The insider view: Hong Kong
Hong Kong’s previously strong economic growth has fallen away over the past couple of years as the result of retail price inflation and the weakening of key export markets, according to Amy Lam FCMA, CGMA, chief financial officer at Jardine Shipping. She says that her company is “adapting its growth model to deal with competition from neighbouring countries such as Singapore”.
Lam observes that a continuous inflow of tourists from mainland China over the past decade has been a massive boost to the special administrative region’s retail industry. “It’s expected that the momentum will continue, which will benefit Hong Kong,” she says. “But there is pressure for us to build and create more tourist attractions and other ancillary facilities to cater for this growth.”
Samuel Ng FCMA, CGMA, senior financial controller at Terumo BCT (Asia Pacific), a producer of medical devices, says that Hong Kong is expected to achieve real GDP growth of 3.5 per cent this year.
“Unemployment is low and the job market is still vibrant here,” he says. “Our economy and stock market are now more influenced by the performance of mainland China – and lots of business activities have been crossing the border.”
Both Lam and Ng note that real-estate prices in Hong Kong remain so high as to be barely affordable even to highly paid professionals, despite the government’s recent measures to cool the property market and deter speculation.
Irelan Tam FCMA, CGMA, vice-president for strategy and investment at Panther Healthcare, another medical device manufacturer, takes a balanced view of her firm’s prospects.
“We forecast that Hong Kong’s and China’s markets for medical devices will grow by 7 per cent and 16 per cent respectively,” she says. “Our main concerns are price inflation in raw materials and the appreciation of the renminbi, which will increase our costs. We expect our competitors in China to continue investing in new products, despite a slowdown in equipment-buying by hospitals. We also predict that the mergers and acquisitions market will be very active.”
“Think fast, act fast” is the watchword in Hong Kong, because time is always of the essence here, according to Lam. “With businesses competing hard for market share, new products and ideas are launched every day,” she says.
Ng observes that the management culture “depends on what type of company you are working for, as a wide range of organisations exist here”. In Hong Kong there are multinational corporations as well as Japanese, Korean and traditional Chinese firms, which makes for a diverse mix.
“In general, though, workers in Hong Kong are diligent, reliable and committed to their responsibilities. But it is hard for people to find a good balance between their work and home lives here,” he says. “The management style is comparatively open compared with that of other areas in the region, despite the high influence of oriental culture.”
Ever since the Wall Street Journal and the Heritage Foundation started compiling an annual index ranking jurisdictions by economic freedom in 1995, Hong Kong has remained at the top of the pile as the world’s freest economy. It’s also an excellent environment for business compared with other nations in the Asia Pacific region, according to Ng, who has set up business units in China, Japan, Australia, India, Malaysia and Singapore.
“Hong Kong has largely phased out its manufacturing sector and now the bulk of the economy is based on the service sector, which means that human capital is the most important asset for enterprises here,” Lam says. “With our low unemployment rate, experienced and committed people are always in demand. Recruiting, motivating and retaining the right talent is the key to running a successful business in Hong Kong.”
Tam agrees that the quality of an employer’s talent development programme will prove key to its success in both Hong Kong and mainland China. “External recruitment has always been expensive, so any company here should focus on its development and retention programmes to support its future growth,” she says.
Tam warns that the recent strengthening of anti-corruption measures in China has made it “critical for companies to design corporate governance policies and procedures for sales staff to follow. Companies need to perform compliance risk assessments to ensure that the right controls are in place.”