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on the 1st of July, growing with the HKSAR - The little
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Kong Handover - Jiang Zemin's speech June 30 1997
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Charles and former Hong Kong Governor Christopher Francis Patten leave HK after
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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
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one week period following the day of the Chinese New Year shall be known and
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Hawaii". This week is not and shall not be construed as a state holiday. [L
2007, c 48, §2] click for more details
4/3/2012 "The Why & How of Leveraging Your Business into Hong Kong"
Youtube http://www.youtube.com/watch?v=OMTB2IQYgY8 Podcast www.hkchcc.org/KGUAM-ThinkTechHawaiiTheWhyandHowofLeveragingYourBusinessintoHongKongJohnsonChoi04032012.mp3 Facebook http://www.facebook.com/note.php?saved&¬e_id=10150787843895619
Meetings and Exhibitions Hong Kong - Converging Possibilities - English the Official Language
The Independent Commission Against Corruption has
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The Hong Kong Advantages under One Country Two
Systems - when most of the world want to do business with
China, there is only one place that China gives 100% backing - that is Hong
Kong. Quoting the former Chief Executive of Hong Kong SAR Honorable Tung Chee-hwa
"背靠祖國 - 面向世界" "backed by China and engaged globally". Whether you are an international business wanting to do business
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Asia's World City: Hong Kong is the right and smart choice.
TED: Martin Jacques
Understanding The Rise of China 马丁·雅克：了解中国的崛起
Hong Kong Education Bureau (click on the links for details) 德育及國民教育指引
Moral and National Education Guidelines
Ferries Accident on October 1 2012 - Day
of condolence for Hong Kong vessel tragedy 全港哀悼撞船事故罹難者
China is doing the right things dealing with the challenges according the World Bank President Jim Yong Kim at this WSJ Interview
Businesses Achieves before 2008
2009 - 2010 2011 2012
China and Hong Kong Closer Economic Partnership Arrangement
(CEPA) 內地與香港關於建立更緊密經貿關係的安排 http://www.tid.gov.hk/english/cepa/
For information about the Hong Kong Chief Executive Policy
Address, please visit www.policyaddress.gov.hk
The website contains all the documents and official video clips (including the recording of CE's presentation at the Legislative Council, press conference and TV forum, etc.).
April 4 2014
Hong Kong's fish farms in the sky 空中也能養魚 香港奇觀創造商機 By Peter Shadbolt BBC Hong Kong
Lloyd Moskalik sells two tonnes of fish to wholesalers each week.
Under eerie blue lights designed to simulate the ocean depths, hundreds of fish swim serenely through the bubbling waters of their circular tanks, 15 floors up in the sky.
There are 11 plastic tanks in total, holding a combined 80,000 litres of salt water.
They are full of grouper, a white-fleshed fish, which are all destined to end up on the plates of restaurant-goers across Hong Kong.
This is the scene at Oceanethix, one of the numerous so-called "vertical fish farms" in the special administrative region, which have become a key fixture of its supply chain.
For while most fish farms around the world are at sea, or at least, land level, in Hong Kong it is more often a necessity to put them many floors up in tall buildings.
This is because as one of the most densely populated places in the world, there is simply very little spare space. So fish farms have to fit in where they can.
For the small firms that dominate the industry, it is worth the effort, as Hong Kong has an insatiable appetite for fish and seafood. It consumes more than 70kg (11 stone) per capita every year, 10 times more than in the US.
"We're way above the hustle and bustle," jokes Lloyd Moskalik, managing director of Oceanethix, which is based in Hong Kong's New Territories. "If you like, this is rooftop farming on steroids."
His business, which employs six people in Hong Kong, buys in the groupers as baby fish, or fingerlings. They then take between 10 and 13 months to get up to market weight.
Oceanethix sells about two tons of groupers to fish wholesalers each week, and Mr Moskalik says he can get as much as 776 Hong Kong dollars ($100; £60) per kilogram.
As demand for farmed fish has soared in the region, wholesale prices have risen at a rate of between 10% and 15% per annum for the past five years.
Oceanethix also sells its water-recycling systems to other companies across Asia setting up similar fish farms in the sky.
"We've been selected by the Korean government as part of an ambitious plan to establish vertical farms in multi-story buildings... in Seoul," says Mr Moskalik.
The Singapore government has also bought a country licence for Oceanethix's water-recycling systems, and the company has its own sister facility in Shanghai.
Farm waiting lists - But it is not just fish farms that have been taking to the skies in Hong Kong, as a growing number of organic fruit and vegetable plots are being created on top of skyscrapers and other spare rooftop spaces.
There is a waiting list for space at Osbert Lam's rooftop farms - No doubt in part caused by a string of recent food safety scandals in mainland China, from where Hong Kong sources most of its food, a growing number of Hongkongers are wishing to grow their own produce as naturally as possible.
Helping to meet this demand is Osbert Lam, the owner of Hong Kong City Farms.
From just a hobby 10 years ago, he now runs three farms that convert thousands of square feet of rooftop space into organic plots he rents at about 190 Hong Kong dollars per month.
"We've got a list of about 30 people all waiting to get boxes," he says, from the top of a 14-storey industrial estate building in Quarry Bay, in the heart of one of Hong Kong's business districts.
Michael Leung's honey commands a premium price
- "If you come here on a Saturday it's an absolute theme park - there are people running everywhere."
He says the urban farms reveal just how shallow Hong Kong's urban roots are.
"Many of the people that come here are not even two or three generations away from the land," says Mr Lam.
"In many cases, it's just one generation before they were from farming families. A lot of people come here with a lot of knowledge."
Expensive honey - The growth of rooftop gardens has also meant more business for Hong Kong's urban beekeepers.
Michael Leung, founder of HK Honey, is always on the look out for new places to put his hives, and to help him locate them, he looks up for papaya trees.
Green spaces are limited in central parts of Hong Kong - "The papaya tree grows very well in Hong Kong - most people, if they grow anything on the roof, it's a papaya," he says. "The height of the tree allows you from ground level to see that someone is using the rooftop.
"We're always looking for little trees that stick out. They're like a flag, a modern agricultural flag," he says. "Through that, we then try to approach the people growing on the roof."
Mr Leung then arranges to rent space for his hives.
He says that the honey his bees produce has a spicy tang, which reflects the biodiversity of Hong Kong's urban flora, and particularly the Chinese basil many people like to grow.
Such is the quality of Mr Leung's honey that he is able to sell it for a whopping 240 Hong Kong dollars per jar.
Pressure on land - For Hong Kong's larger commercial organic farming operations, which buy produce from Hong Kong's dwindling slivers of agricultural land near the border with China, the continuous pressure on agricultural land from developers could mean that rooftop farms will one day be all that's left to the special administration region, which even now produces 2% of the food it consumes.
Hong Kong has a proud restaurant scene - Todd Darling, of Homegrown Foods, an organic grocery delivery business in Hong Kong, said permissive zoning regulations make it more cost effective for owners of agricultural land to store shipping containers on the space than to farm it.
In the meantime, however, the food scandals that creep across the border from mainland China have, perversely, been good for his organic business.
"I would never like to say that, but it does tend to encourage people to consider alternatives," he says.
January 14 2014
Hong Kong pulls off 20-year reign as world’s freest economy
By Stuart Lau email@example.com
City tops world rankings again, but with Singapore snapping at its heels, American think tank says - The policy address slated for Wednesday may cast a shadow over the city's economic freedom.
Hong Kong is the world’s freest economy yet again, in a two-decade reign of the position, a US-based think tank has reported.
The chief executive’s policy address on Wednesday would be key to the future standing of the city, as a possible increase in public spending, especially on poverty alleviation, could weaken the score, the main researcher of the Heritage Foundation’s annual index of economic freedom said.
The index shows Hong Kong continues to face fierce competition from second-placed Singapore, which narrowed the gap in the latest report.
“In recent years, populist policies that increase spending and empower the administrative bureaucracy, as well as an increasing level of perceived corruption, have held back Hong Kong’s overall rating,” the foundation said in its 2014 Index of Economic Freedom report.
Hong Kong also saw a “significant” 1.7 per cent drop in its ranking on freedom from corruption, recording 82.3 points.
It was the city’s second-weakest criterion on the index after monetary freedom, at 82 points.
Still, Hong Kong’s overall score, at 90.1, rose 0.8 points year on year – though the rate of growth was weaker than Singapore’s 1.4 points, which brought its score to 89.4.
On the country, the report said its openness to global investment had facilitated the emergence of a more competitive financial sector.
“However, state ownership or involvement in key sectors remains considerable, hampering achievement of Singapore’s full economic potential,” it said.
Terry Miller, director of the foundation’s centre for international trade and economics, said any room for further improvement would be limited for Singapore. The possibility of Singapore overtaking Hong Kong depended on whether the city slipped in its own performance.
Hong Kong has topped the index since it was launched in 1995.
November 29 2013
Start-ups helping start-ups overcome costs of launching businesses in Hong Kong
By Joanna Chiu firstname.lastname@example.org
Dragon Law is a start-up web service to provide low-cost "do it yourself" legal documents for small businesses in Hong Kong. Daniel Walker and Jake Fisch, co-founders of Dragon Law
A web service launched on Thursday to help small businesses access legal documents more affordably, joining a growing number of startups in Hong Kong that aim to make it easier for other start-ups to thrive.
With basic legal documents costing upwards of HK$40,000 each, some business owners say that they cannot afford to protect themselves from legal risks.
The new website, called Dragon Law, provides customised legal documents from HK$100 each and a free database of legal information for entrepreneurs. It is powered by virtual data room technology, which allows companies to securely store and share legal documents, such as partnership agreements and employment contracts. Families can also use the website to write wills.
Local startups say the service is a welcome addition to the expanding support network for start-ups in the city, which now also include options for shared work spaces and incubation programs.
“It is still very hard in Hong Kong to convince law firms to defer payment on legal costs, so what a lot of entrepreneurs do is share the same legal documents. That of course puts us at risk because one document can’t fit everyone’s needs”, said Jonathan Buford, founder of Makible, a company that ships 3D printers.
America is at the forefront of technology services for start-ups, with various low-cost legal document builder websites available. British crowd-funding platform, Seedrs, recently became the first to operate across Europe, offering equity for investing in start-ups.
In Hong Kong, however, start-ups complain of significant barriers to entry.
“Not only is the cost of living very high, it is difficult to attract investors and law firms generally demand cash upfront. Especially for startups whose businesses involve complicated financial transactions, the legal costs can be debilitating,” said Asif Ghafoor, co-founder of Spacious, a website that helps users find homes in Hong Kong.
Lawyer Daniel Walker, who co-founded Dragon Law with Jacob Fisch, said: “It does not seem fair to us that small enterprises should suffer either expensive legal costs or not have protection because they are a segment of the market that law firms feel are insufficiently lucrative".
“We want to be part of the process in Hong Kong where legal services are democratised through technology.”
In May, Hong Kong saw the launch of Colony88, the first online crowd funding platform that helps entrepreneurs attract investors.
“Investors in Hong Kong tend to be more conservative but we’ve seen that people are starting to become tired of traditional avenues of investing,” said Jono Lilley, co-founder of Colony88.
“Given that the start-up community here is very mutually supportive and given the cash pool in Asia, I can really see entrepreneurship taking off in Hong Kong again,” he said.
November 28 2013
Li Ka-shing has dismissed
rumors he is cashing out of Hong Kong, while also offering his thoughts - and a warning - on the city's political future.
Asia's richest man said suggestions he was pulling out of the city were a "big joke".
But while defending the city's core values, he said: "Hong Kong cannot go down the path of rule of men. Hong Kong has many core values, such as an open and free market and the rule of law, which are not come by easily.
"If there is any mishandling in governance, these [values] would all be gone.
"My relationship with the Hong Kong government and other countries is built on this understanding. It should not be changed when there is reshuffle of individual leaders or officials."
Li, 85, made his comments in an interview with Guangzhou-based Nanfang Media Group that lasted for 21/2 hours.
Li rarely gives media interviews - he hasn't given any one-to-one interviews with the Hong Kong media since the late 1990s.
The tycoon backed Leung Chun-ying's rival, Henry Tang Ying-yen, in last year's election for chief executive and there are widespread
rumors he is not on good terms with the current administration.
But asked whether he should "mend fences" with Leung, Li said: "We have no grudge against each other in the first place. Why is there a need to mend fences?"
Speaking in his office in the Cheung Kong Center in Central, he said people read too much into his business dealings.
"In today's globalised economy, this kind of accusation is out of place and unhealthy for business as well as the government," he said.
Some media speculated Li was moving assets abroad after selling three commercial properties - in Shenzhen, Shanghai and Beijing - for a total of 12.8 billion yuan (HK$16.2 billion).
Hutchison Whampoa was also looking to sell the ParknShop chain, but withdrew the plan after the offers fell short of expectations. Li said such transactions were simply good business.
"[People] accuse me wrongly, and I'm not happy. Today I'm going to hit back. I will present figures and facts and they can't argue with that."
He said: "The gross income of Cheung Kong and Hutchison was about HK$430 billion last year. The capital invested in the two overseas infrastructural projects this year was only HK$8 billion, accounting for less than 2 per cent.
"And this year we invested HK$4 billion in Hong Kong's container port. How can Cheung Kong and Hutchison be said to be pulling out capital? It's Arabian Nights. It's such a big joke."
He added: "Sell high and buy low is normal business behaviour … I have done business internationally for more than 30 years.
"This is the first time I'm hearing [such accusations] … Now it [the criticism] has been extended to the mainland as well.
"We have investments in 52 countries in various businesses, including property. We have sold assets in different countries, in some cases making a profit of more than HK$100 billion.
"People there didn't say that I am pulling out."
Li seemed to be particularly upset by the notion of so-called "property hegemony" - a phrase coined to describe how property tycoons made their fortune through a network which is carefully crafted to enable them to control the city.
The tycoon also dismissed this suggestion as a joke and said his companies were making "much more" in other countries than in Hong Kong.
He claimed there was an "unhealthy trend [of making unfair criticism]" in Hong Kong, which often put officials and public figures in a difficult position.
"It would result in lose-lose situation for both the government and the community. I breathe a sigh of relief that I didn't join the government because officials have to balance the interests of various stakeholders."
Yet he also said, tongue-in-cheek: "If I could choose [a career] again, I'd probably go into politics." Li said his main loyalty was to his shareholders.
