Britain in Hong Kong January - February 2022

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C O N T E N T S 03 CHAIRMAN'S MESSAGE a letter from the Chamber Chairman to share updates on the Chamber's activities over the past two months


11 CHINA'S GREATER BAY AREA: YOUR NEXT BUSINESS DESTINATION Sebastian Hoffmann Senior Sales & BD Associate and German Desk Manager, Hawksford

13 MOVING THE NEEDLE Anson Bailey, Head of Technology, Media and Telecommunications, Hong Kong & Head of Consumer & Retail, ASPAC, KPMG China

19 CYBERSECURITY IN 2022: FROM DAMAGE CONTROL TO EVERYDAY BUSINESS Antony Ma is director and founder at Hoplite Tech

22 INNOVATION AT KELLETT Mark Steed · Principal and CEO at Kellett School, Hong Kong

25 10 YEARS AND A TIME TO CELEBRATE Meraki Executive Search & Consulting

CHAIRMAN'S MESSAGE Dear Members It seems barely fathomable that we are opening the door to 2022 and a third year of the COVID pandemic. In February 2020, when the news of a coronavirus was starting to break, I remember thinking this would be over by the summer and, like the 2003 SARS virus, COVID would peter out in the warmer Hong Kong weather. This virus is different – aggressive and persistent. It seems with every new variant there is another twist to the control restrictions. Last year the Delta variant closed Hong Kong for the year at both international and mainland borders and for a short period the SAR was itself effectively shut down. It felt like we had hermetically sealed ourselves away. The new Omicron variant is now causing a similar level of restriction. We all know that the COVID virus can be dangerous. I also appreciate that the socio-economic conditions in Hong Kong – in particular how many people are housed – require an exceptional control response. At the same time we should see more credit given to those of us who have followed Government advice and taken the vaccine. We should be permitted greater liberties to move more freely particularly at border crossings and particularly if we agree to regular PCR testing. It is not in the DNA of Hong Kong to live like a hermit city. Every day, in normal years, there are 75,000 arrivals at the airport and 250,000 border crossings at the check points at Shenzhen. These are now but a trickle. The pressures on international and cross border business as a result of these restrictions are becoming increasingly difficult to manage. The Chamber will continue to lobby for a more reasonable and more business-friendly approach. We need cross border activity to return and more “People to People” exchanges. We certainly should not be welcoming 2023 with the same propensity to lock ourselves away. I am told the Oxford English Dictionary Word of the Year is “Vax”. Use of the word has risen 57,000% in 2021, although I have no idea how this is calculated. “Lockdown” came a close second. Language does reflect current preoccupations and I suppose it is no surprise that these two words have figured so highly in every day parlance. I would prefer to revert to 2013 when the Words of the Year were Selfie and Photobomb – much more fun!

The Chamber has had a busy set of events and activities at the end of 2021. We ran a successful Digital Health Symposium where one of the highlights was the presence of Grace in what, in other Chamber events, we would call a “fireside chat”. Grace is, in fact, a robot and a prototype developed and built by Awakening Health, a joint venture between Hanson Robotics and SingularityNET. She speaks and interacts to provide healthcare advice to elderly patients, in particular, and is “built to care”. Whilst she doesn’t always seem to find the appropriate response just yet this is extraordinary work in progress and certainly a sign of the times. The company has developed a patented material called “Frubber “which feels and responds like human skin. Perhaps this will be the 2022 Word of the Year. We have also continued our work on the Chief Executive’s Policy Address by examining some of the bold proposals, including the Northern Metropolis Development Strategy. We will continue to do more of this into 2022. The Chamber was also asked to be a Supporting Organisation for a Hong Kong Trade & Development Council webinar “Discovering and Realising New Opportunities in Asia”. The target audience was in the United Kingdom and the event was a virtual solution for the annual HKTDC dinner which would normally be held in London. There were more than 700 log-ons across the UK and Hong Kong which I think shows the strength of the historic connections. The Chief Executive gave a short welcoming address and I had the opportunity to interview her thereafter in an actual person-to-person fireside chat. She spoke of the great business opportunities in Hong Kong that have been identified in the Policy Address, DDDD

including the Northern Metropolis, Creative Industries, Healthcare, I&T and of course Financial Services. I also took the opportunity to quiz her about the chances of border re-openings. We published the result of our COVID survey in November which you can visit through this link. In short, the survey revealed what I think many of us are already experiencing, that the border and quarantine restrictions are starting to have an impact on talent recruitment and retention. On the one hand I take comfort from this as it shows that our members want to invest in the opportunities in Hong Kong. On the other hand it shows that there is now an extraordinary “war for talent” which is taking place at a local and global level. There is a risk that Hong Kong gets left behind if we cannot encourage the right people to come here to live and to work. We held our Christmas Drinks Party at the start of December. This was a not-to-be-missed event and I want to recognise again the support of our sponsors and of all the guests who attended. The elation was palpable as we enjoyed a rare 2021 opportunity to have some fun and party together. You can get a taste for this by looking at the write-up, including some tasty photos, on our LinkedIn page.

“The British Chamber of Commerce in Hong Kong is a worthy winner of this award. The innovative approach it has taken to engaging younger people in the world of business is truly inspirational especially during the era of the pandemic. Its strong commitment to inclusion and diversity was also very heartening along with its dedication to promoting Net Zero goals. They are a great advertisement for the benefits that our Global Business Network can bring.” Amen to that… …and a Happy and Prosperous New Year to you all !

