ANNUAL 2020 HONG KONG BUSINESS ANNUAL 2020 HIGH-FLYERS
Hong Kong's Outstanding Enterprises 18 TOP INDUSTRIES REVIEWED RETAIL SCENE EXPECTS WORST PERIOD EVER
UNEMPLOYMENT COULD WORSEN IN 2020
Contents Annual 2020
2020 OUTLOOK 6
Lack of government support could turn Hong Kong’s
economy for the worse 8
Trouble brews for property scene as demand from multinationals weakens
Tumbling retail and hospitality sectors weigh on employment
Accounting difficulties lie ahead as Hong Kong sinks into recession
Hong Kong’s retail sector may see its worst period yet
Unrest bolsters demand for regulatory and corporate rescue services
MOST READ IN 2019 18
A month-by-month review of Hong Kong’s
top stories in 2019
COMPANIES AND INDUSTRIES 22
Fintech and insurtech continue to shape Hong Kong’s finance sector
24 China’s infra push a boon for construction industry 26
Mainland firms snap up most accounting exports
Dispute resolution buoys Hong Kong’s legal sector
Government bolsters sustainability tech efforts
High costs prompt biotech firms to relocate production to China
MNCs lead electronics manufacturing
Startups drive Hong Kong’s tech innovation push
Air cargo services lead Hong Kong’s logistics
40 Local designers build on rising demand in China 42 Spectacles and goggles take up most exports 44
Film industry rides on foreign recognition
Mainland competition hits local toy firms’ profits
Specialty cosmetic chains take the lead
F&B firms set up factories outside Hong Kong
Foreign brands dominate sporting goods scene
E-commerce boosts houseware sales
Printing firms rev up tech as foreign demand grows
Contents Annual 2020
60 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94
Standard Chartered Bank Archikris Design Group Concord Medical Limited Elite Concepts FTLife Insurance Company Limited Hang Seng Bank Limited Headwin Logistics HKBN Enterprise Solutions Limited Hyatt Regency Hong Kong, Tsim Sha Tsui Lifestyle Insurance Lindt & SprĂźngli (Asia-Pacific) Ltd Nintex OZO Wesley Hong Kong PrimeCredit Limited Standard Chartered Bank Thomas, Mayer & AssociĂŠs Vastcom Technology Limited
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*If you’re reading the small print you may be missing the big picture
Some analysts stated that Hong Kong’s GDP is set for a slight recovery in 2020.
Lack of government support could turn Hong Kong’s economy for the worse Its $19b fiscal stimulus package might be too small and regressive, according to experts.
ong Kong’s reputation as MNCs’ gateway for tapping the Chinese market and vice versa, could be the only thing left for the city to counter its worsening economy. Various analysts and professionals have stated mixed projections on what the region’s economy will be like in 2020. DBS Group Research expects the city’s 2019 GDP to edge down 1.7%, but added that it is likely to recover to 1.5% recovery in 2020. Tricor Group’s Investment Outlook & IPO report showed a more positive outlook as real GDP could rebound from 2.7% in 2019 to 3% in the next year. “The Hong Kong economy may continue to record negative YoY growth in H1 2020. But given the low base comparison in H2 (-2.9% in 3Q19 and -5.0% in 4Q19), there should be a mild recovery in H2 2020,” said Samuel Tse, an economist at DBS Group Research. “The retail sales will continue with
6 HONG KONG BUSINESS ANNUAL 2020
“Fuel subsidies may not be relevant if there is no business. Rent cuts could be positive for corporates but it is highly uncertain on whether the sweetener will be passed to employees.”
its downtrend amidst domestic uncertainties and a weak CNY. The external trade and professional services will remain sluggish amidst slowdown of the Mainland economy and China-US trade war”. In contrast Natixis foresees nothing but rain and gloom for Hong Kong in the following year. In a note, the firm predicts that Hong Kong’s economic growth will contract 1%2% in 2019 and a further 2%-3% in 2020. A survey by CPA Australia on accounting and finance professionals also shared the same sentiment, with 66% of respondents expecting the economy to contract. A further 73% also believe that the city’s competitiveness will go down along with it. This showed a notable difference from the survey regarding the 2019 economy where only 20% of the respondents were expecting a contraction. Back then, the respondents in the prior CPA Australia survey have blamed the
negative outlook on retail property prices (90%). Lack of fiscal stimulus Apart from the continuing effects of the political unrest, Natixis proclaimed the government’s $19b fiscal stimulus package “was too small and too regressive to support the economy from its downward trajectory.” The firm further pointed out that this only represents 0.7% of GDP. In October, the government announced that they will subsidise fuel costs of public transport and commercial vehicles and add exemptions from commercial vessel inspection fees. On the retail front, they also announced to expand rent cuts. “It is true that the government support is now seemingly more targeted on the sectors most impacted by social unrest, such as transport, retail and hospitality. Fuel subsidies and the expansion of rent cuts are
ECONOMY OUTLOOK the core of the package together with measures on tourism to be announced soon,” said Alicia GarciaHerrero, chief economist at Natixis. “But the problem is these measures support corporates rather than the low-income population. This is once again a regressive package as income inequality remains a big problem for Hong Kong.” Garcia-Herrero noted that such measures are not enough to ease cyclical pain, such as market sentiment and confidence, and doesn’t even address structural problems such as income inequality and healthcare. “Fuel subsidies may not be relevant if there is no business. Rent cuts could be positive for corporates but it is highly uncertain on whether the sweetener will be passed to employees. In the same vein, subsidies on airfare for domestic residents will only drive consumption away to other locations whilst rebates on hotels for tourists may not be attractive if the light of the tunnel of social unrest remains distant,” Garcia-Herrero added. The government is also keen to provide support for the residential market. Carrie Lam’s policy address stated that that they will allot $5b to provide 10,000 transitional housing units. This is said to imply that the government see housing and land supply as the issues most needed to be addressed in the short-term. Further, the Land Resumption Ordinance is expected to supply more units for public and starter homes, whilst further announcements will be made for the Land Sharing Pilot Scheme mentioned in 2018 to provide incentives for a mix of public and private housing with developers. These actions are expected to bring a rebound in property prices despite Hong Kong’s economic recession, according to DBS Research. “Transaction rebounded shortly after the announcement of Chief Executive Carrie Lam’s Policy Address. With the raised cap on the value of properties under the Mortgage Insurance Programme, potential home owners could access the property market with higher leverage and weaker stress test requirements. [L]and supply policies such as Use of Lands Resumption
Ordinance and Lantau Tomorrow remain as medium-long term solutions.” This aims to control home prices and improve affordability, of which are dependent on macro-prudential policies and home supply. However, Natixis noted that such goals can be questionable as well. “An average of 31,500 public units is needed per annum based on the most recent Long Term Housing Strategy, but there is clearly a shortfall in the current pipeline.” Furthermore, Deutsche Bank’s head of research for Asia Pacific Property Michael Spencer explained that prices can be essential to Hong Kong’s economy as the events from the Asian Financial Crisis (AFC) compared to the Global Financial Crisis (GFC) have proven. He pointed out that during the AFC, the property price index peaked in October 1997 and fell 45% over the following year. But then prices kept falling for another five years, ultimately falling 66% before bottoming out after the SARS outbreak. After the GFC, by contrast, prices fell only 17% in the second half of 2008 but regained all those losses over the following eight months. “Whilst their strategy for bringing prices down is not well articulated – they have simultaneously made it easier for people to get mortgages and committed to an increase in public housing supply – we think they are determined to get prices significantly lower. Our medium-term outlook therefore assumes that prices fall about 10% pa in 2021 and for a few years beyond. We think the risks are tilted towards this being an overly optimistic assumption,” Spencer said. A year of recovery Despite the lack of government support, foreign direct investments and exports are not expected to be negatively affected as much, according to a report by Deutsche Bank. “The economy has declined sequentially in four of the past six quarters. This is not as bad a recession as was experienced during the 2008/09 GFC – GDP declined 7.5% YoY in 2009 Q1 – and we don’t expect such a large contraction in output mainly because we think exports
won’t decline nearly as much as they did in 2009,” Spencer added. He describes Hong Kong’s export declines “usually short-lived”. Even though export growth is projected to be a little lower in Q4 2019, there may be no further increases in US tariffs or dramatic depreciation of the USD. As a result, export volume growth could be slightly positive by the end of 2020 and above 5% by the end of 2021. “Goods trade will likely rebound more quickly than services exports. Tourist arrivals were down 43.7% YoY in October – arrivals by land and sea are down more than 80% over the past five months. To some extent these will bounce back quickly if the political situation improves, but we think it will take more than a year for tourism to fully recover,” Spencer added. On the investment front, Hong Kong will still remain as conduit for Mainland China firms to tap the rest of the Asia-Pacific markets and vice versa, according to Lennard Yong, group CEO of Tricor Group. Tse also echoed the sentiment, stating that it is a key destination for Chinese corporates to raise funds. He cited the recent Alibaba IPO as a case in point. “I think if you look at the economic development in terms of industry. I would suggest to actually look at it from geography, because most of the drivers of Hong Kong’s growth continues and still comes from Mainland China wanting to use Hong Kong as a platform for their offshore investments. A large part of our IPO listings large corporations, come from mainland originated companies,” Yong explained.
Hong Kong’s GDP and Inflation
Source: CEIC, DBS Group Research
HONG KONG BUSINESS ANNUAL 2020 7
Trouble brews for property scene as demand from multinationals weakens
Office rents will be most affected as firms are moving out of Hong Kong.
ong Kong’s property market is also affected by the social unrest, made evident by the huge drop of prices/rents in H2 2019. However, 2020 won’t be a safe haven for the industry, whether its residential, retail and office. 2019 is said to be the property investment market’s all-time low in terms of transaction volumes, according to data from Cushman & Wakefield’s 2020 outlook report. Its cool down have begun in the face of trade tensions in H2 2018 and has continued to slow down since then. Between January and mid-December, a total of only 194 major transactions (above $100m) have been recorded, compared to 430 in 2018. Its consideration YTD totalled $82.1b, a third of the amount recorded in 2018. In terms of investor profile, local investors have for the most part decided to remain on the side lines in recent months and face no urgency to sell. Mainland investors, apart from a few buyers of luxury
8 HONG KONG BUSINESS ANNUAL 2020
“Economic factors still weigh more heavily on buyers’ decision making.”
residential, have been constrained by capital controls and the devaluation of the Renminbi, and institutional funds have taken a wait-and-see approach to watch how the political situation will evolve. Home prices continue to fall The office property market is not the only affected segment. For the residential market, Cushman & Wakefield expects home prices to drop 10-15% in H1 2020, whilst sales volume will be at the same level as with Q4 2019. The downfall of its prices started in H2 2019, which is blamed on worsening market sentiment and a drop in overall sales volumes. As of mid-December, City One Shatin and Taikoo Shing had recorded a decline of 6.1% and 8.8% in price from their respective peaks in June. Year-todate, the prices of the four estates mentioned have grown between 5.8% (Residence Bel-Air) and 18.6% (City One Shatin), with mass residential estates seeing the strongest growth.
Last October, the government announced that they will ease down the property value cap on mortgage loans, which had a maximum cover of 80% loan-to-value (LTV) ratio from $6m to $10m. The announcement is said to have provided the market a temporary boost, driving total home sales up to 9,757 S&Ps in Q4 through the end of November. JLL’s senior director of research Cathie Chung said that this won’t be enough to prevent the demand falling as buyers are most likely to have become wary of the economic outlook and job prospects. “[A]s the market became accustomed to the uneven progress of the trade talks, and with three rounds of rate cuts instead of rate hikes, home sales volume rebounded this year based on strong pent-up demand, despite the impact of the social unrest in H2. Economic factors still weigh more heavily on buyers’ decision making,” said Alva To, Cushman & Wakefield’s vice
PROPERTY OUTLOOK president for Greater China & head of consulting. The posh residential space will not be spared as well. Luxury residential estates, such as Residence Bel-Air and The Habourside, saw price growth of 14% and 16%, respectively, over the H1 2019 period. During H2 2019, these two estates saw the price go down 5.8% and 3.1%. According to data from JLL, luxury residential sites may post a further decline of 0-5% in prices and down 15-20% in capital value by 2020. Office rents get hit hardest Apart from the residential market, Cushman & Wakefield stated that leasing demand in the Hong Kong office market was already weak since H2 2018 and has been further impacted in H2. Greater Central has suffered the most, with net absorption in the submarket remaining in negative territory for much of 2019 due to a steep drop in take-up by PRC firms alongside a continuing contraction and relocation by MNCs. YTD, the total net absorption in Greater Central amounted to -420,587 sqft, the worst in five years. In contrast, non-core submarkets such as Kowloon East and Hong Kong East, which have seen high quality new supply in recent quarters from decentralisation, accounting for most of the net absorption in the year. Overall, however, 2019 marked a sharp slowdown in Hong Kong’s office leasing market, with total net absorption year-to-date of 444,142 sqft, equivalent to less than half the five-year average and just 23% of that of 2018. “The Greater Central market will be challenging for landlords in 2020. The key sources of demand in recent years — organic expansion, co-working, and the PRC banking & finance sector — have shrunk substantially from the second half of this year and the trend looks set to continue in 2020. In order to backfill the space vacated by tenants downsizing or exiting Central, landlords will have to offer significantly more competitive commercial terms,” said Keith Hemshall, Cushman & Wakefield’s executive director. Prime Central, Greater Central and Kowloon East may show the biggest
drop in rents, down by between 8% and 13% in 2020. The first two submarkets are said to face the prospect of shrinking demand, whilst Kowloon East will be impacted by having the most availability. Cushman & Wakefield’s head of research Reed Hatcher, shared that overall office rents will fall by between 5% and 7% in 2019 and a further 7% to 12% in 2020. “Central is expected to be impacted the most, arising from a combination of the ongoing local uncertainties, continuing decentralization trend, and weak demand from Mainland Chinese firms,” Hatcher added. However, this could be partly countered by the upcoming new supply scheduled for completion through H1 2020. “Only one new Grade A office property, 88 Yeung Uk Road in Tsuen Wan, is planned to be released between now and the end of 2020. That should support the overall market to some extent from an even steeper correction,” Hatcher noted. Retail rents won’t be saved too Just like the residential market, retail property started 2019 positively as new transportation links to mainland China fueled an increase in visitor arrivals to Hong Kong, Cushman & Wakefield stated. Over the first two months of the year, mainland arrivals saw the largest growth in five years, growing by 19% YoY and by 21% for same-day visitors. In particular, rentals in Tsim Sha Tsui and Mongkok witnessed strong growth, benefiting from their proximity to infrastructure links to the Mainland and increasing numbers of Mainland visitors including day-trippers. Then in mid-2019, Hong Kong’s retail market has increasingly struggled and Mainland tourist arrivals plummeted. In October 2019, the number of visitors from the Mainland dropped by 45.9% YoY, the steepest decline ever in a single month. Retail sales dropped by 24.3% YoY over the same period. Such events have immediately extinguished the nascent rebound in retail rents in early 2019. In Q4 the same year, the decline in rentals across all submarkets has become even steeper. This was led by Tsim
Sha Tsui and Mongkok, which was once the retail property market’s growth driver, where average rentals fell by 10% QoQ. Rents in the Central have suffered only slightly less, falling by 9.8% QoQ, whilst Causeway Bay — with the most expensive high street rents in the world — saw a quarterly drop of 8.5% in rents. Non-core areas such as Yuen Long and Tuen Mun also suffered, recording a drop of 8.6% and 5.3% from Q3, respectively. In all rents across Hong Kong have fallen to the lowest level in more than five years. The pressure on F&B rents also worsened in Q4, led by an 8.1% drop in Mongkok. Following these occurrences, JLL’s data showed that rents in high street shops are projected to crash 15-20% in 2020, whilst rents in prime shopping centres will dip 5%. Chung shared that there will be two prime shopping centres project are scheduled for completion in 2020, which are ‘The LOHAS’ in Tseung Kwan O and the commercial portion of ‘The Aurora’ in Tsuen Wan. This adds about 812,000 sqft to the prime retailing stock, which is 28% higher than the historic 10-year supply average between 2009 and 2018. “However, this surge in supply is unlikely to translate into substantial rental pressure on shopping malls, as the vacancy rate is still expected to stay under 5%. The surge in supply might pressure landlords to delay openings to ensure more pre-leasing commitments,” Chung noted. — By Nathanielle Punay
Property Price and HIBOR
Source: CEIC, DBS Group Research
HONG KONG BUSINESS ANNUAL 2020 9
HIRING AND SALARY OUTLOOK
Salary premiums in small markets with limited workforces may hit up to $40,539 annually by 2030
Tumbling retail and hospitality sectors weigh on employment In contrast, the hype around virtual banks and fintech adoption may counter the worsening unemployment.