"I'm not a clever person … I'm not omnipotent. I can't predict changes in politics nor can I influence politics. What I can do is use my intelligence to make decisions which are
favorable for our shareholders."
When asked how to alleviate the gap between the rich and the poor, he said a "free lunch" approach was not the solution.
"The only solution lies in providing a good education for our young generation. It would be wrong if the government only targets those who are competent, rather than resolving the problem of lack of upward mobility."
Li also said that while he had no thoughts of retiring yet, plans were in place. "I have prepared well for retirement. My eldest son, Victor, [Li Tzar-kuoi] can take the helm anytime," he said.
The thoughts of Li Ka-shing
Hong Kong has many core values, such as an open and free market and the rule of law - which are not come by easily … If there is any mishandling in governance, these [values] would be all gone
[When making investments, I] must opt for countries that have fair laws ... The world's investment chances and choices are too overwhelming for us; the group can choose environments that have the rule of law and fair policies to invest in
Buying low and selling high is a normal commercial activity. All over the world, we are never criticised for pulling out capital - except in Hong Kong, where the never-ending
rumors are regrettable
I have a deep love for the country and the people. My home is in Hong Kong. For me, Cheung Kong and Hutchison are based in Hong Kong; I absolutely will never move their domiciles
To gain fame means paying a price for easily attracting criticism … The larger the portion of the investments are in a particular place, the higher the chance [one] gets criticised [there]
I do not fear death. If I were a lamp, I could light up a road, with my still-alive foundation, which can only be destroyed politically
If I am to write an epitaph, I will select two phrases that back my will to fight every day: build up self; go after selflessness.
Sources: Nanfang Media Group / Cheung Kong Holdings
Oct 29 2013
Hong Kong second-best place in the world to do business, World Bank says
By Joanna Chiu email@example.com
Hong Kong is still a great place to do business, the World Bank says, but delays in property registration are an extra hurdle. Hong Kong is second only to Singapore as the world’s best place to run a business, but the city’s high ranking obscures its “glaring” problems with real estate regulations, the World Bank and the International Finance Corporation said on Tuesday.
“Stamp duty reforms have made a negative impact … doubling the cost of transferring commercial properties and making it harder for local entrepreneurs,” said Jiang Nan, co-author of the 2014 edition of the Doing Business report, published since 2003 by the World Bank and IFC.
The yearly rankings score 189 economies on 10 indicators, focusing on the conditions faced by small or medium-sized businesses.
In the overall rankings, New Zealand placed third, the United States fourth, and Denmark fifth. The top five retained their positions from a year ago. The mainland rose to 96th from an adjusted ranking of 99th.
Hong Kong was rated 60th in the world last year when it came to the ease of registering property and dropped to 89th this year. Singapore is now rated 28th for ease of registering property, up from 36th last year.
Jiang said it took 35 1/2 days to complete the property registration process in Hong Kong, compared with 5 1/2 days in Singapore.
Cooling measures introduced in Hong Kong in October last year to curb speculation imposed an additional stamp duty of 15 per cent on purchases by corporate and non-permanent-resident buyers. In February, the stamp duty rate for transfers of commercial properties worth between HK$6.72 million and HK$20 million was doubled from 3.5 per cent to 7.5 per cent.
Hundreds of property agents protested outside the Legislative Council building in June, urging the government to reconsider what they said were “unreasonable measures”.
Chambers of commerce representing thousands of foreign firms in Hong Kong have also criticised the extra stamp duty, saying it targets genuine investors and companies buying offices for their own use, rather than speculators.
Opponents of the stamp duty reforms said yesterday they welcomed the World Bank and IFC’s criticisms.
“The arbitrary duties were a shock to the business community,” said Dr Ho Lok-sang, professor of economics and director of the Centre for Public Policy Studies at Lingnan University. “It called into question Hong Kong’s ability to function as a free-market economy and has already damaged our economic competitiveness.”
The Liberal Party’s James Tien Pei-chun said the stamp duty introduced last October was a “protectionist measure” that discriminated against foreign investors.
“Our party totally objects to this and would not like to see Hong Kong drop in global economic competitiveness rankings as a result,” he said. “High rents for residential, office and commercial property is a big problem, but instead of imposing unfair duties, if the government releases more land to build commercial and office properties, this would help to reduce rents.”
“I hope that the Hong Kong government will stop acting so inward-looking and value the city’s reputation for being an international and cosmopolitan place. Otherwise, foreign investors will increasingly shun Hong Kong.”
Local entrepreneur Jong Lee said Hong Kong’s property laws and procedures were “arcane”.
“It is ironic that a place so ideal for businesses in other areas would lag so behind in real estate law,” said the managing director of RGL Holdings, a firm that invests in small and medium-sized businesses. “Maybe the drop in ranking could give the government an incentive to improve and streamline the process.”
Financial Secretary John Tsang Chun-wah reiterated this month that the government would not amend the cooling measures or introduce a sunset clause for the Stamp Duty (Amendment) Bill 2012.
Oct 10 2013
South China Morning Post Editor's Choice: 美國的民主在香港不可行 Aping American democracy won't work in Hong Kong - Lau Nai-keung says some lawmakers misunderstand our own system By Lau Nai-Keung
Along with the mandatory "one man, one vote", our dissidents have many prescriptions for the good governance of Hong Kong and the entire country. But with a general paucity of ideas, they invariably fall into the "US is best" category.
For example, they think China is too big for a unitary government and that it should adopt federalism to improve its governance. The problem is there is no evidence that governance in the US is in any way better than that in China, especially when we compare periods of similar economic levels.
We have had a unitary government for over 2,000 years, have been the world's most powerful nation for 90 per cent of the time and are heading towards regaining that position soon. So, what is the point of artificially breaking it into independent states and reassembling them in the image of the US?
Here in Hong Kong, the dissidents say our political ills stem from a lack of party politics and the accompanying inter-party coalition. The problem, in a nutshell, is that we are an imperfect copy of the American system of separation of powers. The remedy, obviously, therefore, is to try to be a clone.
True to their word, our dissident lawmakers have not only copied the American filibuster, but have in fact improved on it, making it more frequent and effective.
There is also the issue of gerrymandering. Our dissidents are now busily taking notes. Vetoing the budget and forcing the government to close office might prove more potent than Occupy Central as a "weapon of mass destruction". Chances are we will witness some dissident copycat actions here in Hong Kong soon. Fortunately, this was anticipated in the drafting of the Basic Law and we have measures in place to deal with such eventualities.
Our dissidents lament that the lack of party politics and a coalition government have resulted in our chief executive having no control over outcomes in the Legislative Council. Now look at the US; it has mature party politics developed over 200 years, but with the president and members of the Congress elected separately, effective policymaking is by no means guaranteed. Party rivalries and political deadlocks are frequent.
Under our current system, party politics is not a panacea and some kind of political coalition can be achieved with or without it. The central government has always insisted that it is not a system of separation of powers, but an executive-led one. On top of that, Hong Kong is not an independent political entity, but a regional administration under a unitary central government.
No matter how many cosmetic operations we undergo, Hong Kong will never be a replica of the American system. This is the most fundamental underlying factor we have to bear in mind in our political discussion.
While we are at it, let us dive deeper into the idea of party politics. What, for instance, is the status of Hong Kong's People Power party in the country? This is an unsolved problem even for Taiwan, as while the blue Kuomintang still claims to have a national vision for China, the green Democratic Progressive Party does not. And what about the Chinese Communist Party and its role in capitalistic Hong Kong? Shall we allow it to operate here and participate in local elections? This is a big hornet's nest that we had better leave alone, at least for now.
All told, "one country, two systems" is an unprecedented endeavour. There is no clear trail to follow and we will have to find our own way out.
We should always have an open mind, and take a good look around us before we leap. Any careless move might just prove fatal.
Lau Nai-keung is a member of the Basic Law Committee of the NPC Standing Committee, and also a member of the Commission on Strategic Development
Oct 1 2013
As Chinese firms take their disputes offshore, Hong Kong arbitrators gain By Reuters in Singapore
Most of the Henna's 2,300 passengers had to be flown home after the cruise ship was detained in South Korea in mid-September.
When more than 2,000 passengers aboard China’s biggest cruise liner found their ship detained in a South Korean port and their holiday in ruins, they had unwittingly become pawns in a five-year legal row between two Chinese shipping firms.
The impounding of the luxury liner Henna earlier this month in a foreign country is the type of incident that may occur more frequently in the future as Chinese firms turn overseas to try to resolve legal disputes and recover debts.
In an embarrassment for China’s fledgling cruise industry, most passengers had to be flown home after they were stranded for three days in Jeju Island in South Korea. The cruise liner was released only after a bond was posted.
Chinese shipbuilders and shipowners are taking a growing number of commercial disputes abroad to bypass a domestic legal system they fear may not guarantee a fair hearing.
Weak enforcement of laws, pressure from well-connected corporate bosses and political interference are some of the hurdles they face, lawyers say.
“In order to avoid local interference at different levels within China, there are Chinese companies which have chosen to give up having arbitration within China and instead choose to arbitrate outside China,” said William Leung, head of Hong Kong law and arbitration firm William K.W. Leung & Co.
This is giving a boost to newer centres providing arbitration services such as Hong Kong and Singapore, helped by their proximity to the mainland and familiarity with Chinese firms.
But the involvement of foreign jurisdictions in disputes sometimes has unforeseen consequences, as the Jeju case showed.
A South Korean court ordered the Henna impounded on behalf of creditor Shagang Shipping, which said the ship’s owner, HNA Group, owed US$58 million on lease payments related to another vessel. The claim had been upheld by arbitration in London.
The cruise liner was set free after HNA put up a US$2.7 million bond, Shagang Shipping said. HNA did not comment at the time.
Disputes in China are rising after industries such as shipbuilding boosted capacity to benefit from a decade-long commodities boom but are now facing slowing growth in the world’s second-largest economy.
In July, China Rongsheng Heavy Industries, the country’s largest private shipbuilder, sought financial help from Beijing and big shareholders after cutting its workforce and delaying payments to suppliers.
Shipping companies, on the other hand, have struggled with low charter rates for iron ore, coal, grain and other commodities that are shipped in bulk.
Last year, 196 cases were handled by the Hong Kong International Arbitration Centre, of which 114 involved Chinese firms. By comparison there were 178 arbitrations in 2011, of which 87 involved mainland companies.
Disputes between shipowners and shipbuilders have risen in number in the last six months, said Arthur Bowring, managing director of the Hong Kong Shipowners’ Association and a qualified arbitrator.
These have involved shipowners’ claims against cash-strapped shipyards after vessels were delivered late, Bowring said.
The deepening of China’s role in the transport and trade of commodities is another factor behind disputes. For instance, Bank of China, the country’s fourth-largest lender by assets, has set up an onshore commodities trading unit.
“We are seeing increased involvement of Chinese businesses in the commodities supply chain as traders, transporters and financiers, rather than purely as consumers, which will bring them into more disputes when market conditions become volatile,” said Will Barber, partner at international law firm Reed Smith Richards Butler in Hong Kong.
London has been the traditional centre for maritime arbitration because shipping contracts have been governed by English law.
But other cities, such as Singapore and Hong Kong, have become important arbitration centres as a result of the commodities boom and China’s influence on the sector.
Chinese firms are using their overseas branch offices or subsidiaries to circumvent a legal ban on local companies locked in domestic disputes from going overseas to arbitrate, said Grace Hou, an associate at law firm Troutman Sanders.
For its part, China has been overhauling its arbitration system for firms seeking to enforce foreign arbitration awards against Chinese firms, lawyers said.
Any decision by a local court not to recognise or enforce a foreign arbitration award now needs to be reported to and approved by the People’s High Court in each province and, if upheld, also approved by the Supreme Court in Beijing.
But arbitration in China has become messier since the China International Economic and Trade Arbitration Commission (CIETAC) split last year into three autonomous bodies in Beijing, Shanghai and Shenzhen.
Adding to the confusion, CIETAC in Beijing has set up new arbitration bodies in Shenzhen and Shanghai. This means there are doubts about the recognition and enforcement of decisions by the old and new bodies.
“Enforcement of an arbitral award made by CIETAC Shenzhen or CIETAC Shanghai appears to be a minefield,” said Leung.
A source at CIETAC Shenzhen, which has changed its name to the Shenzhen Court of International Arbitration (SCIA), said the organisation was not aware of any problems enforcing decisions made under its authority.
Liu Xiaochun, secretary general of the SCIA, did not immediately respond to requests for comment.
China’s Supreme Court is expected to issue guidelines soon on jurisdictional issues and the enforceability of awards by the Shanghai and Shenzhen arbitration courts, legal sources said.
September 29 2013
Survival guide: Lost in transit at Hong Kong International Airport By firstname.lastname@example.org
With a modicum of insider knowledge, the misery and boredom of delayed flights can be a thing of the past. Michelin-starred Hung's Delicacies is renowned for its pork (above) and duck. The Aviation
Charley Lanyon spends a day at Chek Lap Kok to prove the point - THERE ARE FEW GREATER horrors than being stranded in an airport. The sickening fluorescent lighting, the mediocre but exorbitantly priced food and the lack of attractions all conspire to make airports among the most miserable public spaces imaginable. It took moving to Asia for me to realise that it didn't have to be this way.
My friends and fellow Asia travellers agreed that Hong Kong International Airport was a "nice airport" but waxed poetic over Singapore's Changi Airport: "You can enjoy a cocktail in the pool," they'd say, and, "My kids just love the indoor slide."
Suspecting that our airport is going underappreciated, I recently spent an entire Saturday there.
Sustenance - Most of my leisure hours are dominated by the desire to find something good to eat, and my day at the airport was no different. Airport food has a reputation for being either dreadful or unaffordable. The food at the airport is not cheap, but it can be good. Good enough that I'd happily pay the same price again, especially at Hung's Delicacies. This Michelin-star eatery on the ground floor of Terminal 2 specialises in marinated meats, especially goose and pork. It's become a bit of a destination itself, so much so that my waitress told me they were out of goose. Fortunately, she believed my far-fetched sob story ("I flew in from Beijing just to try the goose and I'm flying back in an hour") and found one last serving in the back. It was the best and most affordable plate of food I've had at any airport and well worth the karmic consequences of lying.
If you're in the mood for something a bit more exotic, a newer restaurant, Chen Fu Ji on the second floor of Terminal 2 offers a selection of hard-to-find Singaporean dishes such as roasted stingray fillet.