Peter Burnett Chairman, The British Chamber of Commerce in Hong Kong

The end of 2021 gave us all an opportunity to reflect on the successes and disappointments of the year. I know many of our members have had exceptionally good business years – notwithstanding the impact of COVID. I also know that some of you have struggled through social distancing restrictions and lockdown requirements and have been forced to restructure and retrench. The Chamber has also travelled a similar journey. Through persistence, diligence and smarts the team has pulled off an exceptional year in the face of some quite extraordinary challenges. I do want to thank the Executive Team and acknowledge their hard work in 2021. My expectation is that we will probably need more of the same in 2022. A brief overview of the year’s highlights can be found through this link. The year also concluded with a wonderful accolade for the Chamber when we were selected by the British Chambers at an event in London as the “2021 International Chamber of Year”. This award belongs to the entire Chamber and is a direct consequence of the efforts of the executive team and all our members who participate in committees, who contribute to our advocacy and policy work, who organise events and support those events by joining them. The explanation for the award is worth repeating here by quoting Sarah Howard, Chair of the British Chambers of Commerce in the UK:




We are delighted to announce that our wonderful Chairman, Peter Burnett, was awarded an OBE in the New Year’s Honours List for services to British Business in Hong Kong.

Supporting businesses here in Hong Kong is a key focus of ours and we are grateful for the many members and partnerships we have that help to make this possible.

Congratulations to Peter for this well deserved recognition and award.


Manufacturing companies investing in Southeast Asia can accelerate growth by having a deep understanding of the operating landscape and maintaining agile supply chain strategies. Situated at the confluence of major trade routes with US$3.4t of global trade passing through each year, Southeast Asia (SEA) has been a focal point for cooperation and tensions, among both regional and global powers. Amid rising global trade and technology tensions, a new EY report, Investing in Southeast Asia: Reimagining manufacturing and supply chains, highlights that SEA nations have now surpassed the US as China’s secondlargest trade partner. Rising imports from China have also put downward pressure on prices in the region. Despite these roadblocks, SEA is poised for growth in the upcoming years. With a combined GDP of over US$3.2t[1], it is currently the fifth-largest economy in the DD

world. Home to 656 million people, a young demographic and a growing middle class, the region holds immense potential, seen in the gross domestic product (GDP) growth in the region over the years. Multiple free trade agreements (FTAs) between SEA nations, along with its loosening tariffs, also attracts crossborder trade. Initiatives like the Southeast Asian Manufacturing Alliance (SMA) and Regional Comprehensive Economic Partnership (RCEP) connect companies with a network of trusted partners to navigate and grow in the diverse SEA region with confidence while being economically integrated to around 30% of the world. For companies and investors in search of their next phase of growth, SEA brings opportunities for integration of production processes and leverage the region’s unique natural resources, structural capabilities and labor skills. Further, the region’s digital economy is projected to exceed US$240b by 2025.

D [1] “ASEAN Matters for America / America Matters for ASEAN” , East West Center, ?file=1&type=node&id=36244, accessed 20 September 2021


Together with technological advancements and their rapid adoption, continuous improvement to provide state-of-theart infrastructure facilities and development of a sharing based economic model, SEA is fast becoming the desired region for expansion of manufacturing and supply chain capabilities.

Post-pandemic economic outlook Despite the contraction in real GDP during the pandemic, the International Monetary Fund expects growth to remain at 3-5% in 2021-2025. Malaysia is expected to see the strongest growth trajectory in 2021, with real GDP growth forecast to hit 7.8%, followed by the Philippines at 7.4%[2]. Notably, the region’s growing trade and strong fiscal policies have helped the SEA countries witness a boost in manufacturing and service sectors growth. Post-pandemic, real estate, fast-moving consumer goods (FMCG) and food logistics, and manufacturing industries are expected to emerge transformed, due to major shifts in supplydemand dynamics. The integration of information and communication into health care will also drive sectoral reforms. Usage of health care apps will transform the way that hospitals and doctors collect, store, and share patient data and records. Major strides of development in new industries, such as agritech, medtech and edtech, together with radical shifts in certain industries like automotive and electronics manufacturing services can be expected. In this new era, SEA can play a pivotal role in shaping the global supply chain landscape. At the same time, Industry 4.0 is transforming how entities optimize their manufacturing processes. Manufacturers in d

SEA are leveraging digital technologies such as advanced manufacturing methods, human-machine interaction, advanced analytics and intelligence to overcome low productivity concerns and further strengthen their position as “factories of the world”.

Top sectors in SEA Analyzing the pre-pandemic metrics, the following sectors are expected to see strong growth post-pandemic: Consumer goods The consumer goods sector comprises home care, personal care and apparel. For the six biggest economies in SEA, the consumer goods market is forecasted to grow at 9.06% in 2020-2025, and is expected to be valued over US$107b by 2025[3]. Shift in consumer purchase patterns, support from government institutions, economic integration toward a digital infrastructure is improving the overall feasibility the sector’s expansion in SEA. Supply chain resilience and reliance on multiple sources of supply are giving rise to significant opportunities. Further, consumers are now moving toward convenient, personalized and sustainably sourced products that can simplify everyday living, and consumers are increasingly willing to pay a premium for these products. The emergence of super apps across SEA has also altered how people engage and purchase DDD [2] Navigating the Pandemic: A Multispeed Recovery in Asia”, IMF, APAC/Issues/2020/10/21/regional-economic-outlook-apd, accessed 12 September 2021. [3] The Dataset was published in Euromonitor (Sectors Snacks, Apparel, Home Care, Beauty and Personal Care) (Region : APAC),, accessed 20 September 2021.


within the apps, bringing opportunities for the sector.



