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Hong Kong - China's Global Financial Center
  Sundeep Bhandari, Managing Director, Regional Head, Global Markets North East Asia and Co-Head Wholesale Banking, Standard Chartered Bank.
 Simon Galpin, Director-General, InvestHK
 Victor L.L. Chu, Chairman, First Eastern Investment Group Mr. Chu is Chairman of First Eastern Investment Group, a leading Hong Kong-based direct investment firm and a pioneer of private equity investments in China. He is also Chairman of First Eastern Investment Bank Limited in Dubai and Evolution Securities China Limited in London. Mr. Chu is a main board member of Zurich Insurance. Mr. Chu has served as Director and Council Member of the Hong Kong Stock Exchange, Member of the Hong Kong Takeovers and Mergers Panel, Advisory Committee Member of the Securities and Futures Commission, and part-time member of Hong Kong Government's Central Policy Unit. He is currently a Foundation Board Member of the World Economic Forum and co-chairs the Forum's International Business Council. He is also Chairman of the Paris-based ICC Commission on Financial Services and Insurance.
 Professor K C Chan, Secretary for Financial Services and the Treasury Government of the Hong Kong SAR (HKSARG) Professor K C Chan is the Secretary for Financial Services and the Treasury, the Government of the Hong Kong Special Administrative Region. Before assuming the post, he was Dean of Business and Management of the Hong Kong University of Science and Technology (HKUST). Prior to joining the HKUST Business School in 1993, he spent nine years teaching at Ohio State University. He received his bachelor's degree in economics from Wesleyan University and both his M.B.A. and Ph.D. in finance from the University of Chicago. He specializes in assets pricing, evaluation of trading strategies and market efficiency and has published numerous articles on these topics.
Hong Kong Budget 2011 Hong Kong Financial Secretary John Tsang will dish out nearly HK$44 billion (US$5.6 billion) to taxpayers
from Surplus
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Hong Kong Business Name Search
香港政府公司註冊處綜合資訊系統
(ICRIS) 的網上查冊中心可以英文或中文進行聯線查冊，客戶可查閱由公司註冊處處長登記和備存的公司現況資料，以及文件的影像紀錄。
The Hong Kong Government Cyber Search Centre of the Integrated Companies Registry Information System
(ICRIS) enables you to conduct searches online in either English or Chinese on the current data of registered companies and the image records of documents registered and kept by the Registrar of Companies. Hong
Kong Company Registery - HKSAR Government HK Trademark Registration HK Trademark Online Search
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 Happy Chinese New Year - Year of the Dragon - January 23 2012
 Honolulu Chinatown - Year of the Dragon 2012 Lion
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Under the Hawaii State Law "Asian Lunar New Year Commemoration Week" The
one week period following the day of the Chinese New Year shall be known and
designated as the "Asian Lunar New Year Week of Commemoration in
Hawaii". This week is not and shall not be construed as a state holiday. [L
2007, c 48, §2] click for more details
February 3 2012 Share
A central role - Andrew Sheng says Hong Kong's exceptional skills in business and organisation - as the health of its finances attests - hold the key to its future in a global economy where the power balance is tilting East
Financial Secretary John Tsang Chun-wah's fifth and final budget of the current-term Hong Kong government was a model of fiscal design, the envy of most governments.
Which government around the world can boast a surplus of HK$66.7billion, against a forecast deficit for this fiscal year of HK$8.5 billion, amid a year of crisis in Europe and global slowdown?
Which government indeed (perhaps with the exception of Singapore) can claim fiscal and foreign-exchange reserves equivalent to 35per cent of gross domestic product or 22 months of government expenditure?
And which government can claim to have pure government debt (excluding statutory body debt) of less than 2per cent of GDP?
Ministers of finance in Europe who are struggling with their debt crises can only shake their heads at the ability of Hong Kong to increase tax allowances, cut property taxes and waive some profits tax. All these goodies, and the forecast deficit for next year is (only) HK$3.4billion. We should nominate Tsang for the post of commissioner for fiscal reform in Europe.
The financial secretary is correct to warn about potential shocks from global crises. Growth in real terms in 2012 is forecast at 1-3per cent, but the medium-term average (2013 to 2016) is projected at 4per cent.
In his concluding remarks, Tsang said he has worked conscientiously as a financial secretary and I could not agree more.
It has not been easy for him to navigate the most open economy in the world amid the huge turbulences worldwide. But Hong Kong has been lucky to be part of the fastest growth story in the 21st century and to be located in the right neighbourhood.
Tsang spent a fair amount of time reflecting on how to capitalise on Hong Kong's competitive edge, mentioning specifically that the nation's 12th five-year plan has a dedicated chapter on Hong Kong and Macau.
He identified several opportunities for development: the importance of further liberalisation of the mainland economy, the promotion of cross-strait relations, further linkages to Asean and the BRIC countries, and the promotion of more parent companies to locate in Hong Kong.
I commend his analysis of the need to develop our social capital and focus on urban renewal. Ditto the need to promote the four pillar industries of trade and logistics, financial services, business and professional services, and tourism, in addition to the six industries where Hong Kong has competitive advantages.
What I missed from the budget speech was a discussion of what role Hong Kong will play in the global game, when there is now a perceptible shift in economic power from West to East, and how Hong Kong needs to position itself to facilitate that shift so that this will be achieved without major conflict and volatility.
Coming back from recent visits to Saudi Arabia, Indonesia and India, my perception is that emerging markets in Asia are now looking at different models of growth. One trend that is emerging is that the future of competition may be less of nations, but between cities.
The reason is simple. With 60per cent of the global population in Asia and mostly in rural areas, one path for development is through urbanisation. The McKinsey Global Institute has estimated that just 380 cities in the advanced countries accounted for half of the world's GDP in 2007. China and India are urbanising very fast, and the new mega cities will all be searching for solutions to deal with jobs, environment, traffic congestion, education, health care and social welfare.
No one could question the fact that one of Hong Kong's core competencies is that it is one of the most successful cities in Asia, if not the world. That knowledge alone can be exploited to engage in new partnerships with other cities to bring economic opportunities to all.
What does that mean for planning for the future? The current paradigm of economic theory, based on neoclassical thinking and free-market ideology, is too simple and flawed to help us think through the complex and evolving challenges today. Eric Beinhocker, in his book The Origin of Wealth, suggested that wealth is created through the interaction between three forces - business plans, physical technology and social technology.
It is clear in my mind that Hong Kong's comparative advantage is not in physical technology, not because modern cities cannot buy or attract the technology or hardware, but because of scale.
Hong Kong's real comparative advantage is its vibrant entrepreneurial business models that are flexible and competitive on a global scale, and its social technology, which is defined as methods and designs for organising people in pursuit of goals.
In other words, Hong Kong does not have hard power, but soft power. Competition and innovation in the future will be less about more hardware (Hong Kong has infrastructure that is already at the forefront), but about the software of people, skills and experience, and how to organise them in business and government.
People who push for hardware-driven innovation think that helping guys in garages make the next Microsoft or funding large research and development labs and science parks will create the next breakthrough in wealth creation.
For large countries with large resources, this may be true. But for cities like Hong Kong, the real breakthrough, which is already happening, although perhaps not much recognised, is in the innovation in business plans and social technology that Hong Kong is very good at. Facilitating the next phase of innovation in social technology and business plans for Hong Kong to maintain not just its hardware leadership but its thought leadership, globally, will be the real challenge for the next generation of Hong Kong leaders.
Andrew Sheng is president of the Fung Global Institute
February 2 2012 Share
What a relief ... for hong Kong middle class - Finance Scretary John Tsang doles out HK$80 billion (US$10.2 billion) in swansong budget that provides shelter from the looming economic storm for some.
By Gary Cheung, Peter So and Tanna Chong
Note US$1 = HK$7.75
The last budget statement - by Independent News Transmissions Limited http://www.youtube.com/watch?v=Cy5lOQUgMhg
BUDGET BREAKDOWN
Revised estimates for 2011-12
A surplus of HK$66.7 billion in consolidated account, equivalent to 3.5 per cent of gross domestic product.
Fiscal reserves are expected to be HK$662.1 billion, equivalent to 35 per cent of GDP or 22 months of government expenditure.
Estimates for 2012-13
GDP growth: 1 per cent to 3 per cent.
Headline inflation: 3.5 per cent.
Government expenditure: HK$394 billion (up 7 per cent).
Government revenue: HK$390 billion.
A deficit of HK$3.4 billion in consolidated account.
Fiscal reserves estimated at HK$668.7 billion by end-March 2013, equivalent to 34 per cent of GDP or 20 months of government expenditure.
Help for small and medium-sized businesses
Business registration fees to be waived for the year.
Profits tax to be reduced by 75 per cent for 2011-12, subject to a ceiling of HK$12,000.
Charges to be halved on import and export declarations, capital duty levied on local companies to be abolished.
SME financing-guarantee scheme to be enhanced by increasing the maximum loan guarantee ratio to 80 per cent, for which the government will provide a guarantee commitment of HK$100 billion, while the guarantee fee will be lowered.
Hong Kong Export Credit Insurance Corporation will offer discounts to SME policyholders.
Unemployment
HK$220 million for Construction Industry Council to enhance training programmes.
Employees Retraining Board will offer 130,000 training places for the unemployed and people seeking employment.
HK$100 million injection for the Enhancing Employment of People with Disabilities through Small Enterprises Project, which grants funding to non-government
organizations to set up small enterprises employing people with disabilities.
Land
Housing land supply for 2012-13 estimated to provide 30,000 private residential flats.
Application list in the Land Sale Programme will include 47 residential sites, of which half are new sites. They would provide 13,500 flats if sold.
A public consultation will be launched on two property projects above the MTR West Rail Kam Sheung Road station and Pat Heung depot - estimated to provide about 8,700 flats.
Subsidized housing
75,000 public rental flats to be built in the five-year period from 2011-12.
Six sites in Sha Tin, Tsuen Wan, Kwai Tsing and Yuen Long initially identified for the first batch of developments under the new Home Ownership Scheme.
Urban Renewal Authority invited to launch redevelopments of industrial buildings in the form of a pilot scheme.
Education
Government expenditure estimated at HK$60 billion (up 7 per cent).
HK$1 billion to implement a new programme modelled on Project Yi Jin for further education for secondary school leavers and adult learners.
HK$2.5 billion to launch the sixth Matching Grant Scheme, which will cover all statutory and approved post-secondary institutions.
Two separate injections of HK$1 billion each, into the HKSAR Government Scholarship Fund and Self-Financing Post-Secondary Education Fund, to establish more scholarships or award schemes.
HK$5 billion to Research Endowment Fund to enhance the academic and research development of tertiary institutions.
Health care
Recurrent expenditure estimated at HK$45 billion (up 8 per cent).
HK$2.2 billion towards Hospital Authority clinic and hospital projects, including the expansion of the United Christian Hospital and redevelopment of Yan Chai Hospital, Kwong Wah Hospital and Queen Mary Hospital.
HK$10 billion to the Samaritan Fund.
Social welfare
Government spending estimated at HK$44 billion (up 9 per cent).
Extra spending for implementing public-transport concessions for the elderly and disabled, providing additional 1,000 subsidised residential-care places and other elderly care services.
HK$900 million for improving facilities at 250 district elderly community centres.
Relief measures
Extra allowance, equal to one month's payment, for all Comprehensive Social Security Allowance, Old Age Allowance and Disability Allowance recipients.
Two months' rent waived for public housing tenants.
Subsidy of HK$1,800 for each residential electricity account, benefiting 2.5 million households.
Waiving of property rates for 2012-13, subject to a ceiling of HK$2,500 per quarter - estimated to cover almost 90 per cent of properties.
Reduction in salaries tax and tax under personal assessment for 2011-12 by 75 per cent, subject to a ceiling of HK$12,000.
Raising of basic tax allowance to HK$120,000.
Raising of married person's allowance to HK$240,000.
Raising of allowance for maintaining a dependent parent or grandparent aged 60 or above to HK$38,000.
Raising of child allowance to HK$63,000.
Raising of dependant brother/sister allowance to HK$33,000.
Raising of disabled dependant allowance to HK$66,000.
Extending entitlement period for the tax reduction for home-loan interest to 15 years of assessment.
Increasing maximum tax deduction for mandatory contributions to Mandatory Provident Fund schemes to HK$15,000.
Giving all student-loan borrowers who complete their studies in 2012 the option to start repaying their student loans one year after completion of studies.
Social capital
Hong Kong Mortgage Corporation to introduce a three-year pilot scheme of microfinance. The maximum loan amount will be capped at HK$100 million with a repayment period as long as five years.
Injecting HK$200 million into the Community Investment and Inclusion Fund to promote social-capital development.
A further issuance of iBonds worth not more than HK$10 billion.
Allocating HK$150 million to the Mega Events Fund and extending its operation for five years.
Setting up a fund of HK$1 billion to help Hong Kong enterprises tap the mainland market.
Infrastructure
The value of infrastructure projects approved and to be submitted to the Legislative Council is HK$400
billion (US$51.38 billion).
John Tsang's budget speech is broadcast live on a screen at Grand Millennium Plaza in Central yesterday. Every year as financial secretary he has forecast a deficit - and the government has turned in a surplus
In what is likely to be his final budget, the financial secretary presented an HK$80 billion basket of relief and fiscal measures - HK$28.2 billion of which will mostly benefit the middle class.
Observers say that given the city's fiscal reserves - which are expected to reach HK$658.7 billion by March 2013 - the 2012-13 budget came down on the side of caution and ignored many long-standing problems, including the city's wealth gap.
However, John Tsang Chun-wah said caution was justified because of the difficult outlook facing the global economy, particularly in the United States and Europe, which was certain to have an impact on Hong Kong.
Relief measures included a salaries tax rebate of up to HK$12,000 for the 2011-12 financial year, an increase in the basic allowance from the current HK$108,000 to HK$120,000, and a waiver of property rates.
Tsang also extended the period for tax deductions for home-loan interest to 15 years from the current 10, the second time the qualification period has been lengthened.
A five-year tax deduction of up to HK$100,000 was announced in the 1998-99 budget, when Chief Executive Donald Tsang Yam-kuen was the financial secretary, and extended to 10 years in 2006.
The finance chief's incentives were seen as an attempt to appease the middle classes, who were angered by the government's initial refusal in last year's budget to grant a tax rebate and by its controversial U-turn on injecting cash into Mandatory Provident Fund accounts. A HK$24 billion MPF injection was scrapped in favour of a HK$6,000 cash handout to the city's adult permanent residents, worth HK$37.9 billion.
This year's budget was tempered by the gloomy outlook for the city's economy, which Tsang warned would grow by just 1 to 3 per cent this year, compared with 5 per cent last year, amid bleak prospects for Europe and the United States.
Nevertheless, Tsang was able to offer some sweeteners, as the government coffers are flush with cash. Thanks to record land, salaries and profits tax revenue, he estimated a surplus of HK$66.7 billion for the current financial year - against the original forecast deficit of HK$8.5 billion.
Tsang's increase in the basic allowance for salaries-tax payers, the first since the 2008-09 budget, takes 130,000 taxpayers out of the tax net and leaves the number paying salaries tax at 1.5 million in a city of around seven million people.
"Tsang's proposal will further narrow Hong Kong's tax base. The government will face huge political pressure to cut the basic allowance if the public finances deteriorate in future," said Li Kui-wai, associate professor of economics and finance at City University.
A senior administration official admitted the government would pay a price in the short run for the increase in the basic allowance, but said it was an effective response to the interests of the middle class.
"Drafting a budget is not only a process of compiling fiscal figures. A budget is actually a political tool to achieve the government's political mission, including the implementation of the goals set out in the policy address," the official said.
Speaking at a post-budget news conference, Tsang said that every government wanted to expand its tax base. "All citizens say they would like to expand the tax base, but no one wants to pay extra money."
While the relief measures were generally welcomed by parties across the political spectrum, all of them urged the government to introduce measures to address the city's deeprooted problems.
"Although their term is ending soon, I hope officials can prepare the city for the economic turmoil ahead," said Chan Kam-lam, a lawmaker from the government-friendly Democratic Alliance for the Betterment and Progress of Hong Kong.
Henry Tang Ying-yen, the former chief secretary who is hoping to succeed Donald Tsang as chief executive this year, said the government could have been more proactive in rolling out relief measures.
"I think we can extend the tax concession for middle-class people paying their home-loan interest, and increase the amount. And we could also increase the allowance for maintaining parents progressively, according to the dependents' age," said Tang.
"We should further assist the grass-roots sector via the Community Care Fund."
Leung Chun-ying, Tang's main rival to be the next chief executive, said this year's budget was similar to many proposals that are in his own manifesto.
"The basket of measures can take care of the interests of both the grass-roots sector and the middle classes ... and coincide with quite a number of our political platforms," Leung said.
Hong Kong financial chief delivers budget speech
Hong Kong's financial chief John Tsang unveiled the budget proposals for the fiscal year 2012-2013 at a Legislative Council meeting Wednesday, which is the last budget for the current Hong Kong Special Administrative Region government.
The city's economy grew by 5 percent in 2011 in real terms, the lower range of the forecast made in last August, Tsang said in his speech which was live broadcast for Hong Kong's 7.1 million people.
Hong Kong's Financial Secretary John Tsang speaks during a news conference after unveiling the annual budget report in Hong Kong Feb 1, 2012.
Talking about inflation, Tsang said that the underlying inflation rate for 2011 averaged 5.3 percent, a marked rise from the 1.7 percent in 2010.
Looking ahead, Tsang was not optimistic about Hong Kong's export performance in the first half of 2012 due to the deterioration of the external environment.
Fortunately, Asian economies, especially the Chinese Mainland, should be able to serve as an anchor for the global economy. Hong Kong's external trade may also see some improvement in the second half of this year, he said.
Tsang expected the economic growth in 2012 will inevitably be lower than the average growth rate over the past decade, with GDP growth of 1 to 3 percent in real terms for 2012.
He also announced that the inflation rate would ease quite visibly in the second half of 2012. The average underlying inflation rate for the year is expected to drop to 4 percent this year.
Tsang estimated that the operating expenditure for 2012-2013 would be 315 billion HK dollars ($40.6 billion), an increase of 6 percent over the revised estimate for 2011-12. As for the total government revenue, it is estimated to be 390.3 billion HK dollars.
Taking both expenditure and revenue into account, Tsang said," there will be a small deficit in our accounts in the coming years, and will largely achieve fiscal balance."
For the medium term, Tsang projected the annual average growth rate will be four percent in real terms for the period of 2013-2016, while the underlying inflation rate will average 3.5 percent.
In order to better prepare Hong Kong people for the difficult time ahead, Tsang introduced measures worth nearly 80 billion HK dollars ($10.3 billion) to support enterprises and people in meeting challenges. He said the strong package of measures would help stimulate the economy by 1.5 percentage points in 2012.
Tsang pledged the government will firstly lend support to small and medium enterprises which make up the vast majority of the enterprises in Hong Kong. The measures include increasing in loan guarantee ratio and reducing the annual guarantee fee for a loan for small and medium enterprises.
"In the face of the worsening external economic environment, we need to help our enterprises by reducing their operating costs and enhancing our competitiveness so as to protect employment," said Tsang.
To preserve employment, Tsang pledged to continue with the strategy which helped Hong Kong tackle the 2008 financial tsunami. He argued that apart from stabilizing the employment market through the supportive measures for enterprises, the government should provide suitable employment support and training directly targeted for working population.
Tsang also proposed to take effective measures to care for people's livelihood, with the priority of education, health and social welfare.
"We shall continue to allocate resources to recurrent items relating to people's livelihood. We shall, as in the past, adopt fiscal stimulus measures to help those in need by providing them with appropriate services and facilities," Tsang said.
Besides, to ease the tax burden of middle class, Tsang proposed seven tax measures for the coming fiscal year, including raising the tax exemption allowance for tax payers.
In order to promote economic development, Tsang said Hong Kong must take advantage of the existing competitive edge. He continued that the city should "actively take forward" the 36 supporting measures announced by Vice Premier Li Keqiang during his visit to Hong Kong last August.
The continued liberalization of the Mainland economy has presented Hong Kong with an opportunity to further develop its economy, said Tsang, adding that Hong Kong should improve its market infrastructure, seek to enhance the market connectivity of the Mainland and the city, and increase its market capacity.
Tsang also said that Hong Kong should further expand its linkage to the world, pursuing participation in multilateral and regional economic co-operation.
"I believe that we should take full advantage of our relationship with the Mainland while enhancing our international outlook. This should continue to be our way forward. It will further reinforce Hong Kong's position as a global economic, financial and commercial center," said Tsang.
Besides, Tsang also emphasized the importance of promoting four traditional pillar industries, namely trading and logistics, financial services, business and professional services, and tourism, and six emerging industries, including cultural and creative industries, medical services, education services, innovation and technology, environmental industries, and testing and certification services.
Taxpayers can look forward to lower bills - Savings from rebates, rate cuts and allowance rises announced yesterday will ease the pain of inflation
By Amy Nip and Colleen Lee
Wilson Shea says expected savings from the tax cuts could help offset inflation.
Entrepreneur Wilson Shea Kai-chuen, with a family of six, will have HK$24,000 more in his pocket this year thanks to the tax rebates. His family is also expecting to pay HK$5,610 less tax next year after an increase in allowances.
Shea, 49, is among the 1.5 million taxpayers who will benefit from a 75 per cent rebate of salaries tax and tax under personal assessment for 2011-12, subject to a ceiling of HK$12,000 per person. The rebate cannot cover his children's education costs, which amount to HK$60,000 a year, but a smiling Shea looks satisfied.
"It's already quite good," he said. "The amount can be used on tutorial lessons for my daughters. Some of it would be for offsetting inflation."
Raising children is never easy, and for a big family like Shea's costs can run high. Two of his daughters are in Form Four and another is taking an associate degree programme. His eldest daughter recently graduated from university.
Costs for attending interest classes and tutorial classes can add up to a substantial amount over and above school fees, he said.
Taxpayers have already prepaid the tax for the current financial year, but will get the rebate assuming the Legislative Council passes the government's budget - a virtual certainty. In addition, they will pay less tax in the financial year 2012-13 thanks to higher allowances.
Increasing the basic tax-free allowance per person to HK$120,000 from HK$108,000 and the married person's allowance to HK$240,000 from HK$216,000 will benefit 1.38 million taxpayers.
The child allowance will go up from HK$60,000 to HK$63,000. Increases in other allowances were also announced.
Those who are still paying off home loans will also be glad to hear they will benefit from mortgage interest tax relief for an additional five years on top of the current 10 years. Employees who pay into Mandatory Provident Fund schemes or other retirement schemes will see the maximum annual tax deduction for their pension contributions rise to HK$15,000 from HK$12,000.
The budget also includes a property rates waiver for 2012-13, with a ceiling of HK$10,000 a year for each property. Each household will also receive an electricity subsidy of HK$1,800.
For Shea, who makes about HK$60,000 a month, the increase in allowances is not going to make a big difference in his tax bill. The family spends HK$30,000 a month on rent and he was disappointed that there is no allowance for that.
"Many people cannot afford to buy a flat and have to pay a lot of rent every month," he said.
KPMG partner Jennifer Wong Wan How-yee says her calculations show single taxpayers will reap the biggest benefit. A single man who earns a monthly income of HK$20,000 and has no dependents will pay HK$2,040 less in salary tax next year - a near 20 per cent drop.
Married couples will see a bigger drop if they have children. A household with a monthly income of HK$50,000 and two children will pay 15.5 per cent less tax. The bill will fall by 7.7 per cent, to HK$49,200, for a couple without children.
Although the tax reductions do not amount to much in absolute terms, Wong found them to be reasonable.
"Hong Kong's tax base is narrow," she said. "Less than 40 per cent of the working population needs to pay tax. If the government increased the allowances by a large amount, many people would drop out of the tax net altogether."
Ayesha Lau, head of the Hong Kong Institute of Certified Public Accountants' taxation committee, said the government had not accepted suggestions for new allowances.
"We support the tax concessions," Lau said. "But ... there is nothing innovative."
HK$10b to help needy buy medicine - Injection to Samaritan Fund will help patients obtain drugs not on subsidy list; health budget also includes redevelopment of two old hospitals
By Emily Tsang and Lo Wei
A planned HK$8.4 billion redevelopment of Kwong Wah Hospital is due to be completed in 2020.
A record HK$10 billion will be provided for the Samaritan Fund to subsidise patients' purchases of medicines, Financial Secretary John Tsang Chun-wah announced in his budget speech.
The fund supports 1,300 patients who rely on long-term drugs such as cancer medicine and growth hormones.
Hospital Authority chairman Anthony Wu Ting-yuk said the HK$10 billion would be spent over the next 10 years.
The HK$10 billion contribution is part of HK$59.2 billion in health expenditure for the coming year.
Tsang said recurrent funding for the Hospital Authority would increase by nearly 40 per cent to HK$40 billion in the next financial year. Some HK$15.4 billion will be spent over the next several years to redevelop Queen Mary Hospital at Pok Fu Lam and Kwong Wah Hospital in Yau Ma Tei.
The Samaritan Fund, financed by donations, helps patients with financial problems buy expensive drugs that are not on the Hospital Authority's list of subsidised medicines.
As well as the one-off injection, the threshold for households to qualify for the scheme has been lowered.
As a result, about 2,300 more patients are expected to benefit, including middle-class patients who failed to obtain a subsidy under the old scheme, a government source said.
"We understand a family faces a lot of pressure if a member is on long-term medication," the source said. "We hope the scheme will improve the living quality of people who unfortunately fall ill, especially those in the middle class [who did not benefit] under the old scheme."
The cash injection is the government's fourth to the fund since 2005, and the highest yet - ten times its previous contribution of HK$1 billion, made in 2008/09.
Allowances will also be simplified. Bigger families will enjoy higher subsidies.
"Assuming a family of four has an annual disposable income of HK$100,000, and another HK$400,000 in [liquid assets], drug expenses may eat up HK$100,000 a year," the source said.
"But under the new scheme, a cap ... will be set at 10 per cent of the annual disposable income, meaning HK$10,000. That is all they need to pay. The other HK$90,000 will be funded."
Tim Pang Hung-cheong, of the Patients' Rights Association, welcomed the input but said more self-funded medicine should be included in the list covered by the fund.
Queen Mary Hospital and Kwong Wah Hospital will be rebuilt on their current sites.
The redevelopments will not add extra beds at either of the hospitals.
Wu said the redevelopments would be problematical. Queen Mary Hospital is built on a slope and some of its buildings have heritage status, while the Kwong Wah Hospital site is small and has construction constraints.
The HK$7 billion redevelopment of Queen Mary Hospital would focus on upgrading emergency and cardiology services, the government source said. Work could start as soon as the Legislative Council approved funding in 2014, and was expected to be complete by 2025.
Microbiology professor Ho Pak-leung, of the University of Hong Kong, questioned why the project had to take 14 years, considering the speed with which the new government headquarters at Admiralty was built.
He agreed the work had to be done. "Queen Mary is really old and backward in facilities. It often floods during the rainy season."
At Kwong Wah Hospital, a new complex will replace six of the seven current buildings at a cost of about HK$8.4 billion.
Kwong Wah Hospital chief executive Dr Nelson Wat Ming-sun expects the work to be complete in 2020. "Accident and emergency services will not be affected and other services will be adjusted to minimise the impact," Wat said.
Tsang also proposed spending HK$32 million to expand services at maternal and child health centres, in the face of increasing numbers of non-local women giving birth in the city.
January
12 2012 Share
Hong Kong Ranked World's Freest Economy for 18th Consecutive Year
Hong Kong has been ranked the world's freest economy for the 18th consecutive year in the 2012 Index of Economic Freedom, released today by The Heritage Foundation and The Wall Street Journal.
The Financial Secretary, John C. Tsang, welcomed the Heritage Foundation's high regard of Hong Kong as the world's freest economy. He stated that the government was determined to uphold economic freedom in Hong Kong, which was the cornerstone of sustained economic stability, growth and prosperity.
"We see the role of the government as that of an active facilitator. We provide a business-friendly environment where all firms can compete on a level-playing field," Mr. Tsang said.
"We have sound regulatory regimes in place to ensure the integrity and smooth functioning of a free market. We also strive to remove impediments and provide support in an open and equitable manner to facilitate industries tapping into new markets or new growth industries."
On a scale from zero to 100, Hong Kong scores 89.9, well above the world average of 59.5.
The index, which ranks the degree of economic freedom of 179 economies, evaluates economies in the following 10 categories: labor freedom, business freedom, trade freedom, fiscal freedom, government spending, monetary freedom, investment freedom, financial freedom, property rights, and freedom from corruption.
Among the 10 categories assessed, Hong Kong ranks first in financial and trade freedom, second in investment freedom and property rights, and third in business freedom.
Hong Kong is ranked first out of 41 economies in the Asia–Pacific region.
Hong Kong Commissioner to the United States, Donald Tong, welcomed the index's findings, saying: "I am happy to learn that Hong Kong's adherence to a free-market philosophy, together with its business-friendly environment and sound regulatory regimes, has once again garnered such accolades for the 18th consecutive year. Economic freedom underpinned by a commitment to the rule of law is the bedrock of our success.
"We do not take such recognition for granted and are always working to enhance Hong Kong's competitiveness and maintain its standing as a global business, financial, and logistics center."
The index commended Hong Kong's tax system as simple and efficient, and considered the city's monetary stability well maintained.
It further complimented Hong Kong's high-quality legal framework, which "provides effective protection of property rights and strong support for the rule of law." In addition, the index found that the city's regulatory efficiency and openness to global commerce strongly support entrepreneurial dynamism. Moreover, there is little tolerance of corruption.
January
10 2012 Share
Hong Kong Braced for the Challenge
Reasons for such optimism are outlined in the latest hiring trend insights from Morgan McKinley. The recruitment firm’s research found that, while Europe’s debt crises have dampened employment markets in the Asia-Pacific, Hong Kong, showing typical resilience, is expected to bounce back quickly.
Hong Kong businesses look resilient despite the challenging global economy
The research painted a picture of a strong hiring market in Hong Kong from 2010 well into 2011, with increased levels of hiring seen across the board. Demand was particularly high in sales and marketing and technology in the commercial sector, and risk and compliance in the financial services sector. The insurance hiring market was also robust, with actuaries, underwriters and claims specialists remaining highly sought-after.
A significant drop in hiring volumes in the financial services sector was noted in the third quarter of last year, as the European debt crisis, poor United States economic data and a drop in Chinese mainland growth affected markets globally, including Hong Kong. The commercial sector remained relatively buoyant, however, as demand for luxury goods continued from local and mainland consumers.
What Lies Ahead
The findings were gleaned from a survey of more than 1,050 senior-level operational and human resources managers working across the financial services and commercial sectors in the Asia-Pacific region. Respondents were asked about their hiring plans for 2012, and the challenges they expect to face in the Hong Kong market over the coming year.
Nick Lambe, Managing Director, Morgan McKinley Hong Kong
Their responses led Nick Lambe, Managing Director, Morgan McKinley Hong Kong, to be cautiously optimistic. “Though the outlook for Hong Kong’s economy is clouded by the instability of global financial markets, we anticipate this period of low visibility will be short-lived. Once the markets regain strength, we expect there will be a bounce-back in hiring.”
Most respondents from the financial services sector are concerned about the impact of global uncertainty on Asia-Pacific markets, with more than half of employers believing that headcount restrictions will be a major factor influencing hiring levels over the next six to 12 months.
Employers surveyed across commerce and industry seemed less concerned about global market conditions affecting Asia-Pacific growth, with almost half saying they would look to hire within the next six months. And 38 per cent anticipate their hiring volumes will be higher in the next 12 months compared to the previous year.
Economic Resilience
Mr Lambe was not surprised. “In recent years, Hong Kong has had a number of events – the Asian market crash in 1997, SARS in 2003, and the global financial crisis in 2008 – where Hong Kong has demonstrated its economic resilience. Its proximity to the mainland and the financial flow from there significantly aids the demands placed on Hong Kong's industries, from financial services to property to luxury goods and manufacturing.”
A level of cautious optimism is also evident in research compiled for The Hudson Report. The recruitment firm’s last survey of Hong Kong executives across key business sectors showed a sharp decline in hiring expectations for the last quarter of 2011. Nevertheless, most respondents (76 per cent) were still confident about their company’s future performance.
Although a report from Grant Thornton International published this month indicates that many Hong Kong businesses expect challenging times ahead, Daniel Lin, Managing Partner of Grant Thornton Jingdu Tianhua, expects companies will respond by “working harder than ever to maintain margins and competitiveness.”
The “bright spot in the gloom” is that employment needs in Hong Kong remain strong, Mr Lin said. His firm’s findings show that 47 per cent of Hong Kong businesses hired new staff in 2011, ranking among the top five in the world.
Skills in Demand
In 2012, Mr Lin expects a mix of ups and downs in the local job market. “The employment outlook for 2012 will remain optimistic for those who have the right skills and experiences. However, considering the gloomy market outlook in Europe and global markets, fresh graduates and people with less experience may find it a challenging year.”
Daniel Lin, Managing Partner, Grant Thornton Jingdu Tianhua
Not surprisingly, a separate survey by Morgan McKinley has found that continuing job cuts and hiring freezes overseas are pushing more Americans and Europeans to look East for career opportunities. In a survey conducted with 560 financial services professionals in London, Hong Kong was identified – alongside Singapore and New York – as one of the top three destinations for those looking to further their careers with a move abroad.
Career Advancement
Mr Lambe said professionals at mid-management level or above can rightly expect to advance their careers through experience in Hong Kong. “These individuals will spend a number of years furthering their career, managing teams that they might not have the opportunity to do in their domiciled location. After these stints, professionals can then move to a mature market and potentially move up the career ladder within their own or another organisation.”
He cautioned, however, that while job creation in markets such as Hong Kong is faster than in the West, the region has not been left unscathed by the financial crisis. “People with experience in more mature markets are advised against the misconception that they will walk into a job in Hong Kong. While this is certainly the case for niche skill-sets, it may not ring true for all types of professionals,” he said.
December
28 2011
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Expat Parents in Hong Kong Feel School Squeeze
As global companies expand in Asia, financial hubs such as Hong Kong are suffering a shortage of international school places that may blunt the city's competitive edge against regional rivals including Singapore. Above, a teacher shows the Chinese character "Four" to Level One students during a Mandarin lesson at an international school in Hong Kong in September.
Over the past two years, the number of expatriates moving to Hong Kong has surged, lured by China's booming economy. But the steady influx of newcomers has created a huge bottleneck in another area: the region's international educational system.
The dearth of places at the top preschool, primary and secondary international schools is acute and has prompted warnings from business groups that it could erode Hong Kong's position as the international financial hub of Asia. Some people have had to cancel or delay moves because their children couldn't get into schools, while others are planning to move elsewhere.
Michael Chae, who covers Asia for an asset management company in Tokyo, was gearing up to move to Hong Kong a few months ago. One hitch: After applying to several international schools, he was told that it was impossible for his four-year-old daughter to secure a place this year. Now he's aiming to move to Singapore, Hong Kong's archrival, next year.