nemployment rate has widened to 3.1% in August from 2.9% in July, according to data from the Census and Statistics Department (C&SD), as the ongoing social unrests continue to weigh on the city’s economic growth. This is expected to expand further, and in fact, Mercer Hong Kong’s head of career products and total rewards Brian Sy projects unemployment rate to reach 4% or even more. The retail and hospitality sectors are especially expected to be hardest hit. Already, the unemployment rate of the consumption- and tourismrelated segment rose to 5%, the highest since 2017. Sy noted that retail stores in the commercial areas suffered from an average of 40% slump in revenue, and felt that retail closures may likely rise. “Hong Kong has, unfortunately, entered a technical recession. Wavering local consumption
10 HONG KONG BUSINESS ANNUAL 2020
“Employers have learned from previous economic downturns that good talent is difficult to hire back.”
and a decrease in tourists caused by local social incidents continue to affect the labour market,” Sharmini Wainwright, Michael Page Hong Kong’s senior managing director said. For Robert Walters, pinning down precise predictions for the following year is difficult, and finds that this has also been the case for hiring managers who are planning for next year. “So much depends on the economic and political situations, which remains a significant source of uncertainty for both employers and job seekers,” said Ricky Mui, Robert Walters’s managing director in Hong Kong. Hiring freeze and struggling freelancers Still, there have not been plans amongst companies to reduce staff. Rather, they are expected to put a freeze on hiring. “Employers have learned from previous economic
downturns that good talent is difficult to hire back,” Sy said. Robert Walters found that there have still been active hiring, but some firms have slowed down or put roles on hold. “In some cases, organisations have even absorbed roles rather than hiring extra resources due to market conditions,” Mui said. He noted that employers have been adopting a more cautious approach to recruitment, and has been insisting on hiring the best candidates with matching skill sets. “We are seeing hiring processes to be lengthened and additional interview stages added, at the same time more rigorous due diligence on candidates,” he said. Amongst the candidate, although they were found to be willing to interview with clients, they were also said to be less likely to jump or change jobs compared to last year. Data from Robert Walters revealed that the expected
HIRING AND SALARY OUTLOOK rise in salary when changing jobs has dropped to 10-15% for 2020 compared with 10-20% for 2019. Sy also expects for firms to do away with their part-time and contract workers. “Freelancers in the market will be heavily affected with fewer jobs available in the market,” Sy added. In contrast, Mui finds that the contract market to be developing especially where companies have work overload and headcount issues. This was noted to be the case in the financial services industry where IT skill sets such as projects, helpdesk, infrastructure, application support, and risk and compliance are considered to be in demand. Bright spots in tech sphere Still, despite the ongoing recession plaguing the market, some sectors are still thriving and may continue to thrive. Earlier in 2019, the Hong Kong Monetary Authority (HKMA) issued eight virtual banking licences, and for Mui, this could create a surge in demand for virtual banking and fintech talent, ranging from executives to operational staff. “There has also been active hiring in financial institutions such as virtual banks and financial technology which has been a hot area for growth this year. Hiring starts from C-level to manager level in all areas of finance, legal, technology, risk and compliance, as well as operation and HR roles. This has been the backbone of financial services hiring over the last 12 months and we continue to see growth in this area,” he said. True enough, Robert Walters’ survey found that employers have Top areas of job growth
Source: Robert Walters Salary Survey 2020
already been reporting a shortage of talent with the suitable skill sets in this field. “Companies are also increasingly open to considering overseas experts with the right skill sets,” Mui added. Tech jobs as a whole are also still expected to continue enjoying high demand. “There is still a lack of talent on the tech side – AI, research, data analyst and scientists are in hot demand as companies seek to innovate and grow in a data-driven environment,” Sy said. In particular, Wainwright noted three jobs that will be in demand. First, software engineers, especially those experienced in operating systems, C++, Java and more. Second, cybersecurity professionals, as large multinational corporates and global banks continue to prioritise safeguarding security and privacy in the era of digitalisation. Third, customer experience (CX) specialists, with investing in the customer journey, carefully building brand touchpoints, and creating an immersive customer experience becoming paramount to many brands. “The importance of design professionals that excel in user experience (UX) and user interface (UI) has grown dramatically,” Wainwright said. On attracting talent Given uncertainties in the market, firms are bound to go further in order to attract more talent. According to Sy, firms under pressure from this will be challenged by limited resources to retain talent, and must allocate their budgets effectively to optimise what they have. “Pay for performance and identifying high potentials will be key for companies to achieve continued growth in 2020,” he said. Hiring managers are also recommended to ensure that there is an “efficient and wellcommunicated” hiring process in place. “As mentioned above, in a period where budgets are comparatively tight, a positive workplace and corporate culture is important to attract talent,” he said. Wainwright expects more
employers to think out of the box and diversify their employment package in 2020, which could come in the form of providing incentives for good performance on a certain assignment like additional annual leave days, allowing employees to rotate between office locations under the same company or brand, extending flexible working hours to all employees or rolling out more team engagement activities. “Companies will have to work on building their brand image and culture, and have a clear vision and mission in order to attract the best talent. With competition for the top talent higher than ever, many companies will have to venture out of their comfort zones to recruit through non-traditional methods,” she commented. In-demand professionals who are considering changing jobs are also expected to focus on more than just the salary on offer. “Many candidates are also looking to keep their specialist skills up to date, so we advise businesses to offer clear learning and development opportunities to attract the best talent in the market,” Mui said. Sy agrees. “Making crossfunctional experiences available to people so that employees can broaden their skills is becoming just as important as an upwards move. We know that globally, two in five employees are satisfied with their current jobs, but will be motivated to leave due to lack of career development opportunities. This tells us that there is a thirst to learn,” he said. He noted that companies have been providing better wellness programmes like exercise facilities and classes. Mui also mentioned companies focusing on mental health, like setting up hotlines for employees who are facing stress or other emotional concerns so they may discuss with care professionals. “Companies are paying more attention to the presence of a positive workplace culture where flexible working, workspace design and digital technology all playing an increasingly important role in attracting and retaining talent,” Mui said. — By Clarist Zablan
HONG KONG BUSINESS ANNUAL 2020 11
Salary premiums in small markets with limited workforces may hit up to $40,539 annually by 2030
Accounting difficulties lie ahead as Hong Kong sinks into recession The number of fraud and dispute cases grows, leading to a strong demand for advisory services on forensics.
he accounting sector’s outlook for the year 2020 is mixed as some services are expected to be highly in-demand, whilst some have been severely impacted by political and economic uncertainties. “Changes in the accounting sector [for 2020] will likely be slower growth to go with the slowdown in the economy and because of squeezes on fees, clients will be looking for efficiencies as well. All in all, it’s going to be a difficult year,” said Stephen Weatherseed, managing partner at Mazars Hong Kong. Weatherseed expects to see Hong Kong in a recession for 2020, after seeing their clients struggling to keep their businesses afloat. In a past story by Hong Kong Business before the protests began, accounting firms have cited Hong Kong’s status as an IPO hub as one of the main drivers for their gains. Now, it seems like the tables have turned as Weatherseed noted that services related to transactions and IPOs are
12 HONG KONG BUSINESS ANNUAL 2020
“I believe the immigration consultancy and overseas education consultancy will be most in demand because of the recent events in Hong Kong.”
one of the most affected as the flow of investments slowed down as the economy has turned down. In a research report by KPMG, Hong Kong saw 205 IPOs during the full-year 2018, which amounted to around $266.4b. Compared to its latest data as of end-Q3 2019, there were only 96 IPOs at $124.8b. These figures did not even reach half of the data shown for 2018. “A fewer big transactions are still taking place. We’ve seen a noticeable slowdown in the number of IPOs, and the number of businesses wanting to prepare themselves for IPO here in Hong Kong. So, again, that’s a reflection of supposed nervousness or hesitancy with regard to the way the markets are going, or where the market might be in a few months time with uncertainty over whether to invest in preparing for an IPO. In contrast, an outlook report by Xero suggested that it’s business-asusual for some services that are still generating revenue despite the social
unrest. The 146 firms that were part of their survey posted a revenue growth of 10.3% during the past 12 months. This was led by repeatable advisory services where revenue jumped 14.1%, followed by complex advisory practices at 10.9% and compliance services at 10.8%, during the events of the protests. Amongst repeatable advisory services, tax advisory services grabbed the largest revenue share in 2019 at 39%, followed by cash flow forecasting, budgeting and planning (31.8%). Startup mentoring (17.7%) and software implementation (11.3%) came third and fourth, respectively. As for complex advisory services, audit services make up over 40% of the revenue, followed by virtual CFO services, then capital raising and other specialised services. On the client side, startups accounted for 38.8% of the total new clients figure. About 28.8% of new clients are businesses who switched
ACCOUNTING OUTLOOK Salary snapshot for accounting & finance positions
Source: Randstad’s “Market Outlook & Salary Snapshot 2020”
accounting firms, and 28.2% are firms who used to do their own accounting. “This reflects the reality that business owners are often surprised by the range of compliance rules and regulations required of them, and come to realise the value in getting experts in compliance to do the work more efficiently and effectively, Xero stated in the report. Apart from consultancy and advisory services around compliance rules and regulations, the growing number of people looking to leave Hong Kong is driving the demand for another type of service. “I believe the immigration consultancy and overseas education consultancy will be most in demand because of the recent events in Hong Kong. We can only wait and see if the Hong Kong Government can solve the problems soon,” said KT Tam, practicing director of CK Yau and Partners CPA. Enterprises that continue to do business in the city are expected to drive demand for consultancy services on corporate restructuring, led by SMEs, which are more prone to the effects of social and economic uncertainties. SMEs may also boost the demand for IFRS 16 advisory services as they have yet to adopt the new International Financial Reporting Standards for the year ended 31 December 2019. Tam added that these firms are expected to face problems when doing the adjusted audits in 2020. Stability for forensic services According to Weatherseed, services around forensic and financial
services will be the most in demand for 2020. In particular, consultancy in regulatory compliance will be highly sought after by banks and insurers. “This will continue to be in high demand and it isn’t going to be affected dramatically by a temporary downturn in the economy. All the banks, insurers, and regulated businesses are going to have to continue to comply,” he added. Randstad’s Market Outlook & Salary Snapshot 2020 also shared the same sentiment, specifically citing that a sustained demand for junior and mid-level accounting and finance professionals should be expected, especially those in general ledger, accounts receivable and accounts payable functions. These functions are said to be less likely to be affected by external political and economic uncertainties as such functions are essential for day-to-day business operations and regulatory compliance. Apart from these services, Weatherseed stressed that the demand for forensic services could be the strongest opportunity for the accounting sector, benefitting from the technical recession. “Often, when economies start to move down, then disputes become more regular and frauds more prevalent, so the forensic teams get called into conduct reviews or act as experts in fraud or in dispute cases,” he added. A year of adjustment The establishment of the Financial Reporting Council (FRC) will also force professionals, especially those
who are dealing with public interest equity (PIE) clients, to anticipate some changes on audits. “[These firms] have to make sure that the new regime is not just about cooperation but also the right level of communication. Feedback will need to be maintained with the FRC to make sure that the inspection process is collaborative, sufficiently formal to be respected and one that is focused on improving the quality of audits, which I’m sure everybody subscribes to,” Weatherseed said. The FRC is now responsible for the inspection of audits and audit quality review for PIE clients. “If they follow the way in which these independent reviews were introduced in other jurisdictions, starting with the United States and throughout Europe, etc, then there’s likely to be a period of adjustment,“ Weatherseed said. Practices that are also active in capital market and PIE clients are also expected to invest heavily in risk management and quality control infrastructures, shared BDO’s managing director of assurance Clement Chan. This is so firms can better address the tightening of regulatory system across the globe. “Continuing changes in regulatory framework is given as regulatory bodies around the world are collaborating on a basis that had never been closer and more open before. Any weak links or perceived weaknesses happen anywhere in the world would come to the radar of these regulator groups and remedial actions will be taken place in forms of new regulations or rules. Therefore continuing regulatory changes are expected,” Chan explained.
Top sectors by number of IPOs in 2019
Source: HKEx and KPMG
HONG KONG BUSINESS ANNUAL 2020 13
Tsim Sha Tsui
Hong Kong’s retail sector may see its worst period yet as stores close down Thousands of employees in the industry are set to lose their jobs in the next six months.
he local consumer retail demand is projected to get worse in the new year, most especially those that are riding on the tourism sector, which is also expected to be more sour at the same time.. In a survey by the Hong Kong Retail Management Association (HKRMA), 97% of the respondents have posted losses starting mid-2019. About 30% of this figure said that they will resort to laying off 10% of their staff, whilst 43% stated that they will have to close down in the next six months. The respondents of the survey involves 176 companies, which have more than 4,000 stores and 89,700 employees. However, a Bloomberg report stated that this equated to around 5,600 employees that are set to lose their jobs and the retail sector will not be saved by usual holiday rush. David Ji, director and head of research & consultancy for Greater China at Knight Frank, describes this as the worst-case scenario for the sector.
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“The continuation of social unrest is obviously the key challenge followed but the further deterioration of the Chinese economy, which is key for HK’s growth.”
“Retailers who used to have stores concentrated in major shopping areas may consider dispersing their stores to the neighborhood areas. As people have avoided going to crowded areas, sales in community malls, neighborhood malls and suburban malls, which offer daily necessities to locals, were relatively more resilient and saw solid sales even amid Hong Kong’s social unrest,” Ji added. Missed peak period In a study by PwC in 2017, the total retail sales in Hong Kong was likely to relive its 2013 peak of $494.4b (US$63.3b) in 2020, whilst jewellery and watch sales may also return to a high of $118.3b recorded in the same year. Its healthy growth pace continued throughout 2018 and started off positively in 2019, according to a report by Cushman & Wakefield. It was wellsupported by the new transportation links to mainland China as it fueled an increase in visitor arrivals to Hong
Kong. Over the first two months of the year, mainland arrivals saw the largest growth in five years, growing by 19% YoY and by 21% YoY for same-day visitors. It went on through June and provided a boost to foot traffic and retail sales in some sectors such as cosmetics and non-discretionary retail. Then by June, Hong Kong’s retail market has struggled amidst the growing social unrest and resulting disruption to retailers’ businesses throughout the city. Mainland tourist arrivals plummeted as the unrest escalated and in October, the number of visitors from the Mainland dropped by 45.9% YoY, the steepest decline ever in a single month. Retail sales naturally followed, dropping by 24.3% YoY in the same month, after a drop of 18.2% YoY in September. The decline was led by jewelry and watches which recorded a fall in sales of 42.9% YoY, followed by medicines & cosmetics (down 33.5%). These two used to lead Hong Kong’s retail sector
RETAIL OUTLOOK Retail sales
Alicia Garcia Herrero
Sources: Bloomberg, Natixis
two years ago. It wasn’t just the social unrest that kept the retail market at bay. “The continuation of social unrest is obviously the key challenge followed but the further deterioration of the Chinese economy, which is key for HK’s growth,” said said Alicia GarciaHerrero, chief economist at Natixis. A note by DBS Group Research also noted that exports of travel services (down 32.2%) was dampened by a weaker Chinese yuan. Tourist’s hot picks such as clothing, jewelry, and cosmetics/medicines fell by 20%-40% and will be a big slap for retail sales where tourist spending account for 40% of the sector’s performance. In addition, the unemployment rate of consumption and tourism related sectors (16.5% of labour force) already leapfrogged from 3.9% in June to 5.0% in October, lifting the headline 3 month moving average jobless rate from its 20-year low of 2.8% to 3.1%. “Looking ahead, the retail sector will stay weak due to subdued local demand. Hopefully, the temporary rental adjustments for tenants could contain the risks of large-scale closure of businesses and laid-off,” DBS said in the report. Across the retail property scene, rents continue to go down which will endanger Hong Kong’s status as the most expensive retail street. Cushman & Wakefield stated that in Q4 2019, the decline in rentals across all submarkets has become even steeper, falling to its lowest level in more than five years. Landlords are struggling to retain their tenants, Lawrence Wan, senior director for advisory & transaction services– retail at CBRE Hong Kong
added that local pharmacies and larger F&B outlets have abandoned leases over the past few months. “Landlords and high street shop owners are considering to provide short-term lease discounts to retain tenants, to alleviate the impact of the social unrest on retailers’ performance. Retailers are consolidating their operations and looking to upgrade their products and service offerings with enhanced customer experience to encourage spending,” Wan said. He also added that the rent levels will continue to drop in the short run. But in the long run, this might as well be the “new normal” that retailers have to adjust to. Such will be largely dependent on any government policies and measures that will help the market recover. “[W]e can expect a rental adjustment which will allow the retail market to become more sustainable than what we had experienced in the past few years whereby rents were at very high levels. It will be difficult to predict the timeframe but retailers should get prepared and review their business strategies to cater to the “new normal,” Wan noted. Even though there are a number of retailers looking to leave Hong Kong, the region still saw some new openings during the events of the social unrest. Charles Chan, senior Asia retail analyst at IGD, cited the re-launch of beauty retailer Sephora, who have left the market ten years ago. It promised to bring 40 brands in their stores. “The re-launch of Sephora provides an indication of how Hong Kong’s retail landscape has shifted. Shoppers expect exciting digital store engagements and touch points rather than just a range of
products presented to them. We have also seen Lush, for example, launch its first Asia Naked concept store in Hong Kong, whilst Don Don Donki opened its first store in Hong Kong in July earlier this year,” Chan shared. On the digital front, ecommerce platforms may not be as affected as they are still grabbing a larger market share, according to Ji. “In view of this, more physical retailers have already set up online sales channel to catch up the trend. On the other hand, some have leveraged the latest technology such as AR to enhance in-store shopping experience for customers,” Ji added. However, Chan still warned that brands and retailers need to be particularly careful on inadvertently choosing a political side in their marketing and messaging. A survey by YouGov showed which brands have been the most negatively affected in terms of consumer spending, where most cases are correlated to controversies around the protests. Chinese electronics firm Xiaomi’s brand metric score dropped 40.5 points to -4.1 from a score of 36.4 last August. Its decline started when it released a new smart TV carrying a slogan that is said to mimic chants in the gathering. “Despite the uncertain economic and political circumstances, we have seen businesses continue to innovate to stay relevant. The re-launch of Sephora provides an indication of how Hong Kong’s retail landscape has shifted. Shoppers expect exciting digital store engagements and touch points rather than just a range of products presented to them. We have also seen Lush, for example, launch its first Asia Naked concept store in Hong Kong, whilst Don Don Donki opened its first store in Hong Kong in July earlier this year.” — By Nathanielle Punay
Retail Sales and Hang Seng Index
Source: CEIC and DBS Group Research
HONG KONG BUSINESS ANNUAL 2020 15
Will international law firms ditch Hong Kong for Singapore or Shanghai?