Nothing leaves you quite as parched as a big plate of meat. Which leads me to my first and only disappointment of the day. In the West, the airport bar is an institution, but in terms of booze, Hong Kong International falls sadly short. Visitors can quench their thirst with a beer or glass of wine from many of the restaurants - Grappa's in Terminal 2 is probably the most convivial of them.
But if you need something a bit stronger, or are craving the company of other like-minded barflies, I have it on good authority that your best bet is to make your way to the Regal Airport Hotel - accessible through a covered walkway from Terminal 1 - where the fully stocked China Coast Bar and Grill on the ground floor should set you right. I just bought a cold beer from the 7-Eleven on the fifth floor of Terminal 2.
The good life - If you have time to kill, it might be worth springing for a day pass so you can use the pool and gym at the Regal, or the more upscale SkyCity Marriott. The Marriott is home to Quan Spa, a favourite of some of my more discerning friends. If you don't want to leave the airport, there's pampering to be found at two premium lounges on level 6 of Terminal 1 (one near gate 1 and the other near gate 35). There is a third lounge in the arrivals hall.
While most of the best stores are off-limits behind security, the airport has enough shops, especially in Terminal 2, to make for rewarding browsing. At the Shanghai Tang outlet shop, you might actually be able to find something unheard of at most airports - a bargain. I picked a random pair of jeans off the rack and they had been marked down from HK$1,580 to HK$474.
If drinking, getting a massage and shopping aren't for you - we're probably not going to be friends. Perhaps you'd enjoy something a bit sportier. Believe it or not, the airport is home to Hong Kong's first nine-hole golf course created to United States Golf Association standards. The SkyCity Nine Eagles Golf Course, between the AsiaWorld-Expo and Terminal 2, is designed with travellers in mind.
It has a full pro shop and will rent equipment and store your baggage. Even if you are stuck at the airport overnight, you can still head out to the greens for some practice shots under the floodlights.
Or you can pass a pleasant couple of hours at the IMAX cinema.
It plays all the current blockbusters as well as speciality IMAX features.
Next to the cinema, I stumbled across one of the airport's best kept secrets - the SkyDeck. Just off of a small foyer, where loudspeaker broadcasts chatter from the air traffic control tower, is an incongruous little lift. There is a sign imploring visitors to buy a ticket but with no apparent ticket counter. The lift ride features a funny little retro spaceship light show.
It was all very Mothership Connection, until it deposited me, blinking, into the blinding sun on the flat roof of Terminal 2. There are great views of the port, the golf course and the surrounding scenery, as well as pay-to-use binoculars set up where plane geeks can scribble down the tail numbers of passing jets.
Chances are you will be on your own. You can pass an hour or two reading magazines (there's a BookaZine downstairs), enjoying a few cold beers (from the 7-Eleven, also downstairs) or working on your tan. Learn from my mistakes - bring sunscreen and pack a sandwich.
Something for the kids - An airport stint with little ones in tow wouldn't be complete without a visit to the Aviation Discovery Centre just outside the IMAX cinema. Adult aviation aficionados will find many small exhibits about the history and physics of flight - or they may prefer the exhibit on flight attendants through the ages, to each their own - but there's plenty of fun for children, too.
The highlight is the recreated commercial cockpit, complete with an immersive professional-grade flight simulator. Unfortunately, it is a simulator built for two, so bring a co-pilot or you'll end up like me, watching happy couples taking off and landing from beyond a nylon rope.
I did find the section of recreated historical airline cabins quite charming. The cabin from the 1930s was a bit cramped while the luxuriant lounge from the '50s exuded a certain Mad Men chic, though without the chain smoking.
I'm willing to bet you had no idea the airport's best attraction even existed: The Dream Come True Educational Park. Located on the level six of Terminal 2, it's a sprawling complex where children are encouraged to try out different jobs, from astronaut to surgeon, and discover their dream career. I have not wanted to be a child this badly since a mall elf barred me from sitting on Santa's lap a few years ago.
Aspiring policemen are trained, armed with toy guns and set to work ensuring the safety of the park. Kids who want to try their hands running a shop are selling candy and soda.
Other children are trained to be firemen, put in child-sized uniforms, and given fire hoses to spray water on a "burning" building. A model plane is staffed by children as pilots and flight attendants.
Aside from some questionable gender politics - a computer console shows little boys where they can be policemen and little girls where they can be models - it is a sight to behold.
In Terminal 2 just as you cross over from Terminal 1, on the way to the taxi queue. Tel: 3197 9332
Chen Fu Ji
Up the central escalators in Terminal 2 (tel: 3197 9440). There is also a branch past security in Terminal 1 (tel: 2261 0347).
Regal Airport Hotel
9 Cheong Tat Road (connected by walkway to Terminal 1), tel: 2286 8888, www.regalhotel.com
Hong Kong SkyCity Marriot Hotel
1 Sky City Road East, tel: 3969 1888, www.skycitymarriott.com
Plaza Premium Lounge
East Hall before gate 1 (tel: 2261 0888), West Hall after gate 35 (tel: 2261 2612) and in the Arrivals Hall below Airport Express Platform connecting Terminal 1 and 2 (tel: 3559 1108). Open 24 hours, tel: 3559 1108,
The good life
SkyCity Nine Eagles Golf Course
20 Sky City Road East, tel: 3760 6688, www.nine-eagles.com
UA IMAX Theatre @Airport
Up the escalator and all the way to the left as you enter Terminal 2. Look out for the big blue sign, you can't miss it. Tel: 3516 8811,
Something for the kids
Aviation Discovery Centre
Inside the IMAX theatre complex.
Dream Come True Education Park
To the left of the central escalators in Terminal 2. Its name is painted across the whole wall of the park; you can't miss it. Tel: 3559 1028, dreamcometrue.com.hk (no English)
More information and maps are available online at www.hongkongairport.com
• Bring sunscreen, especially if you are planning on exploring the SkyDeck or getting in a round of golf. Nothing’s worse than arriving at a beach holiday already sunburned.
• Pack a book. The airport has plenty of book shops, but unless you want a magazine or a Chinese language guide to getting rich quick, you’ll be glad you brought something good to read from home.
• Before exploring, ditch your luggage. There is a baggage storage next to the lounge near the Airport Express in Terminal 2.
• If you have a lot of time to kill, paying for a day pass at one of the airport hotels is a good investment. Enjoy access to the pool and health facilities at SkyCity Marriott for HK$220 (adults, HK$110 for children),
and at the Regal Airport Hotel for HK$200.
*Sept 28 2013
Hong Kong has strength to innovate, but other factors hold it back - SCMP
Zhang Xiaoming, director of the liaison office, believes the government, organisations and society should work together to create a better environment for innovative thinking in Hong Kong.
Hong Kong has what it takes to be a place of innovation. We have a highly educated population and some of the world's best universities, top-notch infrastructure, abundant wealth, government incubation programmes and good-quality potential mentors, partners and employees. Yet there is no shortage of concern that we are falling behind other cities by not sufficiently capitalising on our strengths. The latest comes from Beijing's top representative, who says a lack of creativity is holding back development.
Zhang Xiaoming, the director of the liaison office, believes the government, organisations and society should work together to create a better environment for innovative thinking. Young people should make greater effort to not just use technology, but to tap its potential. His advice is amplified by the Geneva-based World Economic Forum's latest global competitiveness index, which showed Hong Kong in 19th place when ranked on higher education and innovation, trailing regional rivals Singapore, in second, and Taiwan, in 11th. The quality of research institutions and limited number of scientists and engineers were cited as areas in need of improvement.
But circumstances are not as dire as they appear. Ranking 19th in a global index on innovation is already a considerable achievement. The international standing of our doctors, researchers and scientists in the fields of transplant surgery and virology prove our capabilities. Projects funded by the government's Innovation and Technology Commission show originality and flair, as do those promoted by a growing number of organisations supporting inventors and innovators.
For all the ideas, though, Hong Kong has not yet spawned a world-beating gadget or device, like the mainland company Tencent's instant messaging application, WhatsApp, Google's driverless car or Apple's iPhone. That may in part be due to the high rents and lack of a garage culture; the backyard shed proved crucial to Silicon Valley's founders, who were long on ideas but short on funds. The Science and Technology Park in Sha Tin goes a way towards nurturing start-up companies, although it does not resolve a host of shortfalls in society. Among them are students steered by parents towards finance and business rather than science and technology, companies reluctant to fund research and development, and investors demanding low risk and quick returns. Until there is greater understanding and collaboration, we will lag competitors.
*Aug 1 2013
Why Russians love Hong Kong and Asia By Anna Healy Fenton email@example.com)
Russian nesting dolls bear the faces of Hong Kong icons. Many of us are fascinated by Russia. It’s vast but little is known of what goes on there beyond the high profile antics of loaded oligarchs. It’s mysterious, not exactly Europe yet not Asia. Their literature is dark, their music darker, their food heavy and their language impenetrable to most, but there’s an undeniable glamour about Russia. Now that Russian travellers have recently fallen in love with Hong Kong, there’s a chance to lift the veil.
They are flocking here – 105,000 already in the first five months of 2013 - partly because Hong Kong is a good place if you want to go further, says Hong Kong-based journalist and CEO of Russia-Hong Kong research and events company Asia To Go, Mark Zavadskiy. That remark could almost be Irish. “I mean it’s a great stopover for Thailand and Indonesia for holidays,” he explains. About 800 Russians live here at the moment.
Part of the push to put Hong Kong on Russians’ map comes from the pro-active two-way promotion by the new Russian airline S7, which brought Vladivostok rock band Mumiy Troll here in March. That’s followed by an Asian music festival in Vladivostok at the end of August. Local bands also go there from Hong Kong.
What do Russians do here?
Not much, it seems. “Hong Kong doesn’t offer a very extensive variety of things to do for newcomers who don’t speak Cantonese,” says Zavadskiy. Coming from second-tier Russian cities they don’t speak much English, they see the usual sights, hike, look for Indie music and check the internet for concerts. In addition to the holidaying and culture-hunting Russians from Moscow and the new wave from further east, there’s another lot, the traders operating out of southern China.
“The large community of Russian traders in Shenzhen and Guangzhou flock down here for concerts by well known artists like Sting, because, believe it or not, the tickets are cheaper here than in Moscow,” he explains. Russians are not short of cash. They may only have had capitalism for 20 years, but they have plenty of money, he says. But private bankers can hold off on openning the Siberia branch just yet.
Why pay cash?
So, why do Russians carry so much cash? “That’s changing now,” he says. “Before, it was because they didn’t have banks, now they don’t trust them. A lot of it is grey money. They don’t trust Russian banks but they can’t get an account in a foreign bank, so they carry cash.” Lots of Russians lost their shirts in the 1998 financial crisis and it will take a long time for people to trust banks again.
Switzerland of Asia preferred
Actually there are three times more Russians living in Singapore than Hong Kong, due to the Lion city promoting itself as a wealth management centre, the Switzerland of Asia. Confusion is to blame. “First of all, no one understands what Hong Kong is – China? Not China?” And unlike Hong Kong, if you live and invest in Singapore, you can apply for a Singapore passport after 18 months, and should get it at worst inside five years. Russians happily surrender their Russian passport for a Singaporean one – they can’t have two. Surely no red-blooded Russian would do such a thing? We’ve all seen or read Dr Zhivago. Zavadskiy shakes his head. It seems many Russians abandon their passport, because travel is much easier with Singaporean documents, with many visa free countries beckoning.
But Russians don’t always glide into Singapore. “They go about mixing their melting pot very scientifically – it’s one Ukrainian, one African – American and so on, very strict. It’s done individually and all depends how Russia is viewed at the time they apply.”
Lee Kwan Yu a Russia fan
But Singapore is obviously rather keen on Russia and hosts a big annual bilateral business forum. Hong Kong has never had an event on this scale. Lee Kwan Yu rarely speaks in public but he attends this event every year and answers questions. He even ventured to Moscow to speak to students at the Skolkovo business school two years ago.
Russians are increasingly fond of Asia. Goa, Bali, Koh Samui and Pattya have become like dachas – country retreats - for them, says Zavadskiy. They flee the biting Russian cold for three months in winter, financed by renting out their Moscow apartment. It’s affordable if they stay modestly somewhere cheap like Indonesia or Thailand. Many take it a step further, setting
up compounds in these sunny climes for programmers or IT specialists, so they can come and live and work, thanks to the magic of outsourcing. To earn money in paradise they need a computer, likeminded people, a good internet connection and away they go.
Visa situation crucial
Critical to this winter migration to south is the visa situation. Indonesia, Malaysia and Thailand give Russians one month. For Singapore and Vietnam they need a visa, for two weeks in the case of Vietnam. Cambodia has visas on arrival. And they can visit Hong Kong visa free. Asia is much more welcoming to Russians than Europe, where most countries require a visa.
Hainan is another story. It’s been taken over by Russians completely, Zavadskiy admits. Certainly the Sanya hotel menus were in Russian last time I visited. These are not Muscovites, but Russians from the Asian part. “Before they all wanted to head West to Moscow, but now they’ve realised its easier to head south, especially China. It’s much less expensive than Moscow,” he says.
But for many Hong Kong remains the Holy Grail and gradually Russian facilities are creeping in. Russian restaurants come and go – if it’s authentic Chinese don’t like it and if it’s not, Russians won’t go. But there’s now an online store here selling Russian food. There are two Russian art galleries. Red Square and a new one, AB. And now there’s a Russian wine store in Sai Ying Pun, selling a sweet Ukraine wine called Massandra. A guy brought in a container of it, apparently.
For the Russian traders based in southern China, Hong Kong is seen as an upgrade, says Zavadskiy. “Basically, if you start somewhere like Guangzhou as a trader, if you can move to Hong Kong, you have succeeded in your life. Even if you start doing trading in northern China along the border, and progress to Shanghai, your ultimate goal is Hong Kong.”
*July 24 2013
Food City - Hong Kong
Federico Bogna is Peroni’s brand ambassador in Hong Kong
At Fiesta Ltd, Charmaine So and her aunt, founder Florence Lo, have witnessed a market transformation. When Fiesta was set up in 1991, it was virtually alone in supplying Spanish products in Hong Kong. Today it shares the stage with many similar ventures.
According to Ms So, retailers are riding a wave of popularity for Spanish restaurants, a trend dating back some three years. But she also believes that Hong Kong consumers are more eager to learn about new foods and cuisines.
