Next Magazine (Second opinion A002, 2013.03.14)
Even people who favor free markets will often describe Hong Kong as a city with a business landscape dominated by property developers and their associated conglomerate monopolies. Countless articles seek to “de-bunk” the purported myth that Hong Kong is the freest economy in the world. Such cynicism makes it easier to justify more interventions that chip away at the freedoms we have.
Is the property sector really the most important feature of business in Hong Kong?
Our city is also the home to many companies, large and small, that are highly competitive internationally. They get on with their businesses with little attention or support from the government – a good thing. Understanding what Hong Kong companies need to be internationally competitive must guide public policy.
Compared to many cities, Hong Kong is well endowed with companies founded locally that have grown well beyond our shores and hinterland. It has long been a haven for entrepreneurs grown locally and those who come to Hong Kong from around the world.
Take some well-known examples. VTech produces educational toys found everywhere that are renowned for quality at an affordable price. Johnson Electric is a global leader in small electric motors. Techtronic Industries makes household name power tools. These companies compete more than on cost; they manufacture around the world and have invested heavily in their brands.
Hong Kong shipping companies and ports operators operate in highly competitive markets with efficiency and profitability that reflects the disciplines honed in competitive Hong Kong markets. Commodities traders (say Noble) rise and fall in Hong Kong. We are the home to a growing suite of leading hotel brands that start with the iconic Mandarin Oriental and Peninsula, but have aspiring additions.
Even maligned Hong Kong utilities like CLP and the various Hutchison infrastructure companies have managed competitive international expansion. Hutchison itself has managed to win internationally in retail, ports and telecommunications. The Swire and Jardines groups have rejuvenated conglomerates grown well beyond their local origins.
Our city remains one of the best places in the world to establish new financial services businesses. In education, the Kid’s Gallery franchise is a small and innovative business that shows an economy that is broadening. This journal is a reminder of our vibrant publishing industry. Remember Hong Kong is just a city, with 7.1 million people. However, it has fostered companies with much broader horizons.There are characteristics of these businesses that are intimately tied with corporate origins in Hong Kong. They have an international orientation. Many draw management from all over the world, but have a core of efficient Hong Kong born and educated administration that is in a class of its own. There can be no place in the world with better secretarial support. The Hong Kong diaspora means you can hire people here with connections to every corner of the earth and willingness to be mobile. Efficiency is characteristic of Hong Kong. It is easier to get things done here than most so-called international cities. The rule of law abides in commerce and contracts written here garner confidence as much as those in London or New York. Open borders, free trade, the rule of law, fiscal prudence allowing low taxes, a lean government, well defined property rights and a regulatory burden that remains less onerous than most developed markets all make Hong Kong commerce vibrant and create opportunities for entrepreneurs.Few of these strengths rely exclusively on China for their competitive edge. Being globally competitive is usually the best foundation for success in China.Hong Kong is not unique in struggling to develop competitive property markets. Arguably limited and expensive land has encouraged us to economize on its use, finding a competitive edge elsewhere.Hong Kong’s traditional city state rivals all have their merits, but none have grown the depth of business or have had the economic freedom that has allowed Hong Kong to thrive — and must be preserved — if Hong Kong is to continue its success. A focus on the positives of a free Hong Kong is as important as addressing the negatives that we are all too well aware of.
Bill Stacey is in his 10th year as a resident of Hong Kong and is Chairman of the Lion Rock Institute.
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