From December 2009 to September 2011, the number of U.K. nationals moving to Hong Kong jumped 53% to 15,300; the number of Americans increased 18% to 31,500; Indians are up 21% to 29,200 and the number of Japanese has increased 22% to 8,900, according to the Immigration Department. Meanwhile, there are 36,000 mainly English-speaking international school positions—a figure that has remained more or less constant over the years—and hundreds of parents jockeying to get their kids into the most prestigious ones.
"There is a big British bank that won't post people here with school-aged children. The HR director at a British multinational had to be based in Singapore" while the rest of the team is in Hong Kong, said Christopher Hammerbeck, the executive director of the British Chamber of Commerce in Hong Kong. "This is a reputational issue for Hong Kong. It is a problem that stems directly from the success of Hong Kong, not its failure."
The Hong Kong government has vowed to solve the problem by creating 5,000 new international school places for next year and the year after and limiting the number of local students who can be enrolled in some international schools in the future. The new spaces will add to the 36,000 existing international school slots by providing new "greenfield" sites for schools.
Despite the long waiting lists for schools in Hong Kong, the situation in China is much better, primarily because international schools cannot accept Chinese nationals. The same applies to Singapore, where the Compulsory Education Act requires children to attend a "national primary school," which refers to government schools and government-aided schools.
The biggest factor, as with everything in this crowded city, is space, plus the fact that since the government derives most of its revenues from land sales, it's not likely to offer prime real estate on Hong Kong island to nonprofit schools. "In Hong Kong, the issue fundamentally comes down to land—there just isn't any," says Robyn Joseph, former chairwoman of the board of trustees at the Hong Kong Academy, a private international school that has seen a 35% increase in applications this year. "Sure, it's a frustrating issue, but there's only so much the government can do."
The new schools, including the prestigious British institutions Harrow International School and the Kellett School, won't be located on Hong Kong island, home to the iconic skyline and most expats. Instead they will be across the harbor and miles away in Kowloon or the New Territories—the only areas where sizable plots of land are readily available.
The Hong Kong Academy, which has 470 students in kindergarten through grade 12, is moving in 2013 from a temporary location on Hong Kong island to a campus in the New Territories. While the new school boasts a nearby beach for windsurfing and kayaking and a rooftop courtyard for exhibiting art, it is far from the center of Hong Kong. The school says that parents embraced the decision after many years of uncertainty about whether the school's lease would be renewed.
The irony of the long waiting lists for these international schools is that there are fewer children overall in the city. The fertility rate in 2009 in Hong Kong was 1.04 births per woman, according to the World Bank, roughly half the level of the U.S. and U.K. As a result, public schools in Hong Kong are slowly closing.
But parents in Hong Kong take their children's education seriously, and many try to get their children into international schools. In addition, after the epidemic of Severe Acute Respiratory Syndrome, or SARS, befell the city in 2003, the international schools lost students when families fled Hong Kong. To stabilize their numbers, the schools started accepting more locals.
"One of the reasons the schools are getting so full is that local Hong Kong families are pushing their kids into these schools," said Andrew Work, the executive director of the Canadian Chamber of Commerce in Hong Kong. Local families provide schools with a more stable student body compared with expats, who tend to leave after a few years or when times get tough.
The demand for space has exposed a surprising wealth gap among expats, who are themselves usually paid far more than the local population. Some schools are selling what are known as debentures, which are typically interest-free loans, to parents costing upward of US$80,000. The attraction is that debenture holders often can leapfrog waiting lists.
But expats who don't earn big salaries are frustrated. Dawn Stout relocated to Hong Kong late this summer from Atlanta, after her husband, a sourcing manager, had trouble finding work in the U.S. "We had to come out here for the job," says Ms. Stout, who is homeschooling her seven-year-old because she's wait-listed at an international school. "We're not with a big company, so we don't get any debentures for these schools," she says.
December
20 2011
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2012 Trade Outlook: Focus on Asia
The global economy is only expected to see halting growth in 2012 against a backdrop of great uncertainty
The world economy is back in trouble. Following the sharp rebound from the 2009 global recession, economic headwinds have increased markedly since the second quarter of 2011. While Japan’s supply chains are recovering at speed, the slower-than-expected recovery in the United States (accompanied by political haggling over the debt reduction plan) and, more worryingly, the deepening European sovereign debt crisis are all mounting causes for concern.
Faced with a “double whammy” of economic weaknesses in Hong Kong’s major trading markets, the global economy is braced for a renewed downturn in the year ahead. Examining past crises and experiences may serve as a guide to the likely impact of the latest developments on exports.
 Video Presentation (5 minutes) http://vimeo.com/34007920
HKTDC Chief Economist Edward Leung says there's considerable scope for switching trade to emerging Asia, as troubled developed economies show fewer prospects. Combined, China, India and Indonesia now represent more than half the value of US GDP, while China's economy alone will grow between 8% and 9% next year. He predicts Hong Kong's value exports will grow just 1% in 2012, while volume exports will decline 3%.
The causes of the world’s intermittent economic crises are as wide-ranging as they are predictable or unpredictable; they include national and international policy errors, supply shocks – especially oil shocks – as well as malfunctions of the financial sector, as in the US from 2007-2009.
More importantly, these events have occurred most recently in key developed economies. In particular, US economic crises have had a knock-on effect on a global scale, given the country’s entrenched position in the world economy.
Since the Great Depression of 1929, there’ve been a total of 13 recessions in the US. Prior to the most recent, starting from late 2007, the deepest recessions were those of 1973-1975 and 1981-1982, both stemming from oil crises and lasting for 16 months.
Financial crises, however, tend to be much more serious and virulent causes of recession. Notable examples include the Great Depression itself, as well as the latest recession, which continues to impact the global economy.
The last US recession has been the most severe since the Great Depression. Lasting 18 months, this recession began in December 2007 and ended in June 2009. The underlying cause was a subprime mortgage crisis that led to the collapse of the US housing bubble and falling housing-related assets, which in turn triggered a financial “tsunami.” As a result, many countries fell into recession, with world GDP shrinking 0.7 per cent in 2009, the deepest downturn in 80 years.
Although the global economy has since recovered, the aftermath of the financial meltdown remains with us. However, the Great Depression remains the longest and deepest downturn in the history of the US and many other nations, lingering more than 43 months from August 1929 to March 1933. It was a phenomenon that originated from a US recession, accompanied by the stock market crash of October 1929. The US depression, in turn, sparked a global contagion exacerbated by US trade protectionism that ultimately led to a fully-fledged trade war.
The decline in world and US GDP during the Great Depression far exceeded the contraction of the latest recession. In both crises, fast credit expansion and new financial instruments brought about high leverage and increased susceptibilities to shocks, and a malaise in the US financial sector spilled over to the real economy as well as other countries at a rapid pace.
There are also major differences. Government policy support was almost absent in the Great Depression, while US protectionism contributed to a global trade war. That’s in contrast to the unprecedented policy support and lack of pervasive resort to trade restrictions in the latest episode.
And while the US has been at the epicentre of both crises, its economic weight has notably fallen. Developing countries, such as China and India, have assumed a more important role in the global economy.
While developing economies may not be spared from a downturn induced by developed economies, they’re well poised to weather the adverse impact due to sound fundamentals, providing a buffer against the latest recession and any renewed crises. So even if the economic difficulties have increased after the global rebound in 2010, the chance of a renewed downturn similar to the Great Depression is still remote.
Lost Decade
Struggling with the downturn: confidence the key?
Even if a great depression of the type that overtook the world in the early 1930s is unlikely, the lingering effects of a financial meltdown on the global economy have been devastating, with the US still working hard to stimulate the economy and the EU struggling to fix its debt problems.
Some experts see a repeat of Japan’s “lost decades” happening in the US and Europe. Since the early 1990s,, Japan has suffered from an extended period of economic stagnation and price deflation amid the bursting of its equity and property bubbles in 1989. Compare and contrast that with the early 1980s, when Japan’s economic performance was the envy of the world.
In some ways, the parallels between Japan’s lost years and the more recent global financial meltdown are telling. Both property bubbles were fuelled by easy credit and new financial instruments.
There’s a prominent dissimilarity, however. While the US (as well as other countries) was prompt in providing a policy response to contain the crisis, Japan delayed taking remedial action, waiting more than a year before cutting interest rates. By the time the Japanese government utilised huge funds to revive growth in the late 1990s, the Japanese economy was already in a prolonged slump, accompanied by ingrained deflation.
If anything, the crux of the current downturn is arguably an erosion of confidence. Yet, developments are only mediocre today. In the US, continued monetary easing should help avoid deflation and restore confidence. In the EU, the coordinated efforts enlisted by Eurozone members to resolve the debt crisis, which entail an expansion of the European Financial Stability Facility, are expected to bring some relief. However, the EU region, especially the more heavily indebted member states, is going to remain in difficulty.
Complicated 2012 Ahead
The global economy is only expected to see halting growth in 2012 against a backdrop of great uncertainty. In particular, developed economies will stay in the slower lane.
Although Japan’s supply chains have been recovering at a rapid pace, the slower-than-expected recovery in the US and, more worryingly, the spectre of an EU sovereign debt crisis, are major causes for concern.
Even with prevailing efforts to stem the crisis, there is still a lack of action to stimulate growth. Fiscal austerity, however, will be ubiquitous in Europe. As such, consumption, and hence, import demand in most traditional markets, will be subdued.
Given their solid economic fundamentals, emerging economies should have a reasonably good chance to weather the current crisis with moderate slowdown. Of particular interest to Hong Kong exporters, abundant business opportunities exist in a number of markets. Holding particular potential are Asian countries with large domestic markets such as India, Indonesia and especially the Chinese mainland.
Also attractive are commodity-exporting nations, including Russia, Brazil and some Middle East countries, which are slated to benefit from sustained commodity prices. Prices of crude oil and other commodities like base and precious materials should slacken from the highs stemming from the outbreak of political unrest in the Middle East and North Africa (MENA), but are still likely to remain firm. Sustained oil and other commodity prices could presage better market prospects for commodity-exporting nations.
Hong Kong firms are also facing significant challenges arising from higher wages in China, as the 12th Five-Year Programme strives to tackle structural problems constraining domestic consumption.
Separately, a strong renminbi against the US dollar in the face of mounting appreciation pressures in the run-up to next year’s US presidential election will translate into even heavier production costs. Some firms may also face persistent borrowing costs amid the uncertain external environment. But most Hong Kong companies are not able to fully transfer the higher costs to customers for fear of losing business.
Leaner and Meaner
To some extent, the upward price pressure on Hong Kong exports is expected to persist in 2012. While consumer frugality in overseas markets will translate into downward price pressure on Hong Kong exports, the juxtaposition of skyrocketing labour costs on the Chinese mainland, the unremitting revaluation of the renminbi in tandem with still-high prices of crude oil and other commodities, will exert even sturdier upward pressure on input costs.
As a result, the unit values of Hong Kong exports should continue to rise, although such increases will be unlikely to offset escalating input costs completely, eroding exporters’ profit margins.
Despite higher unit values, Hong Kong exports are expected to show only marginal growth next year. Renewed downturn of the global economy, alongside the attendant sluggishness in overseas demand, will depress the expansion of Hong Kong exports.
The HKTDC forecasts Hong Kong’s total exports to increase by one per cent in value, but fall by three per cent in volume. Re-exports, which account for the bulk of Hong Kong’s exports, are also expected to grow by one per cent in value but drop by three per cent in volume. Domestic exports are likely to contract by 15 per cent in nominal terms and 19 per cent in real terms.
December
15 2011
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星島社論 - 香 港 把 握 新 國 策 拓 中 產 內 需
中央經濟工作會議定出了明年「穩中求進」的工作「總基調」，對應外圍變故和內地經濟增長出現的「下行壓力」，立足擴大內需來促進經濟平穩較快發展，當中提出提高中等收入比重，值得港商和投資者尋覓箇中機遇。
歐美經濟局勢明年仍然極不明朗，危機四伏，對中國的出口打擊比較大，局部反映在本港出口貿易和廠商近月的困境、內地出口導向的製造業艱難掙扎，以及製造業經理採購指數的持續下滑。
相比去年雙位數字經濟增長率，內地今年的經濟增長預計是百分之九，出口和相關行業這一重要經濟火車頭馬力不足，中央一方面略為放鬆銀根，早前開始降低銀行存款準備金率，減輕中小企融資困難，另一方面則設法進一步提升另一個火車頭的馬力，擴大內需。
求穩為先 不大力鬆銀根
新一年經濟要「穩增長」，與往年的「保增長」有所不同。金融海嘯後，中央為「保增長」釋放出四萬億元人民幣的資金，避免經濟急劇下滑，代價則是資金氾濫，樓價物價飛升，通脹嚴重。中央後來透過連串加息和提升銀行存款準備金率，逐步收緊銀根。
經濟工作會議形容現時的情況，是經濟增長下行壓力和物價上漲壓力並存。因此，政策將是既要穩增長，又要穩物價，才可以穩社會。
由於明年全球經濟和金融不確定的因素特強，中央政策更加要強調穩字當頭，因此，縱使最近物價稍為回順，留下一點空間讓中央得以略為放鬆銀根，但是幅度僅屬於「預調微調」。穩物價尤其是穩樓價的政策持續，就算逐步放鬆銀根，都會盡量透過政策把資金導引向實體經濟企業，樓價將繼續受壓，務求在現屆政府餘下一年多的任期內，交出百姓接受的成績表。
減稅惠「小資」 增加消費
在擴大內需特別是消費需求方面，中央提出提高中等收入比重。以往中央主要透過各式各樣的政策補貼來刺激內需，例如補貼家電下鄉等。今次中央則提出減稅，顯示希望減少對政策刺激的倚賴，加強自主增長的能力，減稅釋放的購買力，主要來自中產。
經濟開放改革三十年，內地重新出現不斷壯大的中產階層，形成龐大的消費群，不只大中城市，連部分較為富裕的鄉縣，亦出現這類「小資產階級」隊伍。當局透過擴大免稅額等減稅措施，將進一步增加這階層人士的消費能力。他們的「小資」生活消費模式，不限於基本生活所需，還追求時尚、消閒、品味。
本港經濟近月主要靠旅遊和消費行業彌補出口相關行業下滑，不少人放眼於內地豪客，其實內地來港消費中堅是大量的中產人士，在港購買衣物、化妝品、金飾，和享受優質服務。港人不但可以把握內地中產一族來港消費的商機，還可以設法憑敏銳的潮流品味觸覺，在內地開拓中產消費市場
December
14 2011
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Hong Kong is No 1 financial centre - City leapfrogs US and Britain to head the World Economic Forum rankings By Lulu Chen
Hong Kong has leapfrogged the United States and Britain to top the World Economic Forum's (WEF) Financial Development Index for the first time, after coming fourth last year.
Hong Kong took the No1 spot ahead of a list of 60 countries. It scored 5.16 on a scale of 1 to 7, based on a vast amount of data intended to set standards for the world to follow.
"This is the first time ever for an Asian financial centre to be given the top spot," said Financial Secretary John Tsang Chun-wah. Tsang said he was pleased that the WEF had acknowledged the city's strengths in access to capital, business environment and banking financial services, such as initial public offerings.
"In the past, Hong Kong's status as a financial centre always fell behind New York, London or Tokyo," said Raymond Yeung, an economist at ANZ. "The change could be partly attributed to Hong Kong's geographic advantage of being close to mainland China."
Analysts said Hong Kong's explosive listing volume, low tax rates and status as the key offshore yuan trading centre had boosted its ranking.
Yeung said the city's new status would help attract more fund-raising activities and financial talent.
"There is an increasing trend where we see people moving to Hong Kong because of the low tax rate," said Lu Ting, an economist at Bank of America Merrill Lynch.
Lu added that he did not attach huge significance to Hong Kong's move to the No1 spot, adding that it would be hard to see any tangible benefits.
Out of the seven components in which various financial centres were assessed, Hong Kong ranked first in financial access, and third in business environment and banking financial services.
Institutional environment, financial stability, non-banking financial services and financial markets were also put under the microscope.
The US ranked second overall, Britain third, and Singapore fourth. China was in 19th place.
China, Canada and Singapore were singled out for praise for having increased their overall scores consistently since the index began in 2008.
December
13 2011
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Beijing wants bigger yuan role for Hong Kong
China wants Hong Kong to play a more active role in developing its burgeoning offshore yuan market and the territory has an indispensable part in the process, Chinese Vice Commerce Minister Wang Chao said on Wednesday.
“Hong Kong has a irreplaceable role in the renminbi [yuan] development. We would like Hong Kong to play a more active role and to increase the breadth and depth of trade,” Wang said in a written speech which was read out at a financial seminar.
“The Ministry of Commerce is willing to hear from different sectors regarding the direct investment of renminbi and we will fine tune the relevant measures,” he said.
China is seeking to promote the use of the yuan overseas as part of a longer-term plan to make it an international reserve currency along with the US dollar, and has said it supports the growth of the yuan market in Hong Kong.
During his visit to the territory in August, China Vice Premier Li Keqiang unveiled a string of measures to further develop the offshore yuan market in Hong Kong, including allowing foreign investors to buy mainland shares and bonds.
Li said foreign owners of yuan would soon be able to buy up to 20 billion yuan (US$3.1 billion) worth of yuan-denominated stocks and bonds on the mainland with the renminbi, but did not give an exact launch date for the scheme.
Wang said China would “fine tune” its policy of foreign direct investment of yuan in mainland China to create more convenience and transparency, but did not elabourate.
Since China issued rules governing the investment of yuan in China as FDI in October, a total of 16.53 billion yuan has been allowed to flow into 74 projects in mainland China, Wang said, adding that 70 per cent of the funds came from Hong Kong.
Yuan deposits have been surging in Hong Kong as more trade is settled in the Chinese currency. In October, Hong Kong’s yuan deposits
totaled 618.5 billion yuan (US$96.98 billion), according to the Hong Kong Monetary Authority (HKMA).
December
7 2011
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IP Means Business in Hong Kong
Hong Kong’s growing role as an IP middleman and regional IP services hub is underscored by the Chinese mainland’s drive to build an IP economy
More than 700 professionals from around the world took part in Hong Kong’s inaugural intellectual property (IP) forum, focusing on the city’s strengths as an emerging regional IP trading hub. Organised by the Hong Kong Trade Development Council (HKTDC) and the Hong Kong Design Centre, the event, held 2 December at the Hong Kong Convention and Exhibition Centre, brought together IP professionals and government officials to discuss the latest developments in Asia’s IP market.
Huge Demand
“Hong Kong’s proximity to the booming Chinese mainland market creates huge demand for overseas IP,” said Margaret Fong, HKTDC Deputy Executive Director, speaking at the event’s opening. “And mainland-based IP owners are increasingly looking for IP specialists to help take their business global. Hong Kong is where they turn to,” she said.
Experts agreed that IP gives businesses a competitive edge, while serving as a form of currency and reliable revenue generator. “IP is closely linked to economic growth,” said Andrew Liao, Practicing Senior Counsel. “It’s the Cinderella of the new economy,” he added.
“Patents and IP are like chips in a knowledge economy,” said Dr Jacqueline Lui, President of the Hong Kong Institute of Patent Practitioners. “If you don’t have your own secure IP, you cannot be a player in the new knowledge economy.”
IP Bridge
Speaking at the BIP Asia Forum’s opening ceremony, HKTDC Deputy Executive Director Margaret Fong says Hong Kong offers the best platform for IP trading in the region
Since IP cannot be built very quickly, companies need to acquire it if there’s a gap in their portfolio, according to Dr Tao Zhang, Patent Sales Group Director at Hewlett Packard (HP). “So I believe there will be huge growth in the industry for intellectual property, and Hong Kong can play a significant role because of its unique advantages.” Dr Zhang said that Hong Kong’s autonomy, advanced political and social systems, East-meets-West culture, and long history in obtaining US patents, make it an ideal bridge for IP trading.
Hong Kong entities, according to Dr Zhang, can serve as a link between companies that hold the IP portfolio and businesses that need it. She pointed out that Hong Kong companies can engage in technology consulting services, including understanding a client firm’s IP strategy, finding any gaps, and helping it source the needed technology.
Dr Zhang noted that Hong Kong companies would need to understand the types of programmes run by portfolio holders, as well as their goals. For HP, which has some 1,000 patents for sale, that means optimising the return of investment on innovations.
Helping SMEs
 View highlights video online http://vimeo.com/33262708
Government efforts include setting up R&D centres such as the Hong Kong Science and Technology Park (HKSTP). About 350 companies are based at the HKSTP, with some 6,000 professionals engaged in R&D. Under its incubatee programme, the HKSTP provides 50 per cent funding for companies that file patents, according to Allen Yeung, its Vice President, Business Development and Technology Support.
The HKSTP also boasts a virtual IP chamber, which allows suppliers and potential buyers access to test an IP in a secure environment. “For the buyer, because this is a trial system, they are able to use this at a fraction of the full price,” Mr Yeung said. “Before they have this trial system, they may not know exactly whether this is the right IP or not. Having this kind of IP mechanism will facilitate a lot of IP transactions,” he added.
Besides Hong Kong, other Asian economies such as Korea, Singapore and Taiwan are leading the region in developing their IP portfolio. “IP is one of the very few elements small and medium-sized enterprises should leverage for long-term growth,” said Dr Johnsee Lee, President of Taiwan’s Industrial Technical Research Institute, which generates up to US$80 million from licensing each year, according to Dr Lee.
“But because they’re small, they’re short on resources. They don’t have critical mass, so the government sponsor or supporting research organisations can play a pivotal role in helping SMEs.” Dr Lee pointed out that research institutes also serve a critical role by helping to determine where a new innovation fits in the overall IP chain.
China’s IP Economy
The first BIP Asia Forum brought together IP professionals and government officials to discuss the latest developments in Asia’s IP market
Perhaps the biggest potential for the IP trade lies on the Chinese mainland, where the upgrading of the mainland’s industrial sector has led to significant demand for overseas IP. Dr Zhang noted that the drive to build an IP economy “comes from the very top,” referring to a statement from Premier Wen Jiabao, who said that “enterprises, whether large or small, will need to build their own intellectual property portfolio and will also need to build their own brand.”
As a result, global companies such as Microsoft have seen tremendous licensing opportunities on the mainland. Interest in acquiring patents is “vibrant,” according to Microsoft’s Simmone Misra, Outbound Licensing, Corporate Intellectual Property and Licensing. “They want help to bring their products to international standards. They want to build world-class brands to sell globally.”
Planting Trees
The growing globalization of IP trading activities and increasing IP supply and demand in Asia are giving rise to the need for regional IP intermediaries.
“Hong Kong is in a good position to build an IP trading hub for China and Asia, by understanding the culture of China and the West, and having the rule of law and IP culture,” the HKSTP’s Mr Yeung said. “Having a system that would embrace the buyer side, the seller side and also the intermediaries on the service side, will take some time; like planting trees. But I think, over time, this can happen.”
December
6 2011
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Experts oppose fast yuan reform - Speedy changes to a fully convertible currency could lead to surge in capital flows and endanger banking system, says former financial secretary
By Charlotte So
Antony Leung, Blackstone's chairman for greater China and Hong Kong's former financial secretary, says the yuan will not always appreciate.
Experts have warned that pushing yuan reform too fast would put the still underdeveloped mainland banking system under threat.
"I am not in favor of the yuan becoming fully convertible too soon," Antony Leung Kam-chung, the chairman for greater China at Blackstone, told the Fourth Greater China Conference
organized by the Committee of 100 yesterday.
Beijing has been under international pressure to speed up reform of the yuan amid claims that the currency is undervalued in order to
favor mainland exports.
It would be "very dangerous" should the yuan become fully convertible before necessary market reforms in the banking and financial sectors were undertaken, Leung, the former financial secretary, told the conference, sponsored by the SCMP.
A lot of capital flows would be induced if the yuan was fully liberalized and would endanger the banking system, which was still at a very underdeveloped stage, he said.
Linda Yang Tsao, a former US ambassador to the Asia Development Bank, said China only fulfilled half of the requirements set out by the International Monetary Fund for full
liberalization of its currency.
Internationalizing the yuan, for example, would require wider use of the currency in international trade settlement. The yuan accounts for only 8 per cent of the settlement of the country's foreign trade. The US dollar, on the other hand, accounts for more than 80 per cent of international trade settlement.
Using yuan for trade settlement could help Chinese companies mitigate exchange volatility.
Some economists said the European debt crisis had created a window for China to speed up currency reform and help the yuan take up a more vital role in terms of trade settlement and foreign reserves.
"We should use the two-way swings in the yuan as an opportunity for accelerating reform of the exchange rate formation mechanism," Yu Yongding, a former central bank adviser, was quoted by the China Business News as saying.
Challenges, however, weigh on yuan liberalization. A huge amount of international "hot money" is being parked on the mainland on expectations the yuan will appreciate. China's foreign reserves stood in excess of US$3.5 trillion in September.
"The foreign reserve bubble is driving up asset prices on the mainland," said Xiao Geng, a director of research at Fung Global Institute.
Should the hot money leave the country in light of a plunge in property prices, it would lead to the yuan depreciating.
Beijing has come up with several initiatives to relieve pressure from the huge foreign reserves being accumulated. They include the qualified domestic institutional investor scheme to invest in the Hong Kong stock market and the proposed launch of an international board for multi-national enterprises to be listed on the mainland, providing investment tools for US dollar assets in the country.
Inflation on the mainland had reduced the buying power of the yuan as opposed to other currencies, which would abate yuan appreciation, Leung said.
"Investors should bear in mind that the yuan will not always appreciate and be prudent about their yuan positions," he said.
The yuan non-delivery forward contracts have priced in a depreciation of the yuan rather than appreciation since September as investors start to fret about the mainland economy. Provincial government debts have doubled since 2008 when Beijing adopted a loose monetary policy to counter the global financial turmoil.
The Committee of 100 is a leadership organization of prominent Chinese Americans in business, government, academia and the arts.
December
1 2011
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Pacific Coffee aims to cause a stir - Chain set to reach 50 mainland outlets in the next two months ... with a drop of wine thrown in
By Anita Lam
Patrons inside a Pacific Coffee Group store in Hong Kong - now the company is gradually increasing its presence on the mainland.
A touch of wine seems to have done wonders for Pacific Coffee, helping it to grow rapidly on the mainland.
Since state-owned China Resources (SEHK: 0291) Enterpris, maker of Chinese wines Huadiao and Er Wotou, acquired 80 per cent of Pacific Coffee from Chevalier Pacific 18 months ago, the chain's presence on the mainland has grown from five shops to 33 and is slated to go up to 50 in the next two months.
The group's general manager for strategic planning and investor relations, Vincent Tse Tan-hon, said: "To expand our network, we will explore alternative markets that others have not yet developed."
That includes products such as Huadiao mocha, a mixture of Chinese yellow wine and mocha, and Er Wotou chillino, iced coffee mixed with the strong Chinese liquor that could have an alcohol level of over 50 per cent. Tse said new flavours such as these have found favour with customers.
The coffee chain is also working with banks, companies and universities to set up coffee booths in their premises.
"Setting in-house coffee booths mean we don't have to pay any rent and can pass on the rental savings to our clients, who in turn can enjoy our coffee at prices 30 per cent below retail rates," Tse said.
CRE also plans to open coffee shops at its high-end Ole hypermarkets, install coffee machines and sell coffee capsules in shops, offices and even on the streets. "The profit margin with such machines is very attractive," Tse said.
Pacific Coffee's current share of the mainland market is only a fraction of that of rival Starbucks, which opened its 500th outlet in October.
CRE recently said it aims to open 1,000 outlets in the mainland to take on Starbucks, which is working on plans to triple its number of its outlets to 1,500 by 2015.
Tse said coffee consumption on the mainland will see explosive growth in the coming decade.
According to Japanese trading company Marubeni, the market is set for a 20 per cent expansion every year in the near future.
November
30 2011
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Ringing Up Sales in Hong Kong
Retailers are preparing for a Christmas bonanza to cap off a bumper year
It’s been a difficult time for retail business in many parts of the world. Not so in Hong Kong, where retail sales are up 26 per cent over the first eight months of this year compared to the same period in 2010. With stores about to enter their busiest period of the year – Christmas, followed by the Lunar New Year – optimism is high.
A mid-year report by HSBC found “registers have been ringing non-stop in Hong Kong since the start of this year,” and the report’s author, HSBC Economist Donna Kwok, says the trend continues.
“Registers are still ringing in Hong Kong, even if retail sales have started to
normalize from the dizzy heights reached earlier this year. This, in turn, should help strike a healthier balance for the economy as a whole by lessening demand-side inflationary pressures.”
With mainland visitors averaging more than two million per month, wages on the rise for well over a year, and employment sitting at a record high, it’s no wonder consumer-spending growth has yet to feel a noticeable chill, Ms Kwok continued. “The double-barreled confidence-boost this gave shopper confidence, was a key reason why Hong Kong managed to skirt recession in the third quarter.
“Still, healthy job market conditions and strong mainland visitor inflows augur well for retailers as we approach the busiest sale period of the year, helping to counterbalance the impact of slowing global trade flows and ongoing financial market turbulence on the city's growth,” she added.
Reason for Optimism
Carl Berrisford, Director, Wealth Management Research, UBS
Market analyst Carl Berrisford, Director, Wealth Management Research, UBS, said retailer optimism is founded. “Even in 2008, the year of the global economic crisis, the Hong Kong retail market saw no contraction. In fact, it rose by 10.5 per cent.”
The key, Mr Berrisford noted, is big-spending Chinese mainland tourists, who are coming to Hong Kong in record numbers, mainly to shop. Indeed, mainland buyers dominate the luxury retail sector, and account for close to one-third of Hong Kong's retail market overall.
He pointed out that the 26 per cent jump in retail sales this year is on the back of a 23 per cent rise in visitor arrivals over the same period. “I am not suggesting that there will be no slowdown in the Hong Kong retail market if economic growth in the Chinese mainland starts deteriorating, but I would be surprised if it were to drive a market collapse.”
Value for Money
No longer just a status symbol, gold jewellery and luxury watches are seen as an investment by mainland shoppers
Mr Berrisford said that even wealthy mainlanders are watching their spending these days, and Hong Kong offers value for money.
“I think a lot of mainlanders reserve their high-end luxury item purchases for overseas because of lower luxury duties than at home. Like shoppers anywhere, mainland visitors, even wealthy ones, want to cut costs.
“Hong Kong is probably the most cost-effective overseas option for this category of shopper because travelling costs are relatively inexpensive and certain luxury goods, like watches and jewellery, can be as much as 50 per cent lower than onshore due to the absence of luxury duties here. And of course, you have the currency appreciation factor against the Hong Kong dollar as an added incentive to shop in Hong Kong.”
If shoppers start tightening their belts when it comes to luxury items, Mr Berrisford offered an alternative view that Hong Kong will attract more high-end penny pinchers if mainland domestic conditions contract. “In fact if China's tourists start to curtail overseas travel due to economic troubles, Hong Kong may see visitor flows actually increase as it is a cheaper traveling option.”
Crowds of shoppers reflect a typical day’s trading for high-end brands in Hong Kong
For international brands wishing to reach these shoppers, Hong Kong remains their highly visible shop window, Mr Berrisford continued.
Why Brands Need Hong Kong
Thomas Lam, Head of Research for Greater China, Knight Frank
“Global luxury brands that may also be present on the mainland perceive Hong Kong as a strategic billboard location given the high traffic of Chinese high net-worth individuals that pass through. It is akin to how luxury brands or even private banks like to have glossy brochures in business and first-class lounges at airports. They need to establish a retail presence in Hong Kong at all cost, either to reinforce brand recognition back on the mainland or simply as part of a China brand-building strategy.”
This market competition has led to sharp rises in Hong Kong retail rents, Mr Berrisford conceded. Prime retail space in Hong Kong is already tight and global luxury brands are competing against each other for prime locations, he said.
A recent report by Thomas Lam, Knight Frank's Head of Research for Greater China, confirms a dash to secure prime shopfronts – fuelled by spikes during the "Golden Week" holiday period in October, when mainland visitors jumped 17 per cent year on year, and “there was significant growth in retail sales at major shopping centres, with the jewellery and watch industry reporting a 50 per cent gain in sales over the period, compared with 2010.”
This trend is not lost on international luxury brands, which are prepared to pay a premium to secure their preferred site, Mr Lam said British fashion retailer Burberry will reportedly take up extensive retail space in two prime Hong Kong shopping districts.
Destination of Choice
“Registers have been ringing non-stop in Hong Kong since the start of this year,” says Donna Kwok, Economist, HSBC
And shoppers continue to come, perhaps not only to purchase status symbols. Mr Berrisford believes the top-end retail bonanza in Hong Kong may reflect a lack of investment channels on the mainland. “It is possible that mainland consumers are investing in gold jewellery and luxury watches for that same reason. Just like investors anywhere, they want to get in at the lowest price and they buy it where it is cheapest.”
He believes they will continue to shop in Hong Kong because it is nearby, offering luxury goods cheaper than can be obtained locally. “Until these circumstances change or access to Hong Kong for mainland tourists is in some way restricted, mainlanders will continue to regard Hong Kong as a destination of choice for luxury goods purchase.
“Remember, 23 million annual mainland visitors to Hong Kong is just 1.8 per cent of China's population. If every urban household in every second and third-tier city in China invests in just one luxury handbag, or one branded watch, there is plenty of growth still left for Hong Kong's high-end retail market while its competitive advantages remain in place.”
November
29 2011
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Taiwanese firms eye Hong Kong gateway to mainland China By Adrian Wan
Most Taiwanese firms plan to expand into the mainland in the near future, and would use Hong Kong as a support base, a survey has found.
Despite looming global financial uncertainties, 56 per cent of the firms in Taiwan who responded said they would develop a larger presence on the mainland within three years, mostly in the import and export business and merchandising.
The written survey was jointly organised by the Hong Kong Trade Development Council and Taiwan's biggest manufacturers' group, the Taiwan Electrical and Electronic Manufacturers' Association.
They surveyed more than 780 Taiwanese companies in August and September on their attitude to expanding their businesses to the mainland, and what role Hong Kong could play, after Taipei and Beijing signed their Economic Co-operation Framework Agreement (ECFA) in the middle of last year. The pact was designed to boost the flow of goods and people across the strait and spur growth. It reduced or removed tariffs on 539 Taiwanese products.
About 70 per cent of the companies which had plans to expand into the mainland said the Yangtze River Delta or the Pearl River Delta were their prime destinations.
Almost all of the companies surveyed said they would need support services such as economic information on China, protection of intellectual property, legal and mediation services, and marketing.
And the study found that more than 70 per cent of the companies were interested in using more of these services in Hong Kong.
The respondents said the city was important to their business expansion because of its free flow of capital, effective financial system, and transparent legal system.
Pansy Yau Lai-ping, TDC deputy chief economist, said the study showed that Hong Kong would increasingly benefit from the ECFA. "Many of them know Hong Kong's advantage in certain service areas because almost half of them are already using Hong Kong as a supporting gateway to the mainland," she said.