Unrest bolsters demand for regulatory and corporate rescue services
Despite headwinds, demand for regulatory practice and advisory on cross-border issues may still grow.
ong Kong’s legal sector is expected to see heightened competition as the Big Four accounting firms attempt to enter the industry, international and local firms continue to grow its in-house teams, and magic circle firms look to expand in the region, HFW’s office head in Hong Kong, Patrick Yeung, said. In recent years, the Big 4 accounting firms—namely Deloitte, EY, KPMG and PwC—have been expanding to the legal sector, particularly in Asia Pacific, Tony Williams, Principal at Jomati Consultants, wrote in The Law Society of Hong Kong Journal. Earlier this year, Deloitte launched a law firm, called J. E. Jamison & Co., in the city. A separate article from the journal stated that the number of junior and more senior level lawyers transitioning to in-house is growing, as more companies expanded their legal teams to effectively manage costs instead of seeking external legal
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“In the last three years, many firms have expanded their corporate teams, they have the capacity to take on the [IPO] deals without having to increase headcount significantly.”
counsel. Working under in-house legal teams are said to have become highly attractive to many Hong Kong-based lawyers. Such positions are perceived to offer a better worklife balance and greater opportunity to become a key stakeholder, Lewis Sanders Legal Recruitment’s Camilla Worthington and Chris Chu found. This is despite Robert Walter’s survey findings that associates under private practices are more likely to have higher salaries ($500,000 to $1m) than those working in in-house teams ($500,000 to $1.6m). As it is, the survey revealed that although two in three, or 67%, of legal and compliance professionals feel optimistic about job opportunities in 2020, most of them do not feel too hyped about their earnings. Almost half (49%) expect a salary increment of just 1-6%, whereas 27% expect 7-15%. Only 22% are anticipating anything more than that.
Market uncertainties aren’t helping—the economy abruptly contracted 2.9% in Q3 2019 right after a modest 0.4% growth in the previous quarter. Still, the demand for some legal services could withstand the headwinds, or in some cases even thrive from it. A boon for regulatory practices Michael Page expects regulatory practices and corporate rescue services in insolvency and restructuring to become increasingly popular amidst such uncertainties. In a separate report by Robert Walters, the annual salary for regulatory advising officers in banking are tipped to rise to $400,000 to $650,000 in 2020, compared to $350,000 to $450,000 in 2019. Yeung also believes that law firms will see greater demand for complex advice on either transactional or contentious crossborder issues coming into 2020. “Despite an unpredictable global economic outlook, the confidence in
LEGAL OUTLOOK Expected salary increase for 2020
Source: Robert Walters Salary Survey 2017 Source: Robert Walters Salary Survey 2020
cross-border opportunities remains high. Global trade and development opportunities and issues will primarily drive this demand,” he said. Advisory on data protection governance and data privacy policies are expected to maintain popular as well, especially with the European Union General Data Protection Regulation (GDPR) coming into force since 2018. “This is particularly because the EU is the second largest trading partner for Hong Kong but also because the multinational businesses in Hong Kong are compliant and would rather adhere to a stricter standard,” Michael Page director Serena Tang explained. Lawyers who advise on IPOs may be excited over the bullish outlook for the market, but Michael Page isn’t too hyped about its effect on the legal sector. “In the last three years, many firms have expanded their corporate teams, they have the capacity to take on the deals without having to increase headcount significantly,” said Brian Chan, Michael Page Hong Kong’s senior consultant. A report by Deloitte reveals that Hong Kong is tipped to record 160 new listings in 2020, as more overseas-listed Chinese tech firms are expected to come back to Hong Kong following Alibaba’s secondary listing. “We remain hopeful in the Hong Kong IPO market as the city remains a competitive and strategic platform particularly for New Economy and international listings,” Tang said.
Another major change in Hong Kong’s legal sector is when the Hong Kong government and the Supreme People’s Court of China signed an arrangement in April that would allow any party involved in arbitration proceedings in Hong Kong to apply for interim measures in Mainland Chinese courts before or after the arbitral institution accepts a Notice of Arbitration, and vice-versa. Measures include preservation of assets, evidence and conduct. Boosting dispute resolution status According to a news release by the Hong Kong International Arbitration Centre (HKIAC), the interim measures available in Hong Kong include maintaining or restoring the status quo whilst waiting for the resolution of the dispute, preventing actions that may cause harm or prejudice to the arbitral process, as well as preserving assets and relevant evidence to the dispute resolution. HKIAC also stated that the arrangement is bound to create a new source of work for law firms: as it compels more parties to pick Hong Kong as a seat of arbitrations involving parties in the Mainland, it will bring more work to law firms that participate in Hong Kong seated arbitrations. The arbitration centre noted that all of the 11 applications related to the interim measures they have received as of 13 December came from law firms on behalf of parties. Michael Page’s Chan also expects regional arbitration to become in demand. “The Arrangement
Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the HKSAR will enhance the attractiveness of choosing Hong Kong as a seat of arbitration where there is a possibility that interim measures may be required in Mainland China,” he said. Cross-border dispute resolution has been a fast growing area of law in Hong Kong. According to data from the Hong Kong Trade Development Council (HKTDC), 521 cases have been carried out in the HKIAC, including 265 arbitration cases and 21 mediation disputes in 2018. The total amount in dispute for the cases that have been administered has hit about $52.2b. Amongst these arbitration cases, majority or 190 are international in scope, with Mainland Chinese parties amongst the most frequent users of their service. The most involved sectors in HKIAC seated arbitrations were from international trade, which took up 29.6% of the total. It is followed by the corporate sector with 18.6%, and maritime holding 15.1% of the total. However, growing unrest has put a dent on Hong Kong’s appeal as a seat of arbitration. A report by Reuters revealed that some firms have shifted arbitration hearings out of the city to Singapore out of fear for their safety. — By Clarist Zablan
The ongoing protests give mixed results to the legal scene.
HONG KONG BUSINESS ANNUAL 2020 17
TOP NEWS IN 2019
Daily news: www.hongkongbusiness.hk
Premium Central office rents slipped 11% from June to October Premium Central office spaces were hit the hardest by social unrest and trade conflict, posting an 11% drop in rents in June to October, according to Knight Frank. Monthly grade-A office rents in the district fell 8.4% MoM and 15.5% YoY to $168.2 psf in October, the worst in the city for the month.
Job market strengthens with high demand in Greater China tech: survey The job market is becoming riskaverse amidst global economic uneasiness and weak local outlook for H2 2019, according to a survey by recruiter Robert Walters. Expected salary increments has plummeted to 10-15% in 2020.
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Office rental growth hits decade-low in October Overall Grade A office rents dropped by 1.6% MoM in October, the sharpest monthly fall recorded in more than 10 years, according to a report by real estate management company JLL.Due to a subdued leasing demand, accounting to increased rate of vacancies, rising above 3% for the first time since March 2015, overall Grade A office rents have dropped to $74.3 per sqft in October, whilst Central’s Grade A office rents plunged 2.3% to $122.1 per sqft, recording the largest fall for the month.
Property investments down 32% to $3.67b in Q3 Property owners waiting for the protests to abate will find their financial patience and muscle tested in the coming months as price fall and investments dwindle, with property investments in the city recording its fifth-straight quarter of decline, according to a report by Real Capital Analytics. Property investment volumes declined 32% YoY to $3.67b (US$2.7b) in Q3, driven by ongoing protests and a “particularly strong” Q3 2018. For the first nine months of 2019, investment volumes plummeted 41% YTD to $18.95b.
Four mobile networks buy 5G spectrum for $665.13m Four mobile network operators have collectively purchased 100MHz of spectrum in the 3.3GHz band for total utilisation fees of $665.13m, the Office of the Communications Authority (OFCA) announced. Causeway Bay remains the world’s most expensive shopping street in 2019 Russell Street at Causeway Bay has retained its crown as the world’s most expensive shopping street with stores being leased out at $2,745 per sqft in a year, according to a new report by real estate agency Cushman & Wakefield (Cushwake). New York’s Upper 5th Avenueand London’s New Bond Street followed at $2,250 psf/yr and $1,714 psf/yr, respectively. But Cushwake clarified that the report was based on data as of June 2019, way before the pressures on the retail market intensified.
Hong Kong salaries to rise 1.4% in 2020, still amongst Asia’s lowest: study Hong Kong workers can look forward to higher salaries in 2020, with the average increase expected to be 1.4% above inflation next year from the 1% rise that workers enjoyed in 2019, according to a report by market insights firm Eca International. But this is well below the average salary increase of 3.2% in APAC. All of the top five countries with the highest projected salary raises are from the region.
Restaurant receipts down 11.7% to $26.4b in Q3 The provisional value of restaurant receipts deteriorated sharply in Q3, falling 11.7% YoY to $26.4b compared to a year earlier, according to the Census and Statistics Department (C&SD). This is the largest yearon-year decline recorded since the outbreak of SARS in the Q2 2003, a government spokesman noted. Over the same period, the provisional estimate of the value of total purchases by restaurants decreased by 10.9%YoY to $8.5b.
Hong Kong is the 7th costliest office fit-out market in APAC Soaring AV/IT costs add to the expensive builders’ works. Hong Kong is the most expensive office fit-out market in Greater China and the 7th most expensive across Asia Pacific, with an average cost of $1,018.86 per sqft (US$130 psf), a report by Cushman and Wakefield revealed. Beijing emerged as the most expensive market in Greater China and the 10th most expensive market in APAC, with an average cost of $924.81 psf (US$118 psf).
TOP NEWS IN 2018
Daily news: www.hongkongbusiness.hk
Developers to shift away from nano flats Hong Kong developers are likely to shift focus away from building nano flats following the boosted spending power of first-time buyers, thanks to the expanded loan-to-value (LTV) cap, according to a report by JLL. New supply of nano flats are expected to decrease starting 2022.
Luxury condo prices down 1.7% in Q3 as the rich rein in spending Luxury apartment prices slipped 1.7% QoQ in Q3 amidst disappointing transaction levels, according to Savills Hong Kong. Rich locals abstained from buying trophy assets, as the ongoing trade war had a negative impact on their businesses, both in Hong Kong and China, noted Savills. Instead, high net worth individuals (HNWIs) and family offices turned to more conservative investment strategies, with few choosing to invest in super luxury housing.
Hong Kong urged to boost $2b economic stimulus The government’s $2b stimulus package designed to prop up the slowing economy is still “small and regressive”, according to Natixis, as some of the measures take may not be enough. Hong Kong sinks into recession Hong Kong’s economy has fallen into a “deep depression” in July-September quarter as the gross domestic product (GDP) slumped 3.2% QoQ in Q3, and is expected to contract further in Q4 amidst ongoing political and trade issues, according to Oxford Economics.
Hong Kong economic growth may plunge into negative territory by end-2019 Hong Kong’s economy is likely to record negative growth in 2019, due to contraction in the past threee quarters and lacking signs of improvement, a government spokesperson commented. Advance estimates expects GDP to dip 2.9%.
Bosses spend 14.4% of their time coaching underperforming employees Bosses spend over half a day weekly, or 14.4% of their time, coaching and supervising poorly performing employees, a study by specialized recruitment agency Robert Half revealed. Almost all (96%) of Hong Kong business leaders face the challenge of poorly performing employees, which can impact a company’s productivity levels, staff morale and even reputation.
Public housing plans could hurt commercial supply: analyst The government’s plan to convert factory estates into residential housing may indirectly reduce the potential commerciable saleable area supply of 1.3m sqft, Marcos Chan, head of research for CBRE Greater Bay Area and Hong Kong said in a note.
F&B sector’s jobless rate hit six-year high in Q3 The unemployment rate of the food and beverage services sector rose sharply to a sixyear high of 6% in the JulySeptember quarter, according to the Census & Statistics Department.The unemployment rate of consumption and tourism-related segments rose further to 4.9%, the highest point in more than two years.
Hedge fund assets hit all-time high at $722.33b despite unrest The hedge fund industry has accumulated a new high of $722.33b (US$92.1b) in August of assets under management (AUM) as its performance further rose despite the ongoing protests in Hong Kong, according to the research firm Eurekahedge. This figure was raised by 449 hedge fund managers, growing $54.12b (US$6.9b) of AUM in YTD. It was attributed to proximity to the fast-growing economy of China, availability of highlytrained talent base, and robust regulatory landscape that has attracted both foreign and domestic hedge fund managers to base their operations in the region.
Foreign companies in Hong Kong up 9.9% to 9,040 in 2019 The number of overseas and mainland Chinese companies in Hong Kong rose 9.9% to 9,040 in 2019, according to the 2019 Annual Survey of Companies in Hong Kong with Parent Companies Located outside Hong Kong (SCoP). This was compared to 8,225 firms in 2017. The 9,040 companies comprised 1,541 operating as regional headquarters, 2,490 regional offices and 5,009 local offices.
HONG KONG BUSINESS ANNUAL 2020 19
TOP NEWS IN 2019
Daily news: www.hongkongbusiness.hk
China Mobile Hong Kong wins 3.5GHz spectrum for $300m China Mobile Hong Kong won the bid for 60MHz bandwidth 3.5GHz bands at $300m last October. The 3.5GHz spectrum will provide 5G network across Hong Kong, in line with the country’s goal to be a smart city. It has become the first 5G local and international call in May of this year.
Interconnection bandwidth to grow 55% CAGR in 2018-2022 Hong Kong’s interconnection bandwidth or private connectivity is expected to grow the second fastest in Asia Pacific with a projected 55% CAGR from 2018-2022, according to data centre company Equinix. Its CAGR growth is expected to be driven by local businesses and organisations expanding overseas.
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Prime street shop rents tumbled 15.4% in Q3 as vacancies mount Prime street shop rentals fell 15.4% QoQ in Q3, bringing the overall year-to-date (YTD) decline to 16.4%, reported Savills Hong Kong. Shopping centre rental charges also slipped 14.2% QoQ. Retail sectors most traditionally popular with mainland Chinese tourists have been most affected with sales of jewelry and watches plummeting 47.4% YoY, according to data from the Census and Statistics Department.
Four mobile networks buy 5G spectrum for $1b Four mobile network operators have collectively purchased 200MHz of spectrum in the 3.5 GHz band for a total of $1.006b, the Office of Communications Authority (OFCA) announced.
Majority of executives struggle to upskill staff for new tech: study Majority of Hong Kong business leaders (90%) find it hard to upskill staff to adapt to new technology amidst the city’s bid to become a global innovation hub, according to a Robert Half study.
Hong Kong is the world’s third most competitive economy Hong Kong climbed four places to clinch the title of world’s third most competitive economy in 2019 with a score of 83.1, a 0.8-point improvement since last year, according to the World Economic Forum’s (WEF) 2019 Global Competitiveness Index.
Approved mortgage loans dipped 2.8% to $45.3b The transaction volume of approved mortgage loans slipped 2.8% MoM to $45.3b in August as the number of transactions fell 26.5% MoM to 11,133, according to data from The Hong Kong Monetary Authority (HKMA).
HKEX scraps $285.86b bid for London bourse The Hong Kong Exchanges and Clearing Limited (HKEX) has decided not to proceed with its proposal to buy the London Stock Exchange (LSE), announced HKEX.
Mall rents slashed by up to 25% Swire Properties announced a temporary rental reduction of 10-25% for most of its tenants at Pacific Place mall, the first major shopping mall in Hong Kong to offer a rental adjustment amidst deteriorating sales and tourist arrivals.(HKMA).
PMI plunges to 15-year low in November Hong Kong’s purchasing manager index (PMI) fell 38.5 in November from October’s 39.3, marking the lowest downturn since the country’s SARS outbreak in 2003, according to a report by analytics IHS Markit.
TOP NEWS IN 2018
Daily news: www.hongkongbusiness.hk
Hong Kong is Asia’s third costliest expat city Hong Kong is now the third most expensive location in Asia, and the sixth most expensive place in the world for expatriate workers to live, a cost of living survey published by data company ECA International found. Tokyo jumped six places to become the second-most expensive location in Asia, whilst Ashgabat in Turkmenistan continues to be both Asia and the world’s costliest place for expats.