"The perception before was always that French and Italian foods are supreme,” she says. “But now that people have the knowledge and interest to find out more, it helps our whole market." More adventurous eaters, in turn, inspire more adventurous chefs.
"It's not like before when people would use only tuna or sardines for tapas. Now chefs use a wider variety like white anchovies or gulas (baby eel)." As tastes deepen, Fiesta has expanded its product catalog. At the same time, rising competition has meant falling demand for such basics as olive oil, which along with a brand of tinned sardines, launched the company.
Spanish cheese is popular with Hong Kong consumers
Today the mini-boom in small importers is tackling not only the popularity of Spanish dining, but across the fine food spectrum. For the moment, the rising tide is lifting all boats, and Fiesta has grown steadily each year. Ms So is confident that the trend is here to stay: "There will always be a piece of the market for everybody – for the existing ones at least."
Finding the Freshest
The Fresh Grower, which sources fresh produce from New Zealand, is among a growing number of online food delivery services that are responding to Hong Kong demand for top-quality food products
As competition heats up, new entrants are finding challenges and opportunities in reaching consumers. A chance event during a trip to New Zealand introduced Hong Kong entrepreneur Angela Leung to Allan Fong, a farmer with 12 hectares devoted to vegetables. Ms Leung saw a market for Mr Fong’s fresh produce in Hong Kong. "We really don't have many challenges in shipping the produce to Hong Kong," says Jason Li, who runs The Fresh Grower, Ms Leung's import and delivery service. "We try to have the harvest in the morning, send the vegetables to the airport in New Zealand at night, and arrive in Hong Kong the next morning. So one day from the farm."
Shipments arrive twice a week, with a third added in case of high orders. The Fresh Grower sells directly to consumers, who order vegetables online and have them delivered to their homes. Partly to help maintain freshness, but the delivery model, Ms Li says, also helps keep costs lower by eliminating the high rent and salary costs it would take to reach the same number of consumers they can with a delivery network.
Iberico ham is offered by Hong Kong supplier Fiesta, which has benefited from the growing popularity of Spanish cuisine in the city
The city has also proven well-equipped to spread the word among potential customers; lifestyle publications here are prolific. The Fresh Grower has placed ads in six print publications, in English and Chinese. "The response wasn't bad. We received many enquiries." Three-fourths of their sales are through delivery, but the Fresh Grower does maintain one brick-and-mortar shop. Its store in Kennedy Town on Hong Kong Island serves mainly as a showroom, a place where customers can check out the produce before they buy. "We need to show them there is something real there, so they are confident about our business," Mr Li says.
Italian beer Peroni has positioned itself as a higher-end lifestyle brand
While getting from farm to table in roughly two days poses no significant challenge in highly connected Hong Kong, it is more expensive. According to Mr Li, 70 per cent of the cost to consumers goes to transportation. In most situations, that mark-up would price any, but high-premium products, out of the market. However, Hong Kong already has a two-tiered market for produce: the wet markets, which sells more produce from the Chinese mainland and the supermarkets, where much of the produce is imported from places as far as the Americas and Europe. For anyone accustomed to the supermarket price, the Fresh Grower's direct sales are far from daunting, and in some cases, cheaper, says Mr Li. Regardless, he says his customers are happy to pay the cost for produce that is fresh and safe, which are two nagging concerns for Hong Kong shoppers. The more discerning consumers become, Mr Li is betting, the more they will expect freshness and quality.
Beer and Culture
"Hong Kong is a lighthouse – succeeding here automatically gives you exposure all over Asia”
Savvier consumers are creating opportunities for many in the food industry, but they are entering an increasingly crowded market. Peroni, an Italian beer produced by SAB Miller, found itself in this situation, says Federico Bogna, Peroni's brand ambassador in Hong Kong. For years, the company’s London headquarters had been avoiding beer's usual partner, sports, linking Peroni instead with culture and fashion brands. In Hong Kong, it targeted a different cultural segment: art gallery openings. "Usually in an art gallery, people don't want to have a beer. But we knew there was a need for that specific [market], and we wanted to fill that gap," Mr Bogna says. It believes that the brand’s outsider status and bottle design wouldn't make people feel self-conscious holding a beer while pacing the gallery floor.
Peroni's strategy may be timely; Hong Kong’s art market is raidly growing, drawing visitors from around the world. The hope is, by linking into Hong Kong's culture scene, the brand will connect across Asia.
"Hong Kong is a lighthouse – succeeding here automatically gives you exposure all over Asia,” says Mr Bogna. People in Asia travel a lot; if you do well here, they will likely look for you elsewhere."
*May 20 2013
Focus Asia: American companies should take advantage of business opportunities in Asia – through Hong Kong, says senior US Commerce official Francisco
US Under Secretary of Commerce for International Trade Francisco Sánchez explains why US companies interested in doing business in Asia should attend the upcoming “Think Asia, Think Hong Kong” event in the United States
Trade with Asian economies is a key focus for the United States, and Washington sees Hong Kong as a “great partner” to maintain this, says senior US Commerce Department official Francisco Sánchez, who visited Hong Kong earlier this month. The Under Secretary of Commerce for International Trade will join “Think Asia, Think Hong Kong,” the HKTDC’s largest promotional event in the US, happening next month.
Why is the US focused on Asia now?
Trade and investment flowing in both directions is very important for the United States. The Asia-Pacific region is a source of great opportunity for exports of US goods and services. It’s a great opportunity to attract foreign direct investment to the US, and of course, a lot of US companies have a strong interest in having a presence here. This is all part of President Obama’s focus on rebalancing our agenda and really paying attention to the Asia-Pacific region.
How important is Hong Kong to the US reaching its trade goals in Asia?
Hong Kong is a great partner. We have seen two-way trade increase last year to US$37 billion. It has been increasing over the last several years. Hong Kong has a great business climate, rule of law, intellectual property rights protection, great expertise in business service providers for companies that not only want to access Hong Kong, but also mainland China. So Hong Kong is a terrific partner for American companies.
You’ll be joining the “Think Asia, Think Hong Kong” promotion next month in the US. What would you say to US companies that are considering attending?
I would absolutely encourage them to go if they have any interest in the Asia-Pacific region. They should learn about the opportunities that are here in Hong Kong. I’m delighted that Hong Kong is making the effort to do these conferences in New York and Los Angeles. I want more American companies to know there are opportunities here for them and that there is support for them when taking advantage of these opportunities.
From the US perspective, how is Hong Kong’s role changing when it comes to regional trade?
Other markets can be accessed from here. Hong Kong has positioned itself to be a leader in attracting companies from all over the world to use as a base of operation, to sell goods and services throughout the Asia-Pacific region.
How important is Asia in terms of investment heading to the United States and what’s Hong Kong’s role in that?
We certainly recognise it as an important source for foreign direct investment for the United States. The President set up an office, Select USA, about two years ago, and Select USA has been very active in the region and will continue to be for a long time. We believe there are many companies in the Asia-Pacific region that are interested and ready to invest in America and we want to make it easier for them.
How can Hong Kong help ease concerns US companies may have about doing business in Asia?
That is a concern for many companies; intellectual property rights protection, particularly with companies that have had heavily invested in research and development. So Hong Kong, fortunately, has a very good reputation for enforcement of intellectual property rights protection, for a rigorous rule of law, and these are all very appealing to companies that have those interests and concerns.
Los Angels California USA - Friday June 14
Asia, Think Hong Kong"!
Marriott Los Angeles L.A. LIVE - 900 W. Olympic Blvd - Los Angeles, CA 90015
We cordially invite you to attend the first "Think Asia, Think Hong
Kong", USA in June 2013 in New York City and Los Angeles. Produced by the
Hong Kong Trade Development Council, "Think Asia, Think Hong Kong",
USA brings together top companies, business leaders and experts for two days of
high-level discussions, business matching and networking. Hong Kong’s special
relationship with both mainland China and the US, as well as its status as
Asia’s international trade and financial center, make it the gateway for US
companies seeking new markets and business opportunities in Asia and China.
Building on successful "Think Asia, Think Hong Kong" events in the UK
and Japan, "Think Asia, Think Hong Kong", USA creates this opportunity
for the first time for the US market.
Participation is free of charge. Registration is required and will be
launched online in due course. For the event schedule, Click Herehttp://www.thinkasiathinkhk.com/usa/en/info_programme.html
Over 60 speakers are expected:
The Hon Leung Chun-ying, GBM, GBS, JP,
Chief Executive of the Hong Kong Special Administrative Region
Mr Ronnie Chan, Chairman, Hang Lung Group Ltd
Dr William Fung, SBS, OBE, JP, Group Chairman, Li & Fung Ltd
Mr Song Lin, Chairman, China Resources (Holdings) Co Ltd
Mr James Thompson, GBS, Chairman, Crown Worldwide Group
Mr Tung Chee-chen, SBS, JP, Chairman, Orient Overseas (International) Ltd
Ms Marjorie Yang, JP, Chairman, HK-US Business Council and Esquel Group
Dr Levin Zhu, President & CEO, China International Capital Corporation Ltd
Who should attend?
Small and medium-sized businesses
Service providers and intermediaries
Economists, academics and opinion leaders
What is on the agenda at "Think Asia, Think Hong Kong"?
A series of symposiums, thematic business seminars with high-profile speakers
The latest market intelligence on Chinese investment and key industries of
finance, technology, fashion, digital entertainment, food service/culinary,
legal, telecommunications and more
Business matching and extended networking opportunities with Chinese mainland
and Hong Kong business delegates, covering technology, food and fashion
"Think Asia, Think Hong Kong" brochure is available here http://www.thinkasiathinkhk.com/usa/download/online_brochure.pdf
Check out the last TATHK UK event (September 2011): http://www.youtube.com/watch?v=yL6AkpgDmF0
Additional information, please contact:
Johnson Choi at (415) 691-6138 (San Francisco USA); (808) 524-5738 (Hawaii USA),
(852) 8171-3118 (Hong Kong SAR); Fax (877) 852-8548 or by email to firstname.lastname@example.org
*April 20 2013
Regulate tourist numbers for Hong Kong's benefit
By Ian Brownlee
Ian Brownlee says the overwhelming tourist flood in recent years should persuade officials to regulate the flow and refocus on quality growth, so that local needs are not compromised.
Chief Executive Leung Chun-ying has initiated a review of Hong Kong's tourism policy. It must be a radical reassessment, as the old model is no longer relevant. Continued growth in tourism is unrealistic and it must be
Until recently, all tourism was seen as beneficial. It is inevitable that large numbers of outsiders have consequences beyond creating employment and income. Like anywhere else, Hong Kong has a limited "cultural capacity" to accommodate tourists. Economic benefits now appear to be outweighed by the negative cultural impact from large numbers of visitors.
Hong Kong tourism figures have grown rapidly in recent years. About 50 million tourists come to Hong Kong every year. On average, about 1 million non-residents are in our city every day - creating demand that has not been planned for.
During tourism peaks, there are even more people on our streets. At Lunar New Year, 2.3 million people entered the city, of which 750,000 were from the mainland. Overall visitor numbers over the Lunar New Year were up 21 per cent year on year.
Recent annual increases have been large - 16 per cent from 2011 to last year, and 16.4 per cent from 2010 to 2011. It is the massive increase of numbers in the past two to three years that has forced the issue to come to a head.
Hong Kong is struggling to absorb the impact of these tourists. Shopping centres are dominated by high-price goods that are no longer relevant to the daily needs of local people. Prices of services, accommodation and property are being driven up by what the outsiders pay, rather than "real" demand. Famous local shops and restaurants are closing because they can no longer compete.
The effect is now being felt beyond the shopping centres, with tourists swamping campsites, Repulse Bay and country parks, dominating areas that are also places for local recreation. The complaints are that Hong Kong is overcrowded, tourists are now everywhere, and there is no place to escape. To quote columnist Michael Chugani, "Everything has a breaking point. How many more mainland tourists can we handle or actually need? Is it worth trading our way of life - and quality of life - to boost tourist dollars?"
It's time to set new policies so that tourism here is sustainable - accommodated with minimal costs to the community. Any tourism always incurs costs, whether it is in the allocation of resources such as land, the disposal of waste, traffic congestion or pollution.
Policies must include social goals, not just economic ones, so that tourism is seen in the context of what is good for the lifestyle of Hong Kong residents.
An example is the huge area of land set aside for tourism activities and hotel development at Kai Tak. The cruise terminal has already removed a big area of prime land from use by Hong Kong people, with questionable economic benefit, given the total public resources it has consumed. A further six hectares is reserved for hotel development along the waterfront.
A rational reassessment of the best use of this land is needed. It could be used for housing Hong Kong people, which must be a greater priority than meeting tourist needs. Setting aside the land for community use or as open space would improve the quality of life for local residents.
The contribution of tourism to the Hong Kong economy, at about 5 per cent of gross domestic product, is actually quite small, yet its negative impact on the use of resources and on society is now significant. Hong Kong should choose to develop its other sectors, instead of tourism.
It's time to set goals that change tourism from an endless pursuit of more visitors to growth that focuses on quality and sustainability, and which offers the community the best benefits with the least impact. We should avoid low-quality, low-yield tourism that consumes too many resources at the expense of local needs.
The following policies could be introduced:
- Stabilize the number of visitors to approximately 50 million per annum;
- Allow growth only in proportion to the increase in the permanent population of Hong Kong;
- Retain tourism's contribution to GDP at 5 per cent by paying more attention to high-value visitors, particularly business visitors;
- Don't provide scarce public resources, such as land and financing, for additional tourism facilities or hotel development, but spend on local needs;
- Price mass tourism out of the market to provide a greater return to Hong Kong investors and workers.
- To achieve sustainability, there is a need to adopt a completely different approach and accept that there is a capacity limit for a small place like Hong Kong.
Ian Brownlee is a planning consultant assisting non-governmental organizations and developers
*April 12 2013
An American design firm success story in Hong Kong
A shine to wine By Jacqueline Tsang
WHAT: WINE PAVILION HK$28 (US$3.6) MILLION
WHO: INTERIOR DESIGNERS Erdman and Lee founded davidcloversin the United States in 2007, before relocating to Hong Kong in 2009. The design firm hassince completed six projects, including the Tregunter
Residence, which earned the team a Perspective Award for Interior Designin 2011. Several of its projects are now under construction, including Butterfly House in the US, a 37-storey residential tower in Hong Kong, and a 22.3-hectare parking garage ceilingand nine pavilions for a commissionin Zhuhai.