November
23 2011
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The Intellectual Revolution - Hong Kong an ideal platform
  Video Presentation http://vimeo.com/32568527
Established in 2003, Ocean Tomo is a leading financial institution providing financial products and services related to intellectual property, including expert testimony, valuation, research, ratings, investments, risk management and transactions. The Chicago-based firm has developed its own set of indices and indicators to assess the value of IP products, including the Ocean Tomo Patent ratings and the Ocean Tomo 300 Patent Index (OTPAT), which is listed on the New York Stock Exchange. The company is also involved in several projects in Asia, where it’s collaborating with the Chinese mainland city of Shenzhen to develop a public equity index there. With China’s IP market moving at “light speed,” Ocean Tomo Chairman and CEO James Malackowski says Hong Kong has the potential to become Asia’s IP trading hub.
How significant is the role of intellectual property in today’s global economy?
In the last few years, we have gone through an intellectual revolution that’s no less significant than the industrial revolution a hundred years ago. In fact today, if you look at average corporate value, 80 per cent of that value is based upon intangible assets, where 20 years ago that was only 20 per cent. So we literally have inverted the economy, now driven by intangibles, a large part of that is intellectual property.
It was initiated in the Western economy but it is now clearly a global initiative. There is no business today that can thrive without some proprietary position. Otherwise it comes down to manufacturing cost. It’s too competitive and the margins are too small.
What are some of the key components for creating a thriving IP marketplace?
There are a few common building blocks that are necessary to create any economy, and it is true for intellectual property as well. First, you need to have a valuation skills set, so that owners and investors, who look at intellectual property, are thinking with a common point of view, as to what is that asset worth. Second, you have to have education with policy and with business practice, so that it’s understood how the intellectual property can be used in the commercial markets. And then third, you need transparency of pricing and trading. And often, that comes with either auctions, public auctions, or eventually, a traded exchange for intellectual property.
IP is now at a tipping point where there is now a great understanding and appreciation for its value. There is recognition of its value in public equities but it’s only now started becoming traded as an asset in its own right. And so the next five years are a very exciting time for the intellectual property market.
When did OceanTomo start looking at Asia as a potential IP market?
From the very beginning, we understood IP as a global marketplace. And we think of it as a triangle with three anchor points: the United States, Europe, and Asia. And from the very beginning, we started to reach out to identify those specific geographies where the intellectual property marketplace is developing.
There are activities obviously here in Hong Kong, China, Singapore, Taiwan, Japan and Korea. The question is which of those activities will rise to the forefront to become the central marketplace. And I actually believe that’s a question that will play out for the next year or two. Hong Kong is very interesting because it has a number of unique advantages. It’s the gateway to China, the largest marketplace, it has a strong rule of law and it has a very mature financial services industry. In some respects, the opportunity to own the Asian IP central market is Hong Kong’s to capture.
Why is Hong Kong an ideal platform for IP trading? How can Hong Kong act as a bridge to China’s IP market?
The rule of law is an advantage. Arbitration laws are to some extent similar around the globe. The real advantage is the financial sophistication of the marketplace and that relationship with China. Those are very meaningful benefits. I think the other advantage is the insight by the government, by the Hong Kong Trade Development Council and other organisations that see the opportunity for IP to drive the economy, and that’s a strong catalyst as well.
The marketplace in China is moving forward at light speed. The progress that’s been made in the last five years is dramatic. The vision for a marketplace is strong in several regions, notably Shenzhen, Beijing and Shanghai. We believe that in five to 10 years, the Asian marketplace generally and China in particular will be the largest centre for Ocean Tomo’s business.
Is there a role for the public sector to help develop the industry?
I believe the most important thing is to act. That this is not the marketplace where you can say ‘let me sit back, let’s see how it develops and we’ll enter in two to three years.’ In my opinion, by then, it’s too late. There will be a central Asian marketplace that will link or connect with the other two legs of the triangle, in the US and Europe, and that’s going to happen very soon.
And the advantage of the first mover is significant. So first and foremost I think the opportunity is to partner with those organisations in the US and Europe, begin to establish the basic framework for a transparent market, and to move forward quickly.
How do you foresee the development of the IP industry in Asia in the next few years?
In the next decade, the market will be fully developed. It’s the next two to five years where we’ll see the dramatic growth. And the uncertainty is where that will be. Will that in fact be in Hong Kong for all the reasons we discussed? Or will it be in a neighbouring country? I don’t know the answer. I’m excited to watch and I think the biggest determinant will be that call to action: who steps to the plate and who actually starts to cooperate with the other regions.
November
22 2011
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Hong Kong is 'a remarkable achievement' under One Country Two System
Chief Executive Donald Tsang talks to a China Daily reporter on Tuesday. Hong Kong's success has been recognized by the world, he said.
The concept of "One Country, Two Systems" has succeeded remarkably well, exceeding all expectations for Hong Kong, Chief Executive Donald Tsang told China Daily in an exclusive interview on Tuesday.
"For someone like me, who served in government before and after 1997, it is a remarkable achievement, recognized by the rest of the world," Tsang said as he reflected on the city's progress since the 1997 handover.
"Many people, including myself, expressed concern whether this policy, introduced by late leader Deng Xiaoping, would work in Hong Kong," he said.
"It turns out to be a triple-win situation for Hong Kong, the country and the rest of the world. Hong Kong people have won, the country has won and the rest of the world has also won."
Tsang is entering the final months of his term as Hong Kong approaches the 15th anniversary of reunification on July 1, 2012. By that date Tsang will have completed his second term as chief executive.
Hong Kong has advanced noticeably on the political, economic and social fronts in recent years, he observed.
The electoral processes are far more democratic than before 1997, he said. More significantly, the National People's Congress has agreed on a timetable for universal suffrage for chief executive elections in 2017 and for the Legislative Council in 2020.
"Things are moving on quite nicely, but of course they may not meet everybody's expectations," Tsang said. "If you look at it objectively, even the most critical commentators overseas have seen the advances we have made on the political front."
Economically, Hong Kong is obviously an international financial center serving the entire region, in terms of the size of its market, foreign investment and market infrastructure, he said.
The world has not fully recovered from the shock of the financial crisis that swept the globe in 2008, he noted, but Hong Kong has weathered the storm and remains attractive to foreign capital.
Foreign investors think Hong Kong is a profitable and safe place to invest, he said.
Tsang particularly cited the growth and importance of the renminbi market in Hong Kong.
"This year we are able to handle 1.5 trillion yuan ($236 billion) in trade settlements and renminbi balances kept by our banks hit 600 billion yuan. Remember, we started from humble beginnings three or four years ago," he said.
Hong Kong, as a testing ground, is doing a great deal for the final convertibility of the renminbi, he said.
On social services, Tsang said the special administrative region has developed a better system for elderly care.
Free education for 15 years is provided, with 12-year compulsory, and subsidized pre-school education, while a statutory minimum wage has been introduced to protect workers.
November
18 2011
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Culture Builder - Michael Lynch: Hong Kong's $3 billion (US$387 million) champion of arts
After a distinguished career in arts administration, serving as Chief Executive of the Sydney Opera House from 1998 to 2002, then leading the rejuvenation of London’s Southbank Centre as Chief Executive from 2002 to 2009, Michael Lynch was contemplating a quieter life. That was until he was approached to head Hong Kong’s West Kowloon Cultural District (WKCD) project. It was a challenge the Australian, who has been awarded both an Order of Australia and Commander of the British Empire for his services to the arts, found too tempting to refuse.
You’ve had high-profile jobs before, in London and Australia. Why were you keen to take on the WKCD project?
I’d gone back to Australia in 2009, after seven years in the UK and had been contemplating retirement when I was approached by the West Kowloon Cultural Authority. The job seemed too exciting to resist. I realised that WKCD would make a special place in the world as a state-of-the-art cultural landmark. And it’s in Hong Kong – with its centrality to Asia, and all the extraordinary things that are happening here in connection with China. I’d be an idiot if I didn’t do it.
How would you describe the importance of this project for Hong Kong?
It’s unbelievably important. The project comprises a 23-hectare city park, 15 performing arts venues, a museum, exhibition centre, piazza areas and commercial and residential developments along the waterfront of Victoria Harbour, with the first stage to be completed by 2015. It will provide a real opportunity for Hong Kong to do something within a concentrated period of time that will have positive consequences.
What about on the global scale?
WKCD will redefine the perception of Hong Kong in terms of the rest of the world. It will showcase Hong Kong as not only being an international financial centre, with great shopping and dining, but also sophistication. Its venues will give exposure to artists and arts from Hong Kong and around the world, and become a vibrant and different part of the city’s tourist offer. This project is fantastic artistically, culturally and creatively. It will focus more attention on Hong Kong as one of the great cities of the world.
What do you think of the talent that exists in Hong Kong?
Hong Kong is a dynamic place, with fantastic things happening in it, but one thing people used to say was that it was a bit of a cultural desert. Not true. Where Hong Kong now sits in the visual arts world is very exciting. We’ve got the Hong Kong Art Fair, the Gagosian Gallery, White Cube and more big, successful shows presented here than people give Hong Kong credit for. I’ve met a lot of creative people and artists working in the city, including many who have come back to Hong Kong after distinguishing themselves in other parts of the world.
But Hong Kong is still emerging in this area.
There is a lot happening, and it is really important that this project is realised. In the visual arts world, there is some real progress to be made. We hope that M+ [West Kowloon's art museum] will be an internationally competitive institution. Some existing venues do need attention. But we are creating state-of-the-art venues across all areas of creativity and expect this will be a catalyst for change in Hong Kong, and help to build confidence in the city.
Having been appointed as WKCD Chief Executive Officer in July, you’re now approaching your first 100 days. Does one key achievement stand out?
I believe there is a tangible shift in public perception of this project. It is going to happen. The dreams and aspirations of the people who have been working on it are going to be
realized. I notice increasing support from the community. We have a good opportunity to get the plan in by end of this year, gain approval by 2012, and start digging by 2013. It’s a big vision, and we need to make sure we can encompass the sale of the dream to meet public expectations.
I am energized by Hong Kong and excited by the opportunities WKCD provides, in terms of what we are able to do for Hong Kong itself and, more broadly, in the region and internationally. For a man who was contemplating retirement, this is incredibly exciting.
November
17 2011
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Writing the wrongs - Former lawmaker and international businessman Paul Cheng Ming-fun feels China is misunderstood by the US and hopes to dispels many myths with his new book
By Gary Cheung
Paul Cheng was a lawmaker (top right) and Chamber of Commerce chairman (bottom right).
Why would a 75-year-old businessman spend 20 months of his retirement writing a book on a sweeping topic like the relationship between China and the West?
Paul Cheng Ming-fun, a former Legco member and ex-head of the Hong Kong General Chamber of Commerce, who attended college in the United States and worked for US companies for more than two decades, felt it was his mission to explain his native country to Americans.
"Citizens of the West, particularly in the United States, need to know more about China, which is a rising power," he said. "In fact, even what they think they know may be fuelled by misconceptions and misunderstanding. I hope my book can help clear up misunderstandings about China held by some Americans."
That book, On Equal Terms: Redefining China's Relationship with America and the West, was published this week by John Wiley & Sons (Asia), the American publisher's Singapore-based subsidiary.
Cheng, who published the book under his pinyin name in Putonghua, Zheng Mingxun, says his background makes him an ideal interpreter between the two worlds.
"Having worked for major American multinationals in the US and Asia, I have lived with a foot in both worlds," he said. "I have many friends from the United States and get along with them very well. The tension between the US and China stems from US politics, not its people."
In his book, Cheng disputes some beliefs widely held in the West, for example that the US lost jobs and suffered a huge trade imbalance because American companies relocated production to China.
According to Cheng, most products exported from China are manufactured using materials from around the world; they are assembled in China and then shipped to markets in the West.
"America's trade deficit is with many countries around the world, not just China," he writes. "In fact, the value added in China is marginal; it is not nearly as significant a part of the overall GDP as some may think.
"Consider a product that sells for US$100 in the United States; I would calculate that no more than 10 per cent of that would be likely to stay in China - representing labour for assembling the product - while perhaps another 10 per cent would represent materials imported from various parts of the world."
He says "assembled in China", rather than "made in China", would better describe the products that many Americans find it difficult to do without in their daily lives. "China tends to be merely the final stop in many a multinational's vast global production network," he says. "The most inexpensive link in this chain takes place in southern China, where workers are typically paid less than a dollar an hour to do the soldering, assembling and packaging. If they didn't do it, would it create jobs in the United States?"
Surprisingly, perhaps, for a man who feels so warmly toward America, Cheng offers a vigorous defence of China's one-party rule.
He takes issue with the many Western thinkers who believe every country should adopt a democratic political system, regardless of the nation's history, saying China should not be judged solely on Western values and standards.
In his book, he states: "When the financial crisis first surfaced in the US a few years ago, party politics got in the way of decisions and made that government slow to react. Imagine, a nation such as China with more than a billion people speaking what amount to different languages and living in widely varying circumstances around the country. A proliferation of political parties would result in total chaos nationwide."
But Cheng does see room for subtle change in China, such as allowing more freedom of speech. "Compared with what I witnessed during my visit to China in 1972 - the first after I left the mainland in the late 1940s - the degree of freedom of expression in recent years is much better. You can't expect China to turn into full democracy overnight," he said.
Cheng believes the Chinese government should be more statesmanlike when responding to perceived international provocation as this would help improve Western perceptions of China.
Cheng was born in 1936 in Gulangyu , an island off Xiamen in Fujian . After the Japanese army invaded China the following year, his grandfather took the entire family to Hong Kong.
Cheng was sent to Tianjin after the second world war to attend primary school before returning to Hong Kong to attend high school. He studied at Lake Forest College, a liberal arts institution north of Chicago, in the mid-1950s, then went on to work with US multinationals in New York, Singapore, Bangkok and Hong Kong.
In 1987 he joined Inchcape Pacific, a long-standing British trading company, as an executive director and in 1992 became its chairman. He served as a member of the Legislative Council from 1988 to 1991 and from 1995 to 1998 and was chairman of the Hong Kong General Chamber of Commerce in the intervening years from 1992 to 1994.
In 2005, he was appointed chairman of The Link Management, which operates a listed portfolio of shopping malls and car parks it took over from the Housing Authority. He resigned in January 2007 in protest over actions by the Children's Investment Fund Management of Britain, then the largest investor in The Link, pressuring management to kick out small tenants in favour of large chain stores to obtain higher rents.
Today Cheng is deputy chairman of fashion company Esprit Holdings (SEHK: 0330) and active in a private-equity fund business. He is also co-chair of the foundation board of the East-West Centre, a Honolulu research organisation that promotes relationships between Asia and the US.
Despite the countless articles and books describing the shift of power from West to East and proclaiming that the 21st century belongs to China, Cheng is sceptical.
"Being as familiar as I am with America, I would not write off that country just yet, he said. "All one has to do is attend a National Football League game or college football game to feel the spirit. The American dream is still very much alive, but it is politics that appears to be in the way.
"China is not a military threat [to the US]. It is a tough economic competitor, yes, but Americans are also born competitors."
Cheng said China and the US could join hands to form a dream team for the interests of future generations. In 2010, the US was estimated to have spent US$636 billion on defence, more than eight times China's US$78 billion expenditure.
"Imagine, if the US and China took the lead and rallied other countries to join them in cutting defence spending," he writes. "These funds could be used to address poverty, starvation, disease and climate change - all issues we must address for the sake of future generations."
So does he think his 20 months of hard toil paid off?
"Some of my US friends agreed after reading my book that we [US and China] may not agree on everything, but it's good to have a more balanced view," he said.
November
11 2011
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Hong Kong is offering business
opportunities to Hawaii and the United States ("Hong Kong Reception" at the
APEC 2011 - 5:30 pm - 7:00 pm at Hilton Waikiki on KUHIO (2500 Kuhio
Ave., Waikiki Beach) - Mr.
Gregory So -Secretary for Commerce and Economic Development and Hong Kong CE
Donald Tsang
Hong Kong Chief Executive Donald Tsang has asked the US to grant visa-free access to Hong Kong SAR passport holders.
 Hong Kong CE
Donald Tsang Propose VISA FREE for HK Passport Holders http://vimeo.com/32082553
Rounding up his US trip in Hawaii on November 13, Mr Tsang said he made the suggestion to US Secretary of State Hillary Clinton, who reacted positively, however, no timetable has been agreed so far.
He has also talked about the possibility of abolishing double taxation for Hong Kong-US businesses.
Meanwhile, also at the Asia-Pacific Economic Co-operation meeting, Mr Tsang met with New Zealand Deputy Prime Minister Bill English to discuss the progress of the country's free-trade agreement signed with Hong Kong last year, and the memorandum on education co-operation.
At Mr Tsang's meeting with Chilean President Sebastian Pinera, both sides agreed to enter a free trade agreement to be signed early next year.
 Hong Kong Reception Video http://vimeo.com/32022331
 Hong Kong Reception Video - HK Commerce Secretary Gregory So http://vimeo.com/32083195
Overseas promotion: Secretary for Commerce
& Economic Development Gregory So (left) hosts a reception for Hong Kong
executives and local leaders in Honolulu.
The Secretary for Commerce and Economic
Development, Mr Gregory So speaks at a reception hosted for Hong Kong business
heavyweights and local leaders in Honolulu, Hawaii today (November 11, Honolulu
time). The Chief Executive, Mr Donald Tsang (centre) joins Mr So (second left)
in proposing a toast. Also joining the toasting ceremony are the Under Secretary
for Security, Mr Lai Tung-kwok (second right); Commissioner for Economic and
Trade Affairs, USA, Mr Donald Tong (first right); and Director of the Hong Kong
Economic and Trade Office, San Francisco, Mr Jeff Leung (first left).
 
 
 
 
 
 
 
November
10 2011
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Hong Kong's economy helps create jobs in US: HK Chief Executive Donald Tsang
Hong Kong leader Donald Tsang said the city's financial sector has helped the United States' recovery and created jobs in the largest economy in the world.
Tsang, who is the chief executive of Hong Kong, said on Wednesday that the city's "irreplaceable" role in China's economic reform provided "an additional monetary resource that will help address some of the imbalances that have surfaced here in the US and more lately in Europe".
"We have been given a spearhead role in the internationalization of the renminbi, which in turn will help our country to continue with the reforms and opening-up of its banking and financial services sectors," Tsang said, who had visited New York City and Boston during a recent trip to the US.
The special administration region's top leader said Hong Kong will serve as a "gateway" to improve Sino-US trade. He added that Hong Kong has an expanded economic role in China's 12th Five-Year Plan (2011-2015) with the goal of becoming an international asset management and an offshore renminbi business center.
Tsang said Hong Kong will continue to be the global center of finance and banking, logistics, business services and tourism, which in turn will benefit the city's US partners investing in the metropolis.
The US is Hong Kong's second-largest trading partner and a major investor in the city's economy.
"The Hong Kong dollar maintains its linked exchange rate to the US dollar, as it has done since 1983. We have a long-standing, strong and broad-based relationship, and it is one that I believe will continue to grow," Tsang said.
US exported $27 billion in goods to Hong Kong last year, creating the largest US trade surplus with any single partner that year. There are currently 1,330 US companies based in Hong Kong, of which 840 are regional operations. The number of US companies based in Hong Kong over the past decade has increased 65 percent from 2001.
More than 50,000 American citizens live in Hong Kong and tens of thousands of Hong Kong residents have studied in the US, Tsang said.
"Hong Kong has a pivotal role to play in the future China-US relations," said Martin Indyk at the Brookings Institution, which co-hosted Tsang's visit to Washington.
Donald Tsang will head to Honolulu, Hawaii, to attend the Asia-Pacific Economic Cooperation summit from Nov 11-13.
October
26 2011
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MICE in the Big Cheese in Hong Kong
It’s the height of trade fair season, but the flurry of business activity in Hong Kong right now is no flash in the pan. As the pendulum of international business swings East, savvy operators know that Hong Kong is the place where deals are done.
Hong Kong Tourism Board (HKTB) figures show that meetings, incentives, conventions and exhibitions (MICE) arrivals to Hong Kong reached 725,779 in the first six months of 2011, a year-on-year increase of 10.3 per cent.
HKCEC, located in Hong Kong’s central business district, ended its fiscal year 2010-2011 with record attendance
Trade fair attendances reflect that. The Hong Kong Convention and Exhibition Centre (HKCEC) drew almost six million trade visitors in the fiscal year 2010-2011 – a record number, and a surge of 25 per cent over the previous year. Many fairs expanded – some by as much as 83 per cent – and new ones debuted.
Cliff Wallace, Managing Director, Hong Kong Convention and Exhibition Centre (Management) Ltd (HML), described these results as “a remarkable achievement.”
“Over its 23 years of operation, the HML team has hosted 39,606 events and has collectively served about 70 million buyers, exhibitors, visitors and guests. These events have contributed significant economic benefits to Hong Kong by generating beneficial spin-offs for related industries, created numerous jobs and business opportunities for SMEs, and raised Hong Kong’s international image and reputation,” Mr Wallace said.
Economic Fillip
Allen Ha, CEO of AsiaWorld-Expo Management (left) and Thomas Stanley, Partner (Transactions & Restructuring), KPMG Transaction Advisory Services, announce the results of a study on the venue’s economic benefits to Hong Kong
The economic benefits of trade fairs are quantified in a new Economic Contribution Assessment Report by professional services firm KPMG Transaction Advisory Services for AsiaWorld-Expo. It reveals that exhibition and conference events held at AsiaWorld-Expo alone contributed about HK$13.4 billion to the local economy in 2010 – a 25 per cent increase over 2009.
The report found this economic fillip generated more than 26,000 full-time jobs, not only in the MICE industry, but across many supporting sectors, including retail, hotel and leisure, food and beverage, stand design and construction, and logistics and freight forwarding.
Allen Ha, CEO, AsiaWorld-Expo Management Ltd, said that particularly noteworthy in the KPMG report is the finding that Chinese mainland exhibition visitors typically have among the highest per-visit spend of all regions (US$2,154), about 110 per cent of the average in 2010.
A growing number of overnight international exhibition visitors to Hong Kong are from the mainland, where the economy continues to grow and local buyers are increasingly seeking to source from abroad. Latest HKTB data shows 42.8 per cent of MICE arrivals this year came from the mainland, a 15 per cent jump on last year.
Exhibit and They Will Come
Hong Kong Electronics Fair, the world's biggest electronics event, held at the HKCEC in October, drew a record number of buyers
HKTB Executive Director Anthony Lau expects overnight MICE arrivals will continue to grow in the second half of this year. He said one of the factors fostering this upward trend is the staging of some large-scale conventions and exhibitions, including the recent 2011 Asian Seafood Exposition (held at HKCEC in September), and the upcoming SIGGRAPH Conference and Exhibition on Computer Graphics and Interactive Techniques in Asia, which is expected to draw several thousand participants in December.
“In addition, sustained growth of the mainland economy and exchange rates favourable to major currencies against the Hong Kong dollar are going to bring more meetings and incentive travel activities to Hong Kong, especially from the mainland and other short-haul markets,” Mr Lau said.
Dean Winter, General Manager of Swire’s Upper House and EAST hotels
He added that, through various channels, the MEHK (Meetings and Exhibitions Hong Kong) Office of the HKTB will continue actively attracting more MICE events and activities to the city and providing customised support to event organisers.
Hotels are clearly benefiting from this trend, with high occupancy the talk of the town. Dean Winter, General Manager of Swire Hotels’ Upper House hotel at Pacific Place, Admiralty, and EAST in Quarry Bay, said last year had been “phenomenal” for business, and that this year was proving even better.
“Our timing was very good,” he said. “Coming out of the global recession, we benefited from substantial changes in sentiment.”
Arriving from All Corners
Simon Yip, Regional Director of Marketing, The Peninsula Hong Kong
With his two hotels targeting different market sectors, Mr Winter has noticed that both corporate travellers and entrepreneurs are coming to Hong Kong to do business. “Hong Kong being so regionally well-placed draws short-haul travellers here to hold meetings. Long-haul corporate travellers are transiting through Hong Kong on their way to establish offices in premier Chinese cities, or to look for potential production partners in the second-tier cities. It’s clear that Hong Kong is still very much the gateway to China.”
A trend among overseas entrepreneurs looking to start up in Hong Kong is also apparent in the current economy, Mr Winter added. “Hong Kong’s location and its links to China offer them many benefits.”
Mr. Winter said it’s not just Swire hotels that have had a great couple of years in Hong Kong. “All our competitors are saying so, too.”
Simon Yip, Regional Director of Marketing-China, at The Peninsula Hong Kong agreed. “China attracts many business travellers to this part of the world as one of the few strong performers in the current global economic environment. As a key gateway to China, Hong Kong also benefits from its proximity to this growing market. As a result, many hotels in Hong Kong benefit when there are trade fairs, especially the China sourcing fairs, in town.”
October
23 2011
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Agony and the ecstasy - Donald Tsang says he has had a tough time navigating the politics of office while striving to achieve his goals, but as his term winds down, he savours two achievements that gave him moments of bliss
By Gary Cheung
Former Singaporean prime minister Lee Kuan Yew once mused that being Hong Kong's chief executive was a "thankless job".
If that's true, Donald Tsang Yam-kuen should be thankful for any moment of satisfaction.
The veteran civil servant-turned-politician says that he has had two such moments - both when major policy initiatives were passed by the legislature.
With barely eight months left as chief executive, Tsang insists he has accomplished almost everything he set out to do. A man known for taking pains with details, he said he had delivered most of his pledges since his re-election in 2007.
"If you count it carefully, there were 173 pledges made, and so far I have delivered 169 of them."
One yet to be fulfilled is cutting the profits tax to 15 per cent, a tax break he now considers inappropriate when another global recession looks possible.
His biggest achievements?
"I have felt moments of bliss. I felt nearly heavenly on two occasions, if I may say so," he said in an interview this week. "One was when the Legislative Council eventually passed the legislation on the electoral arrangement for 2012. The second was when it passed the law on a statutory minimum wage. For me, they were some of the high moments of this term."
Despite growing doubts about the governance of his administration after a series of embarrassing U-turns, Tsang vigorously rejected criticism that the government had trouble governing effectively.
"While any governmental process with democracy and openness will have to face the sort of difficulties we do here, I would challenge you to the end regarding the effectiveness of this government to govern.
"In terms of the delivery of services to the public, in terms of managing all the things we have to manage, I think perhaps it is one of the most effective governments on earth.
"With a very highly democratic system in America, or in the United Kingdom, they have difficulties pushing through government policy. It is equally or more difficult with ourselves.
"Look at the sort of things what President Barack Obama is facing, or the problem the UK government is facing, what the heads of most of the governments in Europe are facing in implementing the policies - you have got riots in the street and so on. Are you saying all these are very effective governments?"
In one of his first interviews since moving into his new office in Tamar, Admiralty, the chief executive agreed there was a need for a political alliance to secure stable support for government policies.
"I think for delivery of policies, you need an alliance - a political alliance. For us, it is very difficult," he said. "The chief executive is not a member of a political party and we have a system following the presidential system. We have a direct separation of legislature and the executive. So we always have this tension between the two.
"In the US it's demonstrated in the party system of the Democratic Party and the Republican Party, so at least you can ensure you have a certain amount of support for the policies you put through. The problem we have is when we formulate a policy it must be a very popular policy which will have the majority support from the people. Then the policy is put to the Legco in terms of a law or a proposal for resources with a lot of public backing. Otherwise we are in trouble."
As a way to stabilise support for government initiatives, veteran politicians Allen Lee Peng-fei and Chung Sze-yuen have suggested forming coalition governments consisting of politicians from pro-government and pan-democratic parties.
Currently, representatives of the Democratic Alliance for the Betterment and Progress of Hong Kong and the Federation of Trade Unions have seats in the Executive Council. But some non-official Exco members have raised concerns about a lack of input in the early stages of policy formulation.
The administration was forced into making U-turns when both the budget and the bill to scrap Legco by-elections were threatened by some government-friendly legislators.
Tsang defended the government's controversial decision in March to give HK$6,000 to all adult permanent residents by saying the administration had no better way of dealing with the surplus after its original proposal to inject money into people's Mandatory Provident Fund accounts came under heavy criticism.
"You can see how this is being embraced. People are lining up to register for the HK$6,000," he said.
The chief executive recognises the challenges posed by vocal minorities.
"If a policy can receive 70 per cent support it will be a marvellous policy," Tsang said. "But that means you have 30 per cent opposition and that is translated to over two million people. And some of them may have their own way of coming out with a very, very strong voice against it.
"So we have to accept that this is part of the problem of politics, but I agree with you that we have to think hard in the future.
"Political alliances will have to be made, otherwise things will get bogged down - not because of lack of reasons, not because of lack of justification, and not even the lack of sufficient public interest, but rather simply politics."
Tsang will step down as chief executive in June, spelling the end of his 45-year public service. What was his toughest time as chief executive? "I will tell you later, not now," he said.
Financial secretary during the Asian financial crisis in 1997-98, Tsang is always vigilant about the risks of global financial turmoil. "I personally look at the performance in Europe and in America every day and every night and early every morning. I wake up at 4am to look at how the markets have fared."
The chief executive said the government was always prepared for another global recession: "If you look back at what I said at two question-and-answer sessions in Legco, I warned about a recession. I was laughed out of court at the time. 'Oh, a silly man, how could be there a recession'. I still maintain the risk is increasing."
Tsang, who has acknowledges he sometimes looks stern and his smile a bit stiff, showed he has a sense of humour when talking about a modern Chinese painting entitled Conversation in Two Parts, that was hanging on the wall of the room where he was interviewed. Was it an oblique reference to tensions between government and media?
"It's a little joke I play on my guests as well," he said. "By listening to what you said, I am trying to answer every question. I don't think we are just chickens and ducks talking in different dialects."
October
22 2011
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An honest public servant who just wants a quiet life
By Tanna Chong
When Donald Tsang Yam-kuen completes his tenure as chief executive on June 30 next year, he'll have notched up 16,240 days as a public servant - 2,567 of them in the 'pressure cooker' office of the chief executive.
That is almost half a century. It is hardly surprising, then, that the man they call "Bowtie" - because of his trademark choice of neckwear - is planning a quiet retirement.
Switching to a lucrative job in the private sector is a route well travelled by many civil servants, but that option is out for Tsang, who says he wants a more private life after he takes his final bow.
"After my retirement, I will certainly not engage in any commercial activities. I do not want any directorships," said Tsang in the drawing room of the new Chief Executive's Office at Tamar.
"I have a lot of hobbies which I want to pursue more seriously. I want to do more photography and I want to see my grandchild more often than now and play with her. I want to learn something - new things."
Tsang's younger brother, former police commissioner Tsang Yam-pui, became a managing director of NWS Holdings (SEHK: 0659) (now a listed company) and a chairman of Newton Resources after retiring in 2004.
Tsang's former colleague Frederick Ma Si-hang, who resigned as secretary for commerce and economic development in 2008 because of a brain tumour, joined the listed China Strategic Holdings a year later as its chairman.
Tsang said learning the importance of being silent would be his retirement task, and he would leave public life to do just that.
"I must leave for a while so that I won't be grilled by people like you and others ... I don't want to comment on anything done by my successor. Mr Tung [Chee-hwa] has set a very good example and I will do the same," said Tsang, referring to his predecessor.
However, he added: "I will be living in Hong Kong. My home is here."
Proposing the "Guangdong Scheme" in his last policy address, which allows elderly Hongkongers to claim their old age allowance while residing in Guangdong, the 67-year-old said that might be a good choice for his retirement as well.
"Good idea. But I am not qualified for the old age allowance yet," said Tsang, who will have to wait two more years before he can claim the benefit, which is not means-tested.
Asked what he would like to be remembered for after 45 years as a public servant, "honesty" was all he would ask for. Let the public decide the rest, he said.
"On the internet, there are tonnes of materials written about me, and there is YouTube as well. It is very difficult for people to forget me," he said. "So how exactly I will be remembered will be a matter for people to decide. All I want is [to be remembered as] a public servant, an honest public servant of Hong Kong."
September
15 2011
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HKMA: banking outlook remains bright with overseas collaboration
The future of Hong Kong's banking industry remains bright if local lenders are willing to collaborate with overseas banks in offshore yuan trading, said Norman Chan Tak-lam, chairman of the Hong Kong Monetary Authority.
Local lenders must think about how to work with their foreign counterparts in providing yuan products and services, Chan said in an interview after attending an investment forum in London earlier this week.
"Not all overseas companies are willing and able to manage offshore yuan accounts," he said. "How do we access the market for small- and medium-sized companies? They may go to banks in London. If the banks in Hong Kong work with their counterparts in London in providing the yuan capital, then our catchment is enlarged."
Hong Kong boosts the largest off-shore yuan capital pool, with deposits of more than 570 billion yuan (HK$695.8 billion) in July - a more than eightfold surge from 62.7 billion yuan in 2009.
Yuan deposits in Hong Kong are expected to continue rising, albeit at a slower rate after a period of rapid expansion in the last two years, Chan said.
However, he stressed that no single market, including Hong Kong, can dominate the offshore yuan business, given the geographic diversity of the international offshore yuan market.
Nevertheless, prospects for the city's banking sector remain "attractive" despite recent job cuts as Hong Kong exploits the yuan's internationalisation, he said.
The yuan's internationalisation has accelerated because of the debt crisis in Europe and America, Chan said. Between January and August, 52 Asian and European firms - such as Unilever, Volkswagen and Tesco - had issued 55.7 billion yuan worth of yuan-denominated bonds in Hong Kong.
The finance ministry had issued 20 billion yuan of bonds in the same period.
That should speed up the development of the yuan bond market in Hong Kong, as it should provide a reference for a benchmark yield curve in the bond market, Chan said.
September
9 2011
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Hong Kong IPO Reforms Build Bridges made Japanese companies listing at Hong Kong Stock Exchange possible
Hong Kong Stock Exchange is flying the flag for Japanese IPOs after reforms have made listings possible
Japanese online financial services firm SBI Holdings launched on the Hong Kong Stock Exchange (HKEx) in April, marking another milestone for the world’s busiest bourse by market value. It was the first time a Japanese company had been able to list in Hong Kong.
The listing resulted from a series of regulatory breakthroughs, which experts say should pave the way for more listings of Japanese companies on the HKEx. International law firm Freshfields Bruckhaus Deringer calls the launch “trailblazing.” Deloitte sees it as an example for others.
Freshfields advised SBI on its US$167 million global offering of Hong Kong Depository Receipts (HDRs) and its secondary listing in Hong Kong. SBI, which also listed on the Tokyo and Osaka stock exchanges, primarily operates in five core business segments, including asset management, brokerage and investment banking, financial services, and housing and real estate.
Significant Milestone
Teresa Ko, China Managing Partner, Freshfields Bruckhaus Deringer
Teresa Ko, Freshfields’ China Managing Partner, said the listing marked a significant milestone in Hong Kong's goal to attract foreign incorporated companies to list on its exchange. “SBI is the first Japanese incorporated company to list on the HKEx. Whilst a secondary listing, SBI raised fresh capital by being the first company ever to have offered HDRs in Hong Kong.”
The regulatory breakthroughs that enabled the launch should pave the way for more listings of Japanese companies on the HKEx, Ms Ko continued.
'We feel honoured to have helped SBI complete its fundraising and listing against uncertainty and market volatility following the recent earthquake and tsunami in Japan. Under the sponsorship of Daiwa Capital Markets, SBI has blazed a trail, which we hope will inspire and encourage other companies to list in Hong Kong.”