Bank profits may take hit amidst protests Hong Kong banks can expect tougher times ahead as profitability is likely to take a hit in response to the ongoing social unrest, according to a report by S&P. Credit costs are also likely to rise as asset quality deteriorates.
Hong Kong amongst world’s rising stars for trade potential: StanChart Hong Kong counts amongst the top markets that progressed in terms of trade growth in the past decade, ranking 11th at Standard Chartered (StanChart) Bank’s Trade20 index that identifies the rising stars of trade.
AirTrunk to set up $1.1b data centre in Tsuen Wan Data centre startup AirTrunk will build a $1.11b-worth 20+ megawatt (MW) data centre in Tsuen Wan which is set to open in Q4 2020, an announcement revealed. The facility, AirTrunk HKG1, will retrofit an existing eight storey building and is specifically designed for hyperscale cloud, content and enterprise customers, the company said.
Kowloon properties collectively sold for $2.14b South Crown Development has bought buildings at Whampoa Street and Baker Street in Kowloon for over $2.137b via public auction, according to an announcement by the properties’ auctioneer JLL.
Sun Hung Kai sells homes 20% lower as protests persist Sun Hung Kai Properties, Hong Kong’s biggest developer, is offering new homes at a discount to entice buyers amidst a worsening political crisis.
Hong Kong economy may post 0% growth in 2019 The economy is expected to contract by the second half of the year and post 0% growth for the full year amidst the ongoing conflict ravaging the city although GDP growth may bounce back 1.2% by 2020, according to Fitch Ratings. Budget surplus is also expected to narrow to about zero this year.
Expats eye retreat from Hong Kong amidst unrest Hong Kong’s status as one of the world’s biggest financial and commercial hubs is increasingly under threat as expats and their employers weigh the costs of committing to a city mired in its worst political crisis since the handover to China in 1997. Applications for general employment visas dropped 7% YoY in August, after rising on an annual basis for most of 2019, according to official figures.
Sales of watches expected to steady or grow in 2020 About 48% and 32% of respondents expect sales of watches to remain steady or grow in 2020, according to an on-site survey conducted at the 38th edition of the Hong Kong Watch & Clock Fair by the Hong Kong Trade Development Council (HKTDC). Close to 18,000 visitors from 104 countries attended the fair, according to the HKTDC. Accordingly, most respondents view Japan, Western Europe, Taiwan and Hong Kong as the most promising mature markets in the next two years , whilst the Middle East, Mainland China and the Association of Southeast Asian Nations (ASEAN) were seen as having the best prospects among emerging markets.
HONG KONG BUSINESS ANNUAL 2020 21
company and industry - financial services industry
Fintech and insurtech continue to shape Hong Kong’s finance sector
Virtual banking licenses have been granted to eight firms.
he banking system in Hong Kong is characterised by its three-tier system, which is formed by three types of banking institutions: licensed banks, restricted licence banks and deposit-taking companies, which are authorised to take deposits from the general public. The three tiers of deposittaking institutions operate under different restrictions. As of June 2019, there were 160 licensed banks, 18 restricted licence banks and 16 deposit-taking companies. There were also 46 representative offices of overseas banks. Hong Kong is a major regional fund management centre with a large concentration of international fund managers in Asia. According to the SFC survey, 62% of the investment funds (excluding REITs) were sourced from outside Hong Kong in 2018. Despite that, assets managed in Hong Kong made up over 50% of the asset management business. In 2018, 67% of the assets managed in Hong Kong were invested in Asia-Pacific, amounting to $5.33t, with $2.5t in Hong
22 HONG KONG BUSINESS ANNUAL 2020
Kong, $1.21b in the mainland, $531b in Japan and $1.09t in the rest of the AsiaPacific. Securities industry trading services are provided by investment banks, commercial banks, finance companies and securities brokerage companies. Investment banks are the principal underwriters for initial public offerings (IPO). Hong Kong’s highly liberal and liquid securities market has attracted many international investment banks and securities houses to build their presence here, eyeing the IPO and securities businesses. In the secondary market, local retail customers are served mainly by local brokers and banks, whereas institutional buyers are principally served by the international brokers and investment banks. Being the most liquid overseas market for mainland enterprises, Hong Kong is an important centre for raising capital for companies in mainland China. The majority of mainland companies seeking overseas listings have their listing in Hong Kong. As of June 2019, 1,197 mainland companies
“62% of the investment funds (excluding REITs) were sourced from outside Hong Kong in 2018.”
were listed in Hong Kong, with a market capitalisation of HK$22.25t, or about 68% of the total. As for the insurance sector, the Insurance Authority identified the top five insurers by overall gross premium in 2017. These firms are AXA General, Bupa, China Taiping Insurance (HK), Zurich Insurance and Bank of China Group Insurance. Other mainland insurers listed in Hong Kong include Ping An Insurance of China, CNOOC Insurance, China Pacific Insurance and People’s Insurance Company (Group) of China. Insurance agents and brokers serve as an intermediary between policyholders and the authorised insurers. Whilst insurance agents are contracted with a certain insurance company, insurance brokers are not affiliated with any insurance company. As of March 2019, there were 2,391 insurance agencies and 70,418 individual agents registered with the Insurance Agents Registration Board, and 798 authorised insurance brokers who are members of the approved bodies of insurance brokers, namely The Hong Kong Confederation of Insurance Brokers and Professional Insurance Brokers Association. Issuers of debt securities include governments, banks and corporations. The debt market is mostly made up of governments, with bonds commonly used to finance a variety of projects and operations. Investment banks act as underwriters to help issuers sell the bonds in the market. The Government Bond Programme (GB Programme) was implemented in 2009, with the aim to enlarge the Hong Kong local bond market. An outstanding amount of HK$95.7b under the GB Program was recorded as of July 2019. The Hong Kong government has launched an inflationlinked bond issue programme called iBond, with the latest batch rolled out in May 2016. In the same year, the government also launched its first batch of Silver Bond, aiming to provide an investment product with steady returns for senior residents in Hong Kong. The majority of private equity funds in Hong Kong come from overseas and invest in companies in the region. Hong Kong Venture Capital and Private Equity Association (HKVCA) helps the
financial services industry - company and industry Industry data: Banking Number of Author Institutions
As of 2019
Restricted licensed banks
Representative offices of foreign banks
Source: Monthly Statistical Bulletin, Hong Kong Authority, Quarterly Report of Employment and Vacancies Statistics, Cencus & Statistics Department
development of private equity and venture capital, with over 400 corporate members as of end 2018. The Hong Kong government has established an information portal, StartmeupHK, for Hong Kong’s start-up community, listing the latest start-up events and resources, including government incentive and incubation schemes, accelerators, angels and venture capitalists, along with success stories of both local and overseas start-ups. Aside from this, StartBase.HK, an open-source startup profiling database set up in Hong Kong, has been launched to facilitate information flow between venture capitalists and startup companies, with an aim of encouraging the development in the venture capital market. Hong Kong’s listing reform To improve the opening and healthy development of capital markets on the mainland and in Hong Kong, Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect were launched in 2014 and 2016 respectively, marking important milestones of mutual access between the capital markets of Hong Kong and the mainland. Bond Connect was also launched in July 2017, allowing overseas investors to invest via Hong Kong in China’s $75.15t (US$9.6t) bond market, with the southbound trading link to be added subsequently. As of June 2019, Bond Connect has attracted 62 out of the top 100 global asset management
companies and more than 1,000 international investors from 29 jurisdictions. First Abu Dhabi Bank (FAB), the largest bank in the UAE, has recently joined the Bond Connect and became the first investor from the Middle East. In the 2018-19 Budget, Hong Kong Financial Secretary Paul Chan, advocates the transformation of Hong Kong’s listing platform to be more desirable for emerging and innovative enterprises. The new listing regime launched on 30 April 2018, when the HKEx added three new chapters in the Main Board Listing Rules and made consequential changes to the current Rules. The listing reform allows Hong Kong to capitalise on the opportunities of emerging technology companies and accelerate the development of the new-economy sector. In the longer term, it enables the injection of new knowledge on emerging and innovative businesses into the investor community, including business models and technologies. One year since the launch of the new listing regime, a total of 40 new economy companies (including 9 biotech companies) have gone public in Hong Kong, raising over half of the total IPO funds raised during the period. Fintech is reshaping the financial sector and driving innovation in financial services globally. In Hong Kong, fintech development is also burgeoning and making good headway into areas such as virtual banking, insurance technology and
“Fintech development is also burgeoning and making good headway into areas such as virtual banking, insurance technology and regulatory technology.”
regulatory technology. As of 9 May 2019, there are a total of eight virtual banks in Hong Kong, including Livi VB Limited, SC Digital Solutions Limited, ZhongAn Virtual Finance Limited, Welab Digital Limited, Ant SME Services (Hong Kong) Limited, Infinium Limited, Insight Fintech HK Limited and Ping An OneConnect Company Limited. In an effort to boost the city’s internet financial services, Hong Kong Insurance Authority launched a fast-track approval system for pure online insurers and issued its first virtual licence to Bowtie Life Insurance late last year. Bowtie is set to offer insurance products directly to customers, without any insurance intermediaries. More virtual licences are expected to be issued in the short term to continue pushing the development of insurtech and offering more options for endcustomers. Being the key financial and capital market in Asia, Hong Kong’s financial institutions are well positioned to capture opportunities on capital raising and deal making in the region, especially with the China’s Belt and Road Initiatives (BRI) and the development of Greater Bay Area. Financing demand, including green financing and green bonds, will continue to increase due to more and more infrastructure projects under the BRI. Hong Kong will continue to play a prominent role for capital raising, particularly in IPOs, bond issuance and the private equity sector.
HONG KONG BUSINESS ANNUAL 2020 23
company and industry - real estate and construction industry
China’s infra push a boon for construction industry
“Surveyors practising in Hong Kong have been growing as a result of increasing demand and opportunities.”
As for the architecture industry, all practitioners have to register with the Hong Kong Institute of Architects (HKIA), which has more than 4,000 members. Most of the architect firms in Hong Kong are locally owned. Attracted by the business opportunities in the region, a number of foreign architects have come to work in Hong Kong. Meanwhile, many engineers are members of the Hong Kong Institution of Engineers (HKIE), a local professional body for engineers. First established as the Engineering Society of Hong Kong in 1947, the HKIE was incorporated by government ordinance in 1975 to set professional standards and to encourage professional development for local engineers. In 1992, the HKIE qualification was recognised for government services appointments. The HKIE has become a key qualifying body for a wide range of engineering disciplines. It has over 30,000 members, of which more than 14,000 are corporate members. The number of surveyors practising in Hong Kong has been growing as a result of increasing demand and opportunities in the local and surrounding markets. A number of leading international surveying firms have established their regional offices in Hong Kong. Three divisions of Hong Kong’s surveying industry have gained mutual recognition of professional qualification with Mainland China, namely general practice, quantity surveying and building surveying. The Hong Kong Institute of Surveyors (HKIS) is a professional body established in 1984. As of the end of 2018, the total number of corporate members of the HKIS stood at 6,250. Hong Kong is internationally renowned for its expertise in the construction of quality high-rise residential and commercial buildings, and its services are in great demand in overseas markets, particularly in Asia. The Middle East, where government infrastructure plans provide good support to construction activities in the Gulf region, has become a market with growing potential for Hong Kong’s construction, architectural and engineering companies. Mainland China is the largest export market for Hong Kong’s architectural, engineering and surveying services.
It is also boosted by increasing demand for green and smart buildings.
ong Kong companies have gained a reputation over the years for the rapid construction of quality high-rise apartment blocks and office towers. The adoption of specialised construction techniques, such as reclamation and design-and-build methods, has made Hong Kong a regional leader. The region is also a leading expert in highrise design, slope design, high-density design and designing with space constraints. It is renowned for high-rise buildings typified by skyscrapers in Hong Kong’s central business district, which showcase the innovative application of building materials, technology and designs combined with the versatility of the local architects. Its engineers are active in exporting their services to the region as well, particularly to Mainland China. Major types of professional engineering services currently being exported include project management, building services work and engineering consulting. Hong Kong’s construction industry is characterised by a small number of large local contractors, a large number of overseas contractors, and a high level of sub-
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contracting, with a substantial proportion of companies being both developers and contractors. Most of Hong Kong’s construction companies are small in size. Companies that carry out construction work worth less than HK$10m (US$1.3m) in terms of annual gross value account for as much as 82% of the industry. The majority of the small companies act as subcontractors for the large ones, which tend to be main contractors. There are also a number of big construction companies capable of handling projects requiring sophisticated technology and strong financial backing, which are expanding their business across the region. Hong Kong contractors tend to be experienced and highly skilled. There are no formal restrictions on entry to the contracting business in Hong Kong. Foreign and local contractors are treated alike, and all are allowed to tender local public sector projects. Due to the growing size and complexity of building projects, it is now common to award large and complex building contracts as a single package to multi-disciplined contractors.
real estate and construction industry - company and industry Major Indicators of the Construction Sector 2016
Gross value of construction works performed (HK$ million)
Establishments Employment Number of real estate development projects Private residential premises Office buildings
Sources: Key Statistics on Business Performanceand Operating Characteristics of the Building, Construction and Real Estate Sectors (2017 Edition), Census and Statistics Department
A number of Hong Kong companies in the engineering sector are also exporting their services via working for multinational companies in South-east Asia, North America and Western Europe, covering a wide range of industries including information technology, telecommunications, chemicals and fast-moving consumer goods. BRI prompts infrastructure push To achieve the objective of promoting economic growth through infrastructural development, the Hong Kong government has been increasing its infrastructure investment over the past few years. Hong Kong’s ten mega infrastructure projects, first announced in the 2007 Policy Address, are being rolled out in phases and several transport projects are being carried forward in tandem. Progress has been made on the Rail Gen 2.0 project, with the South Island Line and Kwun Tong Line Extension launched in the second half of 2016. The Hong Kong-Zhuhai-Macao Bridge and GuangzhouShenzhen-Hong Kong Express Rail Link were opened last year, improving logistics and transport efficiency between Hong Kong and mainland cities. The West Kowloon Cultural District, an important cultural infrastructure investment of Hong Kong, has also launched The Xiqu Centre, its first landmark performing arts venue, in January this year.
Other major projects under way include Shatin to Central Link Project, Kai Tak Development and development areas in the northern New Territories. In March 2015, China’s National Development and Reform Commission issued The Vision and Actions on Jointly Building the Silk Road Economic Belt and the 21st Century Maritime Silk Road, outlining the framework of the Belt and Road Initiative (BRI), co-operation priorities and mechanisms. It is estimated that at least US$1.2 trillion could be invested into infrastructure projects along the BRI routes, with a large portion of the funding expected to go to transport infrastructure projects such as ports, railways, and roads. Hong Kong is renowned for its excellent professional services and it is expected that the industry can benefit from the ample opportunities ahead. A list of available investment projects along the Belt and Road can be found here. Rapid urbanisation has driven infrastructure development in Mainland China in recent years. As part of the 2014-2020 urbanisation plan, the Chinese government aims to increase the urbanisation rate from 53.7% in 2013 to 60% by 2020, with approximately 100 million people expected to move from the rural areas into cities. This higher rate of urbanisation is likely to generate huge demand for new public infrastructure, housing and transport networks.
“Hong Kong government has been increasing its infrastructure investment over the past few years.”
Green and smart buildings The growing awareness of the need for environmental protection is creating an increasing demand for green buildings. Hong Kong’s Urban Renewal Authority has announced its environmental sustainability policy for future urban renewal projects. According to the Hong Kong Green Building Council, more than 2,000 buildings are certified by BEAM Plus, a leading initiative in Hong Kong to offer independent assessments of building sustainability performance. Mainland China is also ambitious on its green building movement, with the target of 50% of all new buildings constructed by 2020 to be certified green buildings. In order to strive under the competitive global environment, it is critical for the construction industry in Hong Kong to promote efficiency and innovation by adopting modern construction methods and techniques, information technology (IT) and automation technology. The use of IT technologies such as Building Information Modelling (BIM) has increased across the industry, including large-scale project owners such as MTR Corp and Airport Authority. The introduction of Construction Industry Council (CIC) BIM Standards allows industry participants to manage and assess BIM deliverables by architects, engineers, surveyors and contractors.
HONG KONG BUSINESS ANNUAL 2020 25
company and industry - accounting industry
Mainland firms snap up most accounting exports
“Internationally, HKICPA members are accorded recognition on five continents.”