If you're still holding fast to the idea that a wine cellar has to be cramped, dark, dusty and underground, clearly you don't know what HK$28 million can get you.
David Erdman and Clover Lee, the eponymous founders of design firm davidclovers, have come up with a wine storage solution that not only keeps your prized vintages safe, but also enhances the sharing and
socializing aspect of wine appreciation. To begin with, the design duo didn't relegate the room to its customary location underground, but rather, positioned it atop an entire building. "This is a wine-tasting and storage pavilion that's situated on the top of a residential project podium," Lee explains.
The pavilion spans two levels and is sectioned into several areas designated for storage, tasting and even aesthetics.
The lower level, which Erdman describes as "cave-like", is divided into three areas, each set at a different temperature. This ensures that the wines can be stored at the optimal temperature.
The bottles are arranged along the walls within easy reach, and there are also shelves to store entire cases of wine. The pièce de resistance of this level, however, is the central wine display. Empty bottles are arranged on a sculptural platform, and through the clever use of lighting, the display becomes "a glowing island ... throwing wine-infused light onto the ceiling", Lee says.
Curved around this glowing display is a floating staircase, framed by vertical slats in vivid berry hues. The pavilion owner can access the upper level through this staircase and enter the pavilion's tasting area. Here, a large, sleek tasting table takes pride of place in the airy atrium, with natural light filtering in through the skylight on the ceiling. There are more storage shelves conveniently located around the table, so that the owner can place selected bottles within easy reach if they have a tasting party. This area also extends to a completely outdoors area, which provides the perfect setting for larger events.
The versatile design means that the pavilion may even be shared among multiple residents, with interested parties keeping their favourite wines in designated storage sections.
The designers also suggest that the upper podium be used as a retail space. "We had the idea to include a larger wine-tasting programme," Erdman says. Residents using the wine pavilion could curate a limited selection of vintages every few months, and these wines would then be sold by the glass at an area outside the pavilion.
"Since the project is located on top of a residential building, we thought it would be nice that, while it could be exclusive with regards to storage, the tasting can have a bigger impact on the residents, even if they don't have a collection stored here," Lee explains. After all, she says, "the best wines are those that are shared."
A large, sleek tasting table takes pride of place in the airy atrium, with natural light filtering in through the skylight on the ceiling. Illustration: David Clovers
*March 8 2013
IPOs: how restaurant chains raise cash in Hong Kong
By Nan-Hie In
Sandeep Sekhri, owner of Dining Concepts.
Xiao Nan Guo, with 62 outlets here and on the mainland, listed on Hong Kong's exchange last year. So did Tsui Wah, the cha chaan teng chain. Its share price has since risen by more than half - market reports attribute this to the mainland's growth potential. Chinese operations South Beauty and Golden Hans, and Cantonese chain Tai Hing Roast, are all expected to launch initial public offerings this year.
Edmond Chan, from PricewaterhouseCoopers' Capital Market Services Group, says the primary reason restaurants list is to get more funds for expansion. An IPO is a more "viable" option than traditional methods of raising money. You can usually raise more money from an IPO than from business partners. The appeal of what is seen as a low margin business with high failure rates lies in potential growth in China, Chan adds.
The arduous listing process is a hurdle confronting Dining Concepts. With 22 venues, including celebrity-backed ventures such as Mario Batali's Lupa in Hong Kong, the company generated revenue of HK$65 million in 2012.
It has grown rapidly in recent years and founder Sandeep Sekhri wants to maintain the momentum. He plans to list the company in a few years.
"I would list for expansions into other markets - I would love to expand my business to China," he says.
"The downside is the amount of paperwork and reporting. The question is: do we want to go through that process?
"We used to pay 10 to 12 per cent to rentals from our gross sales. Now, at our prime properties, about 15 per cent of sales go towards the rent and that's rising."
Rising labour and food costs have also added pressure to the bottom line, meaning any increased profits will have to come from expansion not cost-cutting.
"If a good brand wants to expand in China to capture the rising spending power, this is an attractive investment story for the investor," explains Chan.
Xiao Nan Guo raised HK$512 million from its IPO; most will be used to open mainland branches. Almost half of the proceeds of Tsui Wah's listing (HK$692 million) will be for the mainland, including about 35 per cent for new outposts.
Many observers forecast the IPO trend to continue, a view shared by Scott Rothbort, investment adviser and founder of LakeView Asset Management. "Two of the fastest-growing companies in China are McDonald's and Yum Brands [Pizza Hut, KFC and Taco Bell]. Clearly, this industry is growing rapidly in China."
Scares over the safety of Chinese-reared chicken may make a temporary dent on Yum Brands' plans says Rothbort, "But the chicken problem will be transitory, much like the mad cow scare was for McDonald's nearly a decade ago and Taco Bell a few years ago." He believes the restaurant industry will grow in China and will require further access to the capital markets.
Rothbort, who covers dining stocks, says competition to become the homegrown McDonald's or KFC will heat up. "There will be a need to access the capital markets by smaller restaurant chains in the region."
*February 15 2013
Don't let Western bias cloud view of China By Lau Nai-keung
Lau Nai-keung calls on Hongkongers to see past the stereotypes of China - New year, new world view, without the Western bias.
In Western culture, the snake is one of the most hideous creatures in the world. It was the serpent that tempted Eve with the poisonous fruit and got us thrown out of Eden and burdened us with original sin. Yet, Chinese people love this sneaky reptile and included it as one of our Zodiac icons. The Cantonese savour snake soup as a delicacy. We see the world differently.
To the West, human rights are associated with freedom and democracy, seemingly identical to political rights. To most Chinese, who can still recall the taste of hunger, human rights first and foremost is the right to stay alive, and to make a decent living. Other rights may take precedence over political rights.
To people in the developing world, this perception of human rights is not only more reasonable, it is downright obvious. What is the point of one man, one vote when one is struggling for survival?
In the West, slavery as an economic system has survived until recent times. In the US, slavery was formally abolished only in 1865 with the passage of the 13th amendment to the US constitution. In China, slavery as an economic system ceased to exist during the Warring States era over two centuries ago. After that, there were slaves who served mostly as domestic servants, but not production workers.
Chinese thus on the whole do not find freedom an issue, and, in fact, before the Communist regime, many lamented that we were much too free - just like "loose sand" - and this has made us weak.
Few Chinese would be obsessed with democracy as an "inalienable right". "Democracy is a good thing"; this was the evaluation of a contemporary Chinese scholar and has been cited many times, meaning democracy is a tool for good governance. Lamentably, judging from recent experience in the West, whether democracy is such a good tool is increasingly questionable.
In fact, the Chinese term for "democracy" is made up of two words: "people" and "master". This evokes the republican spirit of "of the people, by the people and for the people". Societies everywhere are experimenting to find the best way to achieve this ideal. The trials and errors continue, so why the hurry to clone a defective system? There is no reason to stop performing experiments to attain better results.
And that is exactly what the Chinese are doing right now. Chinese are pragmatic people, and throughout history we have never turned our back on anything we found useful and have always found ways to improve it and adapt it for use. One product of this pragmatism was the reform and opening up that has generated more than three decades of unprecedented growth for China.
The country is currently tinkering with the idea of deliberative polling that originated from Stanford University. We don't care where an idea comes from, just as long as it is useful. Who knows, maybe one day Americans will learn from us, as they are now doing with high-speed trains and coal-fired power plants.
Coming back to Hong Kong, most citizens here have been drilled from their childhood that West is best, and China is both backwards and evil. Confronting an ever-emerging mainland that does not conform to the stereotype we've been taught, Hongkongers are getting more confused by the day and, as a result, we burrow down and become ever more parochial. We are becoming increasingly divorced from the new reality. Needless to say, this will do us no good.
Winter will soon be over. Like snakes do, it's time to awake from our hibernation and take a peak outside to gain a wider vision. It is a different world now. The snake is not evil; it has its merits, and most of all it will bring you good luck.
Lau Nai-keung is a member of the Basic Law Committee of the NPC Standing Committee, and also a member of the Commission on Strategic Development
*February 5 2013
Are You Still Looking For A Job - Help Wanted – Apply to Hong Kong
Hong Kong’s ability to maintain high employment throughout the downturn is significant, says Tony Pownall, General Manager, Hudson Hong Kong
In a global context, Hong Kong’s unemployment rate remains a relatively healthy 3.3 per cent – and has done so throughout the economic downturn. Historically, since 1981, unemployment in the city has hovered at about 3.74 per cent, which Tony Pownall, General Manager of Hudson Hong Kong, calls “a good number.”
“Hong Kong has consistently high employment, and its ability to maintain that throughout the downturn is significant. It means that consumer sentiment is strong, and this drives the business environment,” Mr Pownall said.
The latest Hudson Report on employment trends shows that hiring intentions remain high in Hong Kong this year, despite global economic uncertainty. More than a third of employers surveyed (37 per cent) said they intend to increase headcount in Q1 2013.
Consumer spending from the Chinese mainland, and Hong Kong’s robust IPO market, continue to underpin the positive sentiment, Mr Pownall said.
“The emerging middle class in China has money to spend – and Hong Kong is the place where they do that,” Mr Pownall said.
Tops for Shopping
The Hong Kong job market looks strong this year
- Latest data from the Hong Kong Tourism Board shows that visitor arrivals rose 16 per cent in 2012, with the biggest increase from the mainland – a market that grew by 24.2 per cent. According to Jones Lang LaSalle’s latest report on the retail sector, Hong Kong will remain the top shopping destination for mainland tourists due to its tax-free status, proximity to the mainland, and reputation for selling genuine goods. “International retailers tend to choose Hong Kong as the first market in the region to launch new products,” the report noted.
Mr Pownall said that the increase of Chinese companies using Hong Kong as their global platform is also creating jobs in the professional sector. “We are seeing greater numbers of Chinese firms looking to invest in Hong Kong – securities firms, for example – and firms going public via IPO.”
Global accountancy firm KPMG forecasts that following a last-quarter rally in 2012, funds raised for IPOs in Hong Kong will reach US$15.6 billion in 2013, on the back of a revival of China's economy and as IPO sentiment improves. The firm expects that while market volatility will persist, a backlog of about 85 deals will be launched this year.
A further factor underpinning the Hong Kong jobs market is mainland demand, Mr Pownall said. “Hong Kong feeds so much of China’s domestic demand. Exports may be slowing, but domestic demand is something different.” He noted that new business demand from the mainland recently reached a 15-month high, “which is positive for hiring.” Together, these factors “suggest everything is okay here,” he said.
IT Sector Strong
Visitors at the Hong Kong Career & Education Expo, held last week, discover opportunities in the city’s jobs market
Within the jobs market, the information technology sector goes from strength to strength, Mr Pownall said.
“Hiring in the IT sector is being driven by demand from businesses seeking to improve both efficiency and profitability via technology and more effective data management. Restrictions around permanent hiring among some multinational corporation are resulting in increased demand for vendor services and outsourcing of core IT functions,” he said.
Banking and finance have weaker hiring plans, but Mr Pownall said this sector did not have the “slash and burn mentality” of other markets outside Hong Kong. “It’s more of an evolutionary cycle, improving efficiencies through technology,” he said.
Indeed, Hong Kong remains “a candidate-short market in many respects,” especially with mainland companies cherry-picking the city’s talent to meet their own needs. “Many Chinese companies see [Hong Kong] as a fertile talent ground, seeking to relocate people to offset their local talent shortages,” said Mr Pownall. Professionals who can be a bridge between East and West, are able to work in a multinational company, but with an understanding of the local customs and language, are “like gold,” Mr Pownall said.
Financial Sector Improves
Hong Kong’s 3.3 per cent unemployment rate equates to a state of full employment, says Lancy Chui, Regional Managing Director, ManpowerGroup Greater China
Data from recruitment firm ManpowerGroup also points to optimism in hiring this year, albeit at a more moderate level. According to its research, 16 per cent of Hong Kong employers expect to increase staffing levels in Q1 2013. ManpowerGroup forecasts a better year for the finance, insurance and real estate sectors, which were the most optimistic in their hiring plans, with 17 per cent planning to add staff this quarter.
Lancy Chui, Regional Managing Director of ManpowerGroup Greater China Region, said that despite the continuing challenge of the global financial turmoil and eurozone crisis, both of which generated job cuts by investment banks and brokerages, job prospects for experienced individuals in Hong Kong “exhibit some resiliency."
Ms Chui noted that some mainland brokerages planning to establish more branches in Hong Kong are hiring, especially candidates who have working experience with foreign investment banks. “Moving into Q1 2013, local brokerage firms are still staying active in hiring revenue-generating roles,” she said.
Ms Chui agreed there’s a general feeling of optimism surrounding the Hong Kong jobs market.
“The latest manpower employment outlook survey results report that Hong Kong employers forecast steady payroll gains in Q1 2013 despite a general softening trend from 12 months ago. First-quarter hiring expectations remain positive in all six industry sectors surveyed.”
She noted that Hong Kong’s 3.3 per cent unemployment rate equates to a state of full employment, and that “recent private-sector vacancy figures still demonstrate a generally positive hiring sentiment among employers.”
On the cautionary side, Ms Chui said it remains to be seen whether the pace of job creation is sufficient to absorb the influx of fresh graduates this year, and that downside risks in the external environment “continue to loom large amid the evolving eurozone debt crisis.”
*February 3 2013
Kuok says with right heir his empire can last 'four generations’
Billionaire Robert Kuok says that with the right heir, his extensive network of businesses can continue well beyond him into the future - The Kerry Centre in Quarry Bay is part of Kerry Properties, a developer majority-owned by the Kerry Group.
When billionaire Robert Kuok introduced a luxury hotel brand in 1971, he named it Shangri-La, after the fictional utopia in which inhabitants enjoy unheard-of longevity.
Ensconced in his executive suite 32 floors above Hong Kong’s Victoria Harbour -- the room decorated with a pair of elephant tusks gifted by the late Tunku Abdul Rahman, the first prime minister of Malaysia -- the world’s 38th-richest person appears to have defied the ageing process himself.
Kuok had accumulated a fortune of $19.2 billion (HK$149 billion) as of Jan. 31, according to the Bloomberg Billionaires Index. Trim, dapper and straight backed at 89, he shows no signs of stopping there, Bloomberg Markets magazine will report in its March issue.
