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Driven by the overseas Chinese investment from Hong Kong and Taiwan, the Pearl River Delta (PRD) has evolved into the world’s factory embedding into the global production network (Chen 2007; Enright et al. 2005). The relocation of Hong Kong firms in the 1980s and 1990s also contributed to the formation of industrial districts in the PRD, conceptualized as the PRD model (Eng 1997; Sit and Yang 1997). The early concerns about the relocation in the late 1980s and the early 1990s can be traced back to the literature on the cross border development in the region of the PRD and Hong Kong. For instance, Chan (1998) reviewed the regional development of South China and identified the lack of theoretical discourse on the cross-border development. While the recent location of Hong Kong manufacturing firms have been discussed in the mass media and attracted considerable attention from the policy makers, few empirical studies have timely and comprehensively examine the driving forces, origins, destinations as well as the effects of this round of relocation in relation to the restructuring of the PRD model. Recent years have witnessed dramatic changes of the local business environment in the PRD including labor shortage, stricter environmental regulation and the socalled relocation policies designed by Guangdong government. Against this backdrop, Hong Kong manufacturing firms have to adopt new spatial and transformation strategies (Yang 2006, 2007), giving rise to the emerging industrial relocation of Hong Kong manufacturing firms and the spatial restructuring of industrial districts in the PRD. This paper thus aims to investigate what are the driving forces underlying the new round of relocation? How Hong Kong firms adopted different relocation strategies compared with the 1980s and 1990s trajectories?
Economic geographers have increasingly realized that the literature on the restructuring of industrial districts has paid little attention to the relocation of firms and delocali
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