Exports went up 5.1% to $1.96b.
he use of international standard accounting practices and rising business opportunities in Asia have attracted international accounting firms to set up in Hong Kong, riding on the city’s sound regulatory framework, availability of accounting expertise and proximity to fast growing economies like the Chinese mainland and ASEAN countries. With companies increasingly exposed to globalisation and the attendant needs for their supply and value chains, big international accounting firms have expanded their service scope to better serve their clients. Local accounting firms, mostly small-scale operators, may find it increasingly challenging in serving their clients. Major services provided by certified public accounting (CPA) firms include statutory audit services, tax advisory, company listing, corporate finance, company secretarial, liquidation and due diligence services. Although statutory audit work is still a major source of income for the accounting profession, CPA firms also provide a full range of business advisory services to their clients such as financial planning, corporate
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management and internal audit. Non-CPA firms offer services like bookkeeping, general accounting services, year-end financial reporting, tax filing and company secretarial work. Companies incorporated in Hong Kong are required under the provisions of Hong Kong Companies Ordinance to maintain proper books of accounts and satisfy statutory audit requirements on an annual basis. The Hong Kong Institute of Certified Public Accountants (HKICPA) is a self-regulating body governing the accountancy profession in Hong Kong, and the framework of Hong Kong Financial Reporting Standards (HKFRS) is modelled on International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). According to HKICPA, its total membership reached 43,918 as end of March 2019, with 4,908 practising members. Hong Kong’s accounting sector is dominated by the international firms, particularly the “Big Four”: PwC, EY, KPMG and Deloitte. These companies hold a dominant market share in terms of professional fees earned. They provide audit
services for the vast majority of blue chips and other large enterprises listed on the Hong Kong Stock Exchange (HKEx). Other accountancy firms, including the second-tier international accountancy firms and local Hong Kong CPA firms, mainly serve the local and mainland companies of smaller sizes. Since April 2010, HKICPA has issued Hong Kong Financial Reporting Standard for Private Entities (HKFRS for Private Entities) for companies with no public accountability, eliminating some accounting treatments under full HKFRSs, including removal of some disclosure requirements not relevant to private entities. Besides, HKICPA has also issued a Financial Reporting Standard (SMEFRS) for certain qualifying SMEs. In January 2017, HKICPA launched the new Qualification Programme (QP) to ensure professional accountants are equipped with the skills, expertise and ethics to support Hong Kong as an international business and financial centre. Key features include a progressive qualifying process of three levels (i.e. Associate, Professional and Capstone) in the professional programme and relaxed entry requirements to the Professional Level by making exemptions available in the Associate Modules to students with eligible academic background (including students with non-accounting degrees). The Final Examination under the new QP will have an increased emphasis on developing and assessing higher-order enabling skills such as problem solving, critical and lateral thinking. The new QP is set out to be implemented in June 2019. Internationally, HKICPA members are accorded recognition on five continents. The association has entered into agreements with the chartered accountant institutes of Australia, Canada, England and Wales, Ireland, New Zealand, Scotland, South Africa and Zimbabwe. Deals were also inked with the National Association of State Boards of Accountancy/American Institute of Certified Public Accountants International Qualifications Appraisal Board of the US, the Association of Chartered Certified Accountants, CPA Australia and the Association of International Accountants for access to membership in their institutes and practising rights in their countries.
accounting industry - company and industry Industry Features December 2018 No. of estabishments of accounting, book-keeping and auditing services, tax consultancy Employment
Source: Quarterly Rerport of Employment & Vacancies Statistics, Census Department
Accounting, Auditing and Bookkeeping
Export of accounting, auditing, book-keeping and tax consulting services (US$ mn)
Contributuion to total services exports (%)
Source: Report on Hong Kong Trade in Services Statistics, Cencus & Statistics Departmanent
Mainland snaps up most exports Hong Kong’s exports of accounting services amounted to $1.96b (US$250m) in 2017, up 5.1% from 2016. The Chinese mainland is the biggest export market for Hong Kong’s accounting services. Major export services include: statutory audit services, investmentrelated advisory services (e.g. due diligence), tax advisory and corporate advisory services. The clients requiring accounting services on the mainland can be broadly divided into four types, namely multinational corporations, Hong Kong companies which have invested or intend to invest on the mainland, Hong Konglisted mainland enterprises and mainland enterprises expanding overseas. In April 2014, China’s Ministry of Finance (MOF) proposed new rules to regulate foreign accounting firms to perform audits for mainland enterprises planning to list offshore, triggering concern over a potentially adverse impact on Hong Kong accounting companies. After the MOF discussed with the Hong Kong government and the accounting sector, it was decided that Hong Kong audit firms would be exempted from the new rules on mainland companies’ offshore listings, provided that certain conditions were met. The exemption would apply to audits of mainland companies applying to list or are already
listed on HKEx, of which at least 50% of the shares are held by Hong Kong investors. However, Hong Kong audit firms are still subject to the rules’ ban on taking audit working papers out of the Chinese mainland, and sending their staff to audit mainland companies under a temporary licence. The new rules, the Interim Provisions on Accounting Firms’ Provision of Auditing Services for the Overseas Listing of Enterprises on the Chinese Mainland (the Interim Provisions), were published on 26 May 2015 and came into force on 1 July 2015. The aim of the Interim Provisions is to standardise the audit by foreign accounting firms for offshore listings of mainland enterprises. Hong Kong’s accounting sector and professionals benefit from the Closer Economic Partnership Arrangement between Hong Kong and the Mainland (CEPA) agreement signed with the mainland. In general, CEPA does not include significant market liberalisation measures for Hong Kong’s accounting firms and professionals. For smaller Hong Kong accounting firms, the main option for them to serve the mainland market is via the Temporary Audit Business Permit. Under Supplement V to CEPA, which took effect from January 2009, Hong Kong accounting firms which conduct auditing business on a temporary basis on the Chinese mainland can apply for a Provisional
“The clients requiring accounting services on the mainland can be broadly divided into four types, namely multinational corporations, Hong Kong companies which have invested or intend to invest on the mainland, Hong Kong-listed mainland enterprises and mainland enterprises expanding overseas.”
Licence to Perform AuditRelated Services with the validity period extended from two years to five years. This helps reduce the administrative burden for Hong Kong accounting firms compared with the requirements which otherwise apply to nonCEPA beneficiaries. After ten annual Supplements to keep widening and broadening the liberalisation measures in favour of HKSS, Hong Kong and the mainland entered into a subsidiary agreement under CEPA in 2014 to achieve basic liberalisation of trade in service trade in Guangdong (“Guangdong Agreement”). This was then followed in December 2015 by the Agreement on Trade in Services (“ATIS”) to extend the coverage of the 2014 agreement from Guangdong to the rest of the mainland. The ATIS, which covers and consolidates commitments relating to liberalisation of trade in services provided in CEPA and its Supplements and also the Guangdong Agreement, is effective from June 2016. Hong Kong professionals who have obtained the Chinese Certified Public Accountants (CPAs) qualification are allowed to become partners of partnership firms on the mainland, and are further allowed to apply to become partners of accounting firms on the mainland, with the length of auditing experience acquired in Hong Kong treated as equivalent to that on the mainland.
HONG KONG BUSINESS ANNUAL 2020 27
company and industry - legal services industry
Dispute resolution buoys Hong Kong’s legal sector The government’s efforts in simplifying dispute resolution procedures are paying off.
he legal profession in Hong Kong is divided into two distinct branches, namely solicitors and barristers. Solicitors have limited rights of audience before the courts, whereas barristers have unlimited rights of audience in all courts. Solicitors who pass the assessment of the Higher Rights Assessment Board can become solicitor advocates and be granted the rights of audience before the Competition Tribunal, the High Court and the Court of Final Appeal. Currently there are 64 solicitor advocates. Organisations governing the professional standard of solicitors and barristers are, respectively, The Law Society of Hong Kong and Hong Kong Bar Association. Lawyers practising within one branch of the profession are not, at the same time, allowed to practise within the other. Whilst the majority of members of the legal profession are engaged in private practice, a significant number work in the legal departments of some government bodies, or are employed as legal advisers to public or private companies, or engaged in
teaching and research at one of Hong Kong’s tertiary institutions. Hong Kong is the international law capital of Asia, with over 10,000 practising solicitors and barristers. As of end-June 2019, 924 local solicitor firms and 87 foreign law firms had set up presence in Hong Kong, including more than half of the Global 100 law firms with a presence in Hong Kong. As Hong Kong is a leading international financial centre, the growing demand for services related to finance, such as IPO, will help stimulate continual demand for legal services. Foreign law firms also play an important role in Hong Kong’s legal market. According to the latest available data, 39 foreign registered law firms (including Mainland law firms) had formed associations with local firms as of end-June 2019. Meanwhile, local firms employed more than half of the registered foreign lawyers. Exports of Legal Services According to the latest available figures, Hong Kong’s exports of legal services
“Foreign law firms also play an important role in Hong Kong’s legal market.” amounted to HK$2.9b (US$374m) in 2017, up 16% from the year-earlier period. Hong Kong’s legal services sector plays a pivotal role in satisfying the professional services needs associated with mainlandrelated investment. As Mainland China is one of the largest mergers and acquisitions (M&A) markets in Asia, many top legal advisors in the world have made a significant presence in Hong Kong to serve the region. Meanwhile, Hong Kong law firms have established a strong international-mainland business network and clientele. The listing of mainland enterprises in Hong Kong, along with the simplified procedures for mainland enterprises to set up offices in Hong Kong, further boosts the demand for a wide range of professional services provided by Hong Kong law firms. In recent years, arbitration and mediation have gained in popularity as alternative dispute resolution means to legal litigation, and Hong Kong is seen as a preferred venue for dispute resolution in the region. The Hong Kong Arbitration Ordinance is widely recognised as one of the most advanced arbitration statutes in the world. Arbitration awards made in Hong Kong are enforceable through the courts of most of the world’s trading economies through its being a party to the New York Convention. These awards are also enforceable on Mainland China since the establishment in 2000 of the arrangement on mutual recognition and enforcement of arbitral awards between Hong Kong and the mainland. Arbitration and Mediation Arbitration is a legal process through which awards are issued to the disputing parties by arbitrator(s) rather than the court. For an arbitration to take place, the concerned parties in dispute must both agree that the dispute will be handled by arbitration and not by court. This agreement is usually signed as a clause in the commercial agreement before the occurrence of any disputes. Another option to resolve disputes by mediation. It is a process of settling disputes through discussion sessions between involved parties under the presence of a neutral third party, i.e. a mediator. Unlike arbitrators, mediators are not given any power to impose a settlement for the disputes. Instead, they act as a shuttle
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legal services industry - company and industry Number of Barristers As of July 2019 Total Practising Barristers
SOURCE: Hong Kong Bar Association
Number of dispute cases handled by HKIAC
Domain name disputes
SOURCE: Hong Kong International Arbitration Centre
diplomat by encouraging the disputing parties to discuss, and helping them filter out their emotional elements. In the event of the parties reaching an agreement, a legally binding contract consisting of all the agreed terms will be signed. If an agreement cannot be reached within a certain period, the mediator will suggest a temporary or permanent end to the mediation to save cost. In 2018, 521 cases were carried out under the auspices of the Hong Kong International Arbitration Centre (HKIAC), including 265 arbitration cases, 235 domain name disputes and 21 mediation disputes. The total amount in dispute for the administered cases was approximately HK$52.2b. Top industry sectors of HKIAC administered arbitrations were international trade (29.6% of total), corporate (18.6%), maritime (15.1%), construction (13.7%) and banking and financial services (11.9%). Arbitrators are generally recognised senior experts from professions capable of understanding the technical issues involved in an arbitration case. Therefore, they can be lawyers, accountants, engineers, architects or quantity surveyors, with arbitration services suppliers scattered throughout professional services firms. In this context, prime arbitration
hubs are often major commercial centres in their own rights. As of July 2019, there were 487 persons on the Panel of Arbitrators and 225 persons on the List of Arbitrators. The role of mediators is to assist both parties reaching a settlement, instead of adjudicating. As of July 2019, there were 829 mediators on the HKIAC General Panel and 221 mediators on the HKIAC Family Panel (including 52 family mediation supervisors). The institutions related to arbitration and mediation services in Hong Kong include the following: HKIAC, the Hong Kong Institute of Arbitrators (HKIArb), the Chartered Institute of Arbitrators (CIArb), the International Chamber of Commerce (ICC), the Hong Kong Institute of Mediation (HKIMed), the Hong Kong Mediation Centre, the Hong Kong Mediation Council and the Conflicts Resolution Centre (CRC). According to the latest arbitration statistics with geographical breakdown, of the 265 non‑domain name arbitration cases handled by HKIAC in 2018, there were 190 international cases and 75 domestic cases. Parties from Mainland China, Singapore, the British Virgin Islands, Cayman Islands, the US, South Korea, Vietnam, Macao and Malaysia
“Cross-border dispute resolution has gained popularity amidst the growth of commercial activities among countries.”
represented the most frequent users of HKIAC services. With increasing opportunities on the mainland after China’s WTO accession and continued market opening, more foreign investors or companies have transacted with their mainland counterparts. Hong Kong is a suitable “third” place for settling disputes involving Sino-foreign projects, as many foreign companies prefer to settle disputes in a “third” place, whilst mainland enterprises are also increasingly using Hong Kong as an arbitration centre. Cross-border dispute resolution has gained popularity amidst the growth of commercial activities among countries, the demand of online dispute resolution is particularly increasing. To consolidate Hong Kong’s position as an international dispute resolution services centre and capitalise on the opportunities brought about by the Belt and Road Initiative as well as the Greater Bay Area Development Plan, Hong Kong is setting up an online dispute resolution platform called “eBRAM.hk”. The Financial Secretary announced in the 2019-20 Budget that $150m will be provided for the development and initial operation of the online dispute resolution and deal making platform. The platform is targeted to be launched by the end of 2019.
HONG KONG BUSINESS ANNUAL 2020 29
company and industry - green technology and environmental services
Government bolsters sustainability tech efforts Schemes such as WEEE and WEEE·PARK aim to promote recycling and proper disposal amongst enterprises.
he environmental industry is widely recognised as a new growth sector. According to the latest available figures, the value added of Hong Kong’s environmental industry grew up by 10.8% YoY to $9.3b in 2017 (or 0.4% of GDP). Employment by the industry reached 44,080 persons in the same year, accounting for 1.2% of Hong Kong’s total employment. The environmental industry in Hong Kong consists of mainly small and medium-sized enterprises, which largely focus on six business areas, including (1) water conservation and pollution control, (2) air and odour pollution control, (3) energy conservation, (4) waste treatment, disposal and recycling, (5) noise control and mitigation, and (6) environmental consulting services. Some companies are also engaged in import/export and wholesale trading of waste and scrap. In 2019 Policy Address, the Government announced to prepare for a $2b pilot subsidy scheme to promote installation of electric vehicle charging-enabling infrastructure
in car parks of existing private residential buildings. The Government will also extend the Cleaner Production Partnership Programme to March 2025 with funding of $300m to encourage factories to improve regional environmental quality. Mainland China is one of the fast growing and important markets for Hong Kong companies on environmental technologies and related services. According to the International Energy Agency, Mainland China is now the largest destination of energy investment in the world. In the latest National Five-Year (2016 – 2020) Eco-Environmental Protection Plan, the Chinese government identifies some major tasks in ecological environment protection, including strengthening source control, and executing the air, water and soil pollution prevention and control action plan, which are expected to further boost the development of the environmental industry in Mainland China, bringing opportunities to Hong Kong companies. Hong Kong households and business establishments generate about 70,000 tonnes
“The Government will also extend the Cleaner Production Partnership Programme.” of waste electrical and electronic equipment (WEEE) every year. WEEE and WEEE·PARK To promote recycling and proper disposal of WEEE generated in Hong Kong, the Government launched the Producer Responsibility Scheme on Waste Electrical and Electronic Equipment (WPRS), covering air-conditioners, refrigerators, washing machines, televisions, computers, printers, scanners and monitors (collectively referred to as regulated electrical equipment, or REE) since 1 August 2018. Under the WPRS, sellers of REE must provide for consumer a free removal service for disposal of the waste equipment. Located on a 3-hectare site in EcoPark, Tuen Mun, WEEE·PARK provides an essential infrastructure in support of WPRS starting from March 2018. As one of the leading facilities of its kind in the world, WEEE·PARK offers four processing lines, adopting advanced technologies to turn regulated WEEE into valuable secondary raw materials through a series of detoxification, dismantling and recycling processes. WEEE·PARK also equips with a refurbishment workshop to divert serviceable electrical appliances received for repair into refurbished items. The EcoPark, located in Tuen Mun, is one of the waste management facilities set up by the Government, with a site area of 20 hectares providing long term land at affordable costs for the recycling industry since 2007. A number of enterprises engaging in recycling of waste cooking oil, waste computer equipment, waste metals, waste plastics, waste wood, waste batteries, etc. have a presence in the EcoPark. Development of Green Technology Leveraging Hong Kong’s unique strengths in the global technology revolution, green technology is one of the five core technology clusters of the HKSTP. The HKSTP provides a full-range of facilities and equipment to support the development of green technology in areas of building energy efficiency, environmental solutions, alternative energy, waste disposal and recycling, electric vehicles, and green electronics for infrastructure projects and carbon audits. Phase 3 of the Science Park completed construction in April 2016. This project was one of the
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green technology and environmental services - company and industry Industry Features 2016
Value added (HK$ Mn)
Source: Census and Statistics Department, HKSAR
Government’s initiatives to boost the development of green technology in Hong Kong and to attract high-tech investment by private companies. It can accommodate about 150 green technology companies and create 4,000 research and development positions of green technology in the territory. Another case in point is Dunwell Enviro-Tech (Holdings) Ltd at Yuen Long Industrial Estate which provides used oil and waste water treatment, recycling and reuse services. Dunwell turns waste lubricating oil into cost-effective finished oil using its patented vibrating membrane advanced treatment (VMAT) technology. The ASB Biodiesel plant established in Tseung Kwan O Industrial Estate is a foreign investment project essentially funded by Bahrain and other Middle Eastern investors. It adopts Austrian technology to process waste oil, such as waste cooking oil and grease trap oil, with the capacity to produce 100,000 tons of low-carbon transport fuel per year. Located at Siu Ho Wan in North Lantau, O·PARK1 has commissioned operation in July 2018. Using biological treatment technologies, this facility is expected to convert 200 tonnes of organic waste into biogas, compost and other useful resources daily. O·PARK2 and O·PARK3, located at Sha Ling of North District and Shek Kong of Yuen Long respectively, are designed to 300 tonnes of organic waste per day. The former is seeking funding approval from the Finance Committee of the Legislative Council, while the latter is still at the planning
stage. The Government also provides funding support to environmental technologyrelated R&D projects under the ITF managed by the Innovation and Technology Commission. Since its establishment, the ITF has approved over 160 projects, with the total funding amount exceeded $318m. Hong Kong-Guangdong Cross-boundary Cooperation In April 2008, the Government launched a Cleaner Production Partnership Programme to encourage Hong Kong-invested enterprises in Guangdong to actively participate in improving the quality of the environment in the region. In light of the environmental benefits and positive feedback from industry, the Programme (as endorsed by the 20th Working Meeting of the Hong Kong/ Guangdong Co-operation Joint Conference held in March 2015) has been extended until 31 March 2020. Under the Programme, assistance is given to Hong Kong factories in the PRD to use cleaner production technologies and operation mode so that concerted efforts are made to create a cleaner environment. Efforts include increasing energy efficiency, reducing air pollutants emission, lower production cost and reducing sewage discharge. Through cleaner production, Hong Kong-invested manufacturers can meet national and Guangdong province’s environmental protection standards, enhance their environmental performance, lower cost, increase competitiveness and improve their corporate image. This programme targets eight
“Mainland China is one of the fast growing and important markets for Hong Kong companies on environmental technologies and related services.”