This year, the media-shy Malaysian-born magnate will likely open his 71st sumptuously appointed Shangri-La. Six of them are scheduled to be opened in the third quarter alone, including one perched in the Shard, the 72-story London skyscraper that’s the tallest office building in Western Europe.
Meanwhile, the public and private companies his family controls continue to pump money into his ancestral homeland, China, where his investments range from Beijing’s tallest building to cooking oil brands that have gained a 50 per cent market share in the world’s most populous nation.
One of Kuok’s companies, Singapore-listed Wilmar International Ltd., is the world’s biggest processor of palm oil and eighth-biggest sugar producer.
Others operate shipping and logistics businesses, a property portfolio stretching from Paris to Sydney and East Asia’s most influential English-language newspaper, the Hong Kong-based South China Morning Post.
“He’s so vital, so active and continues to be so personally powerful,” says Timothy Dattels, San Francisco-based senior partner at U.S. buyout firm TPG Capital LP and a director of Kuok’s Hong Kong-listed Shangri-La Asia Ltd. “I can’t imagine a day without him at the top.”
Others can, which is why the question of succession looms over the Kuok empire as the patriarch prepares to mark his 90th birthday in October.
Through the unlisted family-owned holding company, Kerry Group Ltd., which he chairs, Kuok controls listed enterprises with a total market value of about $40 billion (HK$310 billion).
As it stands, the family enterprises are seeking to recover from a rocky 2012 that featured some sharp share-price and profit drops.
In his first interview with Western news media in 16 years, Kuok, who has eight children and numerous other relatives sprinkled through his executive ranks, says he won’t be worried when that day eventually comes.
“Everything on earth is dynamic,” he says in perfectly enunciated English. “I can only give my children a message, not money. If they follow it, we can go another three or four generations.”
Relatives run the most important part of the Kuok businesses.
Kuok’s second son, Kuok Khoon Ean, 57, heads Shangri-La Asia, of which the family owns 50 per cent.
A nephew, Kuok Khoon Hong, 63, co-founded and chairs Wilmar International, the largest Kuok-controlled company, with a market value of almost $20 billion (HK$155 billion), in which the Kuok family controls a 32 per cent stake.
A daughter, Kuok Hui Kwong, 35, is the executive director of SCMP Group Ltd., publisher of the 109-year-old South China Morning Post, which Kuok took control of in 1993, when he paid Rupert Murdoch’s News Corp. $349 million (HK2.71 billion) for a 35 per cent stake.
As to who will succeed the master, most investors in Kuok enterprises focus attention on his eldest son, Kuok Khoon Chen, 58, who’s known as Beau.
Robert declined to confirm that Beau, who is deputy chairman of Kerry Group, will succeed him.
“Newshounds like excitement in their stories, whereas leadership of a business group is always a serious matter, and it would be wrong to put in writing any kind of assumption,” Kuok wrote in an e-mail following the interview.
Beau, who’s worked in his father’s businesses since 1978, is chairman of Kerry Properties Ltd. The firm, 55 per cent owned by Kerry Group, develops luxury apartments, shopping malls and offices mostly in China and Hong Kong.
“I know Beau, and he has a good team,” says Peter Churchouse, founder of Hong Kong-based property investor Portwood Capital Ltd. “But you have to wonder whether the second and third generations have the entrepreneurial and trading instincts that the father has.”
The father’s instincts were honed over decades of personal and historical turbulence inconceivable to the generation vying to take over the family business.
That experience helped him become one of the first -- and best-connected -- foreign investors in China following Mao Zedong’s communist revolution.
“Robert is the best China watcher in the business,” says Simon Murray, chairman of Glencore International Plc, the world’s biggest commodities-trading company. “He understands the steel backbone of the Communist Party, but while other Hong Kong tycoons tend to be hugely subservient to Beijing, he is in no way obsequious.”
For all of Kuok’s prowess, 2012 was a tumultuous year for investors in his enterprises.
While Kerry Properties stock surged 57 per cent in Hong Kong last year -- more than double the increase in the Hang Seng Index -- Wilmar International’s shares plummeted 33 per cent, making it the worst performer in Singapore’s Straits Times Index.
The plunge wiped the equivalent of more than $8 billion (HK$62.1 billion) from the company’s market value -- and almost $3 billion (HK$23.3 billion) from the family’s fortune. This year, Wilmar’s share price has rebounded, rising 14 per cent in January.
In any event, Kuok disputes Bloomberg’s valuation of his personal wealth at $19.4 billion (HK$150.5 billion); he says it’s “a fraction” of that amount, though he does not volunteer an alternative figure.
Wilmar’s woes stem from its massive exposure to China, where its cooking oil brands -- led by Jin Long Yu, meaning Golden Dragon Fish -- grease half the country’s woks and where it gets 48 per cent of its revenue.
Beijing limited price increases on edible oils during most of 2011 and part of 2012, Wilmar said at the time.
Furthermore, the rising cost of soybeans, which Wilmar uses to produce cooking oil, hit a record $17.89 (HK$138.8) a bushel in September, squeezing earnings.
In the first nine months of 2012, profit fell 29 per cent to $779 million (HK$6.04 billion) from $1.1 billion (HK$8.53 billion) a year earlier.
Kuok’s Hong Kong-based companies have had a rough ride since the global financial crisis.
As of Jan. 31, Shangri-La Asia and Kerry properties shares were both down 19 per cent compared with a 1 per cent increase in the Hang Seng Index. Asked about such underperformance, Kuok says enigmatically, “It is right and proper for the investor to like or dislike a share.”
Underperformance isn’t the only problem at SCMP Group, whose share price had declined 69 per cent as of Jan. 30 since Kuok acquired it. In 19 years, the South China Morning Post has churned through 11 editors, including one who served twice.
And although Kuok says his news executives publish without fear or favour, present and former staff members have publicly complained that the paper sometimes self-censors stories it thinks the Chinese government wouldn’t like.
“Under his ownership, criticism of China has been toned down,” says David Plott, managing editor of Global Asia, a Seoul-based quarterly. “And if you look at the turnover of editors, it tells you one of two things: either Robert Kuok doesn’t know what he wants or he knows what he wants and he hasn’t gotten it.”
If that’s true, it might be a first for Kuok, whose life story has been one of single-minded achievement.
The son of Chinese immigrants who had settled in British- controlled Malaya, Robert Kuok Hock Nien -- his full name -- grew up speaking his parents’ Chinese Fuzhou dialect, English and even Japanese during Japan’s wartime occupation of the region.
Significantly, given the role China would play in Robert’s life, his mother encouraged him to achieve fluency in Mandarin and embrace his Chinese heritage.
Kuok’s parents ran a shop that sold rice, sugar and flour. Kuok recalls living with the smell of his addicted father’s opium pipe in his nostrils.
Still, there was enough money for Robert to progress from a local English school to Raffles College in Singapore, where fellow students included Lee Kuan Yew, later the founder of modern Singapore.
Kuok never finished his studies. In 1941, Japanese troops stormed through the Malay Peninsula and in February 1942 captured Singapore. Kuok took a job with Mitsubishi Corp. With Japan’s defeat in 1945, his family resumed doing business under the British.
In 1949, after his father died, Robert; a brother, Philip; and other relatives founded Kuok Bros. Sdn., which later specialized in sugar refining.
Philip went on to become a Malaysian diplomat, and a second, much-admired brother, William, took an entirely different path again by joining the communist revolt against colonial rule. In 1953, William Kuok was killed by British troops in a jungle ambush.
Robert Kuok, by contrast, used his English-language skills on visits to London to learn the sugar business while remaining based in Malaysia and later Singapore.
During the Cold War, he traded with both Western and communist blocs, meeting Cuba’s Fidel Castro and doing business with China’s Mao from as early as 1959.
In 1973, with China in the grip of the Cultural Revolution, Kuok was summoned to Hong Kong for a furtive rendezvous with two of Mao’s trade officials.
They confided that China was facing a sugar shortage. Kuok stepped into the breach, transferring his headquarters to Hong Kong that year.
It was a prescient move. In 1976, Mao died, and in 1978, Deng Xiaoping tore down the so-called Bamboo Curtain, initiating reforms that sparked 34 years of surging economic growth.
In 1984, Kuok opened his first Shangri-La on the mainland. The following year, he partnered with China’s foreign trade ministry to begin building the China World Trade Centre in Beijing.
In 1988, at his nephew Khoon Hong’s suggestion, he branched out into edible oils. By 1993, Coca-Cola Co. was impressed enough with Kuok’s China connections to form a bottling joint venture with him.
That lasted until 2008, when Coke bought back Kerry Group’s stake for an undisclosed amount, both companies pronouncing the outcome a success.
The family’s history of that period harbours an enduring mystery: a 16-year parting of the ways between Robert and Khoon Hong, who in 1991 left the Kuok Group to set up Wilmar with Indonesian entrepreneur Martua Sitorus.
It wasn’t until 2007 that Robert acquired a 32 per cent stake in Wilmar and injected most of his agribusiness into it. Neither Robert nor his nephew would discuss the split.
For all his triumphs in the capitalist world, Robert Kuok says the biggest influences on his life were his devoutly Buddhist mother and his communist revolutionary brother, William.
“Otherwise, probably I would have been an arrogant middle- class Chinese, only caring about materialism, worldly pleasures and fleshpot pleasures,” Kuok says, his moist eyes betraying a momentary sadness. “When I am tempted, I think of what William went through. He sacrificed his life trying to help the underprivileged.”
Kuok says he has tried to pass on those values by not cocooning his children in privilege. Nor, he adds, does he place much emphasis on scholastic qualifications, including MBA degrees, when hiring senior staff.
Beau Kuok earned a bachelor’s degree in economics from Monash University in Melbourne; Ean holds a similar qualification from the University of Nottingham in England. Kuok describes Beau and Ean as “good boys.”
Among members of the extended family, Kuok speaks highly of Khoon Hong, his nephew at Wilmar.
“There are stupid ones, there are mean ones, but he’s one of the cleverest,” Robert Kuok says. None of the second- generation Kuoks would comment for this article. Kuok says they make their own decisions. “I never control my children,” he says. “We are a very liberal, democratic family.”
The perils of succession are acute in Kuok’s bailiwick, according to researchers at the Chinese University of Hong Kong.
Their study of 250 family-controlled businesses in Hong Kong, Singapore and Taiwan from 1987 to 2005 shows that stocks typically plunged 60 per cent over an eight-year period before, during and after a founder’s relinquishing control.
Joseph Fan, the finance professor who led the research, attributes this wealth destruction to the inability of the patriarch to pass on, even to family members, his most valuable, intangible assets, including relationships with governments and banks. “The founder is the key asset,” Fan says.
That’s why, Fan says, so many tycoons remain at the helm of their businesses well into their 80s and don’t disclose succession plans.
Last year, following investor concerns over feuds that have split the second generation of some of Hong Kong’s most prominent families, two of Kuok’s octogenarian billionaire rivals in the property business, Li Ka-shing of Cheung Kong Holdings Ltd. and Lee Shau-kee of Henderson Land Development Co., finally disclosed which of their progeny would eventually take control.
TPG Capital’s Dattels says succession isn’t a concern when it comes to the Kuok businesses.
“There’s only one Robert Kuok, there’s no doubt,” he says. “But he has instilled his business philosophy deep into the family. With what he has built, they are well set to continue, whatever happens.”
Back at his Hong Kong headquarters, Kuok asks an assistant to bring him a favourite quotation. Written by his mother in Chinese and engraved on a steel plate, the aphorism reads:
“If my children and grandchildren can be like me, then they don’t require material inheritance. But if they are not like me, then of what use is my wealth to them?”
Those words beg the question investors in Kuok’s far-flung businesses are asking now more than ever: How like Robert Kuok are his heirs?
*January 30 2013
Movers and Shakers
Find out why Hong Kong is the right place for logistics firms keen to tap the booming Asian luxury market
Handling oversize equipment for the mining sector is a specialty of ART Logistics - The value share of Asian imports and exports in world merchandise trade increased from 25.5 per cent in 2001 to 32.5 per cent in 2011. China's share alone expanded from four per cent during the same period to nearly 10 per cent over the past decade.
“This reflects both the rising consumption power of Asian economies, as well as the changing production patterns in a globalised world, particularly the application of supply chains management,” said Hong Kong Financial Secretary John Tsang, speaking last November at the HKTDC Asian Logistics & Maritime Conference. “Today, sourcing, manufacturing and distribution are constantly reconfigured to take advantage of lower costs and to serve promising markets.”
Hong Kong is well-placed to help Asia’s myriad supply chains and growing consumer markets, he said. “Our prime location, world-class infrastructure and extensive multi-modal transport network make our city an efficient logistics hub in the region. We have the world's busiest airport, with cargo throughput reaching almost four million tonnes [in 2011]. Our seaport is the third-busiest in the world, handling about 24.4 million TEUs [in 2011]. We also have direct cross-boundary links to the economic powerhouse of the Pearl River Delta region.”
Hong Kong’s Russian Connection
Logistics companies choosing Hong Kong as the hub of their regional operations agree. Air Rail and Truck (ART) Logistics Ltd moved its global headquarters from Switzerland to Hong Kong last October. The company provides a broad range of freight logistics services across Russia, Central Asia and the Commonwealth of Independent States (an organisation made up of former Soviet Republics), handling complex shipments in hazardous environments. In the Asia-Pacific, it focuses on oversize equipment, particularly for the oil and gas and mining sectors.
“We are growing quickly in Central Asia and into Mongolia, and Hong Kong has the connectivity, infrastructure and professional services to provide a good platform for our business,” said Tatiana Serova, Commercial Director of ART Logistics.
After three years in Hong Kong, the office was expanded to serve as both ART’s global headquarters and its operations hub. “We are able to access the professional services, skilled personnel, financial services, communications and IT services required to manage a global business,” Ms Serova said.
Hong Kong was viewed as the best location for the company’s headquarters because of its strategic location and its gateway role to the Chinese mainland and Southeast Asia. “There are also many opportunities for international business communications. Even though Hong Kong is currently not the territory of origin for the majority of projects we manage, it is the place where many of our business contracts have been negotiated and agreed,” she added.
Tatiana Serova, Commercial Director, ART Logistics Another reason for relocating its headquarters to Hong Kong, added Ms Serova, “is that some of our service products are very popular with other freight forwarders. As one of the very few specialists on Russia and CIS trade lanes in Hong Kong, we are leveraging this service exclusivity in the city as a competitive advantage. “Hong Kong is a leading logistics hub in the Asian region and is the leading global air cargo hub. The port is also one of the world’s biggest in terms of volume, and this means we have the flexibility to access global markets through Hong Kong.”