Health care equipment The health care equipment market in SEA is expected to see a compound annual growth rate (CAGR) of 10.2% in 2020-2025[4]. In particular, Singapore is among the fastest-growing innovative production hubs of this sector. Favorable business environment, strong intellectual property laws, expansive research network and incentives provide conducive reasons for companies pursuing new opportunities in the country and region. Further, the SEA region is enjoying strong growth in telehealth, digital therapeutics, diagnostics, remote patient monitoring and analytics, all of which can help to drive growth opportunities in this sector. Electronic manufacturing services (EMS) Globally, the EMS sector is forecasted to grow at a CAGR of 5%. In SEA, opportunities are opening up as well, as entities seek to develop more resilient supply chains networks and expand into the region. Notably, six of the world’s top 10 EMS companies are present in Singapore. Governments are also seeking to attract EMS companies into the region. For example, in Singapore, under its Research, Innovation and Enterprise (RIE) 2020 plan, the government plans to invest US$3.3b in advanced manufacturing and engineering R&D[5]. Agritech With an increasing focus on healthy food options and sustainability, the agritech sector is growing at a rapid pace in SEA. The biggest driver for innovation in agritech in SEA is Singapore, which currently imports 90% of its food. The Singapore government has allotted US$21m in support of its “30 by 30” target, with the aim to have 30% of Singapore’s food produced locally by 2030. SEA received approximately US$700m of investments in 2020 in this sector, with the majority going into Singapore[6].

Opportunities to reimagine supply chain The pandemic has exposed the fragility and inherent inefficiencies of traditional supply chains, with industries caught off guard and routine operations impacted.

The just-in-time (JIT) methodology that many companies relied on for supply chain was developed in the 1970s, and it was designed to optimize the supply chain through reduction of inventory and work processes. However, many industries today have complex supply chains, and face significant pressure to achieve cost advantage by sourcing materials and conducting value addition activities across multiple geographies, making unfettered interconnectivity the primary key to success. There are four major shifts expected to impact the traditional supply chain: Acceleration of online retail penetration in next five years: With distancing measures and the pandemic transforming gradually into an endemic, online retail penetration will continue to accelerate. Estimates indicate that online retail in SEA will reach US$53b by 2023[7]. Shifting and expansion of new business models: There are new developments in how products and services are presented to and consumed by consumers. An example is the development of community platforms, which enable multichannel engagement directly with consumers through gamification and personalization. Supply chains will become complex and agile: Combining physical shopfront, online and mobile app presence that companies use to better connect with customers, the omnichannel outreach also means companies may need to leverage predictive and demand forecasting capabilities to improve merchandise planning and product development. Supply chain optimization will become an important driver in decision-making: Supply chain strategy will shift from focusing only on traditional costs like logistics and warehousing, to include the impact of lost sales, inventory holding and obsolescence costs. The dependence on a single source of supply enhances reliability, but hampers flexibility. With the pandemic, companies have been forced to identify alternative, lowerDD [4] Medical Equipment Global Market Briefing 2021: Covid 19 Impact And Recovery by The Business Research Company [5] ”Precision Engineering”, EDB,, accessed 4 September 2021. [6] ”The Future of Food: What makes Singapore an attractive destination for AgriFoodTech start-ups?”, CMS LawNow,, accessed 24 September 2021. [7] “Southeast Asia’s online retail market to reach $53b in 2023”, KrASIA,, accessed 29 October 2021.


risk and local suppliers for diversification. Additionally, proximity to consumers would result in faster time-tomarket, lower logistics costs and provide companies higher flexibility to adapt to local demand. Further, global trade tensions have indicated that the political landscape may face heightened uncertainty and challenges in the decade ahead. With SEA nations now being increasingly seen as low-cost manufacturing hubs, there provides a key opportunity for companies to diversify and develop a resilient supply chain while reducing overheads in the long run. For this, the requisites of a resilient supply chain include: Speed: Customers expect their suppliers to anticipate their needs. With the pace of change, supply chains must be able to turn on a dime to match fast-changing customer preferences. From linear to a digitally networked value chain: Although most companies are evolving from a linear supply chain, only approximately 25% consider themselves digitally networked or autonomous. Supply chains are moving to become a networked ecosystem where all data is in the cloud, and any event can be seen and acted on by players across the value chain simultaneously. Supply chain investment priorities: A key goal is to adopt and pilot emerging technologies with scale in mind — not as an afterthought. Traditionally, supply chains were viewed as a cost center. However, going forward, decision-makers should see their supply chain as a way to effectively compete in the marketplace and steer strategy. Overcoming talent shortage: People are the backbone of an entity, and as industry transforms, so must the talent that drives it. Supply chain leaders need to drive the vision and rethink ways of working to attract and retain the right talent. The workforce must transform as the supply chain reinvents through retraining, recruiting and retention. Further, supply chains of the future should be redesigned with responsiveness, reconfiguration and resilience in mind. In responsiveness, it is important to note that systems respond to inputs from the external environment. The supply chain system relies upon inputs such as customer order volume, commodity prices and freight rates to act. Therefore, businesses should appreciate the value of real-time updates on these inputs by upgrading from legacy systems. In reconfiguration, diversifying one’s supply chain is not as

simple as building additional plants in other jurisdictions. Instead, it involves redesigning functions in the system to be more plug-and-play. For example, in extreme events such as flooding, can certain business functions like procurement and finance continue their operations from other less affected locations? What are the necessary changes to enable that? In resilience, companies need to think bigger and be prepared to build resiliency from the ground up, starting with organization structure, business processes and performance metrics to futureproof against the next disruptive event. There is no “one-size-fits-all” for what this looks like, as every business is different.

Incorporating digital capabilities to enhance supply chain As corporate executives seek to reframe their businesses for the post-pandemic era, they should also be looking for opportunities to integrate digital capabilities to generate financial value and prioritize the development of a transformational culture in their organizations. Development of smart factories, supply chain control towers, and supply chain intelligence platforms (SCIPs) can create end-to-end visibility through the collection of accurate cloud data to support real-time decisions for all ecosystem partners. The improvement in infrastructure shall add additional stimulus for development. Notably, successful organizations are transforming their internal culture from one of “digital also” to that of “digital first.”