Junzaburo Kiuchi, partner in Freshfields’ Tokyo office, said there are very few companies with dual listings in Japan as many international issuers have left the market. “These deals are tough because two very different sets of rules have to be made to work together.”
CEO Endorsement
Junzaburo Kiuchi, Partner, Freshfields’ Tokyo office
At a media briefing in April, Yoshitaka Kitao, SBI’s CEO, said he had been preparing for the Hong Kong offering for more than a year. The Japanese market had been one of the worst performers in the past decade, whereas Hong Kong was more efficient and yielded greater returns, he said. “I would rather be listed in Hong Kong than in Japan and I know a lot of Japanese companies that also want to list here,” Mr Kitao told reporters.
The successful listing of SBI in Hong Kong has also marked the recognition of Accounting Principles Generally Accepted in Japan (JGAAP) in the Hong Kong market. Edward Au, National Co-leader of Public Offering Group, Deloitte China, said this sets “an important example for similar listings in Hong Kong in the future.”
He explained that, until now, barriers were in the way. “Japanese companies, in general, are interested in listing in Hong Kong but most of them remain cautious given the difference in rules and regulations. In the past, they worried that the cost of a Hong Kong listing was higher because of the GAAP difference and bilingual disclosure requirement. They also worried that the IPO process of a secondary listing in Hong Kong would be as lengthy as a primary listing.”
Paving the Way
Yoshitaka Kitao, CEO, SBI Holdings
While the Accounting Standard Board of Japan, the pacesetter in Japan's accounting standards, is working on the convergence of JGAAP with International Financial Reporting Standards (IFRS), it is expected that the mandatory use of IFRS as the basis for consolidated financial statements by listed companies in Japan may not start until 2015 at the earliest, Mr Au said.
Deloitte has paved the way by being the first accounting firm in Hong Kong to map out and bridge the different accounting requirements between the Japan and Hong Kong bourses.
“We served as the bridge between the issuer and HKEx. We assisted the company to identify and list the material differences between IFRS and JGAAP,” Mr Au said.
“We also provided lectures to Japanese companies in assisting them to understand the difference between IFRS and JGAAP and the disclosure requirements under the rules of HKEx.”
Edward Au, National Co-leader of Public Offering Group, Deloitte China
Mr Au said Japanese companies want to list in Hong Kong because of its robust IPO market. Now, they can realise the benefits.
“The successful listing of SBI in Hong Kong has set the scene for Japanese companies tapping into one of the most liquid capital venues in the world. By listing in Hong Kong, Japanese companies can gain access to the deep capital pool, not only at the time of listing, but also at the later stages from follow-on offerings. According to statistics from HKEx, the total amount of follow-on offerings in the first half of 2011 was US$17 billion.
“Also, China is currently the second largest economy in the world. International companies with a China nexus will opt for a listing in Hong Kong as it can raise the brand eminence on the mainland, if not, in Asia. And that may result in a further business expansion in the China market.”
Deloitte expects more Japanese companies will list on the HKEx by the end of the year. It says these companies “are mainly from the consumer and retail as well as mass market sector.”
Healthy Pipeline
Noting the overseas companies to have listed on the HKEx this year – Samsonite, Prada and Glencore to name a few – Deloitte says it is obvious the local market continues to attract and welcome overseas listings.
“However, we remain cautiously optimistic on the performance of the Hong Kong IPO market in the second half of 2011 since challenges arising from the global economy cannot be overlooked.
“We have to keep an eye on inflation and the tightening policies in China, the European debt crisis and the condition of the US economy after QE2.”
September
6 2011
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Chateau Lafite Sale Tops $500,000 By Jake Lee
A phone bidder from China took home 300 bottles of Château Lafite-Rothschild, the most expensive single lot this year.
Bundled into a single lot, 300 bottles of Château Lafite-Rothschild sold over the weekend for $539,280 to an anonymous Chinese phone bidder at a Christie’s auction in Hong Kong, making it the most expensive single lot this year and boding well for a slew of autumn sales in the city.
While normal lots in top-tier wine auctions are typically made up of around a case, Lot 44 comprised 25 cases of Lafite from every year between 1981 and 2005, averaging around $1,800 a bottle. The entire two-day sale raised $7.6 million, with Burgundy’s Domaine de la Romanée-Conti, Moët & Chandon champagne from 1911, and Bordeaux’s ultra-rare 1982 Le Pin making up other top slots.
“It was an extraordinary Lafite collection, and the seller actually trades wine for a living,” said Christie’s Charles Curtis, head of wine for Asia, who estimated the vendor received a 20% premium by selling it as a multi-year collection, or vertical. “We had several bidders, and they were all from China, and they are just getting into wine.”
Zachys kicks off next with a two-day sale this weekend at the Mandarin Hotel, forecast to raise $10 million, and joins Christie’s in selling verticals (also called instant collections), albeit on a lesser scale than the 300-bottle Lafite extravaganza. Examples include a set of 48 bottles from various years of Bordeaux’s Château La Mission Haut Brion, and 28 bottles plus a magnum from Napa Valley’s Shafer Vineyards.
These bottles can be used to “host a lavish evening with an incredible wine tasting, expand your palate into truly understanding the depth and breadth of some of the best wineries, or highlight these verticals as a centerpiece in your collection,” says Zachys.
Acker Merrall & Condit is holding a two-day, $10 million-plus sale on Sept. 16 and 17, with Burgundy wines ranking as the most expensive lots. It will sell an extensive array from Champagne’s tiny producer Salon, including a single 1955 bottle valued at up to $3,000 — an unusual offer for Hong Kong, which tends to prefer red wines.
The auction house is also selling sets of highly collectable Château Mouton Rothschild, which selects different artists each year to design its label. Lot 799 offers a single bottle from almost every year between 1958 and 2007, for a top estimate of $45,000.
Similar to other auctions, a champagne brunch awaits bidders attending the Grand Hyatt for Spectrum Wine Auctions’ sale on Sept. 23 and 24, featuring Bordeaux and Burgundy.
Ending the monthlong series of sales is Sotheby’s two-day, $11 million sale in early October, with highlights including a sale of Bordeaux’s “Ultimate Nine” that uses the “Five Star Provenance” system — wines directly from the châteaux, stored in professional storage throughout their lifetime, and kept in original wooden cases with tamper-proof seals.
September
1 2011
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Creative Collective - Hong Kong is a magnet for Western creative professionals looking to tap Asia’s booming economy
 VIDEO http://www.vimeo.com/28490574
Creative types have long been drawn to Hong Kong’s dynamism, and with a job market that is vibrant across a wide range of sectors, the city is more appealing than ever.
To date, about 32,000 ventures related to creative industries have been established in Hong Kong, employing 176,000 practitioners. Such businesses range from those involved with film, television, music, design and architecture, to those creating comics, animation, games and digital animation.
Initiatives such as Create Hong Kong, a government office launched in 2009 to promote the growth of creative industries, have furthered the sector’s development in recent years. The office is responsible for the administration and management of various funding schemes related to creative industries, among them CreateSmart, DesignSmart and the Film Guarantee Fund. As at end of May 2010, projects worth HK$43 million had been approved for funding.
Hong Kong is a magnet for Western creative professionals looking to tap Asia’s booming economy
Among the early movers to identify Hong Kong’s potential was American advertising agency Leo Burnett. The firm was established in Hong Kong in 1965 “with a handful of staff and one client,” according to Lilian Leong, Managing Director of Leo Burnett Hong Kong. Today, the operation has 208 full-time employees. The company is growing at a double-digit rate, delivering creative services not only to the Hong Kong market, but across Greater China and the Asia-Pacific region.
Ms Leong said creative professionals looking to expand their careers are targeting the city because it is at the centre of the world’s most vibrant economy.
“Hong Kong is fortunate enough to be at the intersection of the most important economic forces in the world right now,” she said. “On the one hand, the United States and Europe are battling with recession and debt,” noting that Europe faces the added threat in Portugal, Italy, Greece and Spain.
“The effects from these problems are certainly felt in Hong Kong, but mainland China’s economic future has far more upside. Its continuing development is also helping bring prosperity to a host of other economies in the Asia-Pacific region. “Overall, there’s a sense of positive sentiment and dynamism about the Hong Kong economy that other developed economies are not experiencing.”
Healthy Competition
Lilian Leong, Managing Director, Leo Burnett Hong Kong
In the current economic climate, upping the ante in terms of marketing and branding has become a commercial imperative of any business, Ms Leong continued. This has been good news for Hong Kong’s advertising sector in particular.
“As the city has developed rapidly over the past 20 years, the advertising industry has grown with it. We’ve seen the scale of the economy grow, bringing more money, more brands, more competition. That’s incredibly healthy.
“We’ve also seen more creative advertising that changes human behaviour. Campaigns are better put together now than they have ever been. The messages have more finesse and more substance. Campaigns now have real appeal on a very human level. There’s a lot of world-class work being done in Hong Kong.”
“An Exciting Market”
Michael Hoare, Reputation Director, Greater China Region, Leo Burnett
The current vibrancy of the industry drew Australian Michael Hoare to switch from journalism to advertising. The Perth expatriate joined Leo Burnett Hong Kong in April 2011.
“I was attracted to the opportunity to take up a regional role, and to work in a developing market where there is real potential,” Mr Hoare said.
“Professionally, the scope is vast. In my career across Australia, Singapore and Europe, I have never come across such a bunch of go-getters as I found in Hong Kong. Things happen here. It’s a city populated by people who want to get ahead, and are career-driven. Particularly for a white-collar professional from abroad, Hong Kong is an exciting market to be in.”
Mr Hoare said the Hong Kong experience “certainly benefits” his career, especially as a stepping stone to opportunities around the region.
“Hong Kong attracts a lot of blue-chip, top-tier companies that have a global footprint, which you wouldn’t normally have exposure to elsewhere. Hong Kong experience is invaluable in dealing with multinational companies and the lifestyle afforded to expatriates is amazing. It’s a privilege to have this opportunity.”
Big Fish in Small Pond
Candace Campos, Founder, Candace Collective
American designer Candace Campos took advantage of Hong Kong’s “hot opportunities” to start her own business. “I never intended to move to Hong Kong,” explained Ms Campos, founder of Candace Collective, an interiors and graphics business.
“I travelled here three times a year for business, and during those trips people started asking if I would freelance,” Ms Campos said. “I came for a few months to test the market, and had so many job requests I decided to incorporate my business here.”
She moved from California in 2008, and success soon followed. “My first interior renovation made it on the cover of Home Journal and 15 other publications after that.”
Ms Campos believes overseas designers are in demand because the US and European markets are “saturated” with Western design, whereas in Hong Kong, customers can’t get enough. “I bring my influence from the US and it is very well received. I think my interior design style is something fresh and different for the Hong Kong market.”
Noting that she “can’t keep up with the demand,” Ms Campos says she is able to choose which jobs to accept. “In Hong Kong, I feel like a big fish in a small pond – I can stand out with my style. In New York or Los Angeles, I would get lost among everyone else.”
Hong Kong projects on Ms Campos’s resume also help to build her global brand. “When I travel back to the US, people are impressed by what I have created in Hong Kong. The city has clout internationally.”
Her business is primarily interior design, which is where Hong Kong delivers another plus. “Being so close to production in the Chinese mainland means I have access to every material you can think of, and a very short lead time for production. This helps with cost as well.”
Drawn to the Light
Michael Young, Founder, Michael Young Ltd British product designer Michael Young says intuition brought him to Hong Kong. He said he came to the city in 2006 intending to use Hong Kong as an industrial base “because I realised that everything was here.”
“I landed there one day and stayed at the Peninsula hotel. I was in the pool and looking at the neon signs and it was just obvious to me this was the place to be.”
Since then, Mr Young has collaborated with up-and-coming companies in Hong Kong, as well as international brands that are keen to sell to Asia.
“I love the people and the technology and the speed. I’m fast in my way of working, and Hong Kong offers me all of that.”
August
31 2011
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Hong Kong: China’s RMB Center
Speaking at a forum on China’s 12th Five-Year Program, China’s Vice
Premier of the State Council Li Keqiang unveils new economic initiatives to
strengthen Hong Kong’s developing role as the mainland’s renminbi center
Beijing has unveiled a raft of new economic measures to boost Hong Kong’s
status as an international financial centre, and help Hong Kong companies gain a
stronger foothold into the Chinese mainland market. The mainland’s Vice
Premier of the State Council Li Keqiang announced the latest Central Government
initiatives during a visit to Hong Kong earlier this month. Mr Li said it was in
the interests of all concerned that Hong Kong continue “to bring out the
unique advantages it has developed over the years and play its irreplaceable
role in the mainland’s reform, opening-up and modernization drive.”
The new initiatives will further open up the mainland market to Hong Kong’s
services industry. It will also upgrade Hong Kong’s standing as an
international financial capital, expanding Hong Kong’s role as an offshore
renminbi centre.
Green Light for Mainland Equity Investors
More mainland companies will be allowed to sell renminbi bonds in Hong Kong
under new measures announced by the Central Government
Of the measures unveiled, 12 are related to financial services and the
development of the offshore renminbi market. One will allow mainland investors
to invest in Hong Kong stocks through the long-awaited index-tracking Exchange
Traded Fund, which will be launched this year. Another scheme, allowing
companies to settle trade in renminbi in 20 provinces, will be expanded
nationwide.
More mainland companies will also be allowed to sell renminbi bonds in Hong
Kong. Mr Li, during his visit, officiated at the launch of the third issuance of
Rmb20 billion worth of mainland sovereign bonds in Hong Kong, the largest to
date.
Industry representatives believe the move will reinforce Hong Kong’s role as
China’s renminbi centre. “Encouraging more mainland enterprises to issue
yuan bonds in Hong Kong will help diversify yuan-denominated products in the
city,” Standard Chartered Bank (Hong Kong) Chief Executive Benjamin Hung was
quoted in The Standard, a Hong Kong daily newspaper.
“China is speeding up its pace of internationalising the currency by these new
measures,” Andrew Fung, head of treasury and investment at the Hang Seng Bank,
told the South China Morning Post. “Most importantly, the Vice-Premier has
confirmed Hong Kong’s role as an offshore yuan trading centre for China.”
Free Trade by 2015
Vice Premier Li Keqiang checks out the day’s trading results during a visit
to the Hong Kong Stock Exchange
In addition, the latest supplement of the Hong Kong-mainland Closer Economic
Partnership Arrangement, expected to be signed in October, will broaden Hong
Kong’s access to mainland services industries. “The target is to realise
free service trade with Hong Kong by the end of the 12th five-year period,” Mr
Li said at a Hong Kong forum on China’s 12th Five-Year Program. Sectors to be
opened up include banking and insurance, allowing Hong Kong companies to set up
across the border.
“Taken as a whole, this comprehensive range of new measures will provide
substantial opportunities across a wide spectrum of Hong Kong business
activity,” said Hong Kong Chief Executive Donald Tsang. “This will help us
maintain economic growth at a time when global economic conditions are
fragile.”
Services Advantage
Financial Secretary John Tsang said that moves to open up the mainland services
industry offer huge advantages to Hong Kong companies. He noted that Hong
Kong’s services industry makes up 93 per cent of the city’s GDP.
“China lags far behind developed countries by 20 per cent, where the service
industry on average accounts for about 70 per cent,” he said. “For those
companies that want to tap the mainland’s market and help lift the industry
standards higher, there is a huge and long-term opportunity for Hong Kong, as
the services sector is one of our strengths.”
August 20 2011
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星島社論: 北京挺港大禮兼重民生特色
中國國務院副總理李克強送給香港一籃子大禮，連串政策和措施，特色是盡量照顧到香港上中下階層，由長遠發展策略重中之重的人民幣離岸中心、惠及中小企和專業人士的開放市場，到與小市民生活息息相關的肉類和蔬果供應，惠及層面廣泛、直接和全面。
身為「十二五」旗手之一的李克強，十七日在公開論壇上，指出香港擁有的種種優勢，在國家「十二五」時期發展的進程中將顯出重要價值。他宣布的三十六項支持香港經濟社會發展的政策措施，大部分都是利用香港的優勢與內地互補，謀求互利雙贏。
此中最明顯的是透過逐步放寬香港和內地人民幣資金的流通、建立在港發行國債的常設機制等連串措施，大幅擴展香港的人民幣離岸中心業務，壯大香港在全球三大國際金融中心中不易取代的特色。香港金融及相關行業明顯受惠，內地則可以利用香港這個較易控制風險的平台，推進人民幣國際化。
對於中小企和專業人士來說，北京以四年後的「十二五」末期，作為內地對香港基本實現服務貿易自由化的目標時間，而今後對外商談自由貿易區時，會更多兼顧香港的利益和訴求。透過這些措施，北京不但進一步向港商和專業人士開放內地市場，為內地引進優質服務，還會協助港商鞏固和發展海外市場，令香港不致因缺乏談判自由貿易區的籌碼而被邊緣化。
連同其他金融和經貿政策措施，李克強今次送的大禮豐富多采。北京早前通過「十二五」規劃綱要，雖然特設專章論及香港，但香港社會並不清楚當中所涉及的廣度和深度。李克強利用這次訪港的機會，權威性闡述「十二五」規劃為港商及港人提供的各方面機遇。
值得注意的是，北京今次宣布的惠港措施，不只涉及長遠重要策略層面，還具體觸及基層民生。這包括確保向香港穩定供應糧食、肉類、蔬果，有助紓緩食品加價壓力；「西氣東輸」提前到明年向港供應天然氣，有助減輕發電空氣污染；讓更多內地高校免試招收香港學生。這些都是可以直接惠及市民的項目。
北京過去的挺港大禮，以開放內地居民到港自由行，最能夠立竿見影讓基層感受到當中的好處。一些策略性項目，例如建立兩地更緊密經貿安排，對香港經濟發展可能更加重要，但是首先受惠的是商界和專業人才，逐漸透過財富的滴漏效應，增加就業機會，惠及基層大眾，要一段時日才見效。
今次李克強的送禮特色，則是盡量照顧各階層的利益，希望升斗市民都能夠直接感受到好處。這次北京在港發行二百億元人民幣國債，就符合這個特色。純粹從經濟效益來計算，北京根本毋須向散戶發債，北京仍然另留五十億元，以一厘六的息率供散戶認購，明顯是不欲讓財團獨享利益，小市民自然樂於可以即時分享到發展人民幣離岸中心的好處。
「十二五」規劃的主要目標是發展經濟，改善民生。香港與北京尋求合作，當然是抓大放小，集中爭取重要領域突破和可以創造互利雙贏的方案，反而北京今次提出的措施，設想的範圍廣泛，反映領導人並非只是被動回應香港訴求，還經過細心研判，比以往注重讓基層分享到國家經濟發展的成果，這些禮物的金錢價值比不上金融上的互利合作，但產生的社會效果，卻隨時會有過之而無不及。
Sing Tao Editorial: Beijing's Gift to Hong Kong focus on the people's livelihood (Chinese to English via Google translate)
Chinese Vice Premier Li Keqiang gift basket sent to Hong Kong, a series of policies and measures, special care of Hong Kong as far as possible on the middle and lower classes, the most important long-term development strategy for the renminbi offshore center for the benefit of SMEs and professionals open market to ordinary people's lives, with meat and vegetables supply for the benefit of the broad direct and comprehensive.
As a "five-second" standard-bearer, one of Li Keqiang, 17 in an open forum, pointed out that Hong Kong has many advantages in the state, "1025" period will show the process of developing an important value. He announced thirty-six support Hong Kong's economic and social development policies and measures, most of them are the use of complementary advantages of Hong Kong and the Mainland, to seek mutual benefit and win-win situation.
Herein the most obvious is through the gradual relaxation of Hong Kong and the flow of renminbi funds, government bonds issued in Hong Kong to establish a permanent mechanism, a series of measures to substantially expand Hong Kong's renminbi offshore center operations, growth of Hong Kong in the three largest international financial center features easy to replace. Hong Kong's financial and related industries benefit significantly, Hong Kong, the mainland can be easier to control risk to use the platform to promote the internationalization of the RMB.
For SMEs and professionals, Beijing to four years after the "five-second" end, as the Mainland to Hong Kong trade in services liberalization, the basic goal of time, and discuss the future of foreign free trade zone, it will further take into account Hong Kong interests and aspirations. Through these measures, Beijing not only to businessmen and professionals to further open the mainland market, the introduction of quality service for the Mainland, Hong Kong will help to consolidate and develop overseas markets, Hong Kong will not negotiate free trade area due to lack of chips have been marginalized.
Together with other financial and trade policy measures, Li Keqiang, this colorful gift sent. Beijing earlier through the "five-second" Plan, although the special chapter deals to Hong Kong, Hong Kong is not clear which covered the breadth and depth. Li Keqiang advantage of this opportunity to visit and authoritative exposition, "second Five-Year Plan" for the Hong Kong and the Hong Kong people of various opportunities.
It is noteworthy that Beijing announced that the benefits of this port measures, involving not only an important long-term strategic level, but also specifically touches the grass-roots people's livelihood. This includes ensuring a steady supply of food to Hong Kong, meat, fruits and vegetables can help to ease pressure on food fare; "natural gas" to Hong Kong early next year, the supply of natural gas will help reduce the generation of air pollution; exemption to allow more mainland colleges and universities to recruit Hong Kong students. These are the people can directly benefit the project.
Beijing last Tinggang gift to open the free exercise of mainland residents to Hong Kong, most of them can feel the immediate benefits to the grassroots. A number of strategic projects, such as the two places closer economic and trade arrangements, Hong Kong's economic development may be more important, but the first to benefit of the business community and professionals, and gradually drip through
财富 effect, increasing employment opportunities and benefit the grassroots, to a time was effective.
Li Keqiang, the gift of this feature, it is best to look after the interests of all strata, hopes ordinary people can directly feel the benefits. The Beijing twenty billion yuan in treasury bonds issued in Hong Kong, on line with this feature. From a purely economic terms, Beijing did not issue bonds to retail investors, Beijing still leave another 55 billion to an interest rate determined for six retail subscription, obviously do not want to let the consortium exclusive interests, ordinary people can naturally be happy to immediately sharing the benefits of renminbi offshore center.
"Twelve Five Year Plan" the main objective is to develop economy and improve people's livelihood. To seek co-operation between Hong Kong and Beijing, of course, encounter, and focus on breakthroughs in key areas for mutually beneficial win-win solution can be created, but Beijing has proposed measures, envisaged a wide range, reflecting not just passively respond to the leaders of Hong Kong demands, but also carefully judged, more than ever to pay attention to the grassroots level to share the results of national economic development, the monetary value of these gifts not as financially beneficial cooperation, but the social effects, but it is worse than at any time.
August 19 2011
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Chinese Vice Premier Li Keqiang stuns university with promise to let 1,000 more students and academics study on the mainland
By Ng Kang-chung and Peter So
HKU gets wider path to mainland
China - Vice-Premier Li Keqiang (center) waves yesterday during an appearance at Hong Kong University's centenary celebration.
HKU was the University attended by the founding father of the Modern China Dr
Sun Yat-sen where he obtained his medical degree
Vice-Premier Li Keqiang (center) waves yesterday during an appearance at Hong Kong University's centenary celebration.
Beijing surprised Hong Kong University during its 100th birthday celebration yesterday with a new
program to dramatically expand opportunities for its students and professors to study on the mainland.
The plan - announced by presumptive premier-in-waiting Li Keqiang during a speech to commemorate the university's centennial - would allow as many as 1,000 students and academics to participate annually in exchange
programs and research projects with mainland educational institutions.
"The central government will set up specific funds to support 1,000 students and teachers of the University of Hong Kong yearly to go to the mainland to study, exchange, and launch scientific research," Li told 600 guests gathered in Loke Yew Hall.
"What is more, the country will also support the launch of comprehensive and in-depth co-operation between other Hong Kong and mainland higher education institutions in order to help teachers and students get a better understanding of the mainland and
familiarize them with the situations of the country," the vice-premier added.
The program, which Li said would start next year, appeared to catch everyone in attendance unaware, even HKU administrators.
Pro-Vice-Chancellor Professor Amy Tsui Bik-may said the university was not given advance word of the announcement. She called it a pleasant surprise because local professors often had difficulty even applying for mainland funds.
"There are already many exchange programs for students and academic staff," Tsui said. "This time, it includes research collaboration. It is also a recognition of the achievements of Hong Kong scholars in scientific research."
The speech was also notable for Li's occasional use of English between praise for the university, where most classes are taught in the language of its British colonial founders. Mainland leaders rarely speak in any tongue other than Chinese.
"HKU is for Hong Kong, attracting talent and educating people to promote Hong Kong's prosperity
(SEHK: 0803) ," said Li, who is widely expected to succeed Premier Wen Jiabao after a 2013 leadership shuffle. "HKU is for China. It has become a key higher-education institution in China, playing an increasingly important role in China's development and its integration with the world."
Li said that he had gained a deeper understanding of Hong Kong by the end of his three-day visit.
"Hong Kong's role in the mainland's economic reform and opening up is irreplaceable," he said, praising Hongkongers as "dedicated and professional", and Hong Kong society as "open, pluralistic and vibrant".
August 19 2011
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China's Vice Premier Li Keqiang Unveils Hong Kong Yuan Measures
By Chester Yung and Fiona Law
In Beijing's latest move to increase its currency's standing internationally, top Chinese leaders unveiled measures to bolster Hong Kong's status as a yuan-trading center.
On an official visit to Hong Kong, Chinese Vice Premier Li Keqiang on Wednesday announced several initiatives aimed at easing the flow back into mainland China of so-called offshore yuan traded in Hong Kong. He also announced plans to launch funds that would let mainland Chinese investors trade Hong Kong stocks. China's central bank governor, Zhou Xiaochuan, said the range of Chinese companies able to issue yuan debt in the territory would be expanded.
Analysts said the measures could generate even more demand for yuan-denominated assets in Hong Kong, which is part of China but operates under its own laws and with its own currency.
Mr. Li, who was joined in Hong Kong by Mr. Zhou and other high-ranking mainland officials, is widely seen as a leading contender to succeed Premier Wen Jiabao in 2013.
Currently China keeps strict controls on the yuan, also called the renminbi. By serving as a center for trading the yuan outside mainland China, Hong Kong has become a key player in China's push to give its currency more international presence.
Several of Wednesday's initiatives were expected, and it was unclear how quickly any would be implemented. For example, businesses and bankers eagerly await rules allowing proceeds from yuan debt offerings to be plowed back easily into China. Mr. Li suggested Beijing intends to follow through, but didn't say when.
Still, the latest move from China "takes yuan internationalization to the next stage," HSBC Holdings PLC said in a note Wednesday.
"This is the strongest endorsement yet of using Hong Kong as the platform for the increased use of renminbi internationally," said Julia Leung, Hong Kong's undersecretary for financial services and the treasury.
The measures come at a time of uncertain economic outlook for Hong Kong, whose recovery from the 2008 financial crisis has slowed in recent months amid volatility in the U.S. and European markets, compounded by surging inflation and intensifying competition with financial centers elsewhere in Asia.
In recent years, China's central government has implemented a number of policies that have helped boost Hong Kong's economy, in what some critics in Hong Kong call an attempt to quiet demands for greater democracy.
"Political reform is the most pressing issue in Hong Kong," said Albert Ho, chairman of the city's biggest opposition party. "It's a shame we didn't get to hear their thoughts on this front" during the officials' visit.
In his address Wednesday morning, Mr. Li said financial firms in Hong Kong will be allowed to buy domestic Chinese securities with the offshore yuan they hold. The total limit will be 20 billion yuan (US$3.13 billion)—small given the more than 500 billion yuan on deposit in Hong Kong's banking system as of June—but analysts believe it could be increased in the future
Mr. Li also announced plans to allow exchange-traded funds holding Hong Kong-listed stocks to be sold in mainland China, making it easier for mainland investors to gain exposure to Hong Kong's equities market.
"This is significant as, for the first time, a high-ranking Chinese official is endorsing a channel for domestic funds to invest in Hong Kong stocks, which could support the city as a wealth-management center and reinforce its financial-hub status," said Raymond Yeung, senior economist at ANZ Banking Group. It wasn't clear when the Hong Kong ETFs, which have been expected for some time, would actually launch.
Also on Wednesday, People's Bank of China Gov. Zhou Xiaochuan said China will allow nonfinancial companies from China to issue "dim sum" bonds, or yuan bonds issued in Hong Kong. The total issuance allowed for financial and nonfinancial companies this year will be 50 billion
yuan.
August 18 2011
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Investment Magnet
Hong Kong is the world’s third-largest recipient of foreign direct investment, at US$76 billion, according to the latest World Investment Report
Despite a population of just 7.1 million, Hong Kong was the world’s third-largest recipient of foreign direct investment, at US$76 billion in 2010 – a leap from US$52 billion in 2009. Hong Kong has bypassed the United Kingdom, which fell from third place to seventh. The figures are contained in the 2011 World Investment Report, published by the United Nations Commission on Trade and Development (UNCTAD).
For the 12th consecutive year, Hong Kong is Asia’s second-largest recipient of direct foreign investment, just behind the Chinese mainland and far ahead of Singapore, at US$39 billion. Hong Kong-based businesses have also made the city the world’s fifth-largest overseas investor, after the United States, France, Japan and Germany, at US$76 billion in 2010, ahead of the mainland, at US$68 billion. The city’s total stock of inward direct investment was estimated at US$931 billion at the end of 2009, according to UNCTAD, corresponding to 4.4 times its GDP that year.
Benefiting from its close proximity to the mainland, Hong Kong “acts as a very good capital-raising centre,” including for mainland companies, says Simon Galpin, Director-General of Investment Promotion at InvestHK, the government arm responsible for attracting foreign direct investment to the city. “We have had high-profile initial public offerings over the last decade, and when mainland companies list, they transfer assets to be owned by new state entities.”
Going Global
Simon Galpin Director-General of Investment Promotion, InvestHK
InvestHK focuses on mainland companies, Mr Galpin says, “and the pitch we make is: ‘Don’t come to us as the gateway to Hong Kong, but use us as a springboard to go global.”
Much of the investment flowing into Hong Kong goes back to the mainland, in large measure because Hong Kong has a simple, low-tax environment, allowing mainland companies to “mitigate their tax exposure,” says Mr Galpin.
“In every major city on the mainland, the number-one investor is currently Hong Kong. It is coming from indigenous companies, foreign companies investing, using their regional headquarters here.”
The flip side of the coin is that the mainland, whose steadily improving economy has built a growing corps of entrepreneurs, accounts for 36.4 percent of the investment into Hong Kong, followed by the British Virgin Islands, Bermuda and the Cayman Islands. Together, they accounted for another 40.6 of Hong Kong’s percentage, according to UNCTAD. It’s assumed that most, if not all of that money, is from the mainland.
According to an April report by HSBC China Chief Economist Qu Hongbin, the British Virgin Islands and the Caymans received 93 per cent of the mainland’s cumulative outward direct investment into Latin America.
Staying Put in Hong Kong
US healthcare technology provider, Hologic, has established a state-of-the art regional training centre at the Hong Kong Science and Technology Park’s dedicated Biotech Centre
Hong Kong benefits not just because it is a gateway to China, but because its regional location and governmental attributes make it the regional business hub of Asia. Global companies have established regional operations in Hong Kong because the English-speaking city boasts one of the world’s best transport links, and because its corporate and income taxes, cumulatively, are the third-lowest in the world.
As an indication of its value as an investment centre, Mr Galpin says funds continue to flow into Hong Kong from Taiwan despite increasing links between Taiwan and the mainland that now allow money to flow directly into the mainland. “A large number of Taiwanese companies still see the benefit of using a holding company structure in Hong Kong to make investments because of the city’s attributes,” he says.
InvestHK, Mr Galpin adds, “is not interested in paper-company holding structures. The thing that drives us is bringing in companies with new expertise, new services that create competition in Hong Kong. We are interested in the jobs that are created from companies setting up here, and the indirect benefits of using local services providers, local accounting firms, public relations.”
Global Regional Hub
The US leads, in terms of the number of regional headquarters that have set up in Hong Kong, with the mainland strong when it comes to opening local offices, according to InvestHK. There are also smaller operations, such as the healthcare technology provider Hologic, which recently established a state-of-the art regional training centre at the Hong Kong Science and Technology Park. The company has invested a further US$10 million in its Hong Kong operations, which were established 10 years ago with a single sales representative and have since grown to be the company’s regional headquarters, employing 20 staff.
“Hong Kong is very close to our biggest markets, Japan and China, so our location and the fact that we share the same time zone enables us to communicate with our customers more effectively,” says Paul Young, Head of Asia Pacific, Hologic. “We can also use Hong Kong as a services centre to send out spare parts and other consumables very efficiently.”
August 17 2011
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Hong Kong's Five-Star Teaching Hotel
A five-star hotel managed by a team of hospitality professionals – most of them students – opened earlier this year in Hong Kong. Hotel ICON, founded and owned by The Hong Kong Polytechnic University, is a HK$1.3 billion (US$193 million) initiative that serves as a teaching and research hotel, as well as home base for the university’s staff quarters and its School of Hotel and Tourism Management.
Hotel ICON is the brainchild of the school’s dean, Kaye Chon, who was awarded the Ulysses Prize 2011 by the United Nations World Tourism Organisation for his contributions to advancing knowledge in tourism. In Six Questions, Professor Chon explains why Asia is now the centre of gravity for the global tourism industry.
How did Hotel ICON come about?
Hotel management is a practical field. It’s very important that our students study not only theory from books but also apply concepts in the real world. So we came up with this idea of building a teaching and research hotel, one that exemplifies the real world as close as possible. By studying in such an environment, students can learn and apply what they learn in real-life situations.
Second, research is important. The hotel industry is driven by traditions. We are doing a lot of things in the industry because other hotels have done it, without challenging or thinking through them. So we want to provide some new interpretations of hospitality. Third, it will help to professionalise our students. Studying in an upscale environment like this will definitely make a difference in student learning experiences as well as their life experiences.
How does Hotel ICON differ from other hotels?
There are some 20 to 30 universities around the world that have some kind of teaching hotel. But they are used more to accommodate visitors to the universities. A teaching hotel must be something the students can be fully integrated into. It should provide a fully integrated teaching and learning experience in a “real-world” environment, and also offer better opportunities for faculty members to conduct research in the areas of hospitality and tourism.
By Hong Kong standards, it’s a small hotel, with 262 rooms. But it has all the facilities of an upscale hotel. We have a ballroom called Silverbox, three commercially run restaurants, a magnificent Angsana Spa, fitness centre, swimming pool, conference and function space. The training restaurant, called Bristol 1979, was named after the year our school was established. We don’t plan to train our students to become chefs. We want to develop managers, but to become managers they must fully understand what employees do in a hotel and in a restaurant.
What are some of the special features in the hotel?
We tried to think outside the box, but the central theme was a fresh new interpretation of hospitality not bound by tradition. To maximise usage, we have an executive lounge on the top floor that’s used as a breakfast lounge in the morning and a bar in the afternoon. We provide fine Chinese cuisine in a contemporary Chinese restaurant environment – no red dragons – which leads to a wine bar. The wine bar is connected to three private dining rooms, one even with a private kitchen. We’ve observed that there is a group of high-end customers who like the idea of using a nice hotel with a nice view as venue, but who would want to bring their own chef.