She also noted that Hong Kong provides the expertise needed for working on the mainland. In the near term, as new air-freight products and services come together, “we may invest in operational infrastructure in Hong Kong, too,” Ms Serova said.
Goodman Interlink, Hong Kong’s fourth-largest warehouse, runs at 100 per cent Australian integrated property group Goodman, a specialist in the development of logistics and warehousing facilities, with assets totalling US$21-39 billion, last year completed the construction of Hong Kong’s fourth-largest warehouse. The massive Goodman Interlink, a US$640 million facility, with lettable floor area of more than 2.4 million square feet over 24 levels, opened last March, with 99 per cent of its space already leased. ( Tall Order)
Good for Business
Phil Pearce, Goodman Managing Director, Greater China
Goodman has been operating in Hong Kong since 2005, and Phil Pearce, Goodman Managing Director, Greater China, said that the city has been good for the business.
“We came in at a time when ownership of warehousing was quite fragmented, and were able to consolidate quite quickly as a result. After 18 months, we started looking for a suitable site to develop,” he said.
Goodman Interlink is strategically located in Tsing Yi, adjacent to Container Terminal 9 and Stonecutter’s Bridge, and close to Hong Kong’s container ports, international airport and major highways to the mainland. The facility serves all of Goodman’s Asia markets except Japan, accounting for 14 per cent of the company’s global business.
Mr Pearce said Hong Kong remains an important regional distribution centre for Asia. DHL Supply Chain, which opened a state-of-the-art mega hub at the Goodman Interlink facility, agrees.
DHL Targets Growth
Frank Appel, CEO, Deutsche Post DHL CEO
Deutsche Post DHL CEO Frank Appel said Asia continues to be one of the most dynamic regions in the world, its rapid growth demanding a constantly developing network to keep pace with its needs. “Both international and local customers require effective and efficient solutions to establish their supply chains in the region,” he said. The company’s Hong Kong expansion, representing a total investment of US$630 million, will enable DHL to better serve the market, Mr Appel said. Goodman is also finding opportunities to expand its Hong Kong business. “We are currently converting a building from a warehouse to a data centre,” said Mr Pearce. “We have a big portfolio in Hong Kong, and we are constantly looking for ways to add value.”
DHL’s Hong Kong operations centre - The company is focusing much of its expansion plans on the mainland, and Hong Kong “absolutely” helps in that regard. “We have been able to move into the market and build critical mass very quickly, becoming a major player in a short period of time,” Mr Pearce said.
Research by Business Monitor International (BMI) published last December, noted the latest developments in Hong Kong’s air freight and port sectors: a new air cargo centre, due to open at Hong Kong International Airport this year, and the redevelopment of the old runway at Kai Tak as a barge-loading dock. Given the continuing expansion of the city’s role in the global logistics supply chain, BMI’s conclusion is that foreign operators will keep expanding as well.
*January 20 2013
The ins and outs of immigration visas - You can live anywhere in the world if you have enough money By Tiffany Ap
So you want to get out of Hong Kong. Perhaps you are tired of the crowds or the pollution. You dream of living in a country where the pavements are wide, the universities cheap and accessible and owning a house and garden is within the realm of possibility.
Plenty of Hongkongers left for Canada and Australia in the wake of June 4, 1989. Many quickly returned to Hong Kong, complaining their adopted countries were simply too boring.
If you are looking to get out, immigration visas are often the best option. With that in mind, Money Post breaks down what you need to apply to some of the more popular destinations. We also explain how to get an investor visa for Hong Kong.
Investor visas can be divided into two categories. The first is an entrepreneur visa suited to those who want set up and run a business within that country. To qualify for this the applicant must point to a business track record, have lots of money and be able to prove that their investment would generate jobs or have other positive effects. Visas are decided case by case; applicants must persuade immigration officials that they would be good for the country economically.
Most people go for the second type of visa, which is aimed at passive investors. Here, people just need to have lots of cash. Many countries will grant residency based solely on bank balance.
John Hu (left), a migration consultant, says the most popular destinations for his Hong Kong clients are Australia, Britain, the United States and Canada. Most are not seeking business opportunities, he says.
"Most would like to send their children overseas, not necessarily to make more money outside," says Hu. "It may diversify their business but the main purpose is to live and study abroad. Children can enjoy education benefits … or maybe they're seeking a more politically stable environment."
For those looking for a slice of the American dream, the most popular investor visa plan goes under the heading of EB-5. To qualify, individuals must invest at least US$1 million in a new business or US$500,000 for businesses in rural or high-unemployment areas. The investment must either create or preserve at least 10 full-time jobs for US workers within two years. There is a quota of 10,000 visas a year, of which mainland investors claim as much as 70 per cent.
Eugene Chow, an immigration lawyer who helped process the first Hong Kong EB-5 application in 1991, says the US is attractive because the main applicant does not need a business background. "They can be a housewife or a student, as long as the source of funds is clean. If dad is a senior executive and the money is documented, he can stay in China to generate money while they live or study," he says.
If you are very rich, be such to check
with your tax adviser FIRST. Tax is a major concern.
Last November, the Australian government relaxed its visa requirements with a new investor scheme aimed at the very rich.
Called the Significant Investor Visa, it asks for A$5 million (HK$41 million) put into approved funds. The investor only needs to stay in the country for 160 days over four years to keep the visa valid. The scheme does away with English proficiency tests, which is good news for many Asian applicants. It does not screen for prior business experience, either.
For entry as an entrepreneur, Australia offers the Business Innovation stream. The applicant must demonstrate that she or he will add value to the economy, by exporting Australian goods, creating or maintaining at least two jobs, or introducing new technology. Once approved, the visa is valid for four years and is eligible for extension. In 2011, both the mainland and Hong Kong were in the top 10 suppliers of emigrants to Australia.
Canada experienced such demand for its investor and entrepreneur visas that it stopped accepting applications on July 1 last year. Between 2008 and 2011, about 17 per cent of applications were from Hong Kong or China. The investor scheme granted visas to those willing to make a five-year, C$800,000 (HK$6.3 million) commitment to a set list of government-approved, Canada-focused funds in addition to proving a net worth of C$1.6 million and having business experience. Hu believes that, when the investor programme opens again, the required investment amount will double to C$1.6 million.
Canada has two entrepreneur pathways. The first federal scheme is open to those who speak French or English, can show two years of business experience, a minimum net worth of C$300,000 and own at least one third of a business that will create at least one job. The government is reviewing this programme as well which was designed in the 1970s and features such a low threshold that the backlog of applicants stretches to eight years at some visa offices.
There is also a Provincial Nomination Programme for entrepreneurs, which has not been suspended. Requirements for that vary from province to province, asking for a personal net worth anywhere between C$250,000 and C$800,000.
Unlike the other destinations, Hong Kong's investor visa scheme is driven by those wanting to invest in the city. Hong Kong's low taxes, abundant human capital and position as a springboard to the mainland market entices many entrepreneurs. Investors who are willing to put HK$10 million into one of a set of government-approved investment plans (generally Hong Kong or mainland-focused mutual funds) can apply for a visa under the Capital Investment Entrant Scheme (CIES). Real estate was excluded from CIES following a 2010 amendment, presumably on the view that HK$10 million was too low a threshold.
Things aren't as simple for mainland applicants. In addition to the HK$10 million investment, they are required to hold permanent residency in another country. This requirement was introduced to cap the influx of mainlanders, who made up 85 per cent of CIES applications last year.
However, because the government doesn't distinguish among third-party jurisdictions, mainland applicants are increasingly obtaining residency in places like Vanuatu, Gambia and Guinea-Bissau. They do not need to set foot in the country to become a permanent resident, says Stephen Barnes (left) of the Hong Kong Visa Centre. Last year, Gambian residency was listed on nearly 60 per cent of mainland applicants to the CIES plan.
Those wanting to run a business in Hong Kong can apply for an entrepreneur visa, which takes three to five months. Applicants must submit a business plan and show how their idea will have a positive impact, such as job creation. There is no minimum job-creation target; a handful seems to suffice.
David Lambert, who came from England to Hong Kong on an entrepreneurial visa to start a construction design company, says he expects to hire one person in the first six months and a second in the first year.
Stephen Mansfield, who was also got an investment visa, says: "Over the next 18 months … I expect there to be three others working for this business."
Britain offers an investment visa aimed at people who can invest at least £1 million (HK$12.4 million) in a fund or scheme offered by a British-regulated institution. Alternatively, the £1 million can come in the form of loans, provided the money was borrowed from a British-regulated institution and the person can prove a net worth of £2 million. Applicants do not need to hold a job or prove any proficiency in English.
Entrepreneurs must be able to speak English, possess a business background, create two full-time jobs or have a net worth of £200,000.
*January 10 2013
Hong Kong again named world’s freest economy By Stuart Lau
Heritage Foundation president Edwin Feulner announcing the 2013 index in Hong Kong on Thursday.
Hong Kong has topped the world in economic freedom for the 19th consecutive year, according to the Heritage Foundation’s index announced on Thursday.
But the conservative American think tank warned that the city could lose the top spot it has occupied since the index started in 1995.
”Although Hong Kong remains No 1 in the index rankings, the uniqueness of its commitment to economic freedom has eroded in recent years, and any further implementation of populist policies that empower the bureaucracy or undermine the principle of limited government could threaten its standing in future,” it said.
The city’s score, the first announced during Chief Executive Leung Chun-ying's term, has dropped 0.6 of a point from last year to 89.3, which the foundation attributed to increases in government spending relative to gross domestic product, and inflation.
Hong Kong is followed by Singapore, Australia, New Zealand, Switzerland, Canada, Chile, Mauritius, Denmark and the US.
Taiwan stands at 20th and the mainland 136th.
Although Hong Kong tops the worldwide ratings in terms of financial and trade freedom, it came15th in terms of monetary freedon and 17th in terms of limited government, a category that includes fiscal freedom and government spending.
For the mainland, the foundation noted a 7.2 point-jump this year in terms of labour freedom, though it scored 2.6 points lower on monetary freedom.
港 經 濟 自 由 度 優 勢 收 窄 (星島日報報道)
美 國 傳 統 基 金 會 公 布 「 全 球 經 濟 自 由 度 指 數 」 顯 示 ， 香 港 得 分 為 八 十 九 點 三 ， 較 去 年 下 跌 零 點 六 分 。香港連續十九年被評為全球最自由經濟體，但與第二位新加坡的差距進一步收窄。今次香港的得分是近五年來新低，較對上一次降低了零點六個百分點。美國傳統基金會董事分析，主要因為民間的「民粹壓力」，增加政府社福開支，故建議政府在下周《施政報告》減少開支和切勿再干預投資市場，包括立法設立標準工時，又提醒本港法治在首五位地區中排名最低，恐影響今年的經濟自由地位。
*January 8 2013
Mexico’s Asia-Pacific Tilt - Hong Kong's largest Latin American export market is shaping up to get larger still, as Mexico shifts its focus to Asia-Pacific markets.
Straddling the Gulf of Mexico and the Pacific Ocean, Mexico is a strategic meeting place for the two Americas
By most measures, Mexico is among the world’s most dynamic markets, highlighted by its selection, by Goldman Sachs’ Jim O’Neill (who came up with the BRICS concept) as one of the “Growth 8” engines driving the world economy.
Mexico’s position as Hong Kong’s largest export market in Latin America, meanwhile, is set to get larger. Its sizeable domestic market and strategic location as a leading outsourcing hub for United States manufacturers was for long the central reason for Hong Kong exports. Increasingly, that is being supplemented by the fact that Hong Kong is a focus for Asia-Pacific trade.
The country recently joined the Trans-Pacific Partnership (TPP) talks and is involved in creating a Pacific alliance with Colombia, Peru and Chile. Crucially, it’s also lifting a wide array of transition duties on imports from the Chinese mainland. All are important signs that Mexico is determined to throw open its doors to Asian trade.
Straddling the Gulf of Mexico and the Pacific Ocean, Mexico is a strategic meeting place for the two Americas. As part of North America, it shares a 3,000 kilometre border with the US and is a member of the North American Free Trade Agreement (NAFTA), the world’s largest economic bloc.
As the world’s largest Spanish-speaking country, Mexico is also a natural gateway to the Western hemisphere. The Americas account for more than 70 per cent of the nation’s total non-oil trade, making it a heavyweight partner for general merchandise. Factoring in the US$18 trillion NAFTA market explains why Mexican businesses are heavily focused on trade in the Americas. That focus, however, has given fewer incentives for Mexican businesses to explore other markets.
Unlike other Latin American countries such as Brazil, Chile and Peru, which have diversified trade to Asia, Mexican trade, both imports and exports, remains heavily orientated to the US.
The catchphrase “when the US gets a cold, Mexico catches pneumonia” certainly rang true during the recent US downturn. The Mexican economy grew only 1.6 per cent on average in the 2008-2012 period, compared to 3.6 per cent in Brazil, 3.7 per cent in Chile and 6.4 per cent in Peru.
Its weak economic performance compared with its peers, and Asia’s ever-growing weight in the global economy prompted Mexico to recalibrate its trade strategy and oil the wheels for its Asian adventure.
Still, the Mexican government is finding it difficult to persuade local businesses – particularly small- and medium-sized enterprises (SMEs) used to trading only with the US, Canada and other Latin American markets – to start their journey East. That’s mainly due to a lack of market intelligence and experience.
Mexico signed an accord last June with Chile, Colombia and Peru to establish the Pacific Alliance, a Latin American bloc with 215 million consumers and a combined annual output of more than US$2 trillion. Mexico and its partners aim to go far beyond free trade and reach out to the Asia-Pacific region as a united force. As of 8 October, Mexico formally joined the TPP talks to promote closer trade ties and diversify exports in the Asia-Pacific.
While Japan and South Korea are no strangers to Mexico, the less familiar Chinese mainland is increasingly considered an important partner in Asia. That’s despite the fact that the mainland is statistically already Mexico’s second-largest trading partner and import source.
In short, there’s plenty of room to strengthen the relationship, given the disproportionately low share of mainland trade in relation to the US, a view echoed by President-elect Enrique Pena Nieto, who expects to visit the mainland soon.