What to consider in a fit-for-future supply chain strategy Multinational companies have traditionally leveraged economies of scale, standardization and centralization to drive efficiencies. However, this strategy is not always fit for purpose for a diverse SEA market. Language, culture, geographic landscape, regulatory and tax regimes, economic maturity and a fragmented consumer base all challenge the replication of such global models to SEA. Further, companies are increasingly moving away from heavily centralized, co-located operating models to hybrid structures, which allow better management of regional differences and balance growth, cost and agility objectives. 08

In addition, the pandemic has challenged the notion that co-location is required, with virtual centralization likely more prevalent going forward. As companies thinking their tailored regional supply chain strategies for the future, there are eight critical factors that they must consider: 1. Customer collaboration and order fulfilment: Covering inventory, warehousing, logistics and last-mile delivery planning to meet consumer expectations for quick delivery and prompt return services. 2. Regional trade and tax value chain optimization: Having an ideal positioning between jurisdictions to optimize total cost-to-serve associated with procuring, manufacturing, importing, transporting, distributing and selling goods. 3. Footprint, assets and investments: Possessing the right level of geographic decentralization attained to serve high-growth markets at compelling costs. 4. Supply chain visibility, intelligence and traceability: Having a well-integrated supply chain with minimum interruption and maximum collaboration. 5. Product innovation: Having the right balance between product standardization and product tailoring to country-specific requirements and at what stage of supply chain. 6. Supply chain resiliency and sustainability at different stages: Reducing dependence on narrow set of global vendors and increased reliance on local sourcing at competitive prices. 7. Workforce restructuring and upskilling: A workforce not only technically competent, but also equipped with strategic thinking and problem-solving capabilities at different stages. 8. Digital enablement: Bringing to life the various principles of Industry 4.0 and provide much-needed boost to manufacturing efficiency and flexibility, labor productivity and safety at workplace.

While considering the above factors, companies should adopt a step-by-step approach to shape their regional supply chain strategies. The strategy should be defined in sync with short, medium and long-term business goals and objectives; nuances of various business segments defined by geographies, products and channels; robustness of current supply chain and potential gaps while scaling up the business and eventually take a segmented approach for different business segments to develop the supply chain strategy for SEA. Companies can shape manufacturing and supply chain capabilities in SEA into a competitive advantage by investing in custom-fit models optimized for business needs. This also depends on where businesses are at across the three dimensions of asset ownership, consolidation and digitalization.

SEA the desired region for expansion of manufacturing and supply chain capabilities Amid global geopolitical tensions, changing business landscape and evolving demographics and consumer preferences, SEA is fast becoming a key investment location for global companies. In particular, the manufacturing sector – especially the consumer goods, health care equipment, electronic manufacturing services and agritech segments – shows strong growth potential. However, beyond establishing a strong production base, another key consideration to ensure that smooth operations would be a fit-for-future supply chain that incorporates digital technology to support the organization even through unexpected disruptions. SEA – sitting in the crossroads of Europe, Asia and the US – is well placed for companies looking to reimagine their supply chain. And as companies around the world are looking to recover from the pandemic, there’s no better time to embark on their manufacturing expansion and supply chain reimagination plans than now.

*The views in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.

AUTHOR Atul Chandna, EY Asia-Pacific Supply Chain Leader

China's Greater Bay Area: Your Next Business Destination By Sebastian Hoffmann, Senior Sales & BD Associate and German Desk Manager, Hawksford The Greater Bay Area (GBA) lays its foundations in the Pearl River Delta, China’s first manufacturing and logistics hub, now transforming into an innovation and technology centre and a city cluster for emerging industries. Local and central authorities invest heavily in infrastructure, talents, and the economy. Domestic and international companies can enjoy a wide range of business support programs and financial incentives in the Greater Bay Area.

1. Connectivity in Talent and Infrastructure Favourable policies are continuously being developed to encourage high-end talent and talent in short supply to settle down in the region. One of the key advantages is the low tax rates, enabling higher mobility and more effortless connectivity to talents worldwide. Usually, the income tax rate for an individual taxpayer can be up to 45%, but eligible individuals working in the GBA can enjoy a preferential tax rate of 15%. Living allowances are also available for eligible high-level professionals and technical personnel.

Kong to strengthen geographical connectivity and talent exchange for creating a “one-hour living circle”.

2. Global Hub for Technology & Innovation Shenzhen has become a forerunner in innovation and technology after a 40-year reformation. The main merits of establishing a tech company in Shenzhen include becoming neighbours with Chinese tech giants, such as Tencent, Huawei, DJI, and ZTE. It also means that you gain access to advanced equipment, best practices, and an extensive network with innovation leaders, local manufacturers, and distributors. Other initiatives to further boost the innovation and technology ecosystem set out in the plan include coworking spaces, entrepreneurship exchanges, innovation platforms, and R&D institutes. Hong Kong can pool together regional and worldwide innovation resources to promote R&D for global businesses and boost GBA’s competitiveness.

3. Financial Powerhouse Cross-boundary facilities and transportation networks are being developed between mainland cities and Hong d

A range of initiatives have been set out to increase the DD 11

scope for the cross-border use of Renminbi (RMB) in the GBA, including cross-border RMB interbank lending, RMB foreign-exchange spot, forward business, and the creation of RMB derivative products. Local banks in the Greater Bay Area will be supported by enhancing their cooperation with external venture capital institutions under the premise of legal compliance and risk control, actively exploring supportive and diversified financial business models. This will improve the crossborder capital flow of venture capital funds and facilitate income exchange. The reforms laid out a blueprint for the structural transformation of deeper collaboration within the regional financial industry and will strengthen the cooperation of financial management among industry organisations

4. Wealth Management Connect Program The Greater Bay Area's Wealth Management Connect program officially kicked off in September 2021. The implementation rules released by the People's Bank of China came into effect in October 2021. The program supports individuals to invest in cross-boundary RMBdenominated financial products issued by banks across the nine mainland cities, Hong Kong, and Macao. It will lead to a significant increase in investment opportunities for individual investors, largely promote the opening of the mainland's financial markets and extend the reach of use of RMB.