I also insisted on having complimentary mini-bars in rooms. The mini-bar concept started in the United States in the 1970s as a way to bring in extra revenue. But in reality, hotels nowadays seldom make money on it. It doesn’t provide convenience to customers but, rather, adds dissatisfaction in many cases. On checking out, they will ask if you used the mini-bar. When you say “no,” they will still send somebody to check your room. The worst thing is if there’s a drink missing, which happens all the time. That’s why we provide complimentary mini-bar, and the customers love it. We offer free Wi-Fi in the rooms as well.
We also have a customer lounge, Timeless Lounge, for travellers on long-haul flights who arrive early in the morning or depart late at night. There was a frequent visitor from Canada who came back three times in a month because he loved the idea.
What can students learn from working at Hotel ICON?
We have a formal internship programme called the Work-Integrated-Education (WIE), through which students can integrate what they learn into the job or vice versa. They work and pick up ideas and apply them in the classroom. After the internship, the students can confidently participate in the class discussions and say, “When I was doing my WIE internship, this was the situation I encountered.”
It’s important for students to understand all aspects of hotel management, such as marketing, finance, human resources management. All of these are important because you are not just running one restaurant or one hotel.
You believe that there’s been a shift in the global hotel industry. Can you explain the idea behind the “Asian Paradigm?”
Historically, hospitality education has had different paradigms. The first was the European paradigm, because Europe was the origin of the hotel industry. In the 19th century and early 20th century, the European paradigm defined quality and excellence.
After the Second World War, the American hotel industry became prosperous and very successful, especially with the international expansion of American brands such as Holiday Inn and Marriott, which expanded internationally and replicated their successes in other countries.
But in the last 10 years or so, Asia has gradually been regarded as a centre of excellence in hospitality and tourism business. More than 80 percent of hotel customers in Asian countries are Asians. The demography has changed. Also, Asian airlines are now the best in the world. You also have the best airports in Asia. If you look at the list of the best hotels in the world, a large number are located in Asia.
The reason why Asia has emerged as the centre of excellence is its strong hospitality culture; that is very conducive to excellent service, which has become an Asian virtue. It’s customer-oriented: you want to make sure that the customer’s well-being is taken care of, not because you’re earning money from them but because it’s part of the culture.
The centre of gravity of the world economy, including tourism, has moved to Asia, with emerging countries such as China a major tourism destination as well as a source market. I believe there will be huge opportunities for a university in Asia to take leadership.
How can Hong Kong play a pivotal role in leading the Asian hospitality industry?
Hong Kong has the best combination of efficiency and a service culture. Hong Kong is also extremely entrepreneurial and business-minded. All these, combined with the traditional Asian virtue, which is respectful, helpful and customer-friendly, has earned Hong Kong very good credits.
At the hotel opening ceremony, I told our students that my dream was to see them someday become general managers and executives, not only in hotels in Hong Kong, but also in London, New York and other world cities. I think this day will come. That’s our school mission.
August 16 2011
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Chinese Vice Premier Li Keqiang Signals New Measures to Support Hong Kong
By Chester Yung
China's Vice Premier Li Keqian addresses the media upon his arrival to Hong Kong on Tuesday. Mr. Li, the expected successor to Premier Wen Jiabao, is making a three-day visit to Hong Kong with plans to speak about economic ties with the territory.
Chinese Vice Premier Li Keqiang kicked off a three-day visit to Hong Kong on Tuesday by announcing plans for fresh measures to back the Chinese territory's economy, which faces an uncertain outlook amid a brewing global confidence crisis.
The visit by Mr. Li, who is seen as a leading contender to succeed Premier Wen Jiabao, comes amid growing public distrust in the Hong Kong government for its inability to slow booming consumer prices and rein in the city's red-hot private housing market.
Chinese government officials have earlier pressed the Hong Kong government, which has its own set of laws and rules distinct from China, to make housing more affordable for the general public.
"I have brought with me new measures...to further support Hong Kong's development...and to deepen economic and trade cooperation between mainland China and Hong Kong," Mr. Li told reporters at the city's international airport.
Mr. Li, who is leading a delegation of top officials that includes People's Bank of China Gov. Zhou Xiaochuan, Minister of Commerce Chen Deming and National Development and Reform Commission Director Zhang Ping, said he will present the measures Wednesday during a speech at a economic forum.
Local media reported earlier that Mr. Li will likely announce measures to boost the offshore yuan trade in Hong Kong, as well as an expanded scope for Chinese yuan trade settlement.
Hong Kong has been developing into a major offshore yuan hub since China removed some restrictions last year on the use and circulation of its currency. The city's push to boost its yuan profile reflects its desire to remain competitive with the emergence of Shanghai's financial and trading markets.
Hong Kong's yuan market has blossomed over the last year, underpinned in large part by strong demand for yuan assets from investors betting on the currency's continued appreciation.
Some analysts and traders are keenly watching Mr. Li's speech Wednesday for streamlined rules that could make it easier to bring yuan funds raised offshore back to the mainland.
Such a move could further diversify the use of the Chinese currency available offshore and encourage more firms to issue yuan-denominated securities in Hong Kong. Currently, China's capital account is strictly controlled, and approvals for yuan remittances into China in the form of foreign direct investment are given only on a case-by-case basis.
August 15 2011
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Accounting body to accept American qualifications - Under an agreement US institute will also recognise 30,000 certified accountants from
Hong Kong By Amy Nip
 
About 370,000 American accountants will have their professional qualifications
recognized in Hong Kong from October. In return, 30,000 certified accountants from Hong Kong will be
recognized in the US by the American Institute of Certified Public Accountants.
A deal has been reached between the US body and the Hong Kong Institute of Certified Public Accountants after five years of negotiation.
"Such arrangements make it much easier for professionals to practise in other regions," Jonathan Ng, the Hong Kong institute's deputy executive director, said.
However, American accountants would still need to sit exams in two subjects, tax and law, to become certified accountants in Hong Kong. They would then need to fulfil a specified period of auditing experience before they could practise in the city. The same rule applies to accountants from Commonwealth countries practising in the city.
Ng said the negotiations had taken so long because different US states had different requirements.
"More American accountants may come to Hong Kong, but strong growth in the mainland market would be able to absorb the increased manpower," said Dr Daniel Ho, an associate professor at Baptist University.
A growing number of professional bodies in Hong Kong face pressure to recognise qualifications from countries outside the Commonwealth.
Cardiologist Dr Lau Yuk-kong took the Medical Council to court over its refusal to recognise his qualification as a fellow of the American College of Cardiology, a credential
recognized in Britain and on the mainland. He won his case last week.
US architectural qualifications are recognized in Hong Kong, but the engineering sector has yet to sign mutual recognition agreements with the US.
The different systems in different states made negotiations more complicated, Hong Kong Institution of Engineers president Chan Fuk-cheung said.
August 10 2011
Seizing the Initiative - Eric Crowley, Commercial Consul of the US Commercial Service, talks up opportunities for Hong Kong companies sparked by US plans to expand exports.
Only one per cent of the 30 million companies in the United States export their products and services abroad. The US government is hoping to change that under the National Export Initiative, which aims to double American exports over the next five years. The US government has identified nine key sectors that it believes US companies have an advantage: creative and entertainment; education and training services; financial services; healthcare, medical and biotechnology; information and communication technology; licensing and professional/business services; renewable energy, environmental; testing and certification services; and value-added food products, such as wines and spirits.
Responding to the US National Export Initiative (NEI), Hong Kong has taken the lead to help US companies find new markets in Asia. The Pacific Bridge Initiative (PBI) encourages US firms to tap Asian markets through Hong Kong. According to Eric Crowley, Commercial Consul of the US Commercial Service at the American Consulate General, the new initiative creates opportunities for Hong Kong companies to partner with US companies entering Asian markets.
What is the US National Export Initiative?
There are five key elements to the NEI. It includes improving trade activities and promotions, so that means more trade shows, trade missions and trade events. It also includes improving access to finance, so that involves giving access to credit and providing insurance for exporting companies. And we are moving barriers to trade – whether it’s tariff barriers, regulatory barriers, all types of subsidy barriers, as well as enforcing trade rules. We are also pursuing global policies to ensure there is a stronger and balanced, sustainable growth on a global basis.
Why are you promoting NEI in Hong Kong?
Most US companies don’t know Hong Kong. Only one per cent of US businesses are engaged in exports, so many don’t know the overseas market. It’s part of our job with the NEI and PBI to educate people about Hong Kong and its opportunities. Hong Kong ranks 12th in the US’ export market. We believe it’s not only a good market in its own right, but it’s also a great platform to the Chinese mainland and markets around the region. There are a lot of reasons why: it’s got great market proximity, it has a very strategic location; you can reach nearly half of the world’s population from Hong Kong, and it has world-class transportation.
What does this mean for US and Hong Kong companies?
The US economy is sluggish, but there are tonnes of opportunities around the world. Through the NEI and PBI, we are doing more outreach events to educate US companies, a lot of them that just focus on the domestic market. The US consumer market accounts for 40 per cent of the total global consumer market. So it’s understandable why US companies were just focused on the domestic market. However, the trend is that other economies around the world are growing faster, and greater competition from abroad no longer makes it efficient for US companies to focus solely on the domestic market.
With the NEI, we are encouraging US companies to focus more on international opportunities. So that’s also an opportunity for Hong Kong companies, because about 99 percent of US businesses that have not been exporting, will look to the overseas market, especially Greater China and the Asia-Pacific region. And they are going to need partners to help them enter those markets.
We provide a range of services, most of them targeted to help US companies export. But we also provide services to Hong Kong companies, including business matchmaking. So if you are looking for a supplier, or a US partner, we can introduce you to an appropriate partner. Also, if you are already importing or distributing or are an agent for US products and services, we can work with you to help you promote the US product and service you represent. We also provide a service called “Industrial America”, so if you are interested in establishing a presence in the US, we can provide information and contacts to help you do that.
Do you see interest growing in exporting among US companies?
Last year, US exports overall grew at about 21 per cent. In Hong Kong, it was even higher. US exports to Hong Kong rose by more than 26 per cent last year. In the first quarter of 2011, US exports grew by 18 per cent globally, so that’s great news, which puts us ahead of schedule.
In Hong Kong, I was amazed to see it grow by 42 per cent in the first quarter of this year. Looking at the categories, the one that saw a huge leap was metals, which jumped by nearly 2,000 per cent, from 90 per cent last year. The large-scale construction going on in the Chinese mainland has sparked the surge in metal demand. Computer and electronics have also grown by eight per cent.
Only about one per cent of US companies export at the moment, and typically, Hong Kong would not be the first place they would explore. Hong Kong is a great place, but they are not aware of the benefits of using Hong Kong as a platform. As we do more outreach and educate people about the benefits using Hong Kong as a hub, I think more and more companies will be interested in coming to Hong Kong.
How was the response from companies that took part in last year’s Eco Asia Expo under the PBI program?
Generally it was very positive. We went from one exhibitor to 37 exhibitors from 2009 to 2010. I talked to various people, including exhibitors, who seemed happy with the companies they were meeting. In term of sales, we went from zero to more than US$700,000 dollars in sales.
Will Hong Kong become a re-export hub for US companies?
It already is. Fifty per cent of US exports goes to and through Hong Kong to the mainland and other markets. That’s how we market Hong Kong: it’s not just a market, more importantly, it’s a hub and a platform for US companies to enter the mainland and Asia Pacific. Its logistics centre, professional business services, and critical mass of support all help US companies do business regionally.
Smart Touch - SmartHK
“Innovation” and “industry upgrade” are synonymous with Conrad Pong’s firm Hong Kong-based Spark Creative Communication, which exhibited at SmartHK at the Guangzhou Jinhan Exhibition Centre in May. His company had already built contacts with many Chinese mainland enterprises that have upgrading and innovation in mind.
SmartHK, the first joint Hong Kong-Guangdong services promotion event on the mainland was held in Guangzhou in May
One of them was Dongguan firm Kam Tat Lighting, which built a chandelier brand name with help from the Hong Kong company. With so many chandelier brands on the Dongguan market, there was a pressing need to stand out from the crowd, so Mr Pong created a deal that brought in global brand Swarovski to cement the product’s success.
Such services in brand management and design were very much in demand at the event, jointly organised by the Hong Kong Trade Development Council (HKTDC) and Guangdong Province’s Department of Foreign Trade and Economic Co-operation and the Guangdong branch of the China Council for Promotion of International Trade.
About 220 Hong Kong services providers joined the showcase event, the largest mainland fair organised by the HKTDC to promote Hong Kong’s services and technology firms. The exhibition covered 20 services sectors in the areas of design innovation, technology advancement and marketing and management upgrade.
Based on the number of on-site enquiries, “design and branding” was the most popular sector, accounting for 14.7 per cent of the total enquiries, from mostly mainland manufacturers, brand owners and retailers.
A number of mainland enterprises visited all of the booths in the design and branding zone. Aside from comparing prices, mainland enterprises talked to each exhibitor, intent on sourcing a Hong Kong company to help them build their brands. Lengthy discussions were held between companies, covering comparisons of strength and possible synergies, with prospects for partnerships.
Domestic Brands
Inspiration Design Studio met manufacturers eager to ride on government policies to help them develop their own brands
Kelvin Wong, Creative Director of Hong Kong’s Inspiration Design Studio, said he was very satisfied with the two-day exhibition, noting that many mainland enterprises visiting his booth were potential new clients. Preliminary agreements were reached with several enterprises. Mr Wong said visitors to his booth were manufacturers hoping to ride on the upgrade opportunities offered by the Central Government’s 12th Five-Year Programme to develop their own brands for the domestic market.
The trend for mainland manufacturers to switch from exports to domestic sales has generated huge demand for services, particularly in brand-building and developing sales networks. With major production experience and confidence in the quality of their products, these manufacturers, however, often don’t possess their own brands. Thus, there is growing awareness among these manufacturers of the need to develop brands that suit the domestic market, creating demand for such services as brand-building, product name and management, trademark development, product promotion and shop design.
Many mainland enterprises with strong production capacity lack sophisticated marketing capabilities, said Mr Wong. Companies, mostly garment and cosmetics enterprises, that enquired at Mr Wong’s booth didn’t know what questions to ask. It was noted that one-stop services from Hong Kong companies were particularly in demand, because they provide a range of expertise that mainland enterprises can coordinate with their own operations.
Mr Wong said his company offers consultancy services to help identify enterprises’ product strengths, fix target markets and position their brands. For companies planning to open retail outlets, it offers such services as identifying the right cities and suitable locations for outlets, shop design and other operational expertise.
“The tasks involved include trademark development, product design, image design, interior design for the shops, marketing and promotion and brand management,” said Mr Wong. “We can work with our peers on these jobs, as a single company may not be able to handle them all.”
International Perspective
Before and after: Hong Kong’s Spark Creative Commmunications helped Dongguan-based Kam Tat Lighting create a more international image to promote its brand
Mr Pong from Spark Creative Communication said he met businesses in the office equipment and household products sectors, which were also looking to develop their own brands. Many mainland manufacturers still prefer to commission a Hong Kong company to build and manage their brands, he said, because Hong Kong design firms have a broader perspective and are capable of developing international brand names.
In the campaign it developed for the Dongguan firm, Kam Tat changed its chandelier brand name to Riserva to evoke the image of ancient Russian crystal chandeliers. This was later enhanced by co-branding with the world-renowned Swarovski.
Two years later, Riserva has more than 70 specialist stores and even during the financial crisis, the brand maintained 25 per cent annual sales growth. Later, the company also invested Rmb10 million on TV commercials and hired film star Huang Xiaoming to endorse the brand.
With Riserva expanding rapidly on the mainland, Spark Creative Communication appointed top mainland advertising firm Ye Maozhong to take over promotions across the country. Mr Pong noted that brand management is crucial, especially once the brand has returned to the custody of its owner.
Digital Media
iGen6 new Media specialises in digital-media promotion
Advertising and promotional services also saw robust demand at the fair, with the use of new media a focus. Rex Ma, Managing Director of iGen6 New Media Company Ltd, said the event was an excellent platform for the company to showcase its strengths in digital media promotion. The company established contacts with new clients in Guangzhou and Shenzhen during the exhibition.
Mr Ma said his company’s digital media services are built mainly on an integrated “six dimensional platform,” connecting clients’ websites with other common social networking sites such as Facebook, Twitter and so-called microblogs that are popular on the mainland.
Mr Ma’s company also helps clients conduct opinion polls, implement marketing and promotion plans, as well as manage products online. The mainland’s vast territory and large population give digital promotion channels an effective lead in the marketplace, said Mr Ma. During the two-day exhibition, iGen6 New Media Company linked up with a number of new clients, including real estate and environmental protection technology firms, as well as so-called “old media” manufacturers of consumer products such as garments and leather shoes.
Aug 8 2011
Sogo operator expects Hong Kong to outperform mainland By Celine Sun
Lifestyle International sees better second half based on surge in tourist arrivals in "Asia's world city"
Lifestyle International Holdings (SEHK: 1212), one of Hong Kong's largest department store operators, expects the Hong Kong retail market to do better than the mainland market in the second half of this year thanks to positive market sentiment and an upsurge in tourist arrivals in the city.
The operator of Hong Kong's Sogo and mainland's Jiuguang department stores posted net profit of HK$807 million for the six months to June, up 30.6 per cent from the same period last year.
Turnover grew 20.6 per cent to HK$2.4 billion for the half-year period.
The company's share price closed down 35 HK cents, or 1.5 per cent, at HK$23.05 yesterday compared with a 2.17 per cent fall in the benchmark Hang Seng Index.
Managing director Thomas Lau Luen-hung said the two Sogo stores in Causeway Bay and Tsim Sha Tsui had seen strong growth, while the retail sector in Hong Kong had also shown remarkable growth this year.
Sales revenue at the two stores rose 23 per cent year on year to HK$4 billion, accounting for 2 per cent of gross retail sales in the city for the period, lifted by rising demand for luxury goods. Same-store sales growth was more than 20 per cent compared with last year.
Meanwhile, Shanghai Jiuguang store, the company's largest branch across the border, achieved 983 million yuan (HK$1.18 billion) in sales revenue in the first half.
However, growth at the shop started to slow down from May as the credit tightening and global economic uncertainties started to bite, the company said.
"We expect the same store sales [at our Shanghai shop] will achieve a low double-digit increase for the rest of the year," Lau said.
The company also operates two stores in Dalian and Suzhou and one shopping mall in Tianjin that was opened last year.
The company declared an interim dividend of 19.2 HK cents per share for the period.
Aug 3 2011 Share on Facebook
Generation Tea
Andrea Chung (far right) opened Leaf Tea Boutique in Hong Kong’s Central business district last year
When Andrea Chung opened Leaf Tea Boutique seven months ago, she envisioned bringing together the different elements of Hong Kong’s tea-drinking culture in one place. After all, said Ms Chung, Hong Kong is in a unique position with its strong population of tea drinkers, who are influenced by their Chinese heritage and British traditions.
“I thought that there was a chance for a place like this, one that has teas from all over the world, prepared nicely in the correct way to bring out the best in taste,” she said from her shop in busy Central.
To stay on top of global tea trends and challenges, Ms Chung will be attending this year’s Hong Kong International Tea Fair, 11-13 August, at the Hong Kong Convention and Exhibition Centre. The fair’s third edition is expected to attract nearly 300 exhibitors from 12 countries and regions.
While Leaf Tea Boutique’s core clientele is people who have some knowledge of tea, Ms Chung said she is trying to attract the younger generation to experience it “properly.”
Fresh Brew
Non-traditional varieties, such as fruit teas, appeal to the younger crowd
“It’s a challenge to get the younger generations interested because first, for young Chinese, tea is something that is old and traditional,” said Ms Chung. “The mentality switch is part of our challenge. We’re trying to build an image that is young, trendy and elegant.”
To help make the tea boutique concept more familiar, the store has borrowed a few ideas from coffee shops: all teas are priced at HK$30 a cup, which is in line with many coffee or coffee-type beverages; a tea bar lines the inside of the shop, where tea is prepared fresh on the spot; and, takeaway and iced options are available for all 40 varieties.
According to Ms Chung, that familiarity helps distinguish her tea house from traditional tea houses, while emphasising the brand’s core values of high-quality tea prepared in the correct manner.
Fruity Teas
Stephen Twining, Director of Corporate Relations, Twinings Tea
But while the shop concept is important, flavour plays a crucial role in attracting different demographics.
“In terms of the younger generation, they seem to prefer fruit teas, something a bit more ‘fun,’” said Ms Chung. “It’s a balance, but we’ll be introducing more fruity teas.”
Ms Chung’s observation is echoed by Stephen Twining of international tea brand Twinings. A 10th generation member of the famed Twining tea legacy, the company Director said that one of the ways Twining appeals to the younger tea drinker is by offering a wide range of blends.
“Often, the younger tea drinker will start drinking fruit infusions and then move into the classic teas later on,” Mr Twining said. “The young are more open to trying different flavours and so are more adventurous and explore a wide range of flavour and blends.”
Sometimes the opportunity to explore can produce some surprising results. Ms Chung, for example, didn’t expect the South African herbal rooibos tea to be as popular as it has been with local tea drinkers, especially combinations such as blackcurrant rooibos.
To help introduce current and potential clientele to premium teas, Ms Chung has undertaken an extensive education programme as part of her marketing strategy. Ms Chung organises regular tastings in the boutique and has started branching out into the corporate world. A tasting session with employees of the Bank of China exposed then to different and new teas and educated them on its healing benefits.
Afternoon Tea
Keith Hutjens, Director of Tea Procurement, Tazo Tea
Ms Chung has also partnered with the luxury lifestyle brand Jo Malone, which introduced a new collection of tea fragrances. Ms Chung’s boutique took part by offering client and press tasting sessions, gaining important brand exposure with an affluent market.
Inter-industry collaborations may be a growing trend to attract new, young customers to tea. Twinings recently collaborated with British fashion designer Alice Temperley to create a limited-edition scarf for their re-launch of their Earl Grey Blend in the UK.
“Afternoon tea, of which Earl Grey tea is a perfect choice, has always been an elegant affair. We then asked Alice Temperley to design us something that might be worn by a lady and Alice came up with the wonderful scarf, with the design to reflect the origins of the blend, and is both elegant and contemporary,” said Mr Twining. “I think it is always good to collaborate with different companies as we should always be open to new ideas and possibilities. While one of the key pillars of Twinings is our expertise, we are always looking outside for inspiration and new ways of thinking and doing things.”
For Keith Hutjens, Director of Tea Procurement for Tazo Tea, getting people of all ages to drink more tea requires an emphasis on flavour, high quality and creativity.
“You create opportunities so that a customer can come into a Starbucks store and easily walk out with a Zen Shaken Lemonade Iced Tea,” said Mr Hutjens. “Or you create an avenue for them, such as a package we did in our stores four years ago, where we took our filter bag teas, put five different flavours together, which all make great iced teas, and put a recipe book in it. [We wanted to say] our Joy Tea, our Om, will not only be good hot, but also good iced.”
Stephen Twining and Keith Hutjens are speakers at the upcoming International Tea Industry Conference during the Hong Kong International Tea Fair, 11-13 August, at the Hong Kong Convention and Exhibition Centre
July 26 2011 Share on Facebook
希拉莉讚揚，香港雖然變了很多，但在「一國兩制」下，仍然是中西方聯繫的橋梁，特別是「公平」、「開放」、「自由」及「透明」四項核心價值始終不變
到訪香港不足二十四小時的希拉莉（左），與曾蔭權會面。
莉旋風式訪港不足二十四小時，分別會見行政長官曾蔭權及四名立法會議員；並於美國商會午餐會上，就亞太地區經濟發表演說。希拉莉指，相信美國國會會就調高債務上限的爭議作出正確決定，又指面對全球經濟發展，美國人會學習「少花費、少借貸」，同時要「多儲蓄」，一改以往的高消費模式；美國又會將經濟外交的重點放於東亞及太平洋地區，以達至雙贏局面。
她在演講開首部分已讚揚，香港雖然變了很多，但在「一國兩制」下，仍然是中西方聯繫的橋梁，特別是「公平」、「開放」、「自由」及「透明」四項核心價值始終不變，令香港成為不少外企尋找商機的重要地點：「香港是高透明度社會的見證，並擁有良好管治、法治、新聞自由、司法獨立和活躍的公民社會。這解釋了為甚麼有這麼多人選擇在這裏營商。」
對於國內有關調高債務上限的爭議，希拉莉指，這是個對國內外都有重要影響的決定，又承認國內對此有強烈爭辯，但她有信心美國國會會作出正確決定，並與奧巴馬政府一同改善美國的長遠經濟狀況。
希拉莉又形容，面對全球經濟發展，美國現時正經歷「必須的轉型」，改變過去的高消費模式：「我們一定要『多儲蓄、少花費』，同時也須要減少借貸。這不單止是美國，我們的夥伴也一定要經歷這個轉變，沒有其他方法。」她又指，長遠的經濟增長，須要靠儲蓄率較高的亞洲國家擴大內需，這亦有助美國創造就業及穩定全球經濟。
為了令國內經濟盡早復甦甚至有增長，希拉莉指，美國會將經濟合作列為首要處理的外交政策之一，希望藉此與其他國家達至雙贏局面，其經濟外交重點將會放於東亞及太平洋地區。
外界一直估計美國密謀「重返亞洲」，重拾昔日對亞太地區的影響力，希拉莉不諱言指，亞太區的未來與美國是不可分割的，因為美國是亞太區的常駐勢力，「不只是外交或軍事上的勢力，而是一股常駐的經濟勢力。我們的影響力將長留於此。」
希拉莉於午餐會後轉往深圳，與國務委員戴秉國會面，並於昨晚經本港返回華盛頓，結束為期十一天的亞洲外訪行程。希拉莉是次行程中曾到訪土耳其、希臘、印度及印尼，並以本港作為尾站
希拉莉曾於一九八一年陪同丈夫、時任阿肯色州州長的克林頓訪港；其後克林頓榮升美國總統，她亦在九八年陪同丈夫訪港。十三年後重遊舊地，希拉莉於昨日美商會舉行的午餐會上，以美國國務卿身分發表演說，分享對亞太地區經濟發展的見解。
Reiterating that theme, Clinton lauded Hong Kong as "a testament to the power of transparency, good governance, the rule of law, freedom of the press, an independent judiciary, and a vibrant civil society, all of which help to explain why so many people choose to do business here." Click here to view Video presentation
US Sec. of State Hillary Clinton gives a speech at the American Chambers of Commerce in Hong Kong on July 25, 2011. Clinton told Asian business leaders she was confident US lawmakers would reach a deal to avert a debt default.
In Hong Kong yesterday, U.S. Secretary of State Hillary Rodham Clinton publicly addressed several major economic issues, chief among them the ongoing fracas in Washington over raising the U.S. debt ceiling before an August 2 deadline.
In a speech co-organized by several local branches of the U.S. Chamber of Commerce and Asia Society Hong Kong, Clinton conceded that "the political wrangling in Washington is intense right now."
But, she continued, "these kinds of debates have been a constant in our political life throughout the history of our republic. And sometimes, they are messy. ... But this is how an open and democratic society ultimately comes together to reach the right solutions.
"So I am confident that Congress will do the right thing and secure a deal on the debt ceiling, and work with President Obama to take the steps necessary to improve our long-term fiscal outlook."
Clinton's remarks were widely seen here as intended to reassure China. With holdings of more than $1 trillion in U.S. treasury bonds, China is the largest holder of American debt in the world, and has been closely, if quietly, monitoring the U.S. debt ceiling debate.
The Secretary also urged Asian countries to adopt a more multilateral approach in trade and economic matters. She cautioned against a "hodgepodge" of bilateral agreements that could potentially impede true regional integration.
July 23 2011 Share on Facebook
Hong Kong Ex-civil servants to face new rules on jobs - Revised regulations follow case of former housing chief who went to work for property developer
By Fanny W. Y. Fung
The government yesterday announced 30 measures meant to tighten restrictions on post-service jobs for former civil servants, but conceded they couldn't prevent former officials taking jobs that might constitute a reward for services rendered while in office.
Under the measures, which will come into effect in September, officials vetting applications for post-service jobs by former directorate-level officials will be able to take into account likely "public suspicion" that a former official is being given a "deferred reward" by a new employer for decisions made while in office.
Applicants will have to provide information about past dealings with prospective employers, and the advisory committee which vets the applications will be expanded and given a more independent role. Approved applications will be available to view on the government website.
"From a legal point of view, an individual's right to work is a fundamental right guaranteed by the Basic Law and the International Covenant on Economic, Social and Cultural Rights," said Denise Yue Chung-yee, secretary for the civil service, as she unveiled the measures.
"While it is not an absolute right, any restrictions placed upon it must be supported by strong and specific justifications, and must be no more than necessary to achieve the objective intended by the control regime. Otherwise, the administration may be vulnerable to legal challenge."
The measures stem from a row in 2008, when former housing chief Leung Chin-man went to work for a developer. In 2004, when Leung was housing director, the developer's sister company had been in a consortium that bought a housing estate from the government at a discount.
Last year, a government-appointed review committee and a Legislative Council select committee recommended tighter restrictions on post-service jobs. Yesterday, the Civil Service Bureau said it was adopting most of the suggestions, though not one that would lengthen the period for which former officials must seek approval for any new job. For top officials, that period is now three years. It is shorter for junior officials.
Legislator Lee Wing-tat, deputy chairman of the select committee, said he was unhappy the government had rejected longer control periods - which he called the most important reform proposal. "If an official waits for five years until he starts another job, the government policies may well have changed and the confidential information he knows will be outdated by then," Lee said.
Yue said the government had decided against lengthening the control period because it wanted to balance the public interest with individuals' rights, and avoid legal challenges.
"We have to bear in mind that an overly stringent control regime would affect the morale of civil servants, undermine the attractiveness of the civil service for quality individuals, engender recruitment and retention problems, and restrict the productive use of limited human resources in our society," Yue said.
A government source said the Department of Justice had sought legal advice from a Cambridge University law professor and a Queen's counsel in London. Both had warned that lengthening control periods would infringe former officials' legal rights.
MAIN POINTS
Public suspicion of deferred reward to be included in vetting criterion
Applicants must disclose contacts and dealings with prospective employers for the previous three to six years, depending on rank
Approved applications will be posted on the government’s website for public scrutiny
Advisory committee on post-service employment expanded from five to nine
July 21 2011 Share on Facebook
Banks Build Critical Mass in Hong Kong
Hong Kong’s banking sector is swelling with international players
RBC Capital Markets, the corporate and investment banking arm of Royal Bank of Canada, recently announced two strategic appointments: Canadian Doug Moore has been appointed to the newly created position of head of RBC Capital Markets, Asia, while Australian Alan Downie, newly appointed Chief Operating Officer, Asia-Pacific for RBC Capital Markets, will relocate from Sydney. The high-level executive reshuffle, in June, follows RBC Capital Markets’ announcement last November of a new trading floor in Hong Kong, doubling its capacity. They reflect what the bank calls “a step change in RBC’s revenue growth in the Asia-Pacific region,” which “will be driven by Hong Kong.”
Mark Standish, co-CEO, RBC Capital Markets
Mark Standish, RBC Capital Markets’ co-CEO, said the appointments were in line with the bank’s growth strategy. “We are focused on further expansion of our platform in Asia. The creation of this position [filled by Mr Moore] signifies the importance of the region for RBC Capital Markets, as well as the opportunity we see for distributing our global products.” The appointment of Mr Downie, formerly COO of Australia, is “in line with the firm’s increasing emphasis on the combined region.”
The Hong Kong-Canada Connection
RBC is also leveraging the natural affinity between Canada and Hong Kong. As Canada’s largest global bank, RBC says it is ideally positioned to leverage this connection. It views growth in Hong Kong as an extension of its global business, and a stepping stone to the Chinese mainland. “It is therefore critically important for RBC Capital Markets to be in Hong Kong.”
Dr Josef Ackermann, CEO, Deutsche Bank
Other international banks are also expanding in Hong Kong to tap the regional market. The Bank of Tokyo-Mitsubishi UFJ Ltd, a unit of Japan’s biggest publicly traded lender, has announced plans to increase its Hong Kong workforce by 11 per cent in the next three years, to expand private banking and offshore yuan services. “Our top management aims to have 40 per cent of profit coming from overseas markets,” Hidemitsu Otsuka, Executive Officer and Regional Head for Hong Kong at Bank of Tokyo- Mitsubishi UFJ, told Bloomberg. “Among the overseas markets, Asia is the important.”
Pivotal Regional Hub
Sebastian Paredes, CEO, DBS Bank (Hong Kong) Ltd (sixth from left), officiates at the opening of the bank’s new service centre for SMEs
Deutsche Bank’s move to the International Commerce Centre earlier this year reflects Hong Kong’s growing importance as a regional hub for the bank and its growing staffing requirements in the city.
At its February opening, Deutsche Bank CEO Dr Josef Ackermann said the base of operations in Hong Kong, its regional hub since 1958, has served as a springboard for its transformation. He highlighted Hong Kong’s business-friendly environment as a major factor in Deutsche Bank's decision to establish a regional hub in the city, and reaffirmed its commitment to the city.
"Hong Kong was the number one market for IPOs globally in 2010, with a record US$57 billion raised, speaking for its global standing. Deutsche Bank is particularly proud to have uniquely played a leading role in all three of the world’s largest IPOs – ICBC, Agricultural Bank of China, and AIA – which successfully listed here in Hong Kong."
DBS Bank (Hong Kong) Ltd has expanded its SME business by opening a new DBS Finance and Enterprise Banking Centre.
Sebastian Paredes, CEO, DBS Bank (Hong Kong) Ltd, described Hong Kong as “our anchor market for DBS' Greater China strategy and loan service in consumer banking,” one of the main focus areas of the bank's growth plans. He added that DBS Bank “remains at the leading position for SME banking services and we hope to establish long-term partnerships with our SME customers, to provide personal support and to seize the business opportunities in Asia together."
Growth through M&A
Mark Aedy, Head of Europe, Middle East and Africa Investment Banking, Moelis & Company
Moelis & Company, a New York-headquartered independent investment bank, is also expanding in Hong Kong via acquisition. The acquisition of independent financial advisory firm Asia Pacific Adviser, enhances Moelis & Company's global footprint and further strengthens its Asia-Pacific capabilities, adding an established team in Hong Kong to complement the firm's growing business in the region.
"As a leading global investment bank, it is critical for Moelis & Company to have a strong presence in Asia,” said Mark Aedy, Head of Europe, Middle East and Africa Investment Banking for Moelis & Company. “More than ever, clients are seeking global knowledge and perspectives, and being in Hong Kong significantly enhances our ability to deliver that information to them."
Bids for Bankers
Banks and hedge funds in Hong Kong are increasingly having to offer their staff lucrative counter offers – known as “buybacks” – to stop them leaving for rival firms, says Astbury Marsden, a leading financial services recruitment firm.
Astbury Marsden explains that a rise in demand for qualified banking and hedge fund staff in Hong Kong has meant that three out of four employees looking to switch jobs will now be offered healthy pay rises just to stay with their current employer.
