By Andrew Work (SCMP, 18th January 2007)
The copy being posted here is the original.
What do Wal-Mart and The Link of Hong Kong have in common? Not much it would seem. One is an American based global retailer. The other a local landlord born out of a government privatization. However, they both share the unenviable burden of being the whipping boy for populist socialists that would rather grandstand than deal with real issues.
Wal-mart is studied by business students, economists, customers and competitors alike. A 2006 study showed that Wal-Mart has revolutionized distribution chains, saves the average American family over $2,300USD ($17,940) a year and employs over 1.8 million people. They have provided spectacular long term returns for investors ranging from the company’s founder’s family to senior citizens whose pensions are dependent on mutual fund returns. Most importantly it provides products and services at low prices that make lives easier for real people around the world. How do we know? Because they choose to keep buying to the tune of over 176 million people a week.
Apparently this isn’t good enough for American populists. Socialists have made it their favourite firm to hate and targeted it with discriminatory laws – as was the case in Maryland. In that state, legislators passed legislation mandating firms over 10,000 employees spend 8% of payroll on employee healthcare. The only firm in the state impacted by the legislation? Wal-Mart. In New York, a similar law exempted unionized companies, singling out Wal-Mart through selective legislative drafting.
While those laws were successfully challenged in court as discriminatory, union sponsored politicians have not been idle. Pundits from California to New York deliver venomous rants about Wal-Mart’s unique responsibility to pay more, provide more healthcare, and so on. In short, if unions can’t get happy Wal-Mart employees to join them, they will make Wal-Mart’s existence miserable by sending compliant politicians to do their dirty work.
Sound familiar? Earlier this month, Hong Kong legislators were posturing about unique responsibilities of another company here. Apparently our politicians have been taking notes from America.
While The Link was once a grossly over-funded, over-staffed and dismal government department, it was thankfully privatized in one of the most popular IPO’s in Hong Kong history. It provides a platform that allows its tenants to serve millions weekly, apparently happy to visit their shopping centres and auto parks. Hundreds of thousands of Hong Kongers, are now counting on The Link management to reform this institution to create wealth and value to support their retirement, provide returns to pay for a new home, or protect the wealth they hope to pass to their children. The Link has been largely successful, raising rents, driving efficiencies in staffing and operations and making malls more pleasant places to visit. Once a drain on taxpayers,it is now a wealth generator for Hong Kong.
Of course, some enriched at taxpayer expense are being displaced. Those with jobs downstairs from their taxpayer supported flats couldn’t depend on triple staffing to cover while they took hours off to nip home for a nap. Shop owners grown lazy on government subsidized rent take umbrage to losing their anti-competitive status. That past is gone and Hong Kong taxpayers and consumers alike should be glad.
Legislators ignore the reality that Link is a private company now, with the same responsibilities as other private companies: to provide a return to shareholders, to honour its contracts to customers, suppliers and employees, and obey the law. In doing so, Link will enrich investors, employees and provide valuable services to the community. As in the US, however, it isn’t enough for some.
Legislator Yeung Sum has called for Link CEO Victor So to make an appearance to discuss management issues with LegCo. Leung Kwok-hung, not one to shy away from extreme socialist solutions, has suggested setting up a legislative committee to monitor Link management. Kwok Ka-ki is complaining about rent rises to garner favour with doctors in his constituency. Wong Kwok-hing uses American union style tactics, invoking corporate social responsibility – the clarion call of socialists everywhere to justify legislation to further their social engineering ends.
Mr. So was right not to appear. If him, why not Li Ka-Shing to answer for Cheung Kong’s management choices? Bill Gates for Microsoft? Steve Jobs for Apple? Where was Kwok Ka-ki when Swire dumped Marks & Spencer from Pacific Place? Nowhere to be found.
Housing Department Deputy Director Kenneth Mak was right to assert that Link is a private company and the government has no right to interfere in their management decisions. Our socialist legislators have learned to ape their American counterparts and have their whipping boy of choice in Link. They should get back to the business to scrutinizing the government and let business get on with the valuable contribution of making Hong Kong a more prosperous society.