6. Free Trade Zones as Entry Gate Business owners can enjoy notable benefits when selling across borders via Free Trade Zones (FTZ), one of which is faster customs clearance and moving goods between FTZs and overseas countries without paying taxes and duties in China. It will also be easier to manage cross-border currency exchanges with banks. Qianhai Free Trade Zone, one of the most well-known FTZ areas in the Greater Bay Area offers business owners subsidies up to CNY 1 million (USD154,000) if conditions are met.

Conclusions The Greater Bay Area represents a privileged business destination for domestic and foreign companies operating in finance, logistics, innovation and technology, and capital-intensive industries. It is important to understand that the initiative is a long-term strategic project, success will not happen overnight, but the region can provide an ideal business environment. In light of this, companies should carefully plan an entry strategy in the GBA, evaluating all the necessary resources and steps, including leveraging synergies and incentives in the area. Working with a trusted partner with local expertise will help you better navigate China’s booming market.

Sebastian Hoffmann Senior Sales & BD Associate and German Desk Manager, Hawksford

5. End-to-end supply Chain The GBA possesses hi-tech manufacturing centres which support cost-efficient production by AI-powered equipment and devices. The new technologies and process management automation will increase industrial supply chain management efficiency, move up the value chain, and significantly increase imports and exports. This will boost the so-called GBA "maker culture" with flexible facilities for quick prototyping and product optimisation. Meanwhile, GBA offers the world’s leading container ports to ensure convenient global distribution after manufacturing. This makes the Greater Bay Area an ideal end-to-end supply chain for innovation, combining research, design, production, and global distribution all at once.

About Hawksford Hawksford, headquartered in the British Isles, is an international service provider of corporate, private clients and funds with 440 staff located in Hong Kong, Singapore, Beijing, Shanghai, Guangzhou, Shenzhen, Suzhou, London, Milan and Jersey. With a strong presence in the GBA, we have successfully been able to help many companies start and run their businesses and ensured that their operations are compliant with local regulations.


MOVING THE NEEDLE By Anson Bailey, Head of Technology, Media and Telecommunications, Hong Kong & Head of Consumer & Retail, ASPAC, KPMG China

“It’s a minute to twelve” said Boris Johnson in his address to world leaders at COP26 as he urged for action on climate change. At the same conference, Stella McCartney admitted that the fashion industry has one of the worst track records for sustainability. Coalitions and working groups such as the UN’s Fashion Industry Climate Charter have formed, but change is not yet apparent. To achieve tangible results, every element across the entire apparel supply chain has an important role to play. The questions to be answered now are how to start and what to do next. KPMG China and Serai joined forces to conduct a study into transparency in the supply chain of the apparel industry. Over 200 senior executives in the industry were surveyed in 2021. The report Moving the needle – Threading a sustainable future for apparel aims to give an overview of the current state of transparency and offers recommendations on how the industry can initiate change.

Transparency in the supply chain Supply chain transparency is an essential component to meet increased demands for sustainability. It consists of two components: visibility and traceability. Visibility is when a company has a comprehensive view of all parties that play a role in its supply chain, from farms and raw material suppliers to manufacturing, distribution and logistics. Traceability deals with tracing all materials and components used in a product from their origins, through each step of processing and manufacturing, to the final goods sold to a consumer. The apparel industry acknowledges the importance of supply chain transparency. In the survey for the report, two-thirds of respondents stated that supply chain transparency was “extremely important” for their business, and nearly a third said it was “somewhat important”. 13

Pressure for the industry to change has come from increased consumer interest in sustainable fashion, new government regulations and a focus on ESG factors by the investment community. The study showed that corporate reputation was the main driver of supply chain transparency for both brands (59%) and suppliers (52%) in the apparel industry. This was ahead of other factors such as business goals, operational excellence and internal risk management. However, the findings do suggest that transparency is a more pressing issue in North America and Asia Pacific than it is in Europe. This could be due to recent regulatory moves in the US that place greater transparency requirements surrounding how apparel is produced, with suppliers in Asia Pacific keen to meet those demands so as not to lose business opportunities.

“Businesses need to think strategically. Today, the major issue impacting the industry is cotton traceability, but tomorrow it will be carbon footprints or water consumption. Solutions need to be able to grow with the industry’s needs.” – Vivek Ramchandran, CEO of Serai The path to end-to-end transparency There is a great willingness by apparel companies to be open about their supply chains, but survey respondents admitted that the overall degree of transparency that they have remains low. Larger companies tend to have more advanced capabilities in traceability as they have more clout to demand information from their suppliers. Smaller companies are slightly stronger when it comes to their visibility capabilities as they have less complex supply chains to manage and find it easier to gain an overview of all the different parties along the supply chain.


What is holding back the industry towards achieving greater transparency? The apparel industry is characterised by low profit margins and has been fixated on cost minimisation over the last few decades, driven by consumer demand for cheap fashion. Short-term financial gains are therefore prioritised over longterm structural transformation such as transparency. The sheer complexity of the fashion supply chain also needs to be considered: an apparel company often has multiple tiers of suppliers spread out across different countries, while there are various components that go into a piece of garment. The use of different disjointed systems may also result in inconsistent data.


Capabilities needed to deliver transparency Most businesses have some sort of system in place to achieve visibility and traceability of supply chain, with a varying degree of manual or automated processes. Larger businesses tend to have more resources dedicated to sustainability, as well as investment in IT systems to track data. However, to make an impact in the industry at large, it is important to find cost-effective solutions so that smaller brands and suppliers can also monitor visibility and traceability. At present, most solutions implemented are either custom-built architecture or an additional module in the existing ERP systems, but third-party systems are expected to become more prevalent in the future. However, there is no one size fits all approach. Companies need to experiment to see what works best for them.


