I'm sure there are some out there who will correct me, but here's my understanding...
Cathay operated to Shanghai for many years. An up-start carrier called Dragonair came into being (1989 if memory serves) and was going to give them a run for their money into China. The Swires being a devious lot, decided that instead of compete they'd buy a majority stake in Dragaonair so instead of competing they can "feed" them in Hong Kong.
The "arrangement" then became Dragonair does all the Hong Kong - China flying and feeds Cathay in Hong Kong.
Interesting aside, before Dragonair received their first A330, Cathay operated an L1011 in Dragonair colours to Shanghai. Eventually Dragonair crews were typed on the L1011.
Dragonair L1011 Original colour scheme
Dragonair L1011 in current colours
Since then the Swires have divested themselves of the majority share of Dragonair with CNAC owning the majority of the place. CITIC owning the major share of Cathay I believe...
Both Airlines being beholden to Chinese masters now there is talk of "merging" and pitting one airline against the other to create "cost efficiencies"... But that is all in another thread...
How'd I do lad's? Am I close?
Cheers, and Merry Christmas to all!