Mark O’Reilly, Managing Director at Astbury Marsden in Asia Pacific, says: “Existing employers will often make aggressive counter offers – including an immediate increase in their base salary of up to 25 per cent. Bidding wars can quickly erupt and in many cases this leads to wages spiralling.”
He said buybacks in Hong Kong are far more competitive than those in London or Europe, where candidates are unlikely to receive counter offers in excess of 15 per cent. This is because of the city’s booming IPO market, with international companies such as Prada and L’Occitane “specifically targeting an IPO in Hong Kong.”
“We are still receiving a steady flow of enquiries from global and European banks who are specifically recruiting London candidates for their Hong Kong offices. Aside from the obvious tax benefits, there are very exciting opportunities for corporate finance and M&A bankers to be involved with a broad range of deals within Asia.”
He observed that banks and hedge funds are giving priority to their Hong Kong offices when deciding on investment in infrastructure and product development.
“Although global banks and hedge funds are generally showing restraint in pay and investment, Hong Kong is getting the lion’s share of operational budgets. Senior management clearly believe they will have the best return from the city.”
July 20 2011 Share on Facebook
Hong Kong is top base for global business - Report finds city's trilingual mix and skilled workforce are factors, as Asian locations dominate ranks, reflecting economic power shift
By Peggy Sito
 
Hong Kong ranks as the most popular location for global businesses, with 68.2 per cent of the world's major international companies having a presence in the city. That finding is contained in the latest "Business Footprints" survey by property consultancy CB Richard Ellis, which also found an increasing trend among global companies to open offices throughout the wider Asian region, reflecting a shift in global economic power.
Asia's dominance in the rankings of the world's leading business hubs was striking, said CBRE, after polling 280 of the world's largest companies in 101 countries and 232 cities in the Asia-Pacific, the Americas, Europe, the Middle East and Africa. The companies were asked about a range of topics, including their favoured locations and expansion strategies.
Hong Kong was closely followed by Singapore (a favoured destination and offshore home to 67.5 per cent of surveyed companies), and then by Tokyo (63.9 per cent). London ranked in fourth place globally, with 63.2 per cent of companies surveyed basing some part of their operations in the British capital; it was the only city in the Western world to be ranked in the top five.
Shanghai (61.4 per cent) ranked fifth as it capitalises on increasing recognition of its status as the financial and business capital of China.
Edward Farrelly, CBRE's director of research for Hong Kong, Macau and Taiwan, said Hong Kong was attractive to international businesses due to its location, lack of foreign ownership restrictions, trilingual mix, and an international and highly skilled workforce. "It is the key gateway city for accessing China and is set to benefit most from the gradual liberalisation of the Chinese financial services markets," he said.
This view that Hong Kong had maintained its attractiveness as an international business hub was echoed by Paul Brough, senior regional partner in the Hong Kong office of KPMG, one of the world's four biggest accountancy, tax advice, and auditing firms
"Hong Kong remains a key location as gateway to China and Southeast Asia," said Brough, who noted that financial services payrolls were the biggest cost and rents were of relatively lower concern.
Salaries of Hong Kong staff are high, but they are productive and hard-working, and the city is therefore still a preferred location for international companies.
Brough said the firm's new global chairman, Michael Andrew, would open his office in Hong Kong when he officially took up the post on October 1. He will be the first of the chairmen of the "Big Four" firms to be stationed in the city and made the decision because of Hong Kong's access to China and Southeast Asia, Brough said.
KPMG will take up five office floors at Hysan (SEHK: 0014) Place after the retail and office tower in Hennessy Road, Causeway Bay, is completed later this year. This office will become the firm's headquarters in the city.
In a separate CBRE research report, office rents rose for the second quarter and demand for prime office space remained strong despite high rents. In the core Central district, rents rose 4.5 per cent and occupier demand drove vacancy rates down to near-record low levels, reaching just 3.8 per cent in Central.
An industry-specific breakdown of office demand in its "Business Footprints" survey indicated that London and New York ranked as the premier locations globally for the banking and finance sector, with 92 per cent of firms having an office in the cities, while Hong Kong was just behind on 88 per cent.
London was also ranked as the most popular location for professional services firms, with Hong Kong again coming a close second.
July 18 2011
Renminbi route - The three 'bridges' - in trade, investment and financial markets - that have to be built before the renminbi becomes an international currency, and the role Hong Kong can play
By Norman Chan
In two years after the launch of the pilot scheme for renminbi cross-border trade settlement, Hong Kong has developed into an offshore renminbi centre of considerable scale. Renminbi deposits in Hong Kong jumped from 60 billion yuan early last year to over 540 billion yuan (HK$650 billion) by the end of May. With this rapidly expanding liquidity, Hong Kong has also become a centre for the issuance of offshore renminbi bonds, or "dim sum" bonds. Sixteen issuers offered bonds worth a total of 36 billion yuan last year, and the figure this year is set to mark a record.
There are two schools of thought on the development of our renminbi offshore business: one believes the renminbi will soon become a major reserve currency, challenging or even replacing the US dollar as an international currency, while the other says the development of our offshore centre should not be too hasty, lest it adversely affect the mainland's macro-economic and monetary management. I think these views call for more elucidation of the current situation.
China's trading partners are all over the world, and enterprises anywhere now have the option to use the renminbi to settle cross-border payments with China. However, the renminbi will be truly internationalised only when it becomes a major settlement currency for international trade and for holdings of foreign reserves by other countries, and when a substantial amount of financial assets denominated in renminbi are held and traded in the international financial markets.
Some people are concerned about the rapid increase in the renminbi deposits in Hong Kong. But, putting things into context, renminbi deposits in Hong Kong amount only to 0.72 per cent of the 77 trillion yuan in renminbi deposits on the mainland. This percentage will remain small even if renminbi deposits here continue to increase.
In the early stage of the currency's internationalisation, it is necessary to have a sufficient amount of renminbi flowing out of the mainland. Otherwise, no offshore market could be formed. Currently, this net outflow of renminbi is achieved mainly through trade, and it is likely to continue for a fairly long time.
With renminbi circulating and being accumulated outside the mainland, there will naturally be demand for offshore renminbi services that banks can provide. Hong Kong's offshore renminbi platform has been able to develop rapidly precisely because of its world-class financial infrastructure, and its long-term role as a gateway for trade and investment between the mainland and the rest of the world.
Hong Kong serves corporations based both in Hong Kong and overseas. Of the renminbi deposits held by corporations, 16 per cent belong to overseas enterprises. I expect more overseas companies will use renminbi for settlement of trade and investment, although not all of them would open accounts in Hong Kong directly; some may choose to open renminbi accounts with the banks in their own countries, which then make use of Hong Kong's renminbi platform.
As renminbi is not freely convertible, the onshore and offshore markets are separate. But the separation should not be absolute. For example, some people have suggested that renminbi funds that have flowed out of the mainland should remain circulating outside the mainland indefinitely. But, this is quite impossible.
At present, renminbi funds that reach offshore markets eventually return to the mainland, even after many rounds of intermediation. This is because there is not yet an economy outside the mainland where renminbi is used so extensively that funds can be accumulated and recycled for use.
Three "bridges" now link the onshore and offshore markets. First, trade items. China's external trade in goods and services can be settled in renminbi and funds can flow rather freely in and out of the mainland for this purpose. This bridge is already very wide and capable of providing smooth passage for China's continuously expanding trade to be settled in renminbi.
Second, direct investment. The People's Bank of China announced new measures in January this year to allow mainland enterprises to remit renminbi out of the mainland for outward direct investments. Foreign enterprises making direct investments on the mainland may also remit renminbi onshore for payments, subject to approval on a case-by-case basis. Hence, this bridge is still under construction. The PBOC has indicated that it is working with authorities on a new set of measures, which can hopefully be introduced within this year. This is an important step to complete the circulation loop of renminbi funds in the offshore market.
Third, financial markets. Linking the capital markets on the mainland with international markets is an important step to gradually remove the restrictions on capital accounts. This must proceed at a measured pace, as there are still many imbalances and uncertainties in the international financial markets. While the offshore markets will develop all kinds of financial products, the mainland is still the primary market where the value of renminbi funds can be preserved or enhanced. Hence, with risks properly controlled, it is necessary to build a link between the onshore and offshore renminbi financial markets in a gradual and orderly manner.
When these bridges become wider and stronger, fund flows between the onshore and offshore renminbi markets would be more or less unrestricted, and that will also be the time the renminbi has essentially become freely convertible and most capital account transactions have been liberalised. At that time, the onshore and offshore markets will be closely linked, and prices in the two markets will broadly converge.
Norman Chan Tak-lam is chief executive of HKMA. This is a translated and abridged version of his commentary on renminbi business development
July 3 2011
Hong Kong: Fifty years no change By Pauline D Loh
The flags fly high at the Star Ferry end of the Ocean Terminal, each reflecting the elements that make for Hong Kong's success, and witness to its resilience.
Hong Kong is living proof that "one country two systems" has worked. It has also lived up to the promise that it will keep dancing, keep going to the races and keep the stock market alive. Pauline D Loh looks back on the last 14 years. It was an emotional sojourn that started with a tremulous return in 1997 and that evolved into a lead role in the nation building of an economic giant. Hong Kong has come a long way from being a tremulous prodigal returning to the arms of an estranged motherland.
It was not always this easy.
Sam Hui, king of Cantopop in the '80s and '90s, was singing out the melancholy and trepidation buried in Hong Kong hearts at that time.
About to be deserted by her British guardians, the ex-colony was to be returned to China, an unknown presence that seemed to be glowering down at the flamboyant delinquent on its doorstep.
The people of Hong Kong, used to the laissez-faire ways of their colonial masters, were unsure of the future, uncertain of what was to become of them and greatly concerned that Beijing might take away the freedoms they had so taken for granted.
In 1984, the countdown began when China and the United Kingdom signed the Joint Declaration in the Chinese capital, starting the process of a handover of power that would be fully complete by 1997.
Under the Joint Declaration was an assurance by Beijing that it would adopt a "One Country, Two Systems" principle, and that Hong Kong would continue its previous capitalist system and way of life for a period of 50 years after 1997.
In the words of the Chinese leaders, this meant that Hong Kong could "keep dancing, keep going to the races and keep playing the stock exchange" -
舞照跳, 马照跑, 股照炒. But in those immediate years before 1997, the uncertainty in Hong Kong was almost tangible. Those who could were looking for another country to escape to.
Those who could not for various reasons could only hunker down, grit their teeth and expect the worst. It was no coincidence that Sam Hui's songs rocketed off the charts at this time.
In one plaintive melody, he sang of how Hong Kong emigrants felt like misfits in a foreign country with strange landscapes full of tall grasses instead of skyscrapers, where they had to adapt to a new language, new lifestyle, and most of all new food.
In another, he sang of the homesickness of the Hong Kong traveler, where the sight of Mount Fuji brought memories of The Peak, and Hawaii's harbor made him long for the fishing lights along Victoria Harbor.
It was both poetic and poignant.
As is so often the case, the gloomy anticipation was about the only punishment meted out to Hong Kong, although it did struggle to find an acceptable administration.
But as it slowly adapted to life under the red flag, it did receive a wake-up call that made the people look deep into their consciousness and decide who they wanted to be.
For the first time, they had a national identify, rather than just a reputation for being the goose that laid so many golden eggs for a faraway master.
About a quarter of the time has passed since China declared the deadline of "No change for 50 years".
What has taken Hong Kong, and indeed the world, by surprise is this: Although the SAR has noticeably evolved in the interim, it is mainland China that has undergone the sea change as it enthusiastically embraced economic reforms that have propelled it to the top of the world economics class, so to speak.
Much of the success story in this unique political integration stems from two main factors. One is the innate resilience and pragmatism of the Hong Kong people and their determined ability to adapt, and the second, equally important, is the tolerance and space Beijing has given this special administrative region so far. In the words of one of the SAR's leading architects: Where else in China can you find demonstrations being held every weekend right under the noses of the SAR administration?
July 1 2011
Hong Kong Rank World's Most Competitive Economy
Hong Kong, together with the U.S., has been ranked the world’s most competitive economy by the Swiss-based International Institute for Management Development (IMD) in its World Competitiveness Yearbook 2011 newly issued on May 18, 2011. It is the first time Hong Kong has been accorded the top accolade.
 Video: The World Competitiveness Rankings 2011 - Hong Kong Rank#1 with United States
Welcoming the results, Hong Kong Commissioner for Economic & Trade Affairs, USA, Mr. Donald Tong, said: “We are glad to note IMD’s acknowledgement of our strengths in having struck a sound balance between government efficiency and business efficiency.”
“Our Government will continue to implement measures necessary to preserve and enhance our competitiveness on various fronts,” Mr. Tong added.
According to IMD, the key factors underpinning Hong Kong’s success are openness to trade, investment and business legislation; sound fiscal policy; mature institutional framework; well-functioning financial market; and global city image.
Of the four main pillars being scored, Hong Kong’s scores for “government efficiency” and “economic performance” remain 1st and 4th respectively, while the scores rise from 2nd to 1st in “business efficiency” and from 23rd to 21st in “infrastructure”.
Analyzed by sub-factor, Hong Kong’s ranking has improved significantly in “domestic economy” (from 25th to 18th) under the “economic performance” pillar; “institutional framework” (from 13th to 2nd) under the “government efficiency” pillar; “productivity and efficiency” (from 11th to 6th) and “management practices” (from 14th to 9th) under the “business efficiency” pillar. Sub-factors with improvement are also seen in “employment” (from 22nd to 21st) under the “economic performance” pillar; “business legislation” (from 2nd to 1st) under the “government efficiency” pillar; “attitudes and values” (from 3rd to 1st) under the “business efficiency” pillar; and “basic infrastructure” (from 27th to 25th) and “health and environment” (from 24th to 23rd) under the “infrastructure” pillar.
Background information
The IMD is a business school in Lausanne, Switzerland. It has been publishing the World Competitiveness Yearbook annually since 1989. It ranked the ability of economies across the world to create and maintain an environment that sustains the competitiveness of enterprises therein. A total of 59 economies have been selected by IMD for its current round of world competitiveness study.
June 29 2011
Jockeying for Growth - three out of four Hong Kong CFOs surveyed expect growth to accelerate in the coming months
Lisa Vehrenkamp, Senior Vice President and General Manager, Global Commercial Card, American Express, Japan, Asia Pacific & Australia
Data from the newly released American Express/CFO Research Global Business & Spending Monitor show that optimism globally is at its highest level in four years. In Hong Kong, sentiment is stronger: three out of four Hong Kong CFOs surveyed expect growth to accelerate in the coming months.
The survey found that more than three-quarters of Hong Kong respondents anticipate top-line growth over the next 12 months, including 24 per cent who expect substantial revenue growth. It revealed that, following a period of prudence, many companies are sitting on large cash surpluses and are preparing to spend it.
“Finance executives are finally moving away from budget cuts and opening up the company coffers to drive growth,” said Lisa Vehrenkamp, Senior Vice President and General Manager, Global Commercial Card, American Express, Japan, Asia Pacific and Australia. “We will see a thriving deal-making environment and greater spending to win and retain customers as businesses jockey for position in a recovering economy.”
Hong Kong Stands Out
Hans Leijten, Regional Vice President-Greater China, Regus
The latest Regus Business Confidence Index is similarly upbeat, reporting that a positive outlook from Hong Kong business is now being matched “by real results.” In Hong Kong, where more than three-fifths of companies reported healthy profit (67 per cent) as well as a rise in revenues (72 per cent), the confidence index is higher than the global average.
“Business confidence has grown since 2010, but is now accompanied in Hong Kong by reports that revenues and profits are increasing in line with expectations expressed in last year's index,” said Hans Leijten, Regus’ Regional Vice President for East Asia. Based on the opinion of more than 17,000 companies across 80 countries, the Regus report also revealed that departmental spending is on the rise.
According to the fourth annual American Express monitor, 79 per cent of Hong Kong respondents expect modest to strong economic expansion over the next 12 months – above the global average of 75 per cent. The pace of that expected growth is also significantly higher: in Hong Kong, 73 per cent see economic growth accelerating in the second or third quarter of 2011, against a global median of 54 per cent.
Ms Vehrenkamp said it’s not surprising that CFOs in Hong Kong are more optimistic about the time and pace of economic growth than their global counterparts. “As Hong Kong’s economy continues to improve, we believe that CFOs here plan to increase spending to capitalise on the improving economy.”
Time to Spend
A Regus meeting room at the International Commerce Centre, Hong Kong
With favorable conditions and companies cashed-up, all indicators points to a renewed willingness to loosen the fiscal purse strings, according to Ms Vehrenkamp.
“Most surveyed finance executives say their companies have been experiencing strong cash flow over the past year, and a majority – 71 per cent for Hong Kong and 62 per cent overall – report that they have been pursuing a deliberate cash preservation strategy. With many companies now sitting on large cash stockpiles, finance executives have plans to put this capital to work.”
Deal-making tops the list of how companies will spend their surplus. Eighty-four per cent of Hong Kong finance executives, compared to 69 per cent of all respondents, expect to focus aggressively on acquisitions. Capital spending, which typically includes outlays for such items as real estate and machinery, is also a top priority. In Hong Kong, 86 per cent of respondents have aggressive investment plans for that category over the next 12 months.
The recession is also prompting investment caution among companies. Hong Kong executives were above the global average in their intent to conduct rigorous due diligence of mergers and acquisitions (M&A) opportunities (81 per cent, against the global average of 76 per cent). Most will also require a more detailed business case to increase spending on headcount and operating activities, as well as analysing capital investments more fully.
“Lessons learned in the downturn are shaping today’s corporate spending strategies for the better,” said Ms Vehrenkamp. “Finance executives are maintaining discipline and carefully weighing each investment. In areas ranging from M&A to headcount to service, companies are looking closely at the justification for spending, laying the foundation for more sustainable expansion.”
On the Road Again
As economic prospects improve, however, nearly half (46 per cent) of Hong Kong finance executives will invest in business development activities to capitalise on the healthier business environment. In Hong Kong, hiring is also expected to increase in sales (53 per cent), human resources and other administration (42 per cent), marketing (41 per cent), information technology (37 per cent) and customer service (32 per cent).
This optimism has also reignited the business travel plans of many finance executives, about half of whom will invest more in travel this year to help drive revenue growth. “Meetings, whether with existing or potential customers, vendors or suppliers, remain vital to business negotiation and development,” Ms Vehrenkamp said. “According to the American Express survey, 37 per cent of Hong Kong financial executives plan to increase budget for meetings with new or potential clients, whereas 34 per cent are willing to spend for meeting with suppliers and vendors. This again reflects that they are loosening their purse strings for revenue-generating activities.”
Expansion Starts Here
The “real results” noted by workplace solutions company Regus in its Business Confidence Index are evident in the company’s own operations in Hong Kong, where it runs 11 business centres. Hans Leijten, Regional Vice President-Greater China, reported a 25 per cent increase in inquiries, year-on-year.
“This increase has come from both overseas and local clients, and across a wide variety of sectors. Companies of every size use our centres, and many of them are start-ups looking to build their business here in Hong Kong or international businesses moving into Asia. For example, in our new Causeway Bay Times Square location, which just opened in May, we have many such customers, from a high-end international jewellery firm establishing its first Asian retail business to a start-up that distributes healthcare products in Europe and the US." Regus is experiencing a “huge demand,” he said. “Not just for serviced offices, but also for virtual offices that allow companies to quickly set themselves up in a prestigious location.”
He said Hong Kong remains one of the most attractive destinations for businesses moving into Asia, and is “a hot spot for expats drawn by a combination of its dynamic economy and bustling cosmopolitan ambiance.
“For any international business person looking to set up a new enterprise or expand into Asia, Hong Kong is an obvious choice,” Mr Leijten said. “It is easy and simple to establish a company here, thanks to government support for business registration and the wealth of business services and workplace options.”
June 25 2011
HK granted US$300m qualified investor quota
The Hong Kong Monetary Authority said it received a US$300 million quota to invest in stocks and bonds on the mainland, giving the city's de facto central bank the opportunity to diversify its US$273 billion in reserves. The HKMA is working on details of how it will invest in the mainland's financial markets, chief executive Norman Chan Tak-lam (pictured) said yesterday.
The China Securities Regulatory Commission granted the HKMA a license to join the Qualified Foreign Institutional Investor programme last year.
Asia's central banks want to diversify their growing foreign-exchange reserves into yuan-denominated debt issued by China's government, Philippine central bank governor Amando Tetangco said in April.
The Hong Kong government won't rule out including the yuan in its reserves in the future, Secretary for Financial Services and the Treasury Chan Ka-keung said this week.
"It's sensible for the HKMA to diversify its reserves into currencies other than the US dollar," Daiwa Capital Markets economist Kevin Lai said. "The quota is not that huge, but enough for the current testing phase. The HKMA will probably invest in products with less risk, like bonds."
Chan also said he expected Beijing to announce new rules on yuan-denominated foreign direct investment by the end of this year.
This would help develop the offshore yuan market in Hong Kong, he said.
Bank Negara Malaysia, Government of Singapore Investment Corp and Abu Dhabi Investment Authority are among sovereign wealth managers that have QFII permits.
June 23 2011
Exports: Recovery with Headwinds
Asia remains a major electronics production centre, with a detailed division of production processes and transportation of parts and components among manufacturing bases
 Video
Presentation - Hong Kong's external trade will rise 12 per cent in 2011, predicts HKTDC Chief Economist Edward Leung. That's down from a 25 per cent leap for this year's first quarter. Leung says the electronics sector should perform well with sales of smart devices. US and EU markets should perform better, as should the Chinese mainland high-growth consumer sector.
It was, by many measures, an extraordinary leap in difficult conditions. Hong Kong exports soared 25 per cent in the first quarter of 2011, even though production costs were surging, with export unit prices up 7.6 per cent. There was also gathering inflation, while factors such as the Japanese disasters and escalating civil unrest in the Middle East were poised to make an impact in the second quarter and beyond.
The good news for exporters is that signs suggest the global economy will continue to be in good shape, notably for commodity exporters and Asian countries with large domestic markets, such as the Chinese mainland, India and Indonesia.
Given the better-than-expected performance so far this year, Hong Kong’s total exports are now forecast to grow by 12 per cent in 2011, against the eight per cent rise earlier predicted.
There is, however, little room for complacency. The Japanese earthquake and associated disasters could affect one per cent of Hong Kong’s total exports for 2011, while sales hit by the crisis in the Middle East and African region (MENA) could amount to 0.6 per cent of total exports.
In addition, soaring production costs, triggered by spiralling raw material costs and gyrating wages on the mainland, could well remain a major challenge for Hong Kong exporters.
Hong Kong’s merchandise performance was again above expectations for the first three months of 2011. Total exports were driven by solid increases of 25 per cent for re-exports and 12 per cent for domestic exports.
This exceptional performance was achieved despite a high base for comparison, and rebounded strongly from a modest 14 per cent growth in the final quarter of 2010, following increases of more than 20 per cent in the previous three quarters.
The showing was supported by burgeoning intra-Asian trade. Sales to the mainland, which constituted 54 per cent of Hong Kong exports, climbed 28 per cent, with hearty demand for machinery and semi-manufacturing, notably electronics parts and components for export processing production.
There was also sustained export growth in the region, reflected by greater demand for capital goods and production inputs. Sales to traditional markets were more moderate, although double-digit increases were still recorded. The European Union, spearheaded by Germany, registered a commendable 14 per cent rise. The United States, for its part, demonstrated a 13 per cent increase. Exports to Japan, where growth should have been hit by the fallout from the earthquake, still rose by 11 per cent in the first quarter.
Growth Engine
Soaring mainland wages have substantially boosted production costs
Electronics, which jumped 29 per cent in the first quarter of 2011, to account for 57 per cent of Hong Kong’s total exports, remained the primary engine of growth. The global demand for electronics was stronger than earlier forecast.
The strength of the world electronics market was clearly evident, with first-quarter earnings from giant multinationals such as Apple (with its sizzling iPhone demand) and Intel (due to a voracious appetite for personal computers) beating out analysts’ expectations.
Asia remains a major electronics production hub, with a detailed division of production processes and transportation of parts and components among manufacturing bases; these were factors that boosted intra-regional trade, injecting much-needed vitality into Hong Kong exports.
Electronics aside, timepieces and jewellery grew 25 per cent and 18 per cent respectively, while clothing, up eight per cent, and toys, inching up two per cent, were laggards among major product categories. What’s more, escalating unit values of Hong Kong exports have significantly contributed to the faster-than-expected sales expansion. In spite of sustained overseas demand, consumer adherence to value for money continued to drag prices.
Nevertheless, towering input costs have bloated export prices. Hong Kong exporters have not been able to pass on all cost increases to overseas buyers. For example, crude oil and gold prices, on the back of unabated global demand and loose monetary conditions with a relatively weak US dollar, displayed respective increases of some 10 per cent since the beginning of the year – despite sharply lower commodity prices recently.
In most cases, lofty price increases have translated into much higher input costs and, hence, more expensive finished products, with supply disruptions of certain electronics parts and components from Japan only adding to the woes.
Significantly, soaring labour costs on the mainland have substantially raised production costs. To attract migrant workers, Hong Kong manufacturers must increase wages and other benefits, further raising production costs.
According to a survey by the Hong Kong Trade Development Council, 98 per cent of respondents saw higher labour costs on the mainland in the second quarter of 2011, vis-à-vis 78 per cent in the first quarter of 2011 and 74 per cent in the final quarter of 2010.
A strong renminbi, which has appreciated by more than four per cent against the US dollar since last June, has compounded the problem. To a certain extent, these increased costs have been translated into a higher unit value of Hong Kong exports – up 7.6 per cent in the first three months of 2011, against a 4.7 per cent rise last year.
Global Outlook
The Japan disaster earlier this year and the political unrest in the Middle East have cast a pall over the global outlook in the medium term
A sustained recovery of overseas markets is certainly good news for Hong Kong exporters. In traditional markets, the US is set to lead the pack. In the EU, some core members, especially Germany, will see decent growth despite the lingering sovereign debt crisis.
Resurgence in many emerging economies should also stay strong. Holding particular promise are commodity exporters, as well as Asian countries with a huge domestic market, notably the mainland.
Yet the disaster in Japan and the political unrest in MENA have cast a pall over the medium-term outlook. World economic growth, according to the International Monetary Fund, is expected to stand at 4.4 per cent in 2011 and 4.5 per cent in 2012, after growing by five per cent last year.
In the US, massive monetary and fiscal support, including the bond-purchase programmes and extension of tax cuts and social benefits, is leading to financial stability and rallies in stock prices, which contribute in turn to improved consumer and business sentiment.
Against this backdrop, there are signs that both consumption and corporate earnings are advancing, while joblessness has begun to edge down, although the unemployment rate is still high by historical standards.
The housing market, on the other hand, remains sluggish, and high gasoline prices are eroding spending power. This means that consumers will likely remain conservative, especially when the extended fiscal and monetary expansion fades.
These likely developments presage a better sales outlook for products that offer value for money. Clouded by the hovering sovereign debt crisis, the EU is expected to stay on a slower lane, with a two-speed recovery prevailing. On the one hand, there will likely be sturdy growth for some core members.
A case in point is Germany, where strength in manufacturing and exports is filtering through to the domestic sector. On the other hand, the Eurozone’s peripheral economies, hampered by austerity moves to contain current and fiscal imbalances, are expected to remain fragile for the foreseeable future.
Japanese Fallout
Developments in Japan are even worse, due mainly to the March earthquake, the country’s most powerful on record. But even before the quake, the Japanese economy was set to slow noticeably because of entrenched deflationary pressure, alongside weakening exports amid a strong yen. The cost of the powerful quake, tsunami and nuclear fallout could top US$300 billion, slashing the country’s GDP in 2011 by between two and three percentage points.
Still, developing Asia should continue to lead the world recovery, although inflationary pressure stands out as the major concern. Significantly, the mainland is expected to see growth remain healthy this year and next despite monetary tightening to prevent overheating. Its 12th Five-Year Programme (FYP), approved by the National People’s Congress in March, will offer new dimensions for Hong Kong companies. The programme foresees that economic growth in the years ahead will be driven more by domestic demand, particularly private consumption, than by exports and inward investment.
Hong Kong, as a brand showcase and trendsetter, is expected to benefit from a growing and increasingly sophisticated mainland consumer market.
While the mainland will invest much more in R&D in the next five years and move to upgrade technology to meet FYP targets, it will need to acquire the necessary technology. Hong Kong’s role as a technology marketplace should flourish as a consequence.
Hong Kong must also look to other regional markets for sales expansion. Various Asian governments, fearing surging inflation, are tightening their monetary grip to ensure macroeconomic stability and medium-term growth. Yet the economic environment should remain generally favourable, helped by sustained domestic demand and continued export expansion. Intra-regional trade in general, and demand from the mainland in particular, will remain a key stimulus to other Asian economies.
Consumer spending, in the meantime, should remain robust amid the region’s strong economic fundamentals. In tandem with developing Asia, other fledgling economies are likely to record varying degrees of recovery. Broadly speaking, market opportunities will be buoyed by an expansion of their consumer markets, although rising inflation is weighing on consumption.
In Latin America, commodity exporters such as Brazil and Chile should benefit from higher commodity prices. The outlook for Mexico, which is closely tied to the US economy, is expected to be upbeat.
In contrast, Central and Eastern Europe should remain a weaker area in the global growth picture because of its close integration with the EU. Outside the EU, Turkey, with a better macroeconomic environment, may have better prospects, while Russia is expected to gain from firming oil and commodity prices.
For MENA, high crude prices should strengthen the economic health of oil exporters. Yet this positive development is overshadowed by a wave of political unrest that has spread through the region since the beginning of the year. The unrest has negative consequences for the regional economies. It also has an indirect impact on the global recovery because of higher oil prices, given that MENA accounts for about one-third of the world supply.
Hong Kong Outlook
While Hong Kong exports should continue to expand vigorously for the rest of 2011, the pace of growth is expected to moderate somewhat from the surge of the first quarter.
Looking ahead, the growth of Hong Kong exports should remain decent through 2012, although there are plenty of risks and challenges ahead.
Electronics Jump-starts Trade
Hong Kong exports of electronics products grew by a better-than-expected 29 per cent during the first quarter, following 28 per cent growth in 2010. This was thanks to the solid demand from the Chinese mainland, which absorbed more than 60 per cent of Hong Kong’s total electronics exports, notably for inputs for export processing production.
Other Asian economies saw Hong Kong exports, mainly parts and components, expand on the back of a regional revival in export production.
What the Consumer Wants
Sales to other major markets, including the US and the EU, have also performed well, given the sustained resurgence of consumer demand for electronics.
The world electronics market has been fuelled by trendy products such as iPhones and iPads, which have stimulated demand for tablets and smartphones, as well as complementary products and accessories.
Electronics exports have been assisted by a steady demand for the replacement and upgrading of computers and telecom equipment, given the stronger consumer and business sentiment.
Sales of audiovisual (AV) equipment have been assisted by the popularity of large-screen TVs and digital devices, although competition in the market has become fierce.
The sustained demand for consumer electronics continues to boost the derived demand for parts and components, prolonging the upturn of the global electronics cycle.
For the rest of 2011 and probably 2012, electronics exports will perform well, in view of the continued demand for trendy digital products. Exports of parts and components, especially re-exports of semiconductors, will be boosted by further expansion of the mainland’s processing production.
Exports of AV products and parts, however, will be less robust, as fierce competition cuts prices. The market for AV equipment will be less energetic than for IT and telecom products. Products with more advanced and green features will likely be better received. If anything, the shortage of components and materials following the Japan earthquake will slow Hong Kong exports. For now, some players have been able to secure certain supplies from alternative sources, notwithstanding longer delivery lead times and higher purchasing costs.
As to household electrical appliances, Hong Kong exports managed to expand by 20 per cent last year and 22 per cent in the first quarter of 2011.
But exports in the year ahead are expected to slow. Sales of household electrical appliances will be constrained by intensified price competition and weaker consumer sentiment in Japan. To complicate matters, the popularity of trendy IT and telecom products may further erode the discretionary demand for electrical appliances.
June 22 2011
A Little Less than Luxury
Rue Madame, a boutique stocking Parisian fashion targeting the mid-market consumer, opened in two prime locations in Hong Kong
Hong Kong is a bastion for big-name shopping, attracting the well-heeled set from around the world. Visitor numbers jumped to 36 million in 2010, up nearly 22 per cent over the previous year, according to the Hong Kong Tourism Board. The visitors, the majority of them shoppers from the Chinese mainland, spent about HK$210 billion. Visitor numbers are forecast to reach nearly 40 million this year.
Mainland tourists have been key in sustaining Hong Kong retail sales. Each weekend, they line up outside shops like the Louis Vuitton flagship on Canton Road, a designer shopping Mecca, waiting to be allowed into the store. Just doors away, more stand patiently behind velvet ropes at Dior and Channel, Tiffany and Gucci.
Recent trends, however, suggest a growing opportunity for fashion brands targeting mid-market consumers. In recent years, mid-priced brands such as Sweden’s H&M and Spain's Zara and Mango, have joined high-end names in Hong Kong's mega-malls. In April, it was reported that United States retailer Abercrombie and Fitch won a bidding war for a colonial-style space in Central's Pedder Building, a prime retail spot minutes away from British mid-priced chain M&S. Abercrombie and Fitch will replace one of Hong Kong's most successful fashion houses, Shanghai Tang, owned by Swiss luxury group Richemont. The 12,500-square-foot space will launch the casual-wear brand, with the company reportedly paying an area record HK$7 million a month in rent.
The ABC Look
Valerie Wilson Trower, Stylesight’s Trend Director for Asia
The company parlays a clean-cut collegiate look, comprising T-shirts, hooded-sweatshirts and cotton shorts, a style that's already been adopted by Hong Kong's younger generation. “We've had a very strong 'ABC' or American-born-Chinese look over the last four years,” says Valerie Wilson Trower, Trend Director for Asia at trend analysis and forecaster Stylesight. “It's a very LA look. If I can describe it, it would be hoop earrings, long layers, denim shorts and cowboy boots, worn even though it's July,” says Ms Wilson Trower. Interestingly, she says, girls that have been raised and educated in Hong Kong rather than the US, also wear the look. “Their boyfriends find it attractive,” she says.
The move isn't a total shoe-in for Abercrombie and Fitch, says Ms Wilson Trower. “In Hong Kong, it's girls who wear the look, while in the US they sell more to guys. We'll see if the guys pick up on A&F, too.”
Hong Kong shoppers are well-travelled, sophisticated and informed, says Ariane Zagury, who opened Rue Madame, a boutique stocking Parisian fashions, located in two prestigious locations: IFC Mall in Central and Lee Gardens in Causeway Bay. Rue Madame targets the mid-market consumer. “Most of them are well-informed; they read fashion magazines and fashion blogs. I would say that customers in Hong Kong are very sophisticated and have a very good eye for fashion,” she says. Accordingly, they are becoming less reliant on wearing splashy labels.