The majority of companies plan to have a transparency solution in place by 2027. However, this may not be fast enough for the industry to meet the sustainability expectations of consumers and regulators, which are expected to intensify over the coming years. However, there are good reasons for companies to act quicker. Traceability and visibility solutions can act as a differentiator for businesses as they provide more trustworthy evidence of their sustainability credentials. This in turn can lead to increased orders and sales; enhanced risk management; better decision-making; and, ultimately improved profitability.

“Walking the talk on sustainability issues is something that apparel companies can no longer afford to ignore. Consumers nowadays have so much more information on the sustainability credentials of products, as well as the companies behind them and their impact on the wider community.” – Anson Bailey, Head of Consumer Markets, ASPAC of KPMG China. Achieving a sustainable future We recommend the following considerations for businesses to move towards a sustainable future: 1. Internal alignment – the entire organisation needs to be aligned in setting enterprise-wide transparency goals and the pursuit of sustainable growth. 2. Collaboration – partnership-driven, collaborative relationships should be established across the end-to-end supply chain. 3. Data standards – supply chain stakeholders need to ensure consistency in the way data is collected, shared and consolidated. 4. Technologies – manual processes need to be replaced by dedicated systems/platforms to collect and share information. We see strong intentions in the apparel industry to become more transparent, but there is a lack of urgency by many companies to deal with a range of issues. If the whole industry is to build resilience for tomorrow’s sustainability challenges, supply chains need to become more collaborative and adapt a forward-looking, customer-driven, and predictive approach. It’s a minute to twelve.

KPMG China is based in 30 offices across 27 cities with around 14,000 partners and staff in Beijing, Changsha, Chengdu, Chongqing, Dongguan, Foshan, Fuzhou, Guangzhou, Haikou, Hangzhou, Hefei, Jinan, Nanjing, Ningbo, Qingdao, Shanghai, Shenyang, Shenzhen, Suzhou, Taiyuan, Tianjin, Wuhan, Xiamen, Xi’an, Zhengzhou, Hong Kong SAR and Macau SAR. Working collaboratively across all these offices, KPMG China can deploy experienced professionals efficiently, wherever our client is located. KPMG is a global organisation of independent professional services firms providing Audit, Tax and Advisory services. We operate in 145 countries and territories with more than 236,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients. 17

CYBERSECURITY IN 2022: FROM DAMAGE CONTROL TO EVERYDAY BUSINESS Chances are, you will hear of Log4j soon At the time of writing, a new software vulnerability found on Log4j is disseminating panic among cybersecurity experts. The bug has been given a full risk score 10 out of 10 – for context: only 1.7% of software bugs reach this mark. Amit Yoran, CEO of the cybersecurity firm Tenable, called it “the single biggest, most critical vulnerability of the last decade” – and possibly the biggest in the history of modern computing.

As Log4j is widely used across many software products, a vulnerability on this software may impact a substantial number of users. In the first days since it was discovered, it has already proven to its ability to affect products such as Apple and Samsung Cloud, Tesla cars, as well as less known products and services utilised across all industries. Furthermore, unlike most cyber threats that download files to, for example, take control of the victim’s computer, this vulnerability acts directly via web traffic, making it significantly hard to detect by traditional means. As a cybersecurity SaaS developer and founder, I have often witnessed similar scenarios: cybersecurity tends to appear in board meetings after a major risk pops up in the radar and organisations are trying to contain the damage. Otherwise, it is rarely discussed at a high level. However, this reactive or firefighting mindset is outdated and just cannot cope with the risks that inevitably accompany the many opportunities of digital transformation. To be fair, we dd

are seeing some improvement in Hong Kong as well as the APAC region, as more and more businesses start to take cyber security into consideration as part of their wider efforts to improve governance and meet ESG standards.

So, what can we do to effectively change our attitude towards cyber in 2022? 1. Aim at speaking the same language internally Years of experience in digital and cybersecurity education have taught me that in large teams, people have diverse points of view, experiences, needs and trainings, and cybersecurity being by nature such a complex and evolving topic, it can be overwhelming to manage across departments, or among employees, consultants and vendors. Having a common language and being able to communicate efficiently means building a good foundation for execution. Universally accepted frameworks like ISO 27001, ISACA Cobit, UK Cyber Essential and US NIST Nice can help in that sense. Following these standard or industry frameworks, business leaders can align the organization and making business decision more effectively. Companies might not need to get a formal certification but can still benefit from referring to these systematic and structured knowledges systems. 2. Encourage participation No matter how strong your defence is, hackers will always try to attack the weakest point in the system. Sadly, oftentimes, employees are the weakness point when it comes to cybersecurity. Cybersecurity measures that impact operations can meet internal resistance at the same time as employees themselves are constantly targeted by email or web-based attacks. Security managers alone cannot win this battle. Business owners and decision makers must therefore make cybersecurity part of the culture of the organization. While teaching cybersecurity at the Hong Kong Institute of Bankers, one of the exercises involved asking teams to make decisions on how to assign a given cybersecurity budget, and I would often end up being positively surprised by the creativity and problem-solving skills of the teams. When given a chance to participate and contribute, people can become an asset, instead of being a liability for a company’s internal cybersecurity goals. 3. Make cybersecurity a brand asset Cybersecurity and data protection are important to tech DDDD


giants like Google. For such corporations, making sure they are perceived as a trusted guardian of users' data is part of the core business. But cybersecurity awareness and users’ data protection can be a brand asset for any business. In the recent years, ESG values like diversity, inclusion, or responsibility towards the environment have (thankfully!) become a must-have for businesses to earn and retain the trust of the public. Today, cybersecurity is set to become the next trait businesses will want to associate to their brand. Users everywhere are becoming more concerned about data protection, and they will certainly differentiate between companies that take this important concern of theirs at heart. We are already starting to see very good examples of this new trend in Hong Kong. At the Hong Kong Jockey Club (HKJC) this year, the team’s security awareness training was not yet another mandatory task routinely assigned to employees, but became an important event for the whole company, where employees gathered and had a chance to celebrate and share their learning and achievements during the course, with photos and rewards being shared on the company’s media.