industries, namely chemical products, food and beverage, furniture, metal and metal products, non-metallic mineral products, paper making and paper products, printing and publishing, and textiles. Currently, more than 180 environmental technology service providers have registered with this programme, including service companies in Hong Kong and the PRD. In April 2010, Hong Kong and Guangdong signed a “Framework Agreement on Hong Kong/Guangdong Co-operation”, and agreed to, amongst others, cooperate on environmental protection. In June 2012, the Government jointly published the Regional Co-operation Plan on Building a Quality Living Area with Guangdong and Macau. The Plan covers longterm co-operation initiatives in five major areas, namely (1) environment and ecology, (2) low-carbon development, (3) culture and social living, (4) spatial planning and (5) green transportation systems, which aim to build a green and quality living area in the greater PRD region. At the 22nd Working Meeting of the Hong Kong/ Guangdong Co-operation Joint Conference held in February 2017, Hong Kong and Guangdong agreed to continue to take forward the air pollutant emission reduction work, conduct mid-term review on the emission reduction targets for 2015 and 2020 and implement various emission reduction measures for the sake of continuously enhancing the living environment in the region.
HONG KONG BUSINESS ANNUAL 2020 31
company and industry - biotechnology, medical & healthcare industry
High costs prompt biotech firms to relocate production to China Most firms are engaged in the manufacturing of mechano-therapy.
here are approximately 250-300 biotechnology-related companies in Hong Kong, comprising of mainly healthcare-related companies with business on pharmaceuticals, medicinal or healthcare products of traditional Chinese medicine origin, and medical devices and diagnostics. These companies engage in a wide range of activities, including product research and development, manufacturing, marketing and sales. The medical and healthcare equipment industry has two distinct markets: the household consumer and professional or institutional (hospitals and clinics). Most medical and healthcare equipment companies in Hong Kong are engaged in OEM business, such as producing
massagers and blood pressure monitors for household consumer use; and rubber moulding, plastics/resins for institutional use. With increased competitiveness in price and product development, the Chinese mainland is increasingly putting pressure on Hong Kong local companies, inducing them to strive for product and company re-positioning. Many Hong Kong-based companies also provide engineering design services in order to enhance their competitive edge. To lower production costs, many Hong Kong manufacturers have relocated their production facilities to the Chinese mainland, and most of them are cc appliances/massage apparatus. However, quality control, marketing, research and
"Hong Kong companies are in good position to act as contract manufacturers or sourcing partners."
development, design, as well as material and equipment procurement continue to be conducted in Hong Kong. Products with better growth prospects for Hong Kong manufacturers include homebased equipment, hygiene sterilised supplies, equipment for less-invasive procedures, orthopaedic tools and devices, devices and supplies for high health-risk diseases and injuries and telemedicine etc. Performance of Hong Kong’s Exports of Medical and Healthcare Equipment In 2018, Hong Kong’s total exports of medical and healthcare equipment increased by 4.6%. Exports to Mainland China, the largest market for Hong Kong’s medical and healthcare equipment increased by 5.6%. Meanwhile, exports to the EU increased by 17.2% and exports to the US dropped by 25.9%. Amongst different product categories, Hong Kong’s exports of miscellaneous electro-diagnostic apparatus (including apparatus for functional exploratory examination or for checking physiological parameters) increased by 20.6%. Meanwhile, exports of miscellaneous medical instruments and appliances increased by 17.5%. Outsourcing has been growing in popularity among overseas manufacturers of medical and healthcare equipment in recent years. Hong Kong companies are in good position to act as contract manufacturers or sourcing partners given their edge in quality assurance and intellectual property (IP) protection. Though the cost of regulatory compliance is relatively higher in Hong Kong than the Mainland, this helps to differentiate Hong Kong companies from other low-cost competitors. It also reinforces the role of Hong Kong companies as a partner providing high-quality products and services. Sales Channels Medical equipment is mainly sold directly to hospitals and clinics, while healthcare equipment is mostly distributed to department stores, chain stores and supermarkets via local or overseas trading companies. Well-established suppliers, such as Osim and OTO, have set up their own
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biotechnology, medical & healthcare industry - company and industry
(% of billion)
Total expenditure on in-house R&D activities performed locally
Expenditure on in-house R&D in the higher education sector (HK$ billion) R&D Personnel in Full-time Equivalent Total expenditure on technology innovation activities in the business sector(HK$ billion) SOURCES: HKSAR Census and Statistic Department
specialty shops. Many of Hong Kong’s medical and healthcare goods are exported under OEM arrangements with supplied product specifications and designs. Hong Kong manufacturers are highly regarded for their handling of customers’ intellectual property (IP) and sensitive technology. In recent years, Hong Kong manufacturers have become increasingly involved in product design and development, engineering, modelling, tooling and quality control. In order to differentiate themselves from low-end products, many Hong Kong manufacturers apply for different international certifications for their products. Apart from producing for OEM customers, some Hong Kong manufacturers also have in-house R&D departments to develop models produced under their own brand names. For these original brand products, Hong Kong manufacturers would sell to overseas importers and distributors, who would also act as agents to provide an after-sales services. It is advised that manufacturers/distributors take out insurance or make other arrangements to minimise the risk of product liability claims. To further explore overseas market opportunities, medical and healthcare equipment manufacturers and exporters are encouraged to join the trade fair missions and exhibitions organised by the Hong Kong Trade Development Council (HKTDC). HKTDC also organises from time to time study or matchmaking missions
for Hong Kong manufacturers to visit specific markets for establishing new business connections. Industry Trends Demographic trends have an important impact on the medical and healthcare equipment industry. According to the United Nations, the older population is, and will remain, predominately female. Globally, women outlive men by 5 years on average in 2019. Life expectancy at birth was 75 years for females compared to 70 years for males. Globally, life expectancy is projected to 77 years in 2050. These trends have resulted in an increasing demand for medical and healthcare products designed for the ageing population. The wold spent US$7.5t a year on health, according to the World Health Organization, and health expenditure as a percentage of GDP has been increasing among all major economies, including Mainland China. The increasing share of medical services or healthcare in household expenditures in some developing countries can be translated into more opportunities for Hong Kong exporters of medical and healthcare products. Meanwhile, growth of public health expenditure in the more industrialised countries is slowing down which, however, creates opportunities for home medical equipment targeted at patients undergoing recuperation and therapy processes. As a result of the aging
“In recent years, Hong Kong manufacturers have become increasingly involved in product design and development, engineering, modelling, tooling and quality control.”
population, treatments for cardiopulmonary disease, diabetes and neurological disorders will see rapid growth, such as orthopaedic devices and pharmaceuticals that can help aging baby boomers stay active. In addition, increased consciousness in personal health and fitness in developed countries is boosting demand for home-based or self-care equipment such as pill alarm boxes, positioning aids, shower chairs, electric wheelchairs, canes, crutches and patient lifts. This equipment facilitates the prevention, detection and management of illness. Modern technology plays major role in the medical and healthcare equipment industry. Innovations such as microminiature and remote surgery techniques, DNA-based diagnostics, tissue-engineered organs, 3D printing for cranial implants and advanced information technologies provide solutions to some of the most persistent and debilitating healthcare problems, and create demand for medical equipment utilising these new technologies. In addition, Bluetooth technology has also given rise to new medical devices such as a patient-worn pulse oximetry and a portable patient monitor. Technology has also led to telemedical services and lessinvasive procedures. Being a major player in promoting technological innovation in the city, Hong Kong Science Park has identified Biomedical Technology as one of the five key technology clusters, aiming to translate biomedical research from innovation to commercialisation. In 2017-18, Biomedical Technology was the fastest growing cluster. As of 31 March 2018, 82 biomedical technology companies had established their R&D hubs at Science Park, up from 65 in the previous year. During the year, 18 start-ups were incubated in the Incu-Bio programme.
HONG KONG BUSINESS ANNUAL 2020 33
company and industry - electronics industry
MNCs lead electronics manufacturing
These firms engage in sales, distribution and sourcing activities of parts and components in the region.
ong Kong’s electronics industry is the largest merchandise export earner of the territory, accounting for 68.3% of Hong Kong’s total exports in 2018. A substantial portion of such exports are regarded as high-tech products, especially those related to telecommunications equipment, semiconductors and computer items. The Chinese mainland is both the major source and the major destination of Hong Kong’s trading in such electronic products. According to the latest available statistics Hong Kong was the world’s largest exporter of electronic integrated circuits; the second largest exporter of computer parts/ accessories and video recording apparatus; and the world’s third largest exporter of telephones/mobile phones in value terms in 2017. This is thanks to the huge re-export business handled through the territory, as Hong Kong is among the major trading hubs in the globe. Parts and components constitute about three quarters of Hong Kong’s electronics exports, of which the majority are re-
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exported to the Chinese mainland for outward processing production. Finished goods constitute about one quarter of the exports, of which the majority are consumer electronics for domestic use, including a wide range of audio-visual equipment, computer products and telecommunications equipment. Most Hong Kong manufacturers have relocated their production facilities to the Chinese mainland to reduce cost. Their Hong Kong offices now focus mainly on R&D activities, product design and development, management, logistic support, marketing, etc. Their setups in Hong Kong are largely classified as non-manufacturing establishments statistically, despite the fact that they have manufacturing activities across the boundary. Against the fast changing markets and advancement in technology, Hong Kong companies emphasise quick response to ensure effective services to their customers. Also, many companies have further strengthened their quality assurance and environmental management systems,
“A number of multinational manufacturers of parts and components have set up their offices in Hong Kong.” and are accredited with ISO 9000 – an internationally recognised standard for quality management system, ISO 14000 – a standard for environmental management system, etc. Hong Kong’s electronics exports rose by 10.7% in 2018. The major export markets were the Chinese mainland (accounting for 62.6% of the total exports in 2018), the EU (8.3%), the ASEAN (6.2%) and the US (6.2%). Exports to the Chinese mainland grew by 9.8% on the back of steady input demand of mainland’s outward processing production. Distribution Channels Hong Kong companies engaging in parts and components business are capable of producing on custom-made basis and offering total solutions for famous US, European and Japanese companies, e.g. parts and accessories of computers, RF modules for telecommunication purposes, chip-sets for LCD modules, etc. Meanwhile, standard components are usually exported directly to distributors and manufacturers in overseas markets, while some Hong Kong companies also have their own sales offices and/or representative offices on the Chinese mainland and other overseas markets. Notably, Hong Kong is an important trading hub for electronic parts and components in Asia-Pacific. Many items from the US, Europe, Japan, Taiwan, and South Korea are re-exported via Hong Kong to the Chinese mainland, and vice versa. A number of multinational manufacturers of parts and components have set up their offices in Hong Kong, engaging in sales, distribution and sourcing activities in the region. As regards finished items, Hong Kong companies mostly produce on ODM basis for reputable brand names in overseas markets. Some of these major buyers have set up buying offices in Hong Kong for direct sourcing. Hong Kong companies also sell to specialised importers and traders in North America and Europe, who distribute the merchandises under their own channels or re-sell to their clients for further distribution. There are also a number of Hong Kong companies marketing electronic products under their own brand names, including Truly, V-Tech, Group Sense, Venturer, GP
electronics industry - company and industry Performance of Hong Kong’s Exports of Electronics HK$ bn Domestic Exports Re-exports of Chinese mainland origin Total Exports
2017 Growth %
2018 Growth %
Source: Census and Statistics Department
and ACL. Their sales network covers not only the advanced countries, but also economies like Latin America, Eastern Europe and various parts of Asia. Promotion via participation in trade fairs is an effective way for Hong Kong’s electronics companies to explore market opportunities. Important trade fairs include the CES Show held in the US, CeBIT Fair and Electronica in Germany, Taipei International Electronics Show in Taiwan, CommunicAsia in Singapore and Hong Kong Electronics Fair organised by the Hong Kong Trade Development Council (HKTDC). CEPA Provisions Since the implementation of the third phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III) in January 2006, all products of Hong Kong origin can be imported into the mainland at zero tariffs. Starting from 1 January 2019, goods of Hong Kong origin fully enjoy zero tariff when importing into the Mainland. In addition
to the product-specific ROOs (PSRs), Hong Kong and the Mainland introduced a general rule of origin (General Rule) based on the calculation of the value added to the products in Hong Kong. The CEPA origin criteria for Hong Kong items largely include: (1) change in tariff heading; (2) performance of specific manufacturing process in Hong Kong; or (3) fulfillment of the regional value content (RVC) requirement, under which the value of originating raw materials and component parts, labour costs, as well as the product development costs should account for at least 30% of the FOB value of the products when calculated by the build-up method, or the value of nonoriginating materials accounting for not more than 60% of the FOB value when calculated by the build-down method. Product Trends On the back of technological advancement and falling prices amid keen competition, conventional IT products like notebook computers have
“Promotion via participation in trade fairs is an effective way for Hong Kong’s electronics companies to explore market opportunities.”
become mass products. Now, the industry is focusing on further technological enhancement to sustain their business. Notably, mobile devices with enhanced smart features are in demand in the globe. Meanwhile, mobile communication has become part of the daily lives of consumers in most countries. In particular, sales of high-end smartphones are rising rapidly. Many models are now compatible with certain wearable electronics and other smart devices. This has lured demand especially from youngsters and high-income consumers. As regards consumer electronics, one of the developments is digital imaging. In particular, large-screen digital TVs with connectivity for internet surfing with the so-called “smart TV” features and capability to communicate with mobile devices, as well as the ultra high definition TVs (UHDTVs) with display resolution of 4K or higher, are among the industry foci for further development. In addition, some players are keen to promote their 3D printers in the market in view of the falling printing and other material costs. Also, the industry is keeping an eye on the development of certain niche items like action camcorders and drones, as well as those related to the Internet of Things (IoT) application, which are taken by some players as means to inspire the market and create new businesses. Smart homes will be one of the major IoT application areas that would elicit huge demand for related IT systems, hardware and devices.
