Cottage industries, or small enterprises operating out of the home or a back-room workshop, are as old as Chinese civilization, embracing everything from wood and ivory carvings to musical instruments, jade, coffins, toys, beadwork, lanterns and silk-covered New Year’s dragons. They average perhaps a dozen employees each, and number in the thousands. The colony government has kept a careful record of total employment in registered factories (with 20 or more employees and subject to government inspection) and recorded workshops (15-19 workers and subject to inspection), but it has never had a statistical record of the number of industrial workers outside these two categories. There are government estimates, but no precise figures, for the number of persons working in cottage industries, or such major industrial groups as building construction, engineering construction, agriculture, fishing and public transport. Estimates of the number of people working in shops, offices, and other commercial establishments are even hazier. A purely statistical assessment of changes in Hong Kong industry that followed the 1951 trade collapse must necessarily be limited to the registered and recorded industries. Luckily, it has been the registered and recorded factories which most clearly reflected the colony’s recent economic revolution. Between 1947, when the postwar boom began moving, and 1951, when the U. N. embargo was imposed, the number of registered and recorded industries rose from 1,050 to 1,961 and their employed force nearly doubled. The colony’s trade had been shooting upward at almost the same rate, and the Net Domestic Product (the total value of all its goods and services) had increased by 75 percent. The embargo halted the trade boom and reduced its volume by almost one-third in 1952. Not until 1960 did the total climb back to the record level of 1951. Colony traders, abruptly cut off from the China mainland market, had to find new markets or liquidate their accumulated stocks. Some found new markets in Southeast Asia; others liquidated their stock for whatever it would bring. Colony imports rose uncomfortably above exports, investment capital began searching around for better opportunities outside Hong Kong and unemployment became an additional cause for anxiety. One obvious need was to step up the colony’s export volume at once. It was in this situation that the “poor relation” in Hong Kong’s economy—its industry—came into its own. Despite its rapid postwar growth, the colony’s industry had supplied only about ten percent of the products it exported. In simple desperation, the traders invested their Korean war profits in local industry. So also did the transplanted Shanghai industrialists who had lost their factories to the Chinese Communists but had retained their capital and managerial skills. The effect on Hong Kong was basic and far-reaching.