Act, don’t react Cybercrime affects victims in several ways, ranging from business interruption, confidentiality breaches, theft of intellectual property, loss of financial assets and reputation damage. However, cyber risk is virtual and most of the time difficult to articulate. Hence, it is easy to overlook it until when absolutely necessary. It is no mystery that the cost of cyberattacks keeps increasing. McAfee estimates that roughly one percent of global GDP was lost to cybercrime in 2021. According to RiskIQ, cybercrime results in a $2.9 million loss every minute. As tech and digital transformation becomes an essential aspect of business operations, business leaders must include cyber risk among the key aspects to consider when making decisions. Taking steps to turn cybersecurity into business as usual might very well end up being your competitive advantage in 2022.

In 2022, cybersecurity should become not only part of your daily operations but should take a central role in your PR and marketing activities as well!


Antony Ma is director and founder at Hoplite Tech About Hoplite Tech ( Hoplite aims at filling a gap in the cybersecurity market, where most products are developed for large companies with well-trained cybersecurity professionals and substantial budget. Hoplite develops cybersecurity software that is low touch, simple to use and cost effective, such as AntiPhishing Lens (AP Lens) an endpoint protection solution that combines website whitelisting and cloud-based browsing.


Innovation at Kellett Mark Steed · Principal and CEO at Kellett School, Hong Kong Kellett School is committed to preparing young people for the world of the mid-Twenty-first Century. With this in mind, Kellett Senior School has introduced ‘Innovation’ as a new subject on the curriculum. ‘Innovation’ at Kellett is an opportunity for students to learn through long term projects, many of which are at the cutting edge of technology, which encourage them to be creative, persevere, collaborate and rely upon each other's strengths. These projects will foster the key C21 workplace skills of teamwork, collaboration, communication and problem-solving. Most importantly, they will encourage students to experiment and to learn from failure. In the first year, this takes the form of four projects running over the span of the entire year in rotation, meaning about 89 lessons in total per project per group. Some projects are stand alone, while others rely on a number of student teams or groups to work consecutively to continue the projects throughout the year. In this way we're trying to emulate the world of real work where a project is not something you always see through from start to finish but something you more realistically will have to pass on to another individual or team.

The Projects Vertical Greenhouses and Hydroponics Students will develop a vertical greenhouse on the roof of the school. Students will have the opportunity to research and develop a system to automatically water soil-based plants or float their plants on a hydroponic solution, as well as create the system to filter pump and manage the nutrients of the water which feeds their plants. This project will be run as sustainably as possible, for instance we're currently looking into recycling cardboard packaging to create biodegradable planting containers for saplings and other sustainable innovations. Soft Robotics Students will develop robots from soft materials such as plastic tubing and flexible resins, this will allow them to compete in a series of challenges from manipulating delicate objects to navigating safely through unpredictable terrain. Students will need to investigate how to manipulate compressed air and construct an inflatable robotic structure in order to move their soft robots in the directions they want them to, create grasping hands and attach cameras to the end of 'snake like' growing robots. 22

Hong Kong Conservation Students will investigate the diversity and health of Hong Kong's wildlife by making their own camera trap from Raspberry Pi computers, a camera and a motion sensor. The student's camera traps will be placed in a wild location of Hong Kong and snap pictures of any passing wildlife, while recording the time and location. Students can then collate this information into a "big data" map and draw conclusions from their shared data across the entire year. Stop Motion Animation By far the most ambitious and intricate project, students will create a number of stop-motion animation productions over the span of an entire year between multiple groups. The first groups will build an armature (metal skeleton) to go underneath a character, the next group will cover that with plasticine or foam latex and model or sculpt a character's body or features, others will develop a short story suitable for animation (under 1 minute) which focuses around one of the UN's Sustainable Development Goals, and then further groups will interpret, animate, film and edit from the storyboards and characters developed by previous groups. “Students have reacted with lots of enthusiasm, and are enjoying learning in a totally different way than in any other subject. They are especially enjoying working in different environments and considering topics in a much larger context than within the bounds of a single lesson. Innovation has really pushed students to think about longer time-scales and a bigger picture, and many students are already beginning to see the value in this”, said Head of Innovation, Martin Davies.

About Kellett School Kellett School, The British International School in Hong Kong established in 1976, provides an exceptional education, offering outstanding quality and breadth, in line with respected UK independent schools. At Kellett we aim to engender ‘a love of learning and confidence for life’ by providing challenge, offering opportunity and entrusting responsibility.

10 years and a time to celebrate The Women’s Directorship Program (WDP) is 10 years old this year, 2022. An extra-ordinary achievement, for the people behind it, but more so for the 200+ women who have graduated with their Masters level diploma in Board Governance. The raison d'être for the WDP program was to move the needle on board level appointments, by increasing the pool of ready talent, raising the visibility across the Asia Pacific region. Our partner in WDP is top 30 global university, The University of Hong Kong Business School, who have been stalwart in their support and determination for this program, now one of their flagship programs alongside their renowned EMBA. The needle has moved, rapidly in some parts of the world, though far too slowly in Hong Kong and some parts of Asia. Board composition in Hong Kong has risen from 7.8% back in 2012 to 14.3% today, and Singapore from 7.5% to 13.2% all boards (and 18% for the top 100 firms) listed. More impressive is India from 5% to 17.5%, and the spectacular is Australia, improved from 9% to 34%.