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company and industry - innovation and technology industry
Startups drive Hong Kong’s tech innovation push Major research focus includes ICT, SaaS, IoT, data analytics, biotech, AI, robotics, virtual reality and augmented reality.
eing a strategic business platform and technology marketplace in Asia, plus a growing local research cluster, Hong Kong’s innovation and technology (I&T) sector together with that of Shenzhen – the Shenzhen-Hong Kong technology cluster – ranked the world’s second largest based on the Global Innovation Index 2019. With opportunities brought by the Guangdong-Hong Kong-Macao Bay Area development, Hong Kong will further capitalise on its advantages in R&D capabilities, technological infrastructure, legal system and intellectual property to spearhead the I&T industry, and act as a business platform for innovative companies looking to access the Asia market (China in particular), or mainland innovative companies to go international. Hong Kong’s start-up ecosystem has gained traction in recent years on the back of increased investment in the necessary
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infrastructure required and funding supports. In 2018, Hong Kong continued to see a steady upward trend in the number of start-ups (+18%) and the number of staff employed in these start-ups (+51%) from a year ago according to the survey by InvestHK. Major research focus of Hong Kong start-ups includes information and communication technologies (ICT), software as a service (SaaS), Internet of things (IoT), data analytics, biotech, artificial intelligence (AI), robotics, virtual reality (VR) and augmented reality (AR), as well as new material. In terms of applications, fintech (financial technology), smart city and smart home, healthcare and big data applications are among the most popular sectors. With rising corporate engagement in incubation and accelerators programmes, new initiatives to promote start-ups
“Hong Kong’s start-up ecosystem has gained traction in recent years on the back of increased investment.” springing from universities, Cyberport and Hong Kong Science Park, and a string of notable funding rounds for start-ups, particularly the emergence of start-ups with “unicorn” status, it is anticipated that Hong Kong’s technology sector may soon reach a tipping point and will be propelled into much faster growth. Fintech Being an international financial hub complemented by a highly developed ICT sector and an increasingly conducive start-up ecosystem, Hong Kong’s Fintech industry has witnessed significant growth in recent years. The number of fintech start-ups in Hong Kong rose by more than double from 138 in 2016 to 427 in 2018. Hong Kong ranked the world’s sixth most significant Fintech hub in the “Connecting Global FinTech: Interim Hub Review 2017” published by Deloitte. Currently 48 of the world’s top 100 Fintech companies are operating in the city. There are many factors that make Hong Kong ideal for FinWWWWtech companies, of which the most attractive advantages are: (1) providing a base for new and established Fintechs which target Hong Kong and the Asia-Pacific region which, particularly given the large number of regional financial operations based in Hong Kong, constitutes the territory’s natural catchment area; (2) focussing on B2B Fintech, i.e. fintech firms and businesses that serve incumbent financial institutions, aiming to meet their regional needs; (3) attracting Mainland Fintech, IT and e-commerce companies to set up in Hong Kong as a base for regional and international expansion. Hong Kong would also be able to support incoming international Fintechs seeking expansion into the Mainland. While major Mainland banks and insurance companies have set up presence in Hong Kong, companies operating in Hong Kong can also have easy access to the Mainland’s Fintech leaders. As regards specific Fintech segments, Hong Kong’s most significant technology development are seen in data analytics, robotics, big data, P2P technologies and natural language processing. In recent years, key disruptions by Fintech are already witnessed in financial services sectors including foreign exchange, cybersecurity,
innovation and technology industry - company and industry e-commerce, wealth management and robo advisory. Biotech Excellence in scientific frontiers with continuous research breakthroughs have fuelled development of a competitive biotech industry in Hong Kong. It is estimated that currently Hong Kong universities produce about 250 biomedical publications of high impact factor per annum. Hong Kong has also made a mark in its scientific contributions in international, large-scale genomic projects, and identification and characterization of emerging infectious diseases such as SARS and avian flu virus. Hong Kong has two excellent medical schools rated among the top in the world in the field of clinical medicine by the ISI Essential Science Indicators. Some of the achievements of these two medical schools include research in molecular diagnostics using circulating cell free DNA in blood and prescription drug “Oral Arsenic Trioxide” to treat Acute Promyelocytic Leukemia (APL). Patents of the researches held by Hong Kong universities have been licensed and sublicensed globally, and resulted in start-ups in this field. Hong Kong is also a major clinical trial centre for new drugs. Two Phase I Clinical Trial Centres that were established in Hong Kong in 2014 have established extensive collaborations with multi-national pharmaceutical companies. Apart from conducting clinical trials for the US new drug registration approval, the Hong Kong Eye Hospital, the University of Hong Kong and the Chinese University of Hong Kong are the first three institutions located outside Mainland China to gain approval from the China State Food and Drug Administration to carry out clinical trials in a number of
disciplines for drug registration purpose in China. Supported by various public funds and investment, several research institutes were established to advance the development of life science and biotechnology. These include the Hong Kong Institute of Biotechnology (HKIB) and the Biotechnology Research Institute (BRI). Founded in 1988, the HKIB provides R&D support, as well as facilitates technology transfer and product commercialisation for the biotechnology industry. It also established a Biotechnology Incubation Centre in 1996 for local start-ups and international biotechnology companies with equipment, technical and administrative support. Hong Kong’s biotech ecosystem is favoured by world-renowned research institutions. Artificial Intelligence Artificial Intelligence (AI) is the major driving force of the fourth Industrial Revolution which is characterised by automation and connectivity. In particular, with the wide adoption of internet-connected devise and advancement of cloud computing technologies, AI has become a mainstream technology today, and is an increasingly integral part of many industries, including finance, marketing, retail, and logistics. According to an analysis of academic publications on AI by Times Higher Education in May 2017, Hong Kong ranks third world wide in terms of fieldweighted citation impact on AI. Smart City Hong Kong also has a number of leading private AI technology companies such as SenseTime. SenseTime was co-founded by Professor Sean Tang who developed a novel facial recognition system with deep learning with an accuracy rate of over 99%, grew into a unicorn in 2017 in just three years’ time.
"Hong Kong ranks third world wide in terms of fieldweighted citation impact on AI."
As one of the most densely populated cities in the world with world-class ICT infrastructure and Internet connectivity, Hong Kong is an ideal testing ground for a lot of smart city applications. To catch up the global trend and build Hong Kong into a world-class smart city, the Government released the Hong Kong Smart City Blueprint in December 2017 that maps out development plans in the next five years. Hong Kong’s Smart City Blueprint embraces I&T for a smart Hong Kong under six major areas: (1) smart mobility – intelligent transport system and traffic management, (2) smart living – free public wi-fi access and eID for government and commercial services, (3) smart environment – green buildings and technology applications in energy efficiency, waste management and pollution monitoring, (4) smart people – I&T capacity building, (5) smart government – open data, smart city infrastructure and e-public service, and (6) smart economy – leverage I&T to strengthen existing and develop new economic pillars, and promote sharing economy. Mainland and International Collaboration Currently, there are 16 Partner State Key Labs (SKLs) approved by the Ministry of Science and Technology of China and six branches of the Chinese National Engineering Research Centres in Hong Kong. These research labs are managed by Hong Kong’s publicly funded universities and research centres. Besides, the Guangzhou Institutes of Biomedicine and Health under the Chinese Academy of Sciences has set up a stem cell and regenerative medicine research centre at Science Park. Some Hong Kong universities have set up branches in Shenzhen to enable faculty members to perform research work in the Mainland.
HONG KONG BUSINESS ANNUAL 2020 37
company and industry - logistics Industry
Air cargo services lead Hong Kong’s logistics
“Hong Kong’s well-developed transportation infrastructure allows the city to interconnect with the world smoothly.”
About 38% of Hong Kong’s total exports and 45% of its total imports were transported by air in 2018, being the most in-demand service.
with about 43,000 vehicles crossing daily. For goods vehicle and container only, the four cross-border points handle about 20,000 vehicle trips a day.
s one of the regional hubs for Asia, Hong Kong has good connections with most Asian urban centres and half of the world’s population is within 5 hours’ flight time. Currently, more than 120 airlines operate about 1,100 flights daily, linking the Hong Kong International Airport (HKIA) to about 220 destinations worldwide including about 50 destinations in Mainland China. HKIA has five first-tier air cargo handling facilities, with over 7 million tonnes of annual handling capacity. With the Hong Kong government’s affirmation, construction of the Third Runway System (3RS) began in 2016 and is expected to be completed by 2024. The 3RS project will allow HKIA to handle future traffic demand of as much as 102 million passengers, 8.9 million tonnes of cargo and 607,000 aircraft movements annually by 2030, according to IATA Consulting. Hong Kong has nine container terminals for sea transport, comprising 24 container berths capable of handling up to 20 million TEUs a year in total.
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Intermodal Connectivity Hong Kong’s well-developed transportation infrastructure allows the city to interconnect with the world smoothly, especially Mainland China, and provides maximum flexibility. Hong Kong-Zhuhai-Macao Bridge (HKZMB), the world’s longest sea crossing, officially opened to traffic on 24 October 2018. Built to facilitate passenger and freight transport over land between Hong Kong, Mainland China and Macau, the bridge greatly reduces journey times between cities and forms a new passageway to connect the east and west banks of Pearl River Delta. Endowed with a deep-water, silt-free natural harbour strategically located along a major sea route and with Mainland China providing a huge cargo base, Hong Kong has become a sea transport hub in Asia. There are about 21,500 inward vehicle crossings and 210 arrivals of river cargo vessels from the Pearl River Delta (PRD) to Hong Kong daily. Lok Ma Chau, Man Kam To, Sha Tau Kok and Shenzhen Bay are the four land boundary crossing points in Hong Kong,
Range of Services The air transport industry can be divided into the cargo and passenger sectors. There are scheduled and non-scheduled carriers operating in both sectors. More than half of Hong Kong’s airfreight is carried in the holds of passenger aircraft rather than pure freighters. There are two major cargo types, express cargo and heavy-lift cargo. Air transport has become more important for Hong Kong’s trade over the last few decades. 38% of Hong Kong’s total exports and 45% of its total imports were transported by air in 2018, compared with 26% of its exports and 19% of its imports in 1980. Hong Kong’s efficiency in customs clearance and its status as a free port are among the main reasons for this increase. Mainland China is the largest export and import market for items carried by air. Simple customs clearance procedures and 24-hour operation of HKIA make it convenient for goods destined for Mainland China to go through Hong Kong. Besides air cargo handling services, Hong Kong also provides airport management services, especially in air cargo terminal operations. This involves either investing directly in overseas air cargo terminals or providing consultant services. Hong Kong is well positioned to tap into this market, as more and more airports around the world, particularly on Mainland China, are either privatised or run as a commercial operation. A success story is the joint venture between Airport Authority Hong Kong (AAHK) and Hangzhou Xiaoshan International Airport (HXIA), under which AAHK has an equity share of 35% while the rest of ownership is retained by the Hangzhou government. The core business of a freight forwarder is to move a shipper’s consignment to the consignee within the stipulated time, in perfect order and at the most competitive price. Responding to changing customer demands, many freight forwarders also provide more value-added services such as warehousing, distribution, total logistics and supply chain management solutions.
logistics industry - company and industry Logistics Industry Number of Establishment in the Industry Air transport services
As of December 2018 170
Air cargo transport services
Sea cargo transport services
SOURCES: Quarterly report of employment and vacancies statistics (Fourth quarter 2018), census and statistic departmement
Larger freight forwarders offer a wide range of transportation and logistics services while small ones tend to provide more basic and economical services with higher flexibility and more personalised services. Services related to trade, including the preparation of shipping documents, customs clearance and logistics, may be undertaken by the import and export companies or their agents. The sea transport sector is vitally important in supporting Hong Kong’s status as the world’s seventh largest trading entity. Mainland China is the biggest source of and destination for Hong Kong’s transhipment cargo. Sea cargo to and from Hong Kong is carried both by liners and bulk vessels. Liner shipping is operated under a scheduled timetable with pre-announced rates and destinations. Many key routes operate under liner conferences (agreements by the main shipping lines on tariffs and sailings). Hong Kong is a major hub with about 340 container liner services per week, connecting to about 470 destinations worldwide. The larger container lines have invested in advanced systems to provide cargo tracking information and improve efficiency. They often form alliances or merge with other transport providers to develop door-to-door multimodal services. Many liners are also forming alliances amongst themselves to increase efficiency and reduce cost in a very competitive environment. Vessel sharing has enabled the liners to offer a more flexible service in terms of global coverage, higher frequency of departures and a greater choice of routes.
Hong Kong’s port facilities are financed, built, owned and operated by private firms. Hong Kong has nine existing container terminals with a total of 24 berths at Kwai Chung and Tsing Yi Island, operated by several private consortia. Through various productivity enhancement measures, their combined throughput capacity is some 21 million TEUs per year. To meet the development needs of the port and logistics industries, the Hong Kong government has been implementing a number of enhancement measures. The government took forward a project to dredge the Kwai Tsing Container Basin and its approach channel from the present navigable depth of 15 metres to 17 metres, to allow ultra-large container ships to access the container terminals at all tides. The dredging works were substantially completed in April 2016 and outstanding works is expected to be completed by 2020. The Pearl River links Hong Kong with many manufacturing centres in Southern China, with the PRD being the main cargo base for the territory. River trade has grown fast over the past three decades, rising from 9.3 million tonnes in 1990 to 94 million tonnes in 2018. To cater for this increasing river trade, a dedicated terminal, the River Trade Terminal (RTT), was established in 1996 and became operational in November 1998. The RTT is located in the west of Tuen Mun. More than 120 international airlines provide about 1,100 scheduled passenger and all-cargo flights each day between Hong Kong and about 190 destinations worldwide, including about 50
”Hong Kong’s port facilities are financed, built, owned and operated by private firms.”
mainland cities. There are also on average approximately 350 non-scheduled passenger and cargo flights each week. As of September 2018, Hong Kong has signed air services agreements with 68 aviation partners.All air cargo terminals in the airport are privately-run. The largest one is known as the SuperTerminal 1 (ST1). To supplement the cargo terminals, there is an airfreight forwarding centre at HKIA, providing space for warehousing, loading platforms, truck parking bays and offices. In Hong Kong, larger sea freight forwarders tend to target big companies for exclusive deals. They provide valueadded services and invest in information technology to ensure that they meet the changing needs of their customers. Some of them set up logistics subsidiaries to provide tailor-made and specialised services, which can become service partners for their customers. Larger companies’ well-established brands and far-reaching logistics networks have helped boost their significant market shares in the global export market. The smaller regional players tend to have a better understanding of the business culture, a better knowledge of their markets and have established networks in the region.
HONG KONG BUSINESS ANNUAL 2020 39
company and industry - design industry
Local designers build on rising demand in China
Many international companies rely on Hong Kong designers to tailor products for mainland China and Asian markets.
he design industry in Hong Kong encompasses a broad range of disciplines: product design, multimedia, visual and graphic design, interior and furniture design, fashion and accessories design, jewellery design as well as industrial design. In recent years, design management has been taking shape as a new discipline in Hong Kong. Design management deals with the management of projects with a high content of design. Design management can be widely applied to projects related to fashion, product, graphics and interior design, though more applications are found in interior and product design whereby designers oversee the entire process from conceptualisation to production. In addition to their core services, some Hong Kong design firms also
provide other design services including shop front design, advertising and promotion design. Service Providers In 2018, in terms of number of establishments, multimedia, visual and graphic design (37%) and interior and furniture design (36%) are the two largest sub-sectors, followed by industry design sector (13%). For the same period, the number of employments in design services also reached 17,590, up 5.3% a year ago, contributing a value added of some $4.3b to the cultural and creative industry sector. Hong Kong’s design practitioners are organised into various professional associations aims at promoting design as a value-adding activity, while raising
“Hong Kong design firms can bring in comprehensive branding strategies and product design services for mainland enterprises.” Hong Kong’s image as an innovation and creative hub. As a major contributor to the development of the InnoCentre, HKDC organises an annual event called “Business of Design Week” (BODW) in Hong Kong. The week-long event with conferences, forums, award presentations, exhibitions and outreach programme is nowadays the largest annual design event in Asia and one of the world’s leading design events. With Melbourne as a partner city, the BODW 2018 attracted more than 120,000 participants including business executives, designers and brand owners from Hong Kong and overseas. For 2019, the UK will be the partner country for BODW. Exports According to the Census and Statistics Department, the total exports of selected cultural and creative goods amounted to $521b in 2017, accounting for 13% of Hong Kong’s total exports of goods, in which the largest component was audiovisual and interactive media goods ($380b), followed by performing arts and celebration goods ($61b) and visual arts and design goods ($58b). Many Hong Kong designers are exporting their services. Export content varied among different design industries, and mainland China is one of the biggest export markets for Hong Kong’s design services. Hong Kong designers have been paying increasing attention to the mainland market. Whilst many mainland enterprises are expanding, some of them are seeking services from Hong Kong design firms for re-designing their brands with the aim of better catering to the international market, as well as to maintain their competitiveness in the domestic market. With deep knowledge of the Chinese culture and international market practices, Hong Kong design firms can bring in comprehensive branding strategies and product design services for mainland enterprises. Industry Development and Market Outlook The demand for Hong Kong’s high-end design services is rising in light of a more flourishing China market. Many international companies, large and small, rely on Hong Kong designers to tailor
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design industry - company and industry Industry Features Number of Establishment in the Industry
As of December 2018
Number of establishments
Employment (excluding those in civil service)
SOURCES: Quarterly report of employment and vacancies statistics, census and statistic departmement
products for mainland China and Asian markets. Hong Kong designers can satisfy the demand for quality-assured creative services, which match international standards and at the same time, take into consideration Chinese tradition and design. On the other hand, many of Hong Kong’s light industrial products, such as toys, electronics and garments, are highly favoured in the international market. Hong Kong designers have participated in these industries for a long time and they maintain close working relationship with overseas companies. They understand fully the demands of overseas markets and therefore can capitalise on their international vision in designing products, and assisting Hong Kong companies to advance from Original Equipment Manufacturers (OEM) to Original Design Manufacturers (ODM) and/or Original Brand Manufacturers (OBM). With the affluent China market growing more sophisticated, more and more mainland enterprises are keen to stay ahead of the game in the local market while making inroads into the world market. Renowned as a stylish cosmopolitan and design hub in Asia, Hong Kong has always been a forerunner which mainland enterprises look up to their excellence in design, branding, and marketing. The Hong Kong government’s Create Hong Kong Office (CreateHK) was set up in June 2009 to drive the development of Hong Kong’s creative sector. CreateHK administers and manages two funding schemes, namely the CreateSmart
Initiative (CSI) and Film Development Fund. CSI offers funding for initiatives related to design and other creative sectors (except film). CSI, a scheme of $300m when it was set up in 2009, received an additional $300m fund in 2013, whilst another $1b has been injected to the fund according to Policy Address 2017, of which $300m has been earmarked for HKDC to fund mega activities in the three years starting 2019-20. In recent years, revitalisation of decommissioned buildings has become a popular means to provide spaces for the development of the design industry. For instance, a decommissioned factory estate in Shek Kip Mei has been turned into the Jockey Club Creative Arts Centre, where there are art galleries and other communal facilities hosting themed exhibitions, as well as arts and craft fairs. The Creative Arts Centre is providing more than 100 artists and art groups with workspace to practise and showcase their works. Moreover,
“Many of Hong Kong’s light industrial products, such as toys, electronics and garments, are highly favoured in the international market.”
the club house of the former Royal Yacht Club in North Point has been converted into a venue called ‘Oi!’. Opened in May 2013, ‘Oi!’ is a platform for art exhibitions, forums as well as other art and creative activities. The West Kowloon Cultural District (WKCD) Development Project, aims to turn the 40-hectare waterfront site situated in the southern tip of West Kowloon into an integrated art, cultural and entertainment district, and enhance the development of art and culture in Hong Kong. WKCD is expected to become an arts hub which include a visual arts museum “M+”, focusing on modern art, design and architecture, offering good platforms for all the designers. Meanwhile, a design and fashion project is planned in Sham Shui Po, providing spaces for local up-and-coming designers as showrooms and housing a design library and the workstations of the HKDC upon completion expected in 2023-24. Across the border, expected to start operation in August 2019, the Hong Kong-Shenzhen Design Innovation Hub is set to become an exchange platform for designers and entrepreneurs in the Guangdong-Hong KongMacao Greater Bay Area.