Working with Hong Kong
Hong Kong air connection is part of Mexico’s trade shift to the Asia-Pacific
Mexico has long been Hong Kong’s largest Latin American export market, outperforming the more populous Brazil. Hong Kong is an effective platform for Mexican companies to source a comprehensive range of Asian consumer goods, particularly from the mainland. Hong Kong is seen as a reliable sourcing base, while the accumulated experience and established relations of its traders have made them priority partners for Mexican exporters. In a recent move, ProMexico, the Mexican trade and investment agency, added Hong Kong to the list of markets where it wants to have a representative office to boost business volumes. In addition, ProMexico signed a Memorandum of Understanding with the Hong Kong Trade Development Council last August to promote trade and business cooperation in such priority sectors as electronics and food and beverages.
Mexico also signed a comprehensive agreement for the avoidance of double taxation with Hong Kong in June, to encourage investment and talent flows. Under the agreement, Mexican residents can claim tax credit for income tax paid in Hong Kong, while a lower withholding tax will be applied to Hong Kong residents receiving interest from Mexico.
In addition, Hong Kong airlines operating flights to Mexico will only be taxed at Hong Kong’s corporate tax rate, which is lower than in Mexico, and profits from international shipping transport earned by Hong Kong residents that arise in Mexico will be exempted from taxes in the country.
Brand positioning in Mexico
Mexican businesses in Hong Kong and Hong Kong businesses in Mexico are not prominent. Many Mexican traders, especially SMEs, view Hong Kong primarily as a financial centre, while many Hong Kong enterprises know little about the Mexican market beyond outsourcing from the US and its famous alcoholic drink, tequila. But there’s an increasing number of visionary Mexican companies working towards diversification in the Asia-Pacific. The La Nao Group is one; its unit, La Nao Green, has formed a joint venture with Hong Kong’s Synergy Group to commercialise patented green lighting technology in Mexico, while La Nao Foods has established a partnership with Mexico-based Export All Jalisco to cultivate Mexican branded health products under the name KANTE, for the Asian market.
Cathay Pacific Airways, meanwhile, has been working with the Mexican Tourism Board to establish flights between Mexico and Hong Kong, probably via San Francisco or Los Angeles. This could provide Hong Kong traders with more flexible and convenient flight options, boosting commercial and social contacts, including tourism and education.
*January 5 2013
Hong Kong Export outlook for 2013: a pallid promise***
2013 will unlikely be an overly fussy year for Hong Kong exporters to live with. It is instead expected to witness a more stable, yet still pallid, global trade environment with sustained headwinds. As the EU continues to muddle through the debt crisis, the world economy should only expand at a tempered pace, and Hong Kong exports are forecast to grow moderately by 4% in value and 1% in volume. Renewed downturn of the global economy, proliferation of protectionism, as well as escalating geopolitical tensions, notably with respect to the territorial flare-up between China and Japan, are apparently the major risks and challenges facing Hong Kong exporters.
Video on YouTube http://www.youtube.com/watch?feature=player_embedded&v=W9ZuY0t3CsU
Parallel to the unassuming world trade environment, Hong Kong exports, despite slight pick-ups in the recent couple of quarters, have stayed largely tepid in 2012. Following the 10% growth in 2011, exports edged up by a scant 2% during January-September 2012, with sales contracting by some 2% in the first quarter before showing increases of 2% and 4% in the second and third quarters, respectively. If anything, this modest performance was in part bolstered by the continued rise in the unit value of Hong Kong exports, which grew by 4% during January-September due to higher input costs, not least higher wages across the border. Not surprisingly, Hong Kong exports have so far declined in volume terms.
Among developed economies, the US looks stronger and more resilient. With uncertainties stemming from the presidential and congressional elections out of the way, modest growth may be feasible amid continued monetary easing. There are now some signs of life in employment and the housing market. That said, the jobless rate, construction activity and property prices have long yet to return to the pre-crisis levels. Further aggravated by deep-seated fiscal problems, continued household deleveraging and the spillover from the EU, domestic demand will remain timid, and many recession-induced buying habits, not least going back to basics, will likely prevail.
Given the protracted debt crisis, the EU stays as the most troublesome region. Only Germany is in relatively good shape, but prospects are darkened by the persistent high unemployment, anaemic demand and massive debt of its neighbouring countries. To be sure, fiscal tightening and the fragile eurozone fundamentals will continue to cast a pall over economic growth across the whole EU, although the foundations for tackling the debt crisis are gradually falling into place. As a result, consumer confidence should remain delicate, and the absorption capacity for imported goods will likely be weak, with cautiousness and frugality remaining the buzzwords.
On the other side of the developed world, Japan remains baffled by a number of problems different from the US and the EU. While the stimulus from the massive reconstruction efforts following the devastating earthquake is expected to peter out, the Japanese economy will continue to face formidable challenges ranging from unstable electricity supply to a firm yen that suppresses its exports. Adding to the woes, the territorial dispute with the Chinese mainland is also dealing a blow to various sectors of the Japanese economy. By all accounts, sales to the market, production inputs and finished items alike, are unlikely to be promising.
To sustain their business, Hong Kong exporters are advised to diversify into emerging markets. For China, where the priorities are stablising growth and promoting restructuring, its exports are impeded by the sluggish EU market, especially affecting the coastal provinces, which are already impaired by the relocation of lower-end production to the inner regions and other countries in Asia. Yet there are indications that the economy is on the mend, as investment picks up along with policy easing. Meanwhile, the mainland, facilitated by further optimisation of its distribution channels and facilities, will continue to foster consumption with measures like purchase subsidies and higher wages, thus bringing a better appetite of mainland consumers and more opportunities for Hong Kong suppliers.
In addition to the mainland, the largest single growth driver in developing Asia, there exist abundant business opportunities elsewhere. On the back of sound fundamentals and monetary easing, consumption will remain resilient in a number of countries, especially those possessing a huge domestic market like India and Indonesia, with their rapidly expanding middle class holding big promise. Stabilisation of the global market will also take some weight off countries with high dependence on exports, such as Vietnam and Bangladesh. Potential markets aside, these exporting nations are viable manufacturing bases for Hong Kong. Myanmar, which has embarked on the road to economic liberalisation recently, is a noted case for garment and footwear production.
In other parts of the fledgling world, there is no shortage of welcome outlets for Hong Kong exporters. In particular, resource-based economies should benefit from an expected firming of oil and commodity prices arising from the permutation of copious global liquidity, stable world demand, sustained geopolitical tensions and increasingly severe weather conditions. In Latin America, therefore, commodity-exporting economies like Brazil, Chile, Peru and Mexico should hold up well. Especially for Mexico, the abolition of anti-dumping duties on a wide range of mainland-origin products from December 2011 is expected to continue to enhance the access of Hong Kong exports to the Mexican market.
Likewise for Russia, growth is expected to profit from sturdy oil and commodity prices, whereas its recent WTO accession should open up further market opportunities. In addition to tariff reductions, Russia should follow international practices in areas like customs administration, which will certainly facilitate sales to the country. Other than Russia, emerging Europe will generally remain a weaker region due to its close integration with the EU, although economies featured by healthier fiscal conditions like Poland and Turkey are likely to perform better.
Regarding the Middle East and North Africa, steadfast crude prices should bode well for the economic fortune of oil-exporting nations, although social and political unrest will remain a major downside risk in the region. Given the lingering security concerns, Hong Kong exporters should take full advantage of Dubai’s entrenched role as a regional business hub, luring buyers from as far as Sub-Saharan Africa, where economic growth will be supported by steady commodity prices, as well as sustained inflows of overseas capital and investment. Dubai apart, Egypt, South Africa, Kenya and Nigeria, which comprise the “African diamond”, have risen to be respective gateways to Africa’s northern, southern, eastern and western regions.
Unrelenting risks and challenges - The biggest threat to Hong Kong’s export outlook is undoubtedly a renewed downturn of the global economy caused by the EU debt crisis. Despite the current lull in the eurozone, the crisis is far from over. While there is a lack of political will to push through macroeconomic reform in the indebted countries, establishment of the banking union remains at the planning stage. For now, Greece is struggling to meet the bailout conditions, and Spain is still considering a bailout request. There are also concerns about France and Italy, the eurozone’s second and third-largest economies. Given the pathetic fundamentals of the EU, any major shock in the eurozone could bring a calamity to the whole EU, with profound effects on the global economic and trade environment.
Protectionism is another hindrance to Hong Kong’s export outlook. While there is no widespread resort to trade restrictions in overseas markets, protectionist pressure has indeed increased recently. Given the inconspicuous outlook of the global economy, coupled with the gloomy prospects of further multilateral market liberalisation due to the failure of the Doha Round, the tide of protectionism is expected to prevail. Not only traditional markets, notably the US and the EU, but also emerging markets, such as Brazil and Argentina, are erecting barriers to international trade, potentially stirring up trade tensions among economies that could further hamper the global recovery.
Apart from economic factors, geopolitical developments may further incite trade tensions. A case in point is the territorial flare-up between China and Japan. After the earlier suspension of their mainland operations due to anti-Japan protests, Japanese shops and factories are back to business, but exports to China have taken a beating. If China and Japan are to swiftly resolve the dispute diplomatically, the likely economic impact will be minimal. But with no immediate signs that the conflict can be resolved, it would hardly be surprising that sour bilateral relations could translate into real economic damage to both China and Japan. The spillover to regional supply chains, which are skewed to electronic production, will likely be high, as Hong Kong re-exports of origin other than Japan and China may also be affected.
An insipid outlook for Hong Kong exports
Glossed with higher unit values engendered by sustained rises in production costs, Hong Kong exports are barely expected to display modest growth in 2013. While the world trade environment will likely become a bit more stable, continued consumer frugality in overseas markets in general, and the nagging anxieties in Europe in particular, should continue to weigh on the pace of export growth. Barring any jolts arising from a rekindled global downturn, rising protectionism or adverse geopolitical developments, our forecast is for Hong Kong exports to grow by 4% in value and 1% in volume. In the course of the year, export growth in the first half will be bloated by a low comparison base, whereas performance in the second half will very much depend on the state of the global economy, especially the momentum of US recovery.
Product-wise, Hong Kong’s electronics exports, which take up a good chunk of total sales, are expected to see slight growth. Though the demand for IT products, including tablets, will remain robust due to the introduction of new models by leading players, sales of telecom products, especially smart phones, should moderate on the back of a high base for comparison. For their part, sales of certain AV products like large-screen TVs, digital cameras and other gadgets will continue to encounter keen market competition. Likewise for household electrical appliances, sales will face challenges from mainland enterprises, but lighting products should fare better. By and large, a modest appetite for both finished electronics and electrical appliances will spur the demand for semi-manufactures, which may involve multiple shipments across the border.
For clothing, exports will likely improve a tad in line with the stabilisation of the world market. As consumers still opt for simplicity and value-for-money, products with basic and practical features will witness better performance. Nonetheless, the hastening trend towards the diversified manufacturing and sourcing models, as a result of the ever-accelerating production costs on the mainland, plus the rising competition from emerging production bases like Bangladesh, Indonesia, Vietnam, Cambodia and Myanmar, will continue to deter overseas apparel orders.
For toys, getting back to basics will stay as the creed too, and hence sales of traditional items should remain steady. Sales of electronic and video games, on the other hand, should see a modest rebound, as new video game platforms, including the PlayStation Vita, Sony's handheld game console and Nintendo's Wii U, will be released in different markets. On the supply side, as Hong Kong manufacturers are more capable of meeting the stringent overseas regulatory requirements on toy safety, relocation of production and sourcing from the Pearl River Delta region to other production bases is difficult. As such, Hong Kong toy suppliers are less threatened by competition from other Asian competitors compared with their counterparts in the clothing industry.
As regards timepieces, exports of higher-end items should remain in the doldrums, although there are tentative signs of a bottoming out in light of the convalescence of the global market. In tandem with the prevailing trend, however, less costly items, especially for watches with fashionable designs, are expected to lead the pack. Regarding the lower-end segment, where demand is expected to hold up well, sales will be constrained by competition from indigenous mainland suppliers.
As for jewellery, consumer appetite will again be impaired by the shift away from lavish consumption. Most shoppers, owing to their cautiousness, will likely stick to less pricey articles marked by good quality and craftsmanship rather than flashy brands. Besides consumer demand, Hong Kong exporters are expected to face troubles caused by sustained prices of precious metals, particularly gold. Despite their corrections in 2012, the prices of precious metals will likely resume their upward trends, given a flood of international capital, as well as the strong consumer and investment demand for precious jewellery in emerging markets, notably China. To add to the problems, competition from the mainland and other countries like India will also increase.
Evidently, Hong Kong exports in the first three quarters of 2012 continued to be dragged by waning demand from the EU, where sales fell by 9%. Yet sales to the US, aided by a more stable economy, crept up by about 2%, while those to Japan grew over 7% amid the country’s revival from the tragic earthquake. Given the attendant unpretentious export production in developing Asia, Hong Kong exports to the region, dominated by semi-manufactures for export processing, have remained humble, with sales to the Chinese mainland, the regional manufacturing centre, expanding by some 4%. Other regions, in the meantime, posted mixed results, led again by the Middle East.
Buttressed by the prevalence of mobile devices, electronics, up by over 5% in the first three quarters to account for some 57% of Hong Kong’s total exports, remained the main engine of growth. Household electrical appliances, however, were embroiled by competition from indigenous mainland enterprises. More worryingly for clothing, exporters have been exposed to other fledgling suppliers in the region, not to mention their counterparts on the mainland. Toys were another laggard. But instead of competition, exports were encumbered with dwindling demand for electronic and video games. In contrast, jewellery and timepieces, which showed respective rises of some 20% and 12%, were among the winners, although their sales in volume terms were less exciting.
Lacklustre world prospects for 2013 - Overshadowed primarily by the lingering European sovereign debt crisis, the world economy, though likely to stabilise somewhat, will only expand haltingly in 2013 with sustained downside risks. Developed economies will see growth in a slower lane. Defying the talk of decoupling, their apathetic performance will inevitably put a drag on emerging economies, which will continue to fare relatively better, however. In all, Hong Kong exports will still face strong headwinds in the year ahead.
*News information are obtained through various sources:
South China Morning Post, The Standard, Hong Kong Trade Development Council,
Hong Kong Economic and Trade Office, Hong Kong Government, Asia Society, Wall
Street Journal, China Daily, Xinhua, World Journal, The Singtao Newspaper, TVB,
CCTV Stations in China and others that are deemed reliable, but not guaranteed