Innovation strategy, firm survival and relocation: The case of Hong Kong-owned manufacturing in Guangdong Province, China

Based on a survey adapted from the Fourth European Community Innovation Survey (CIS-4), this study finds that, in the changing manufacturing environment of Guangdong Province in China, Hong Kong-owned businesses that generate a higher share in new product sales as a percentage of total sales or engage in R&D or collaborative innovation activities in China are more likely to survive and remain in Guangdong. The study fills a gap in the literature by investigating the effects of innovation on the survival and relocation of Hong Kong-owned manufacturing firms in Guangdong. The results support policy initiatives that strengthen collaborative ties among key innovation system actors.

► Hong Kong manufacturers in Guangdong Province, China are struggling to survive.
► Government policies, escalating prices are forcing some to leave or shut down.
► Using the EU's CIS-4, we surveyed Hong Kong-owned firms operating in Guangdong.
► Firms that push new products, R&D, or innovation in China can survive in Guangdong.