of Hong Kong industries lies in their ability to respond promptly to changes in consumer tastes. This ability, in turn, derives from the abilities of local firms to maintain their ties with global subcontracting networks and from the method of organization of local industries. The organizational method in question, according to Lui and Chiu (1996:7), is an extensive use of informal work, which is possible because of a network of interdependent producers permeated with notions of personal connections and trust.