APAC (from The Women’s Foundation) 1. Australia 34% 2. Malaysia 25.7% 3. Singapore 18% (top 100) and 13.2% (all SGX listed) 4. Japan 11.5% 5. Hong Kong 14.3% 6. China 13% Data from TWF, Catalyst, Community Business, AICD, Deloitte, SCBD/Boardex/CBD Data 2020/2021 reports In comparison to other global markets; France 46%, UK 38% (FT100) and 35% (FT350), Canada 35.4%, USA 28.2%, India 17.5% Hong Kong did at least make up ground with 24% of any new board seats in 2020 going to women (Heidrick and Struggles 2020). The even better news is the new HKeX announcement about their consultation paper, which will mean a huge demand for more women to join the boards of Hong Kong companies. WDP has already created that pool of talent ready to take up the opportunity. Board training is important. There are some compelling reasons why – understand the role and responsibilities, the knowledge to execute their legal duties with reasonable care, skill and diligence. A program will also send a clear message about continual learning, interest in good board governance and will generate trust. 25

According to Leading Governance ‘’Organisations that invest in people development are also highly innovative’’. In his 2014 article on Innovation, Productivity and Training, Benoît Dostie highlighted that increasing training leads to increased innovation. Increases in innovation, increases in investment in learning and development leads to improved corporate performance, revenues, profits and share price. Alongside WDP, there are now a number of really good board governance programs around the world including INSEAD Corporate Governance Program, IMD Board Director, Stanford University Directors Consortium and the FT Board Director Program. There are also leadership and board programs with a gender lens, such as those at Cambridge University, Harvard University, UCLA, Women on Boards, Kellogg School of Management and Wharton Executive Education. It's fantastic really! The participants for WDP have come from all over APAC, mainly from Singapore, Hong Kong, Australia, India and China, though we have had some even further afield like France, Dubai, Mauritius and Scandinavia. To date, over 60% of our cohort of 200+ have already landed their first iNED board role or joined their first Exco, which is great. Let's go back to the beginning, to 2012, and the Meraki team of Kirti Lad, Sophie Gray and I were sat on a window ledge in our office (in IFC2 at the time). We were discussing the lack of women on boards in the region, and the poor governance standards. We reached out to the leading universities in the region to see what they were doing to change this, and realised there was a massive gap. We got into a deep conversation with The Dean of the Business School at The University of Hong Kong, Amy Lau, who was an inspiration. Together, we decided to make a leap and set up a board governance program, but we wanted it to have some element around diversity, given that 70% of the applicants would be men. We made a bigger leap, and decided the only way to really move the needle was to focus this program on women only. It was a huge risk as no other program in the world was doing this; we knew there were candidates, but would the women come, and would companies pay? Could we get the right speakers? We had no program, no participants, and no track record, but we thought this would be an interesting proposition for many leaders. In the UK, Sir Donald Brydon, then Chairman at Royal Mail and Sage and recently the London Stock Exchange Chair, Rick Haythornthwaite, former Chairman of Mastercard, and logistics retailer Ocado Group and Sir Roger Carr, Chair of Centrica, all 30% Club founding members, all said a resounding and swift yes! They all said if you do it, so will we, as they truly believed in the purpose. Back in Hong Kong, Jean-Pascal Tricoire, Chairman and CEO of Schneider Electric, immediately said yes, he would love to be involved, as did Hong Kong’s IPO leader, Teresa Ko the China Chair at Freshfields, Fred Ma and Raymond Ch’ien the Chairmen of MTR and Hang Seng Bank. All have been involved in one way or another every year since. Threading important business leaders into WDP, has always been a core part of the program, those who can talk authentically to the journey to the board, and the role of an Exco and iNED.

Image: Local Doctor and SERGEYMANSUROV. Cohort 1 in 2013 with Sir Donald Brydon and Professor Amy Lau and Professor Gary Biddell on the front bench with Nick Marsh and Kirti Lad

It’s has been quite amazing, that fantastic business leaders, Chairs and iNEDs want to be involved in WDP, have included those from Blackrock, PWC, EY, McKinsey, Bloomberg, HKVCA, Hang Seng Bank, HSBC, Warf, Bank of England, Pepsi, MTR, Prudential and many more. We have also had great support from Hong Kongs’ The Womens Foundation with former CEO Su-Mei Thompson, current CEO Fiona Nott, and the TWF team.

Fred Ma

Raymond Ch’ien

Our cohorts have come from across industry Financial Services, Industry, FMCG, Retail and Technology.

Jean-Pascal Tricoire – Chair and CEO Schneider

Innovations arrived, driven by speakers or participants – Sir Donald said “it’s not a good use of me, to just fly in and talk, so let’s make it more real, and so he wrote the first iteration of The WDP Board Simulation, ‘’Jewell’’ in 2015. He then starred as the simulated companies CEO Mr Tang’’. Jewell, based on real life and Sir Donalds’s boardroom experiences woven into a curated company, is a chance for WDP participants to experience a real boardroom, with big decisions to make and important issues to discuss. The full day Board Sim is now the highlight of the program, rounding off the cohort’s year with an intense board meeting. Other important elements of the programme include sessions hosted by HK University Business School Professors David Bishop, David Lee and others on the topics of ethical decision making, communications, responsibilities of an iNED, strategic leadership, securities regulations and more. All these, to equip individuals with skills and expertise to be an effective and successful board member. In September we will host a 10-year anniversary party in Hong Kong together with our partners to celebrate the successes of the 200+ Alumni.

Teresa Ko – China Chair Freshfields

Sir Donald Brydon – former Chair LSEG

We can also announce today, the expansion of WDP into mainland China with our second program, WDP-Beijing to focus on board training for those in mainland China, in an expansion of the partnership between Meraki Consulting and The University of Hong Kong Business School, hosted in the amazing HKU Beijing campus in Autumn and Winter 2022, to add to the Hong Kong program in Spring and Autumn of 2022. The story continues!