The Globalization Index 2010 released by Ernst & Young in cooperation with the Economist Intelligence Unit (EIU) shows that Hong Kong embraces the highest level of globalization among 60 largest economies in the world. Singapore, ranked first in 2009 becomes the third this year. Ireland jumps one level, ranking number two this year.
The Globalization Index measures and tracks the performance of the world’s 60 largest economies in relation to separate indicators in five broad categories: openness to trade; capital movements; exchange of technology and ideas; movement of labor; and cultural integration. Hong Kong ranks first in openness to trade, capital movements and cultural integration.
“Hong Kong is playing a very significant role in the world. China is now the second largest economy in the world, investors regard Hong Kong as the gateway to enter and invest in Mainland China while Chinese enterprises view Hong Kong as a springboard to expand into the international market. Hong Kong is also well known for its unique 'East meets West' culture,” says Agnes Chan, Ernst & Young’s Regional Managing Partner, Hong Kong and Macau.
Despite its success in evolving to become the most globalized economy in the world, Hong Kong should not rest on its laurels, stresses Chan. "Although Hong Kong is doing well in terms of openness to trade, capital movements and cultural integration, we are lagging behind in exchange of technology and ideas, and in net labor migration. We need to do more: we propose tax and financial incentives for business to encourage investment in innovation. We should improve the green environment and education system to attract talent and professionals to work in Hong Kong to facilitate labor and talent immigration.”
The reports predicts that after a brief pause in 2009 and a modest rebound in 2010, the world’s 60 largest economies will continue to globalize steadily between now and 2014, driven by the continued global economic recovery, technological innovation and the increasingly important role of the emerging markets in the world economy.
“To succeed in a polycentric world and to be a long term winner in this new globalized world, companies should focus on four priorities: first, redefine global and local approaches in business strategies; second, develop a 'polycentric' approach to innovation; third, rethink relationships with government and tax administrations; and fourth, build diverse leadership teams with strong global experience," says Dilys Chau, Ernst & Young’s Partner, Assurance. Chau adds leading companies are localizing product, research and business development to achieve local market relevance, as well as developing new approaches to business development.
“These approaches include a wide mix of alliance and partnership arrangements, often in ‘co-opetition’ — co-operate in some markets and compete in others — to help obtain economy of scale in their business quickly,” adds Chau.
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