Business leaders debate way ahead for Hong Kong

Hong Kong Skyline
By Robert Outram, Editor of The CA magazine

5 March 2015

Business people debate the way ahead as the finance hub prepares for closer ties with Mainland China.

Since Hong Kong's handover from British rule in 1997, the Chinese Government has followed the principle of "one country, two systems" and, with the exception of international relations and security matters, Hong Kong has been largely allowed to run its own affairs.

The Chief Executive - the equivalent of a Prime Minister or President - has up to now been elected by an election committee representing a range of interest groups, and 2017 should see the introduction of universal suffrage for the first time. Debate is currently raging, however, over how to implement it; either through voting for a limited raft of candidates put forward by a nomination committee or, as some opposition groups are calling for, a much wider range of candidates.

The argument spilled onto the streets last autumn when the Occupy Central movement staged an ongoing demonstration, blocking off part of the city's financial district.

To discuss the impact of the political debate and the way forward for Hong Kong, The CA magazine brought together a panel of businesspeople, all with a considerable knowledge of and stake in Hong Kong.

How life in Hong Kong has changed since British rule

CK Tsang JP, managing director of the Ryoden Engineering group of companies, commented: "For people who have lived in Hong Kong practically all their lives, there has been almost no change, apart from the change of flag... but not all civil servants and ministers here are up to par. On the economic front, we're doing exceedingly well."

Ken Morrison CA, a director with Mazars in Hong Kong and chairman of Mazars Greater China (and of the ICAS Hong Kong community) said: "Since 1997 we have had three Chief Executives, none of whom have had the support of the people, and there hasn't been the degree of leadership that any country needs."

Richard Margolis was a member of the British diplomatic team at the handover and then became a director with Rolls-Royce in Hong Kong. He is now a director with the Asian arm of Hakluyt & Company, an international business advisory firm and an adviser to Milestone Capital, a private equity fund.

His view was that the run-up to 1997 had held back some necessary changes. As he put it: "Some things got slightly frozen during the long transition period."

Richard added: "There was a failure on the part of our post 1997 leaders to realise that once the transition was done... we could just have 'got on with it' to a much greater extent, and we could have been more robust in our dealings with China."

Vivian Lo, a managing consultant with Linkage Asia, commented: "I don't think we were very prepared. We talked about the handover, but we saw it just as a ceremony. "Beijing is not used to leading a city like this so they were not able to give us a lot of guidance. And in the meantime, the world has changed... I am more optimistic, though. Everybody's learning - not just the civil servants. In another 10 or 15 years I think we will see a different Hong Kong, but still a strong one."

China is starting to pay more attention

T Brian Stevenson has been a CA and part of the Hong Kong business community for many years and is currently member of the board of MTR, the territory's mass transit system. He commented: "China has kept its hands off, but it will now be paying more attention to things like education, and the Legislative Council. For me, as a citizen, I welcome that. We need leadership and I don't see that from our existing politicians."

Rob Dorfman, chairman of public listed industrial group Herald Holdings Ltd, argued that, more than 17 years after the handover, Hong Kong continues to enjoy a free society and a free and vibrant press. He added that the recent corruption trial involving one of the territory's richest property magnates, Thomas Kwok, and former chief secretary Rafael Hui, shows the rule of law is still strong, and nobody stands above it.

According to Ken Morrison: "There is no question but that we have a terrific future ahead of us, if we believe in it. Things work in Hong Kong - we get things done. But if we start believing that the future is not bright, we may start finding that we fulfil that scenario."

Ken added that recent street demonstrations risked scaring off international investment: "Perceptions drive investment and if people think that Hong Kong is not quite the same as it was before, it doesn't matter whether it is true or not."

Patrick Cheung, chairman of Hong Kong based investment advisory company QED Global Ltd, commented: "Some of what had been negotiated in the handover was not created with permanence in mind... we have a flawed governance structure, with a LegCo [Legislative Council] that is not connected to the Chief Executive."

View from the outside

Offering an outsider's view, ICAS Chief Executive Anton Colella noted that Hong Kong's current political introspection contrasted with the mood in Singapore. He said: "Their identity is growing stronger and they could end up eating your lunch - maybe they already are!"

On a positive note, Richard Margolis said that, with levels of debt climbing rapidly in China, when and if capital becomes harder to source on the mainland, Hong Kong will be ideally placed to help.

He said: "Hong Kong knows how to price capital and risk, and there will be an increasing role in China for people who know how to deploy capital effectively and price it properly." Rob Dorfman said: "Hong Kong could be a financial centre for Asia - like Singapore - not just a China-centric location. For example, Indonesia represents a huge opportunity, as does the Philippines."

And CK Tsang pointed out that Hong Kong is also in some ways influencing and changing China with, for example, a reformed circuit court in Shenzen which follows some of the principles of the Hong Kong legal system.

So what will it take to realise Hong Kong's potentially bright future? Vivian Lo said that Hong Kong must maintain the things that make it distinctive and different. Also, argued Richard Margolis, reforms to the way government owns and sells land, to make property more affordable would be a major step forward.

Patrick Cheung said: "Ultimately HK can become the leader in the Pearl River Delta. And that region will be significantly different from the rest of China, because of Hong Kong. I don't see China as monolithic."

The issue of trust is key

Ken Morrison stressed, "there is still a sense of 'them and us' between Hong Kong and the mainland. We are on the same team and it's a case of listening to one another, and playing to each other's strengths. If we can play to the strengths of China and Hong Kong, Hong Kong can indeed be the world city it has the potential to be."

T. Brian Stevenson: "The solution lies in something like the Singapore model: leadership, controlled democracy, discipline. We should all be thinking of Hong Kong as the New York of China."

Anton Colella summed up, stressing that in addition to the politicians, civic Hong Kong has a part to play in creating a positive future. He said: "Those who have been successful are now required to be more vociferous, to ensure there are opportunities for the next generation; opportunities not just for protest but for progress."


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