It has been on the public agenda for the last three decades, at least. The approaches changed over time; so did the favoured alternatives to deal with the problem. The issue persisted.
Diversification was not always well defined. The top concern was usually clear: the economy’s health depended too heavily on a single sector (you know which one.) For all the riches it was bringing to the city, should a major shock strike the industry and its aftermath could be dire. The main source of income for the region (and its public finances) would be hit. So would also all those activities that depend significantly on the visitors’ flows, including casino and hotel suppliers, and significant chunks of both food and retail shops.
Expressed one way or the other, the main idea was (and is) that the resilience of the economy needed strengthening, to cope with adverse circumstances, should the leading sector performance be seriously hurt. These concerns notwithstanding, the regions’ dependence on gambling has grown over time. But the subject keeps going back and forth and is still worth proper consideration.
Let us leave aside those calls for diversification that mean essentially that there should be more local providers for the myriad of services and goods that casinos and satellite activities buy. And leave it aside not because that would be bad, but because that would be ‘diversification’ within the cluster. Its contribution to resilience would be limited. Should the main carrier be severely hit, and the supporting fleet would also be in equally serious trouble.
One the sectors that occasionally have been pointed as possible vehicles for a more meaningful diversification is the development of the traditional Chinese medicine (TCM) sector. Investments in the area have been carried out on Hengqin Island, and the issued was brought to the fore again in a recent conference on the topic.
What is not so clear yet is what the longer-term view is. The major difficulties of TCM in the world market, and especially in more developed economies, relate to matters of identification of active ingredients, production standards, and dosage consistency, and robust clinical trials to back their usage. Without addressing them, Macau involvement may be useful for labeling purposes and producers’ accounting reports. But that alone will do little to reverse the perceived patient’s weakness.