In this paper, information from four major studies of Hong Kong's manufacturing investment in China, as well as published statistics concerning foreign investment in Guangdong, and data from a detailed investigation of seven manufacturing firms in Hong Kong are drawn upon in order to detail the locational and sectoral characteristics, the production and linkage attributes, and the regional economic impacts of foreign manufacturing investment in Guangdong Province, China. It is found that, geographically, foreign manufacturing investment clusters in Shenzhen and Guangzhou, with Dongguan, Huizhou, Zhuhai, and Shantou as the secondary centers of concentration. Sectorally, investment from Hong Kong is concentrated in the electronics, garment, and textiles industries, whereas investment from other countries is centered in electronics, construction materials, transport equipment, and chemical industries. Foreign manufacturing investment in Guangdong is directed at a diverse array of activities, of which a significant amount involves work that is technologically similar to that conducted in the source countries. These beneficial impacts are attributable primarily to the extensive production decentralization from Hong Kong, the social affinity between Hong Kong and the Zhujiang Delta, the ability of the state to control foreign investment flows, and the entrepreneurship and ingenuity of individual locales in the province. The impacts are especially concentrated in the Shenzhen region. This region, along with the Foshan and Guangzhou regions, is likely to become a major industrial district in Pacific Asia.
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