Statement Pieces
Radha Chadha, Brand Director, Chadha Strategy Consulting
While the nouveau riche, with a penchant for status-flashing luxury goods, is a dominant demographic on the mainland, there is increasing room for a varied retail mix, says Brand Director Radha Chadha of Chadha Strategy Consulting, and author of The Cult of the Luxury Brand. Mid-level executives, or junior salarymen, those on more modest budgets, buy big-ticket statement pieces like bags and accessories, but mix those items with mid-market and high-street brands.
“I call it scrimp and splurge,” says Ms Chadha. “The bag makes a statement, some shoes make a statement, the watch makes a statement and jewellery, if it's branded, makes a statement,” says Ms Chadha. “This is how they splurge. Secretaries will definitely have a nice bag, but the rest will be modestly priced brands,” she says.
Some second-generation high-net-worth individuals are moving away from the most well-known brands after having grown up around them. If their parents bought into brands as they first appeared on the mainland 20 years ago, the offspring are increasingly looking for new or exclusive brands, says Ms Chadha. Historically, luxury brands were used as a way to show wealth or status. But the younger generation no longer feels the need to use clothing and accessories to prove their worth and, while still wanting to spend, look for less obviously branded goods. Their parents may also be looking to move on from such introductory brands, searching for new, unique labels, often those they first encounter on trips overseas.
Both groups offer opportunity out of the sphere of the big luxury houses. “It's not a big sub-set, but it is a growing subset,” she says, adding that, as it grows, “you have an absolute need for brands that are smaller.”
Retail Springboard
Hong Kong can serve as an ideal entry into the mainland market. Mainland consumers favour brands that portray an international image, and Hong Kong's glamorous shopping malls can work like a gallery space for labels seeking exposure. In December 2010 to February 2011, more than 13,000 mainland tourists visited the K11 mall in Tsim Sha Tsui, an upscale mall that opened in 2009. The mall has run more than 300 tailored shopping tours for mainland tourists to encourage patronage.
Last year, Warrantex Group, a Hong Kong-based retailing and distribution company, opened Bruuns Bazaar in another new mall, Isquare, also in Tsim Sha Tsui. Bruuns is a Danish company that produces simply designed clothing in neutral palettes, well-suited to Asian skin-tones, says Warrantex founder Yardley Wong. A store presence in Hong Kong is useful for creating brand recognition among mainland consumers, and can be used as a springboard, she says.
“China is our main focus. We want the store here to showcase products and concepts and also show people that we are an international brand,” she says. The company has already moved the concept into outlets in Beijing and Shanghai.
Smaller businesses need to be creative and generate excitement, says Ms Wong. As more mainland residents travel abroad and witness creative retail spaces in Europe's shopping capitals, they will want similar experiences replicated at home. “In China, they easily accept new concepts, and they like new things,” says Ms Wong.
Retailers who can accommodate Asian size and fit in their designs, whose use of fabric and styles responds to the seasons and whose design suits Asian
coloring, will hold extra market appeal, experts say.
Just as Hong Kong and mainland-based retailers and distributors look for brands, many European and US labels are looking to break into this lucrative region. Laura Li, who opened Gizzy and Nacho, a Hong Kong-based online fashion boutique that stocks Spanish, Australian, Hong Kong and US labels, began trading to appeal to a growing Hong Kong demographic hunting alternatives to mainstream offerings. Ms Li says she scours blogs, magazines and showrooms looking for unique items and gets enthusiastic responses from those she targets. “Brands I approach all get very excited when I tell them I am buying for Hong Kong, Asia or China – this is the region everyone wants to be in now.”
June 15 2011
Fast-Track Growth for Hong Kong
Buoyant Asian economies, and the Central Government’s focus on boosting domestic consumption represent key opportunities for Hong Kong companies, according to Dr Jonathon Choi, Chairman of the Chinese General Chamber of Commerce. In Six Questions, Dr Choi also spells out the promise of the Central Government’s new Five-Year
Program.
How has Hong Kong’s business environment fared so far this year?
Hong Kong’s economy increased by 7.2 per cent in the first quarter, the fifth consecutive quarter of higher-than-average growth in the last 10 years. Every sector posted significant recovery, thanks to an improving consumer market and rising visitor numbers, boosting our domestic economy. This reflects the remarkable growth of our services sector.
The strong economic growth on the Chinese mainland is boosting production and export activities in the region. Hong Kong’s total exports jumped 16.8 per cent in the first quarter, with exporting companies receiving more orders.
The surging mainland economy is stimulating strong growth in cross-border finance. Mainland demand for our financial, business and professional services continued to expand, leading to a 9.1 per cent rise in our services output in the first quarter.
What are some of the external factors that could affect Hong Kong’s business for the rest of the year?
Under the quantitative monetary easing policy in Europe and the United States, the global economy is expected to continue facing inflationary pressures and asset price rises. Mainland consumer prices rose 5.4 percent, year-on-year, in March, while Hong Kong's composite consumer price index shot up 4.6 per cent. Energy, commodity and asset prices are facing upward pressure, because of strong economic performance. I believe inflation will remain high. For Hong Kong businesses, inflation will push up employee wages and, together with such factors as the rising renminbi, raw material and energy prices, will pose challenges ahead.
In spite of Asia’s satisfactory economic performance and recovery in Europe and the United States, the Eurozone’s sovereign debt problems, the gradual tightening of macroeconomic policies in Asia, and the political instability in the Middle East and North Africa, all bring uncertainties to business.
Moreover, the impact of Japan’s earthquake and nuclear incident will gradually affect the supply chain, which may affect Hong Kong’s foreign trade, thus slowing down export growth in the coming quarters.
Fortunately, the national economy is rapidly growing, supported by the mainland’s 12th Five-Year
Program, which is devoted to modern services industry development and expanding domestic demand, providing Hong Kong companies huge business opportunities to explore the mainland market.
What’s in it for Hong Kong in the Central Government’s 12th Five-Year
Program?
The new Five-Year Program mainly focuses on the shift to a domestic-driven economy, as well as the structural transition to modern services. Hong Kong has many advantages in these areas and should seize opportunities through a number of policies on domestic consumption and urbanisation. The mainland agriculture and industrial sectors have been doing very well, so the focus now has started to tilt to the services sector. For Hong Kong companies, it’s time to think carefully of how to take advantage and discover new opportunities.
The appreciation of the renminbi has brought many benefits to Hong Kong. If the trend continues, I think there will be more and more mainland tourists coming to Hong Kong, boosting consumption and investment. Sectors such as tourism, retail, food, properties and the stock market will all benefit. But it is also important to be cautious about their side effects – rising interest rates. A strong renminbi might be helpful for consumption, but it also leads to higher cost on the mainland, which ultimately results in higher inflation in Hong Kong. So it’s a balancing act.
What are the specific opportunities for Hong Kong companies from the Five-Year
Program?
The 11th Five-Year Programme emphasised “one country, two systems.” But China and Hong Kong cannot be seen separately in the new plan. I think it sends the message that the integration between Hong Kong and the mainland is a win-win game, which is why I feel Hong Kong people and companies favour the scheme. Hong Kong is trying to completely integrate itself into the Five-Year Programme and is thinking about how to make it happen.
The new plan has identified Hong Kong as the offshore and renminbi settlement
center, with Shanghai as an onshore centre, a position that benefits Hong Kong. Hong Kong, meanwhile, will collaborate with Guangdong on Pearl River Delta port projects in Qianhai, Hengqin and Nansha. Hong Kong needs to take advantage of the incentive policies introduced in these areas. Cooperation with the Pearl Delta region spans infrastructural, governmental and industrial projects. In addition, Guangdong-Hong Kong collaboration remains the top priority within a broader picture that includes reaching out to the Yangtze River Delta region. Hong Kong will enjoy advantages from having rich experience in modern services, including finance, carrier, logistics and information services. Hong Kong also has many professional lawyers, auditing professionals, doctors, architects and surveyors, who all speak for our competitiveness.
What are the challenges facing Hong Kong companies?
The challenges come with the changing world. Both national and private mainland enterprises have broadened their vision, looking not only at the domestic market and its 1.3 billion people, but also trying to conquer the global market. They spare no effort to break into the overseas market by having more competitive professionals with global views. And the strategy for them is to be based in Beijing to manage business on the mainland and, in Hong Kong, to look for international opportunities.
What suggestions have you made to the Hong Kong Government to cement Hong Kong’s value?
We are very concerned about the 12th Five-Year Program. Hong Kong needs to figure out its position in the Central Government’s plan. Many countries such as Japan have similar blueprints to guide the direction of the country’s economic growth. Considering Hong Kong’s position as an international city, we should further develop relationships with ASEAN member countries. The question for us now is how to partner with ASEAN countries. China and ASEAN countries have created the “10+1” model, and Hong Kong should not be excluded. What role can Hong Kong play without being excluded? We need to do more research.
Hong Kong companies have a strong presence in ASEAN countries and have a deep knowledge of the region. The high-speed-train project linking China’s Yunnan Province with Myanmar and Pakistan to Phnom Penh in Cambodia will strengthen relations with ASEAN economies. If it does not take these into consideration, Hong Kong will likely be
marginalized. It is extremely crucial for Hong Kong to have a vision of how to take advantage of opportunities presented by these inter-country transport link projects.
June 14 2011
Getting with the Program - Guangdong-Hong Kong cooperation
Guangdong-Hong Kong cooperation during the latest Five-Year-Program should be a process of market integration, a move from manufacturing to marketing in the PRD
The period of the 12th Five-Year Program (FYP) will be crucial in the transformation of the Chinese economy and society in general. The plan promises to usher in a people-centred, consumer-oriented era for the country as a whole.
The transition from “made in China” to “made for China” will be at the heart of the new
program. This involves building “a domestic market ranked as one of the largest in the world” – a goal formally endorsed at the Fifth Plenary Session of the 17th CPC Central Committee.
Long-term development demands the emergence of a large middle-income group. Only then will China offer the basis for sustainable development. This is a key reason why expanding domestic demand has become the primary task of the 12th FYP.
Path Ahead
In pursuing PRD integration, the market system will eventually have to be compatible with the Hong Kong system
Despite its huge potential, China’s domestic market faces institutional development hurdles. The China market is highly controlled and
characterized by high transaction costs.
“Made in China” owed its rise over the past three decades to the international market rather than the local one. The “front shop, back factory” model, which gave Guangdong-Hong Kong cooperation its great economic benefits and competitive edge, was actually a combination of advantages enjoyed by the Pearl River Delta (PRD), with its low production costs and a multinational-dominated international market and supply chain.
Even now, Guangdong-Hong Kong cooperation has yet to shake off this basic pattern and penetrate the PRD local market. This is true for PRD-based manufacturing started by Hong Kong manufacturers, as it also is for PRD services based on the Closer Economic Partnership Arrangement (CEPA).
Thanks to PRD manufacturing upgrades in recent years, tremendous headway has been made in extending the local industrial chain. Virtually all production materials used in traditional industries are made in China.
The main markets for these “made in China” intermediate products, however, are outside, rather than inside, China. This makes China the biggest source of imports for “made-in-China” raw materials and supplies. But re-imports of mainland origin have accounted for more than 20 per cent of Guangdong’s imports since 2000. That percentage exceeded 25 per cent in Dongguan.
As to PRD services promoted by CEPA, apart from real estate developers, 60 per cent of Hong Kong-invested services providers are engaged in logistics, freight forwarding and other activities in the service of manufacturing in the PRD. These Hong Kong services providers have yet to gain substantial access to the PRD market. Guangdong-Hong Kong cooperation is still based on external markets and is an export-oriented economic integration. The PRD and Hong Kong are still two separate markets.
Market Integration
Guangdong-Hong Kong cooperation during the 12th FYP period should see a move from PRD manufacturing to PRD marketing
Market integration should be the logical progression of Guangdong-Hong Kong cooperation during the 12th FYP period. This would mean moving from PRD manufacturing (made in China) to PRD marketing (marketed in China).
There will also be a transition from export-oriented economic integration to real integration of local and overseas markets; that is, market integration in a substantial sense. Seen from the long-term prospects of development in the Greater PRD, the rise of Hong Kong and Guangdong as a major city cluster requires not just world-class manufacturing and trade, but also an internationally competitive market system. That system has to be free and open, featuring the integration of internal and external markets and world-class manufacturing, logistics and consumption.
Market integration has to include a number of key features. First, there has to be a unified process of commodity inspection and certification for manufacturing in the PRD. That will provide a process-driven means for a transition from manufacturing to becoming a market, ultimately achieving the integration of the PRD consumer market.
There should also be unified market access for PRD services industries in order to achieve the integration of a services market. Finally, unified rules are required for the PRD market, including standards for goods and services and a system of market regulation.
The Hong Kong Model
To achieve these objectives, other tasks need to be kept in mind, including deepening the domestic market’s structural reform. This involves lifting government economic controls and eliminating unreasonable market rules, which are the fundamental reasons for high transaction costs. It is also necessary, eventually, to make the market system compatible with the Hong Kong system.
Guangdong as a pilot province should take the lead in building an efficient market system with low transaction costs, combining internal and external markets in cooperation with Hong Kong. This represents a great opportunity for a cooperative transition in the Guangdong-Hong Kong relationship and, at the same time, its biggest challenge.
June 10 2011
Sitting Pretty: ART Hong Kong
ART HK 11, which attracted 260 galleries from 38 countries and regions, will be integrated into the Art Basel brand
The crowds were a telling sign. Another was the number of exhibitors attending the fourth edition of the Hong Kong International Art Fair (Art HK 11). The four-day event, 26-29 May, at the Hong Kong Convention and Exhibition Centre, attracted 260 galleries from 38 countries and regions.
In just a few short years, ART HK has emerged as the region’s leading international contemporary art fair, raising the city’s status as an international arts hub.
“Hong Kong is uniquely placed because it’s the world’s third-largest art market by auction turnover,” said Fair Director Magnus Renfrew. “Its shared Western history, the English language, as well as tax advantages, are strong reasons” for Hong Kong to remain the regional centre for the international arts market, he added.
New to this year’s fair were top international galleries L&M Arts, Victoria Miro Gallery and New York-based Marian Goodman Gallery. They were among the 168 leading modern-art dealers who took part in this year’s ART HK. Other well-known art dealers, including London gallery White Cube, also returned this year, showcasing work by English artist Damien Hirst and other leading contemporary artists.
ART HK Director Magnus Renfrew (center) is flanked by Richard Chang (left), ART HK Advisory Group member and Director of Tira Holdings, and Tim Etchells, CEO of Asian Art Fairs Ltd
Some of the highlights at this year’s event included Asia One, a new section dedicated to solo presentations by Asian artists. Galleries from Turkey, the Middle East, the Indian sub-continent, Australia and New Zealand, as well as north, east and Southeast Asia were represented. The Art Futures section, showcasing work by emerging artists represented by 45 of the world’s best new galleries, was also expanded.
Art Basel Comes to Asia
The popularity of ART HK reflects the growing importance of Asia to the international art market. To underscore that, a deal was announced last month for Swiss MCH Group, organisers of Art Basel and Art Basel Miami, to acquire a majority stake in ART HK. The sale, which takes effect in July, means that ART HK will eventually be integrated into the Art Basel brand.
“We considered this long and hard,” said Tim Etchells, CEO of Asian Art Fairs Ltd, which owns ART HK. “The Basel brand is so strong that this gives us the opportunity to take the fair to the next stage. Art Basel will bring its unrivalled experience of running the two most important art shows worldwide to our existing expertise and know-how in Hong Kong.”
Perfect Fit
Pablo Picasso’s Buste d’Homme (1969) was featured at ART HK 11 by New York-based Acquavella Galleries
The news was no surprise to those in the industry, many of whom believe the partnership makes sense. “It’s a perfect fit,” said Ben Brown, owner of London-based Ben Brown Fine Arts, and one of the first exhibitors at ART HK. “I think that Basel would do a good job with it, and I hope that Art Basel will retain a very strong element of Asia and Asian culture in the fair.”
Asian art exhibitors voiced similar sentiments, including Indonesia’s Arkgalerie, which returned for its second showing. “Art HK remains a strong regional arts hub. We made many important contacts when we exhibited for the first time last year,” said Arkgalerie Manager Putri Ayu Pratiwi. “When we heard the news, we thought it would open doors to a wider set of contacts. But we still hope the new owners will keep the fair’s identity.”
MCH has pledged to preserve ART HK’s Asian flavour. “With our acquisition, we will be able to build on their know-how, while at the same time, channelling our own extensive expertise in the art world,” said Rene Kamm, CEO of the MCH Group.
“We have no intention of doing a ‘copy-and-paste’ fair in Hong Kong,” Marc Spiegler, co-director of Art Basel and Art Basel Miami Beach, told the Financial Times. “Each of our shows has to have a unique core.”
Moving East
Hong Kong artist South Ho’s Into the Light VI (2008) was showcased at the new Art Futures section by Blindspot Gallery
To time ART HK with the dates of Art Basel and Art Basel Miami Beach, future editions will take place in early spring. Next year's show, however, will again be held in May after an earlier decision to hold the 2012 edition in February was scrapped because it would have been too close to the Chinese new year holiday.
“May has been a good time, coinciding with the major auctions,” said Mr Renfrew, who will remain the show’s director next year. “But February puts it squarely in between Basel Miami and Basel in June. It’s been thought that the new schedule would create a third peak in the Hong Kong art season. Auction houses might create a new season [as a result].”
With last week’s record-breaking sale of Lotus and Mandarin Ducks (1947) by the late Chinese painter Chang Dai-chien for US$24.5 million at the latest Hong Kong Sotheby’s auction, it’s not surprising that the Western art market is taking notice.
Philip Dodd, Advisory Group member, and former Director of ICA London and Creative Director of China Now Festival 2008, summed up the general sentiment within the industry: “The world is moving East, and Hong Kong is simply an important sign of the times.”
June 3 2011
Hong Kong’s Biggest Auction: The Take Away
After six days of Christie’s auctions in Hong Kong, the final tally is in: Buyers spent 3.65 billion Hong Kong dollars (US$469.2 million) on fine wines, antiques, jewelry, watches and art, making it the biggest sale in Hong Kong auction history.
The auction surpassed its presale estimate of HK$2.4 billion, selling 88% of its lots. The sales value was 59% higher from Christie’s spring sales a year ago. (Both Christie’s and rival auction house Sotheby’s typically group their big sales of collectibles into multiday events that occur twice a year.) Sotheby’s, for its part, sold HK$3.49 billion during its week of spring sales in April.
Who was buying? And what did they buy? Here is a recap of what happened over the past six days:
1. China’s buying, of course.
As with previous sales of recent years, the largest contingent of buyers were Chinese. The auction house said clients from Greater China—mainland China, Taiwan and Hong Kong—were responsible for 70% of the total sale value of the auctions.
Indeed, China overtook the U.S. as the world’s most valuable art market last year, according to trade publication Artprice, and the strong sales at the Christie’s event, including contemporary Asian art, proved that the appetite for art remains strong. Hong Kong last year became the largest auction market for fine wines, overtaking New York and London. Christie’s eight-hour sale of Chateau Latour wine on Friday saw the auction house’s highest average lot value to date, at HK$152,000.
2. Ceramics are most popular, followed by contemporary art.
Four sales Thursday composed of mostly precious Chinese porcelains drew the most money, selling a combined total of HK$829.7 million. The top sale of the day was a Falangcai “kui dragons” bowl from the Qianlong period (1736-1795), which sold for HK$60 million, well over its presale high estimate of HK$15 million.
Sales of contemporary art was the next highest-selling category, bringing in HK$761.5 million. The top lot sold: Zao Wou-Ki’s “2.11.50,” for HK$41 million.
3. There are limits to Chinese spending.
While some items went well over their high estimate, the most prized and anticipated lot, an antique Chinese vase from the 18th century, failed to sell. The revolving double vase attracted some bidding interest, but didn’t breach the reserve price of HK$240 million. In April, Sotheby’s faced a similar fate when its top lot, a HK$180 million Falangcai vase, failed to sell at auction.
4. Latour is the new Lafite.
The first sale of the six-day event was a wine auction featuring bottles from Château Latour. All 392 lots sold and 95% of them went over their high estimate, bringing in HK$59.7 million. In October, a record Sotheby’s sale of bottles of Château Lafite-Rothschild brought in HK$65.4 million HK$5.4 million for its 284 lots. Latour is quickly becoming an equally important trophy label for Chinese collectors.
5. Filipino art: The new hot thing?
The sale of Southeast Asian modern and contemporary art wasn’t the most popular section of the spring sales event –76% of the lots sold and it garnered just HK$49 million, though some of the works sold for far above their estimates. But the sale set records for lesser-known Filipino artists such as José John Santos III and Patricia Eustaquio. In fact, 95% of lots by Filipino artists sold, including Mr. Santos’s “Paper Dolls,” which fetched HK$1.1 million from an Asian collector, almost 10 times the high estimate of HK$120,000.
June 2 2011
Beef Stakes
Romulo Gonzalez Johansen (left) and business partner Hernan Caetano Das Pedras set up Hong Kong-based Global Sight International to promote Argentinean food products in Asia
Romulo Gonzalez and his business partner and childhood friend, Hernan Caetano Das Pedras, set up Global Sight International (GSI) in Hong Kong in 2009 to promote Argentina’s food products.
“We started with beef because we already had a brand. People know about Argentinean beef,” said Mr Gonzales Johansen. But unlike Europe, he said, Asia remains an untapped market for Argentinean products.
“Our aim is to create a company that provides Argentinean and South American food to Asia. We do not deal with brokers. We buy direct from Argentinean producers to supply hotels and restaurants.” He said the company is also in discussions to supply Argentinean beef and wine to the city’s upscale supermarkets.
According to Mr Gonzales Johansen, Argentinean beef is “different,” because of the way cattle is raised in the country, where cows outnumber people. He said few beef-producing countries have the luxury of raising cows as they do in Argentina, where “each cow has the space of a football field to roam and graze.
“What we need to change is the belief in Asia that cows naturally eat grain. Grain-fed beef is fatty, marbly, which makes it tender, but is not healthy; it’s full of fat. Argentina has lean beef because cows are grass fed. We have to educate people here about that fact, which takes time.”
One of the ways they’re helping to promote their products is by holding blind tests. “We’ve found that consumers come away surprised that Argentinean beef was actually one of their top choices.”
Business Pioneers
A choice cut of Argentinean ribeye steak
Mr Gonzales Johansen was inspired to set up GSI after frequent business trips to the Chinese mainland exposed him to Asia’s commercial potential.
“In Argentina, and elsewhere in South America, Hong Kong is like a new market to us. That’s why we chose this part of the world to set up our business,” Mr Caetano Das Pedras said. “It would be easier to go to Europe to start our business, because they know about our products, our beef. But we’re interested in starting to promote our produce and tradition in this part of the world.”
By being among the first from their home country to set up business in Hong Kong, the two are showing the way for a growing number of Argentinean businesses interested in exploring Asia from Hong Kong. To cater to that trend, the partners, with government support, set up the Argentina Chamber of Commerce in Hong Kong last October.
Playing by the Rules
Premium beef is sourced direct from Argentinean producers for delivery to Hong Kong hotels and restaurants
“International business people prefer to do business in Hong Kong, where the rules are clear, and people feel safer doing business from here,” Mr Gonzales Johansen said. He noted that while the mainland is an attractive market, “Hong Kong is like the office of China, where everybody comes to play by the clear rules.
A chef by training, Mr Caetano Das Pedras has been instrumental in educating people in the industry about the special qualities of Argentinean beef.
“It helps that I can speak the same language as the industry, teaching chefs how to prepare traditional Argentinean food, especially beef,” said Mr Caetano Das Pedras. “For instance, it’s best to use charcoal when grilling steak because it brings out the flavour. But that’s more difficult to do in Hong Kong restaurants, which typically use a gas grill.” Another tip: “Argentinean beef is best seasoned only with salt and pepper.”
The company has also begun focusing on importing Argentinean wine, including the country’s popular Malbec and Torrontes wines. “Hong Kong is a really competitive wine market. You have no taxes, you can find wines from every wine-producing world, so there are many players already set up,” said Mr Gonzales Johansen. “But we’re not trying to compete with the big players. We’re trying to bring nice wines, boutique wines that we think are great. Wine goes hand in hand with beef, and we know Argentinean wine is growing in Asia,” he said.
By setting up in Hong Kong, the partners believe they are well-positioned to eventually enter the mainland market, where authorities are poised to allow Argentinean beef imports.
“In China each year, there are about 40 million people new consumers being created, which is equivalent to the population of Argentina. And as the society keeps growing, so will their spending power,” he said.
“But you are what you eat. Even if you can afford the best cars or fashion brands, that doesn’t matter if your food is still of poor quality. And this market will start demanding the best products. That’s the opportunity for our country – to be able to supply high quality and natural products.”
June 1 2011
Flying High
Hong Kong’s role in the region’s rapidly growing market for commercial and private aviation was evident at the Asian Business Aviation trade event, held in the city in March. Organisers report that the 11 manufacturers, which had 22 jets on display, took orders worth about US$10 billion on the first day alone.
More than half the world’s commercial fleet were represented at Asian Aerospace in Hong Kong in March
Held alongside Asia’s premier commercial aviation event, Asian Aerospace, trade visitors were up 130 per cent on the previous show two years earlier, and they included more than 500 delegates from Chinese mainland airlines. The global airline representation exceeded 100 carriers, which operate over 11,000 aircraft, accounting for more than half the world's commercial fleet.
The event’s success supports figures from independent private aircraft data service, JetNet, which reported double-digit growth of private planes in Asia-Pacfic region, year-on-year, since 2005, with China recording the highest growth.
Mike Walsh, Chief Executive, Asia Jet
Mike Walsh, Chief Executive of Hong Kong-based operator Asia Jet, said Hong Kong offers a convenient and cost-effective location for aviation businesses and their clients. He said this explains why “everyone is trying Hong Kong first, looking to get into China.”
Tax Benefits – and More
Notably, importing aircraft into tax-exempt Hong Kong avoids a 23 per cent tax on the total asset that’s applied on the mainland. But Hong Kong offers other benefits as well, Mr Walsh said.
He cited ease of access and no cabotage issues, as Hong Kong is an island, and every flight in and out of Hong Kong is currently international. “The tax regime is flexible, and the Hong Kong Civil Aviation Department is experienced in accepting general aviation at its airport. Hiring and attracting pilots and crews is easier than on the mainland, where there is a lack of pilots,” added Mr Walsh. “And unless you are like us and have associated your company with a mainland airline as your strategic partner, it is difficult to get the staff required to run a successful operation in China. So Hong Kong is definitely the right platform.”
Asia Jet is preparing to add new aircraft to its fleet
Asia Jet is a Hong Kong-registered company established in 2008 under parent company, BVI-held Asia Jet Partners Holdings. It began trading in March 2009, with the launch of the Asia Jet Card Program, the first dedicated Jet Card business in Asia.
Currently, Asia Jet operates a fleet of Gulfstream G-200s, a G4, CL-605 and Hawker 800. Mr Walsh said that, within the next four months, there will be an additional G-150, G-200 and Citation XLS+, all “brand-new aircraft straight from the manufacturers,” including two that are the first of their kind for the region. Asia Jet services include on-demand charter service, block charter (the Jet Card Program), and an ownership programme, in which clients purchase a share of an aircraft.
Flying Limousines
Jackie Wu, Chief Operating Officer, Hong Kong Jet
Hong Kong Jet, a subsidiary of HNA Group, the fourth-biggest aviation group on the mainland, opened in Hong Kong in 2009. Its first aircraft will be delivered in June. Chief Operating Officer Jackie Wu said growing demand was the reason behind the move.
“We’ve witnessed a 50 per cent growth of business jets in Hong Kong in the past two years, and forecast another 50 per cent growth by 2012. The strong demand is reflected in requests regarding chartering, aircraft management and aircraft acquisition.”
Ms Wu said that Chinese clients account for 30 per cent of all charter enquiries received by the company, and 50 per cent of the aircraft acquisition enquiries.
“Riding on the economy boom of China, entrepreneurs in Hong Kong fly more frequently to explore business opportunities and meet business partners on the mainland,” she said. “They need personalised and flexible transportation tools to accomplish their plans. Entrepreneurs choose private jets over commercial airlines, as it saves time from security checks, long waiting periods, unexpected delays and indirect flights. They may have many meetings in different cities in a day. They take private jets as their own air limousines.”
Ms Wu added that private jet ownership is rising for similar reasons as chartering, especially for wealthy mainland buyers for whom it is a status symbol. “Basing an aircraft in Hong Kong is convenient, as it can accommodate jets in different registration and provide the necessary flexibility. The city is a hub for corporates that would like to develop business in China.”
Expertise on Hand
The interior of the Gulfstream G550, the world’s most advanced business aircraft, to be operated by Hong Kong Jet
While agreeing that the absence of import tax is a major incentive for the private aviation business, Ms Wu emphasised Hong Kong’s other advantages.
“Geographically, Hong Kong is a gateway to the China market, possessing well-developed facilities, with comparatively flexible registration procedures and more expertise on hand,” she said. “There are more new private jet operators in the market and aircraft manufacturers setting up branch offices in Hong Kong. We foresee a very positive potential development in Hong Kong.”
Hong Kong Jet’s first aircraft will be delivered in June
Jeff Lowe, Director of Sales and Marketing for Hong Kong-based jet management company Business Aviation Asia Ltd (BAA), agreed that growth in Hong Kong “has been extraordinary over the past five years.” He recalled that, in 1997, there was only one private jet in Hong Kong – a pre-owned Hawker 700 belonging to businessman Sir Michael Kadoorie. Today there are closer to 60.
“In Greater China – the mainland, Hong Kong, Macau and Taiwan – there were an estimated 54 business jets at the end of 2007; today there’s an estimated. 177. That’s 123 more over 3.5 years – 35 per year – so that’s at least 65 per cent growth per year if you assume the same growth per year.” He said BAA will add another 13 to 15 aircraft to its fleet this year.
MAY 27 2011
Hong Kong's New West Kowloon Cultural District Authority CEO Named for the US$2.8 billion project
An Australian has been named to take over as chief executive of the multibillion-dollar West Kowloon Cultural District Authority, which has been plagued with delays and an executive reshuffling.
Michael Lynch, the 60-year-old former chief executive of the Sydney Opera House and South Bank arts complex in London, has signed a three-year contract for the top position at the Cultural Authority. He will assume his duties in Hong Kong on July 25, authority Chairman Henry Tang said Friday.
Mr. Lynch fills the vacancy created when Graham Sheffield stepped down as chief executive of the 21.6 billion Hong Kong dollar government project (US$2.8 billion) in January, citing health reasons.
Plans for the district now seem to be moving forward. In March, the cultural authority selected a design by architect by Norman Foster and his firm, Foster + Partners, dubbed “City Park” for the 40-hectare waterfront arts complex. The other two proposed plans, one by Hong Kong firm Rocco Design Architects Ltd. and the other by Office for Metropolitan Architecture, led by Dutch architect Rem Koolhaas, may also be integrated into the design.
Indeed, Mr. Lynch, who is currently board director of the Australian Broadcasting Corp., said he intends to see construction begin by the time his three-year contract expires. After three years, the board will decide whether to offer to extend his term.
“This is the biggest and most complex art project in the world,” he said. “We’re about to move into ‘do’ phase rather than ‘talk’ phase.”
As for the type of programming he hopes to attract to the district, he says it “needs to reflect the art forms people are interested in,” adding that “freedom of expression is the mantra for what we’d be doing.”
May 26 2011
Lesson in cold, hard cash for aspiring Harrow pupils - Initial batch of debentures sells out more than a year before HK branch of top English school will open
- estimate total cost in excess of US$129,000,000 By
Foreign Affairs commissioner Lu Xinhua, Chief Executive Donald Tsang Yam-kuen, education secretary Michael Suen Ming-yeung and Heung Yee Kuk chairman Lau Wong-fat at a Harrow stone-laying yesterday.
Money is no object for parents aspiring to have their children attend the Harrow International School.
The school's top executives yesterday said the first batch of HK$600,000 each
(US$77,430) debentures had sold out. But the HK$3 million (US$387,096) capital certificates, which give candidates top priority, were still available. Parents can also choose to pay an annual levy of HK$50,000
(US$6,451) on top of school fees, which is proposed will range from HK$106,600
(US$13,755) to HK$145,000 (US$18,710). The school's English parent counts Lord Byron and Winston Churchill among its alumni.
Harrow International chief operating officer Mark Hensman said the prices - among the highest in a city known for its expensive international schools - were necessary because the co-ed boarding school was completely self-funded.
But he stressed that the school was "a school for everybody" instead of "only for elites and the wealthy". The school plans to open in September next year.
So far, more than 1,000 parents have expressed interest in having their children enrolled. Hong Kong branch headmaster Mel Mrowiec said 300 children had been tested so far, with some awarded a place. He said scholarships, to come from 10 per cent of fee income as well as private donations, would be provided to children who showed leadership potential.
Henderson Land (SEHK: 0012) vice-chairman Peter Lee Ka-kit is among private donors who contributed an unspecified amount to the school. Lee said he hoped that good students from grass-root families, as well as his three sons born through surrogacy, could attend the school.
Hensman stressed that all children must pass admission tests regardless of how much their parents have paid the school.
Shopping in Hong Kong becomes a matter of necessity for mainlanders customers
By Anita Lam
The strong yuan and rising food prices are sending mainland tour groups to the city's retailers in search of soap and noodles - as well as luxury goods
Shoppers at YATA in Sha Tin, which expects mainlanders to account for 15 per cent of sales this year.
Throngs of mainland tour groups are a common sight at luxury retailers in Hong Kong's shopping malls, but they are now coming to the city for their daily needs, too.
The strong yuan and soaring food prices have prompted some marketing agents to organise shopping tours targeting staple items such as noodles, frying pans and bed linen rather than the usual designer gowns and hand-made wristwatches.
Li Ying, a Guangzhou-based executive with Panasonic, who joined a one-day shopping tour to the YATA department store in Sha Tin yesterday, said she planned to spend 8,000 yuan (HK$9,575) on goods ranging from skin-care products and bed linen to Japanese soya sauce, cooking oil and crackers.
"It may sound a bit weird that I should carry such bulky and low-value goods all the way back home, but really, some of these goods cost twice as much in Guangzhou."
Another woman, who gave her name only as "Ms Chung", said she visited Hong Kong nearly every month, picking up merchandise that included noodles, baby formula, diapers and cooking utensils, and spending up to 10,000 yuan a trip.
"With the difference in rates and sales offered by stores, we make 20 per cent savings on prices, and of course the goods are of better quality," she said.
While inflation in the mainland rose 5 per cent last month, food prices rose 11 per cent.
Albert Hung, a marketing agent for China's Unionpay card, who organised yesterday's trip, said they would organise more if they proved to be popular.
Daniel Chong Wai-chung, managing director of YATA Department Store, which launched its biannual five-day sale yesterday, said mainland clients' contribution to total sales is expected to reach 15 per cent this year, from 8 per cent last year.
While the city abounds with anecdotes of big-spending mainlanders, some tourists said the stories are often exaggerated.
Four members from the tour group said they planned to spend or usually spent HK$8,000 to HK$10,000 during their shopping trips, but one of them, Liang Luisi, an accountant earning 3,000 yuan a month, admitted she had been told to say so. "The travel agent told me to tell the media that I planned to spend a few thousand yuan here," Liang said. "But I may not actually spend that much."
Liang, a first-time visitor to Hong Kong, said she had been drawn to the tour after seeing friends bringing back shampoo and skin-care products that she had not seen in Guangzhou. But she did not find the shoes and handbags particularly cheap.
A Hong Kong Tourism Board survey found that only about 1.5 per cent of the 60,000 mainlanders spend HK$50,000 or more during a day visit to the city.
May 25, 2011
A Hands-On Hotel Internship By Amy Ma
Richard Hatter, the general manager for Hong Kong’s Hotel ICON, says his first internship wasn’t a great learning experience: six months of sitting behind a desk as a cashier for the Intercontinental Hotel in Portland Square, London.
But the newest flock of interns at Hotel ICON, who begin their stint in July and stay until November, won’t have to suffer those bottom-of-the-ladder experiences. This is because the hotel, which had its soft opening on April 29, is owned by their school, Hong Kong Polytechnic University. Two hundred students will be chosen as interns from the undergraduate class of 2,000. On a regular basis, the hotel is run by 300
non-student, full-time staff.
“We don’t want the interns to be waiters or spend their summer at the copy machine,” says Mr. Hatter. “We want them to develop real skills.” He recently invited 700 “mystery shoppers” from various backgrounds to have a stay in the hotel and test the staff with demands ranging from room service at odd hours to delivering their luggage to special locations, and plans to have a new group for his interns.
While other hotel-management programs tend to have franchise agreements with universities, Hotel ICON is in fact an integrated campus of sorts wholly owned and developed by the school. It comprises three sections: a 36-unit apartment complex for faculty; two basements and eight floors of classrooms, libraries, and study space for students; and a 262-room hotel.
Three of the rooms in the hotel are designated “prototype rooms,” and students can try their hand at designing them. Each room has its own theme: lifestyle, technology and design. “You can literally go in and change the carpeting or sheets to a different texture, or add in your art pieces,” says Mr. Hatter. “At the end of their stay, your guests can give you instant feedback and what worked and what didn’t.”
The rest of the hotel, however, has designers that are far from amateur. Along with big international names like Terence Conran – who created the executive club floor and the Above & Beyond Chinese restaurant – and Patrick Blanc – who is responsible for a “green wall” of 8,000 live plants — there’s also a selection of local Hong Kong talent. Hong Kong fashion designer Barney Cheng created the staff uniforms. And fashion designer Vivienne Tam – a graduate of the Hong Kong Polytechnic University – put her mind behind the honeymoon suite.
“The most important thing here is that ICON is a self-sustaining hotel, and not just a simulated environment,” says Mr. Hatter. “We can’t very well teach people about hotels without running a successful one.”
May 24 2011
IPOs Power Job Boom in Hong Kong
Hong Kong's booming IPO market is having a direct effect on job growth
Nick Lambe, Managing Director, Morgan McKinley Hong Kong, describes a job market he hasn’t seen since before the global financial crisis. “We have seen very strong hiring activity in Hong Kong within the corporate finance space so far this year, with the majority of hires being at the analyst and associate levels. There are already more senior roles at VP (vice-president) and director levels starting to come online, as organisations continue to build their teams and compete for top talent.”
Mr Lambe says this is “a direct result” of Hong Kong’s booming IPO market, the world’s largest by fund-raising size in 2010, with a record HK$445 billion raised, according to accounting firm PwC. Even with the mega-listings that made history last year, he expects the trend to continue as Chinese mainland companies continue to drive IPO activity in Hong Kong.
Nick Lambe, Managing Director, Morgan McKinley Hong Kong
“The Hong Kong Stock Exchange has become a hub for cross-border IPO activity, leading to a shortage of professionals in the local market,” Mr Lambe says. “Top investment banks are therefore competing heavily to secure individuals, either locally or from further afield. Individuals with experience at top-tier organisations, and native or fluent Mandarin speakers, are particularly sought after.
He notes that professionals with strong financial modelling skills, Ivy League education or equivalent, with strong deal experience, are in high demand, while areas such as Equity Capital Markets and research are particularly hot areas at the moment.
Luxury Brands Lead the Way
Mr Lambe says these IPO-related positions are indicative of a strong market in Greater China. “Examples of this are particularly prevalent within the luxury goods sector, where organisations are looking to access the financial markets to help fund business growth in the Greater China region.”
Mr Lambe was referring to luxury Italian brand Prada’s decision to launch its Initial Public Offering in Hong Kong, and widespread speculation that other European brands may follow in positioning themselves at the gateway to China, the world's fastest-growing market for luxury goods. Last year, French cosmetics and skincare brand L’Occitane International chose Hong Kong over Paris for its global IPO, making history as the first French company to list in Hong Kong. Last month, upscale American handbag and accessories maker Coach and luxury shoe group Jimmy Choo emerged as the latest global brands to consider a Hong Kong listing. According to a report by Thomson Reuters publication IFR, New York-based Coach Inc is in preliminary talks with several investment banks.
Anthony Thompson, Managing Director of Michael Page, Hong Kong and Southern China
The Wall Street Journal also reported in March that the list of global brands planning to list in Hong Kong is swelling. The report cited commodities trader Glencore International of Switzerland, Italy’s Ducati Motor Holding and luggage maker Samsonite among the names that are considering applying for a Hong Kong listing or have recently gained listing approval.
Recruiters Busy
James Carss, Executive General Manager, Hudson Hong Kong
Other recruiters also report a flow-on effect to the city’s job market. “The boom in IPOs and the resurgence of M&A activity are certainly keeping the Hong Kong consulting industry busy and impacting hiring decisions,” says Phil Shirley, Greater China M&A Business Leader at Mercer. “We're seeing a lot of interest in due diligence services, executive remuneration advice and consulting around cultural change relating to these transactions. We also notice our clients beefing up their corporate strategy teams and adding M&A expertise to functional areas."
A recent Michael Page International survey also forecasts a continued strengthening of the professional labour market in Hong Kong this year. “This positive hiring outlook is aligned with high levels of business confidence after a strong recovery in 2010,” the report found. Anthony Thompson, Managing Director of Michael Page, Hong Kong and Southern China, says demand for senior-level professionals with proven experience in initial public offerings is a trend “evident across a range of sectors that include consumer, property and mining.”
TY Lee, Manager – Front Office Division, Robert Walters Hong Kong
James Carss, Executive General Manager, Hudson Hong Kong, says the booming IPO market is “definitely having an effect” on the city’s job growth. “Mainland Chinese candidates with the necessary deal experience, as well as Western candidates with good Asian cross-border deal exposure are in high demand in Hong Kong. “ Mr Carss says employers want people who can hit the ground running. “They don’t have time to bring them up through the ranks. Instead, they are looking to other parts of the world for lateral moves to start working on deals.”
Job Magnet
TY Lee, Manager – Front Office Division, at Robert Walters Hong Kong, says Hong Kong’s hot job market is nothing new. “Hong Kong has always been the prominent financial hub of Asia,” he says. “With the booming IPO market, we see a lot of demand for bankers with relevant IPO and investment banking experience, especially those with good experience in China and with Mandarin-speaking ability. Besides the demand for front-line investment bankers, the IPO boom has also created jobs for middle- and back-office professionals who can support these bankers.”
May 23, 2011
Milan Station: Even Its Stock Draws Shoppers
Hong Kongers love shopping — for equities as much as handbags. The latest evidence is the intial public offering of Milan Station, which has given them a chance to indulge both passions in one go.
Shares in Milan Station, a retailer of second-hand high-end fashion items with operations in Hong Kong, Macau and China, soared as much as 77% on its first day of trading on Monday. The Hang Seng Index was down more than 1%.
The last time an IPO was this well received by retail investors was in 2006, when Tianjin Port Development Holdings Ltd.’s retail offering was 1,702 times covered.
As Dow Jones Newswires reports, the tiny IPO, which raised just HK$271 million (US$34.9 million), was 2,179.5 times oversubscribed by retail investors. That triggered the option to increase the retail tranche to 50% of the IPO from 10% originally.
Milan Station’s IPO is riding on a wave of brand-name IPOs in Hong Kong, including Prada SpA and Samsonite, but the company has a special place in the hearts of tai tais , Hong Kong’s wealthy ladies of leisure , and those who aspire to be one. It’s popularized the business model of buying used fashion items and re-selling them, giving mere mortals the chance at carrying a Hermes Birkin bag, even if it’s going to be so-last-season.
May 19 2011
Full steam - or fry - ahead - Choosing the best dim sum restaurant in Hong Kong is no easy matter
By Susan Jung susan.jung@scmp.com
From left: Tucking in at Tim Ho Wan restaurant in Mong Kok while students learn the art at the ChineseCuisine Training Institute.
Clockwise from top left: Steamed dumplings with prawns and leaf amaranth at Fook Lam Moon; Abalone puffs at the Four Season Hotel's Lung King Heen; Deep-fried beancurd skin roll at the Chinese Cuisine Training Institute; and Baked bun with barbecue pork at Tim Ho Wan
Dim sum provokes passionate debate in Hong Kong. When I took a poll among my foodie friends about which restaurants I should visit for this story, the suggestions came fast and furious, sparking discussion about whether we should just go for "the best" or also include places that are local institutions.
Arguments about these steamed, fried or baked morsels might seem petty, but it takes years for dim sum chefs to perfect their craft.
Chan Chun-hung, who worked as a dim sum chef at places such as the Kowloon Shangri-La and Luk Yu Tea House before becoming senior instructor in Southern Chinese food preparation at the Chinese Cuisine Training Institute in Pokfulam, says that it takes about eight to 10 years to become a good dim sum chef. A trainee must learn to make seven types of dough, from fermented dough for char siu bao to egg wrappers for sui gau (water dumplings).
"The hardest thing to learn is dumpling skins - they need to be delicate," says Chan. "There are certain criteria when making dim sum, for instance, har gau [shrimp dumplings] must have a skin that's chewy, and it must be filled with fresh shrimp. The shape must be uniform, with a minimum of nine to 10 pleats."
Dim sum is the most technical and delicate component of the CCTI's two-year training course, says Peter Lo Hon-fai, programme manager of culinary training.
Lo differentiates between the dim sum as made in its spiritual home - southern China - and dim sum served in the north, where the cooking techniques are limited to poaching, pan-frying and steaming.
"There's more variety in southern dim sum, with some techniques that are learned from the west, such as baking," he says, adding that deep-fried dim sum is the most difficult. "With steaming, the temperature is fixed, but with frying, there are different types of wrappers and they need different levels of heat."
Most of us think of the food first when we go out for dim sum, or yum cha, as it's also known. But it started off as something to accompany tea.
"Tea drinking has a long history in China - it came before dim sum," says Lo. "People started to eat food with tea, because tea is good for the digestion. The food became smaller and smaller, so it's now one bite food. It wasn't meant to be a full meal - it's breakfast, afternoon tea or a snack."
Today, though, most people treat it as a full meal and there are specialist dim sum shops that serve it all day.
For this story, I visited restaurants across the spectrum - from traditional and inexpensive to modern and luxurious, and a few places in between. Some of the best are listed below, but remember, this only touches the surface of what's available in Hong Kong.
May 19 2011
The Age of Innovation
 video presentation http://www.vimeo.com/23909476
Lawrence Lau is Professor of Economic Development at Stanford University, Professor of Economics at the Chinese University of Hong Kong and Chairman of CIC International (Hong Kong) Co Ltd, a wholly-owned subsidiary of China Investment Corporation, the sovereign wealth fund of China. In Six Questions, Mr Lau talks about Hong Kong’s role in the development of branding and innovation on the mainland.
What lies ahead for the Chinese economy?
As you can tell from the 12th Five-Year Plan, China is going to change in two directions at least. One is to change from an export-oriented economy to an economy focusing on its own internal market, which is huge.
I think the second thing is, if you really look at what has happened in the last 30 years, Chinese growth has basically been driven by growth in inputs; but that can’t continue for too much longer. So I think China will be shifting to growth much more driven by technical progress and innovation.
Do you see the Chinese mainland being the consumer society of the future?
I think it would be for the next 30 years. They’re at that stage where they begin to want things: cars, watches, television sets, you name it. I think it’s coming. In some sense, it has already happened in the major urban centres in China.
Consumers are seen as a low component of economic growth on the mainland. Do you see that changing?
I think that’s really based on a misunderstanding. People say China is export-oriented but, in fact, the proportion of exports to GDP isn’t that large, at about 30 per cent. What is more important is that the domestic value-added to the domestic measure of content is very low. You take something like the iPad, supposedly made in China. Let’s say the wholesale [value] is about US$500 [per unit], do you know what the value-added is in China? It’s less than US$15. The basic chips are, of course, owned and produced by Apple, while the liquid crystal display, the LED, is made in Japan, South Korea or Taiwan. Chinese value-added is very small.
So is building brands on the mainland important?
If you want to sell to 1.3 billion consumers, you cannot do without brands. There are some very successful brands, but they maybe not well known outside China. One is called Kangshifu (Master Kong), and it makes instant noodles. It used to be a very small, obscure firm in Taiwan, and went to the [Chinese mainland] more than 10 years ago. The firm developed the brand, spent money on advertising. Kangshifu now has 40 per cent of the Chinese instant noodles market. So it’s happening. Other foreign brands that are doing well would be McDonald’s and Starbucks, as well as a lot of Hong Kong and Taiwan brands moving in.
Would developing Chinese brands ultimately push out foreign brands?
They could, although Coca-Cola would probably stay there forever. But more importantly, some brands are branching out, such as Haier, which is doing very well in many parts of the world. For China, a little bit like the United States, you can capture your own market first and then, using that as a base, push out.
Where does Hong Kong stand when it comes to branding on the mainland?
I think Hong Kong can play a role, because people in Hong Kong have much more contact with the rest of the world. They are more current with what’s going on, so they could play a very important role in design, in advertising and in helping to establish brands.
May 18, 2011
Hong Kong Film Festival, Fox studios offer new movie award By Clarence Tsui
Winner gets HK$100,000 prize plus Hollywood deal in bid to promote independent Chinese-language films
The Hong Kong International Film Festival has joined forces with a major American studio in offering a new award aimed at promoting independent Chinese-language films.
The winning project gets a shot at Hollywood funding.
The Fox Chinese Film Development Award, announced at a Cannes Film Festival press conference this week, is a collaboration between the Hong Kong film festival's Hong Kong-Asia Film Financing Forum and Fox International Productions of the United States.
The annual award will be open to Chinese-language film projects that have yet to secure financing or sales representatives. A shortlist of five projects will be drawn up after the call for entries ends on October 30.
The winner will be announced during the film-financing forum in March 2012.
Roger Garcia, the Hong Kong festival's executive director, said the top prize would include HK$100,000 in cash and a first-look development deal with the American studio.
The president of Fox International Productions, Sanford Panitch, said the award would allow what he sees as an emerging class of commercially minded Chinese filmmakers to "have a safe garden to grow in".
The studio's initiative is largely seen as part of its major push into the mainland Chinese market. Fox has already released two Chinese-language co-productions, Hot Summer Days in 2009 and The Butcher, The Chef and the Swordsman last year. Production began in March for Love in Space, a sequel to Hot Summer Days. Panitch said on Monday that the studio was working on its fourth Chinese-language production, but declined to reveal details.
One of the award's eligibility criteria is the applicant project's "high possibility" of being adapted into a Chinese-language film. Panitch said that means the award "will need to be sensitive to the realities of censorship" on the mainland, where screenplays and films must be submitted for official approval before production or release.
"Our tastes and instincts of what we want to achieve matched that of Sarft," said Panitch, referring to Beijing's State Administration of Radio, Film and Television.
The award will be selected by a panel comprising a Fox executive, a festival representative, academics and film industry figures. Panitch said the studio would probably nominate its head of productions and development in Greater China, Carrie Wong, for the jury.
May 13 2011
Why Chinese Buyers Want Hong Kong Homes By Jason Chow
Developers of this show flat in the Cullinan are trying to appeal to rich mainland Chinese property buyers.
China’s rich are snapping up properties all around the world, with all the cities in the world from which to choose, why is Hong Kong so popular?
It has to do with the rule of buying what you know: Hong Kong is the most popular destination for Chinese tourists – it’s nearby and it’s a city where many speak Mandarin. What’s more, the rising yuan goes a long way in Hong Kong, a special administrative region that remains nominally under Chinese rule but whose currency is pegged to the U.S. dollar.
Samson Law, managing director of Sotheby’s real-estate division, adds that China’s recent measures to cool its property market—including limits on multiple-home ownership and higher interest rates—have prompted wealthy Chinese investors look outside the country.
“What’s the next step after China? Hong Kong,” he says. “Then later, they’ll look to buy overseas, in London, New York or in Australia.”
The surging demand from China, especially for luxury properties, has prompted the high-end real-estate divisions of Sotheby’s and Christie’s to set up Hong Kong offices. These buyers aren’t buying just any homes —they’re buying the most expensive in town: In Hong Kong, buyers from China make up 28% of the transactions for properties that are priced at 12 million Hong Kong dollars (US$1.5 million) and higher.
Apparently, Chinese shoppers are most interested in luxury addresses—the Peak and the southern side of Hong Kong Island are top choices for those with sky-high budgets. Neighborhoods with convenient transportation links back to China rank high as well, Mr. Law says. West Kowloon is prized because it sits above an Airport Express station, for instance, and Hung Hom is close to the train terminus that links Hong Kong to Shenzhen and Guangzhou.
The developers of the Imperial Cullinan, a luxury development in West Kowloon, seem to know what Chinese buyers want. The group recently launched a marketing road show in Shenzhen to publicize its four-bedroom condos. Many of the apartments feature sweeping views of Victoria Harbour and two kitchens: one enclosed kitchen with a gas-fired cook top for Chinese cooking and an open Western-style kitchen with an induction stove.
According to Joseph Tsang, managing director of Jones Lang Lasalle, Chinese buyers also value new developments over old, and are looking for capital appreciation rather than rental income.
“These buyers never flip the property and they seldom lease them out,” he says. “They’re not aiming for yield. They’d rather just leave them empty. They just want to park some of their money in Hong Kong.”
Property prices in Hong Kong, fueled by record-low interest rates and the strong demand from China, have reached historic highs, pushing past their previous 1997 peaks. The average price for a house rose 24% last year alone after surging 30% in 2009. Hong Kong’s government has considered several cooling measures in recent months and interest rates are expected to rise later this year, which could bring prices down.
While mainland buyers make up the overwhelming majority of overseas players in the Hong Kong real-estate market, shoppers from other countries are buying as well. Home sales are brisk in Discovery Bay, a small car-free community on Lantau Island that is accessible by ferry and popular among expatriates. According to Christine King, director of the real-estate agency Headland Homes, 90% of them are going to mostly Western expatriates.
During the 1990s and early 2000s, many expatriates—mostly from the U.K. and Australia—were transferred to Hong Kong by their employers and assumed they would spend a maximum of three years in the city before moving home, Ms. King said. But many have chosen to retire in Hong Kong because the taxes are much lower than in their home countries.
“Before, none of the expats would buy,” she said. “They couldn’t get their head around it. But now, people are seeing Hong Kong as home and they see the sense in it.”
May 12 2011
Hong Kong Start-up Support for tech-related start-ups
 State-of-the-art facilities at Hong Kong Cyberport attract tech-related start-ups
Setting up a new company can be a daunting business. But for entrepreneurs thinking of taking the plunge, Hong Kong is about as welcoming an environment as they'll find. That's partly because of the ease of setting up and running a company in the city, and the broad range of reasonably priced professional services available. But it's also due to the wealth of information, advice, even financial help provided by the government and local trade bodies.
Hong Kong's business-friendly environment makes setting up a company a cinch, according to one local entrepreneur. "The whole process was pretty painless," says Jimmy Gao, founder of QTrack.hk. Set up last year, the company sells its own proprietary customer-management system aimed, initially, at the restaurant industry. "It was all up and running in five to six days."
Mike Ko, founder of time-based online event-searching business timable, adds that straightforward procedures for business registration, taxation and audit meant he didn’t need fulltime professional help to set up his company.
One-Stop Shop
But more important still is the raft of services available specifically for start-up businesses. The Hong Kong Trade Development Council's (HKTDC) Entrepreneur Day, 20-21 May, is just one of the many forums in which new and potential business owners can get information and take advantage of networking opportunities.
 Video Presentation (5 minutes) http://www.vimeo.com/23635771
Another is the HKTDC's SME Resource Centre, which was launched last September. Located in the Hong Kong Convention and Exhibition Centre, the 15,000 square-feet venue is a "one-stop resource centre, especially for start-ups," said the HKTDC's Senior Manager, Customer Service, Katherine Lo. It houses a trade library of 8,000 business publications and reference material, including business directories, market reports and trade-fair catalogues. It also offers access to Kompass and other electronic business databases, which are usually out of the financial reach of start-ups.
The SME Centre also features meeting rooms and other facilities available to small businesses. It offers workshops on a range of themes, including entrepreneurship and doing business in China. SMEs can also take advantage of the centre’s advisory services, one focusing on general SME issues, the other on the Chinese mainland. Government officials from Guangdong, Beijing, Shanghai and Fujian are based in its offices, and meetings can be arranged as part of the service.
Saving Time and Money
Cedric Delzenne, who used the SME Resource Centre extensively to launch his online fashion retail business Shop des Créateurs, last October, says he found the China business information particularly helpful.
Cedric Delzenne used the HKTDC SME Resource Centre extensively to launch his online fashion retail business, Shop des Créateurs, last October
"Creating my own company was something I'd had in mind for a long time, and when I moved to Hong Kong, I quickly realised it was the perfect place to do this," says Mr Delzenne, a former management consultant in his native France. "Because of the people I was able to meet, it was easy to concentrate on the business and make it grow rather than spending time on administration. I was even able to apply for an investment visa myself," he says.
"Being in Hong Kong didn’t only save time, it also saved money, because I had a limited budget for the launch, and I was able to spend it on a top-notch website rather than on lawyers and so on. Hong Kong is also a very good place for web developers. I was very pleased with what I got; for the same site in Europe, I think I'd have had to pay twice as much."
He adds that the French Chamber of Commerce also helped to connect him with useful contacts through events, something that's common at the city's many other national chambers. There are also a number of
organizations that cater specifically to start-ups, providing everything from networking get-togethers to office space, including BootHK and StartUpshk, which has been running the popular Start-Up Saturday events (now moved to Mondays).
Incubating Business
The Hong Kong Government's Trade and Industry Department also provides small businesses, including start-ups, with free business information and consultation services. The Support and Consultation Centre for SMEs offers the services in collaboration with 100 industrial and trade organisations, professional bodies and other government departments.
Located in Kowloon, the centre offers a start-up information service, including requirements on government licences and permits, methodology in drafting business plans, market information, costing and expenditure analyses. There's also a business advisory service for prospective entrepreneurs and free SME seminars and workshops.
For IT-related start-ups, Hong Kong Cyberport provides low-cost grade-A office space, and high-bandwidth Internet access. Its Digital Media Centre includes media production facilities for small companies. It also provides funding: unconditional grants of HK$100,000 to entrepreneurs. "All you need is a good business idea," says Cyberport Chief Technology officer David Chung.
 David Chung, Chief Technology officer, Hong Kong Cyberport
Its incubation program, which is currently helping about 50 companies, can provide additional subsidies of up to HK$300,000, plus two years' free rent. Companies receiving support from the
program don't have to base themselves at Cyberport. There's a similar incubation programme on offer at the Hong Kong Science and Technology Parks.
Cyberport is also setting up an office in Shanghai, and offering office space there as part of a soft-landing program for Hong Kong businesses looking to tackle the mainland market.
In addition, the Vocational Training Council runs a Business Start-up Centre to provide office facilities and administrative assistance to new businesses, while the Hong Kong Productivity Council (HKPC) runs several programs aimed at helping small businesses improve their efficiency. "For entrepreneurs, they have to learn how to eliminate waste, control expenses and cut unnecessary costs," says Ricky Leung, Principal Consultant in the HKPC's business management division. The body also helps business with branding, by matching new businesses with royalty-free work from local designers. "For entrepreneurs, it's quite difficult to put a lot of money into advertising and promotion," says Mr Leung.
May 11 2011
America Gains From Chinese Investment - These companies, like the Japanese before, are creating jobs and growth in the U.S.
By Daniel Rosen and Thilo Hanemann
Traditional macroeconomic issues usually dominate U.S.-China economic conferences such as the Strategic and Economic Dialogue (the "S&ED") held in Washington this week: exchange rates, trade disputes, market access and the like. But beyond the familiar laundry list, a new topic has burst on the scene: direct investment by Chinese firms in the United States.
Between now and 2020, we expect Chinese firms to deploy between $1 trillion and $2 trillion of direct investments abroad. Americans could be a major beneficiary of this—if anti-China sentiment in Washington and around the country does not bring down the curtain just as the show is starting.
China started investing overseas in a big way in the mid-2000s, almost entirely in the natural resources sector. Chinese firms made some attempts to invest in the U.S.—notably CNOOC's failed bid for oil company Unocal in 2005—but through 2008, such forays were few and far between. Since 2009 that story has begun to change. In a new study, we find that over the past two years direct investment expenses by Chinese firms in America have grown more than 130% a year.
In 2010 alone, Chinese firms spent more than $5 billion in America on a combination of 25 "greenfield" projects built from scratch and 34 acquisitions of existing companies. While China still accounts for only a tiny share of total foreign direct investment in the U.S., Chinese firms are today invested in at least 35 of 50 states and an upward trend is clearly underway.
It is not politics but profit that is driving the vast majority of Chinese firms to invest in the U.S. With over-investment leading to excess capacity in much of industrial China, Chinese companies increasingly see greater profit opportunities across the Pacific.
The shift of China's growth model toward domestic consumption and increasingly intense competition at home forces Chinese firms to upgrade their technology; capture the higher levels of the value chain they traditionally conceded to foreign partners; and augment their managerial skills and staff base to remain globally competitive. Investments abroad are a way to do all this.
Ren Zhengfei, CEO and managing director of Huawei Technologies.
China's gain could also be America's gain, as demonstrated by an earlier round of Asian investments: Japanese firms had a difficult start in the U.S. in the 1980s, as they were greeted with skepticism and fear. Today, Japanese firms employ almost 700,000 Americans with an annual payroll of nearly $50 billion.
Yet, as with Japan, the high growth of Chinese investment—albeit from a tiny base—is already sparking a political firestorm in the U.S. Recent controversies have flared around various investments by telecommunications equipment supplier Huawei, as well as
steel maker Anshan in a Mississippi rebar plant, and the acquisition of small aircraft maker Cirrus by a Chinese state-owned company.
There is a clear danger that anti-China reactions will only grow louder as the numbers increase, and even result in more restrictive terms for firms from China. Such a closed-door policy would be bad for Chinese firms. It would also be tragic for American communities to lose the jobs, innovation and tax revenue additional investment dollars could create.
Preventing a bilateral investment shut-down will require effort by both sides. In America, clearer thinking on national-security issues is important. The inter-agency Committee on Foreign Investment in the United States review process is generally working well to vet deals for security threats, but a hyperbolic tone emanating from Congress and others on this issue is toxic. Congress and the White House together must send a clear bipartisan signal that Chinese investment is welcome in the U.S., lest Chinese investors take their checkbooks to less hot-headed countries.
China also has ways to help its cause. It's little wonder deals get bogged down in Washington, given the non-transparent, politically influenced nature of many Chinese companies. Improving governance within companies will help this. So will regulatory changes to brighten the line between government and companies. For instance, a clearer separation between regulators and the firms they oversee would send a good signal.
China must recognize that its restrictions on American direct investment affect the political mood in Washington. Beijing maintains barriers to foreign investors in many sectors, such as telecommunications or financial services, and U.S. negotiators are working to remove those hurdles. China can help sustain openness to Chinese investment abroad by continuing to reform its inward investment rules.
That said, however, it is critical that Washington not play a tit-for-tat game with Chinese investment. America has tried to keep politics out of the foreign-investment screening process not to do foreigners a favor, but because openness to investment is good for American firms, workers, communities and the economy as a whole.
That logic applied to Japan in the 1980s, and it holds with China today. Now would be a terrible time for the U.S. to drop its own successful principle. If we do, we risk Chinese firms setting up plants in Ontario instead of Michigan, or Juarez instead of El Paso.
Messrs. Rosen and Hanemann are partners at the Rhodium Group, a New York-based advisory firm, and authors of the new study: "An American Open Door? Maximizing Benefits from Chinese Direct Investment in the U.S."
May 7 2011
Pearl perch set to make a splash By Ada Lee
 
Food critic Leung Man-to gets ready to taste a pearl perch at a fisheries department event yesterday in Yuen Long.
A round-bellied fish with a small head and black spots is making a return to Hong Kong's supermarkets, but anyone who wants one will have to pay a relatively high price.
The pearl perch, with properties said to promote growth and help stave off cancer, will cost HK$60
(US$7.75) to HK$70 (US$9.03) a catty (600 grams), double the cost of the popular grey mullet.
Native to Australia, it was first brought to Hong Kong from Queensland nine years ago, but the high cost of its fry and difficulties in breeding it discouraged some fish farms, and supplies have been inconsistent.
But a breakthrough last year made it possible to provide a stable supply to the market in the coming years, the Agriculture, Fisheries and Conservation Department said.
The aim is to bring 300,000 of the freshwater species to the market each year starting with the first batch of 3,000 in mid-May, and the Fish Marketing Organisation expects them to sell well despite the price.
"Even when the supply was unstable, we got calls from the public asking when the fish would be available again," the organisation's market manager, Henry Yip Hin-wai, said.
The fish is high in Omega-3 fatty acids, which are essential to normal growth and, according to some studies, can help reduce prostate tumour growth.
The department first bred the fish successfully in 2007 in co-operation with several fish farms, but many were eaten by birds and other fish before they reached marketable size.
John Lee Hong, who has farmed pearl perch for a couple of years, said they cost 10 times more to rear than other freshwater varieties, and farmers were still looking for ways to reduce the costs. He said they ate a lot and were picky about their food.
"In the two weeks after birth, they need to be fed constantly for 18 hours a day, and they only eat live food," Lee said.
The fish also had to be taken care of round the clock in the first few weeks, because they would kill each other even when they were only two days old.
But they grow quickly. While a grey mullet needs a year to grow to a marketable size of 600 grams, a pearl perch needs only half that, fish farmer Lai Loi-chau said.
Lai said about a dozen farms were now growing the fish and about 100 were needed to provide a stable supply. "We can achieve that by the end of the year," he said.
May 3 2011
World's highest hotel opens in Hong Kong
 
The Ritz-Carlton Hong Kong, a luxurious hotel located on the top of the city's tallest building, held its opening ceremony on Tuesday, claiming its title as the world's highest hotel.
The 312-room hotel, occupying the 102 to 118 floors of International Commerce Center (ICC), a 490-meter high building developed by Sun Hung Kai, the largest property developer in the city, is the 75th in a series of Ritz-Carlton's globally growing luxury hotels, and the 16th in Asia.
The opening of the Kowloon-based hotel marks the comeback of the Ritz-Carlton in Hong Kong, after the group closed operations in its former location in the Central in February of 2008.
With the return of the Ritz-Carlton, guests and visitors could have a bird's-eye view of the stunning city scenes, said John Tsang, financial secretary of the city government, while addressing in the opening ceremony.
Room price of the hotel starts from 6,000 HK dollars ($771. 3) per night for a deluxe suite, while the presidential suite will cost about 100,000 HK dollars per night, the hotel said.
The Ritz-Carlton Hotel Company is currently running 7 hotels in the Chinese mainland cities of Beijing, Shanghai, Guangzhou, Shenzhen and Sanya.
ICC, the 118-floor skyscraper sitting in West Kowloon, was completed in 2010. As the fourth highest building in the world, ICC contains a observation deck on the 100th floor, called "Sky 100", which opened to the public in April this year.
May 2 2011
Scourge of sharks not just Hong Kong's soup treat By Zuleika Sedgley
The Chinese love of shark's fin soup gets all the blame. But fish and chips in Britain and Australia, shark sashimi in Japan, and shark-based products in Taiwan contribute significantly to depletion of shark populations, diverse studies show.
Greenpeace estimates 100 million sharks are killed every year, 35 million to 70 million of them for their fins. While this confirms the impact of demand for shark fin, a lot of sharks end up elsewhere - in culturally diverse kitchens cooking for diners often unaware of what they are eating.
Take the English meal fish and chips. Although cod is the species most often used, a popular alternative is called skate or rock salmon. These names keep many diners ignorant of the fact they are eating spiny dogfish shark, a species that since 2006 has been listed as vulnerable on the International Union for Conservation of Nature Red List for Endangered Species.
The extraordinary demand for this species of small shark - Europe consumes 20,000 tonnes a year, with the lion's share eaten by Britain - has seen the northeast Atlantic population decrease by 95 per cent.
Britain has passed its taste for dogfish fish and chips to many former colonies. In the Australian state of Victoria, dogfish is the most common species used for fish and chips, hiding behind a different name, flake.
Sharks are used in other dishes elsewhere. A 1997 report by the wildlife trade monitoring network Traffic says shark meat is used in Taiwan to produce minced fish products, including fish balls, fish cakes, fish sausages, tempura and artificial crab.
This is also the case in Hong Kong, according to Stan Shea Kwok-ho, project co-ordinator for Bloom HK, a conservation group. "I spoke to local fish ball producers and they said they sometimes used the meat of sharks that are fished locally for fish balls because it is inexpensive," he said.
"The meat of these sharks is also boiled to make soup and is stewed with marinated vegetables."
In Japan, diners indulge in same no sashimi, thinly sliced raw shortfin mako or blacktip reef sharks - both on the IUCN red list, respectively, as vulnerable and near threatened.
Recent education campaigns to discourage diners from eating shark fin have begun to change attitudes among Chinese. Some, like local activist Rachel Tang Hoi-yan, now even reject the idea of shark's fin soup as part of Chinese culture.
Tang, whose Facebook page "Say no to shark fin" has more than 8,000 followers, most of whom are Chinese, changed her thinking on the delicacy after learning of the finning industry.
"I don't think that eating shark fin has anything to do with Chinese culture, it is all about status," she said. "Traditional Chinese culture does not support it. Confucianism encouraged benevolence and to live within your means, it rejected extravagance. Similarly Taoism instructed us to go with the flow of nature and not against it. What does either have to do with eating shark fin?"
April 28 2011
Hong Kong's Polytechnic University (PolyU) US$200 million training hotel ready to open its doors
By Amy Nip
  
A controversial Polytechnic University (PolyU) training hotel that was given a multimillion dollar discount on land use transfer fees will open to guests tomorrow - and its rates will be similar to conventional hotels nearby.
The redeveloped former university staff quarters site in Tsim Sha Tsui boasts a 28-storey complex comprising three parts: a school of hotel and tourism management that takes up the first nine levels, housing for some university staff and the Hotel Icon.
Some hoteliers voiced concerns about unfair competition after the government charged the university a nominal land use transfer fee of HK$1,000 instead of the estimated market rate of up to HK$300 (US$38.71) million.
But PolyU executive vice-president Nicholas Yang played down the competition concerns yesterday, saying the hotel was not designed to compete, but to train people for the industr
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