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company and industry - spectacles industry
Spectacles and goggles take up most exports
Companies are facing keen competition from their counterparts in nearby regions, such as Wenzhou and Danyang of mainland China.
ong Kong’s spectacles makers specialise in making medium to high-end frames. They are able to cope with small orders and offer an extensive range of frame designs. Hong Kong companies are traditionally strong in making plastic spectacles frames, which include hand-made cellulose acetate frames, rimless nylon frames, and injection-moulded frames. They also produce metal frames made of rolled gold, aluminium alloy, brass, stainless steel, silver, titanium and mixtures of metals. The majority of Hong Kong’s spectacles companies are engaged in the production or trading on an OEM/ODM basis for overseas buyers and international brands. This labour-intensive industry is characterised by short life cycle, fast changing design and small order sizes. In this regard, a few Hong Kong companies have diversified their business from manufacturing to distribution and retail of brand-name products in mainland China and overseas, with some even developing and producing their own brands.
Hong Kong’s spectacles companies are facing keen competition from their counterparts in nearby regions, particularly from Wenzhou and Danyang of mainland China. Nonetheless, competition is confined to the lower-end sector. The leading Italian companies still prefer to engage with Hong Kong sub-contractors because of their quality, business integrity and longestablished relationship. In order to reduce operation costs and stay competitive, many spectacles makers have relocated their factories to mainland China and increasingly also in ASEAN. On the other hand, high value-added activities, including marketing, management, finance and accounts, are still carried out in Hong Kong. Technological investments such as advanced machinery and information technology are substantial for largescale manufacturers in improving their production efficiency and product design. They are equipped with 3D CAD/CAM technologies and computer numerically controlled (CNC) production lines to
“Hong Kong was the world’s thirdlargest exporter of spectacles and frames after mainland China and Italy.” enhance their design and streamline the production process. For instance, 3D Head Mold and design database can customise spectacles which fit in with Asian faces. The industry is well supported by ancillary industries, including the production of cellulose acetate sheets for plastic frame production, optical parts including spring hinges, nose bridges and temples, as well as other industrial supports such as electroplating and mould-making. Hong Kong was the world’s third-largest exporter of spectacles and frames after mainland China and Italy in 2017, according to the latest available data. In the first half of 2019, Hong Kong’s total exports of spectacles, lenses and frames decreased 1% year-on-year to $10.3b. During the same period, exports to the EU and the US, the two largest markets with a combined share close to 60%, fell on par by 5% year-on-year. However, exports to mainland China, the next major market, showed a surge of 10% in January-June 2019. By major category, spectacles and goggles, and frames and mountings took up the largest share to account for a total of 83% in the first six months of 2019. On the other hand, the next two major categories, lenses and parts for frames and mountings, saw a 14% growth and a 3% slide, respectively, in January-June 2019. Sales Channels On the retail side, most of the sales are done by chain stores and mass merchants worldwide. Many manufacturers deal with overseas buyers directly, including large retail chains. There are a growing number of Hong Kong exporters that produce house or international designer brands under the licensing agreement. Some Hong Kong exporters have formed strategic alliance with overseas companies and brand license to consolidate long-term relationship and explore overseas market opportunities. Hong Kong manufacturers are also engaged in OBM, developing their house brands for other markets, particularly in Southeast Asia and mainland China. Major Hong Kong optical retail brands such as eGG Optical Boutique and Optical 88 have diversified into distribution business by setting up retail chain stores in mainland China and
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spectacles industry - company and industry Performance of Hong Kong Spectacles Exports By category
Spectacles, goggles & the like
Frames & mounting
Lenses, incl. contact lenses Parts for frames & mountings
Source: Hong Kong Trade Statistics, Census and Statistics Department
Southeast Asia, while some of them even have established distributors throughout Europe and North America. Industry Trends The Internet is an increasingly popular channel for spectacles, thanks to growing commercial application of 3D facial scanning, Augmented Reality (AR) and online vision tests. While many Hong Kong retailers have setup online showroom, some foreign companies like Ace & Tate (the Netherlands), Hubble Contacts (the US), Warby Parker (the US) and Zenni Optical (the US) are offering customised spectacles online. Apart from cost-controlling measures, Hong Kong companies are putting increasing emphasis on design, technological innovations and quality management to stay competitive. Many large Hong Kong manufacturers have attained quality management certification, such as ISO 9000 and/or Q-Mark awarded by the Federation of Hong Kong Industries. To promote and enhance the design and quality of Hong Kong eyewear, an eyewear design competition is held at the HKTDC Optical Fair every year. Hong Kong exporters are facing the challenges of escalating production costs, as higher raw material prices, labour wages and energy prices have fully offset the positive effects of economies of scale. ODM basis of production has helped various Hong Kong companies to increase valueadded. In addition, some manufacturers, such as Arts
Optical International, Sun Hing Optical Manufactory and Swank International Optical, have shifted their focus further to OBM – developing their own brand products in order to enhance their competitiveness. The mainland Chinese optical market is promising with more than half of the population experiencing myopia. Some foreign companies seek for partnership opportunities with Chinese chain stores notwithstanding the fact that existing ones are confined to big cities and are much smaller in scale as compared to their foreign counterparts. Meanwhile, some leading spectacle manufacturers, such as the Luxottica Group and HAL Investments (Asia) BV, as well as contact lens companies, like Johnson & Johnson, Ciba Vision and Bausch+Lomb, have entered the Chinese market. Eco-friendliness and sustainability are becoming more important for the spectacles industry. Product Trends Weight and durability continue to be the key considerations when choosing frames. The lightweight and corrosionresistant metals, such as titanium, titanium alloy, stainless steel and beryllium, have growing popularity, especially among designer brands. Prevailing plastic frame materials include zyl which allows colourful layers, blended nylon which is most fit for sports and performances, and cellulose acetate propionate which is more transparent and glossier than other plastics. Other more exotic but heavier
“Hong Kong exporters are facing the challenges of escalating production costs, as higher raw material prices, labour wages and energy prices have fully offset the positive effects of economies of scale.”
frame materials such as wood, bone and buffalo horn, as well as 10k gold and sterling silver are also used for fashionable and premium eyeglass designs. Many fashion and designer labels promote their collections of spectacles and frames as fashion accessories by granting licences to spectacles manufacturers. Luxottica Group has been producing and distributing the brand eyewear of Chanel, Burberry, D&G and Prada under licensing agreements. Frames featuring floating big logos at temples and the hinges are common amongst the brand-named eyewear. Some frames are screwless and feature a patent-pending flex-hinge design that allows customers to quickly make repair by hand without costly parts or tools. Handcrafted frames that are durable, comfortable and easy to adjust are also gaining a following. Top brow and the temple of a frame are a prime source of added style, accents with crystals, metal, colour
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company and industry - film entertainment Industry
Film industry rides on foreign recognition
Co-producing with firms outside Hong Kong boosted revenues.
ost local film companies deal directly with cinema chains for local screening on a revenuesharing basis. Rights will then be sold to distribution companies for other forms of release, including video rental and sales, and television broadcasting. There are also companies which specialise in distributing foreign films in Hong Kong. The film industry is represented by several industry associations, including the Movie Producers and Distributors Association of Hong Kong Ltd (MPDA), the Motion Picture Industry Association (MPIA), the Hong Kong Film Directors’ Guild (HKFDG), and the Hong Kong Screenwriters’ Guild (HKSWG). Industry Development and Market Outlook As of October 2018, there were 55 cinemas in Hong Kong. Films are mainly released through channels such as United Artists, Broadway Circuit, Emperor Cinemas, Golden Harvest Cinemas, Newport Circuit, MCL Circuit, AMC Circuit and Cinema City Circuit. Other movie distribution
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channels include selling of film Blu-ray discs, DVDs and VCDs, broadcasting by local free televisions, pay televisions, subscription satellite services and online platforms such as Amazon, iTunes and Google Play. Hong Kong is among the world’s largest film exporters. In 2018, 53 locally produced films were released. In 2017, Hong Kong’s audio-visual production-related services exports amounted to HK$620 million. Hong Kong’s film industry as a whole is reliant on overseas revenues, given the limited size of the domestic market. Asia accounts for the majority of the foreign sales income. The box office on mainland China has become a vital market for Hong Kong movies. According to China Film Administration, the mainland box office income grew by 9% to top RMB61 billion in 2018. Nowadays, an increasing number of movies have been co-produced by Hong Kong and mainland film production companies. In 2017, the total box office revenue from Hong Kong-Mainland coproductions reached RMB7.3 billion or 13% of the mainland’s total. Thanks to such co-operation, many
“Hong Kong is amongst the world’s largest film exporters.”
good-quality films with critical acclaims have been produced. For example, The Grandmaster won the Best Costume Design in the 8th Asian Film Awards (AFA) and the Best Cinematography of the 56th Asian Pacific Film Festival (APFF). In terms of box office, action war movie Operation Red Sea, directed by Dante Lam achieved a box-office feat of RMB3.7 billion in 2018, surpassing the previous highest-grossing of Stephen Chow’s The Mermaid. Hong Kong’s films have gained increasing recognition from the international film industry over the years. In 2018, No. 1 Chung Ying Street, directed by Derek Chiu, won The Grand Prix at the 13th Osaka Asian Film Festival, whilst Paradox by Wilson Yip was awarded the Best Action Film at the 12th AFA. Young talents are also on the rise. Examples include Wong Chun’s winning of the Best New Director Award at the 53rd Golden Horse Awards with his debut feature Mad World, when crime thriller Trivisa, directed by new talents Frank Hui, Jevons Au and Vicky Wong and produced by Johnnie To bagging the Best Original Screenplay Award (by Loong Man Hong, Thomas Ng, Mak Tin-shu and Best Film Editing Award (by Allen Leung Chin-lun and David Richardson). Apart from buying rights for theatrical distribution, overseas film production companies are also interested in acquiring rights to remake Hong Kong movies. The most recent examples include the South Korean re-toolings in Believer of Johnnie To’s 2013 crime thriller and in Mujeogja of the classic Hong Kong gangster film A Better Tomorrow, both released in 2018. Others include The Eye, a remake released by Hollywood in 2008 based on a 2002 Hong Kong movie Gin Gwai (見鬼) directed by Pang Brothers and the Oscar-winning movie The Departed remade by Martin Scorsese from Infernal Affairs in 2006. Hong Kong has a unique advantage in bridging the mainland Chinese with the Western audiences and opening a window on the world for Chinese audience. In 2015, Warner Bros. Entertainment and China Media Capital (CMC) formed a joint venture of US$1b, headquartered in Hong Kong, to develop and produce films for
film entertainment industry - company and industry Motion pictures and other entertainment services Number of establishment
Employment (including those in civil service)
Source: Quarterly Report of Employment and Vacancies Statistics, Census, and Statistics Department
global distribution. Hong Kong film talents and professionals have managed to make their names known in both Eastern and Western movie market. For example, Louis Koo was awarded his very first Best Actor Award after 25 years of making movies at the 12th AFA, when Kara Hui was presented the Excellence in Asian Cinema Award. Whilst major film companies have their own distribution departments, smaller independent filmmakers usually rely on distribution companies to sell their films in overseas markets. Key channels for international distribution are the three main film markets in Los Angeles, Cannes and Berlin, where producers, distributors and buyers meet to initiate deals for the distribution of films. In 2018, the HKTDC organised the Hong Kong Pavilion showcasing the latest Hong Kong film productions at the Marché du Film in Cannes. Hong Kong has hosted an annual film market since 1997 to promote Hong Kong as a film distribution centre in the region. In 2018, FILMART attracted more than 8,700 global visitors and 850 exhibitors from 37 countries and regions, in which more than 360 exhibitors were from 15 Belt and Road countries. As Asia’s biggest film and entertainment event well known for its series of events, including new film launches, networking activities and professional seminars, FILMART, now in its 23rd year, is increasingly seen as a remarkable platform to explore co-production in Asia. Last year, the four-day event welcomed more than 580 Asian exhibitors and 4,800 Asian visitors, with majority of them coming from mainland China, Japan, Taiwan and South Korea. Hong Kong as Asia’s
world city is also a popular place for overseas crews shooting commercial films, TV programmes and advertisements. Recent examples include two 2017 Hollywood science fiction films Ghost in the Shell, which used Hong Kong as the blueprint for its futuristic metropolitan setting and Geostorm, which shut five blocks in Mong Kok down for filming and featured Daniel Wu as a Hong Kongbased weather scientist, and various TV programmes such as Cesar to the Rescue (US) and Asia’s Got Talent (Singapore). Television programmes Hong Kong TV companies derive a substantial portion of their revenue from overseas markets, targeting primarily Chinese-speaking populations. In addition, some programmes are dubbed into other languages to target the non-Chinesespeaking audience. Hong Kong’s television broadcasters sell their products using the following methods: programme licensing, pre-packaged programme content and subscription fees, with satellite distribution and landing rights now becoming an increasingly important source of revenue. There are currently three
“Whilst major film companies have their own distribution departments, smaller independent filmmakers usually rely on distribution companies to sell their films in overseas markets.”
domestic free television programme service licensees, namely, Fantastic Television Limited (Fantastic TV), HK Television Entertainment Company Limited (HKTVE) and Television Broadcasts Limited (TVB), delivering free TV services by using frequency spectrum and/or fixed network as transmission mode in Hong Kong. Domestic Pay TV services in Hong Kong are currently provided by Hong Kong Cable Television Limited (HKCTV) and PCCW Media Limited. The number of pay TV channels increased to 399 as at 31 December 2018 from only eight when pay TV was first launched in 1993. Recently, mobile viewing platforms have emerged to be an important distribution channel of TV content in Hong Kong. Nowadays, most of the latest TVB programmes are available on the mobile application platform “myTV Super”, which amassed more than 5 million subscribers and became the biggest OTT provider in Hong Kong as it turned two in 2018. Other players include ViuTV, the channel run by HKTVE and launched in April 2016, offering both free-to-air broadcast and media-on-demand streaming services on mobile devices and the global streaming giant Netflix rolling out its OTT service in Hong Kong.
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company and industry - toys and baby products industry
Mainland competition hits local toy firms’ profits
“Hong Kong’s toys market started to lose momentum since the second quarter of 2018.”
This was blamed on rapid expansion of production capacity.
ong Kong toy makers produce a wide range of items, including dolls, doll houses and other accessories, action figures, construction sets, toy guns, make-believe toys (toy versions of adult “objects”, e.g., kitchen implements, vacuum cleaners, etc.) and gimmicks such as beauty kits and doctor’s kits. Other major categories are electronic toys and games, radio/remote controlled toys, battery-operated toys and metal toys. To reduce operation costs and stay competitive, most Hong Kong toy makers have set up production facilities offshore, mainly in mainland China. As such, many toy companies in Hong Kong have been reclassified as import-export establishments, contributing to the apparent decline in the number of toy makers locating in Hong Kong. Meanwhile, the role of their offices in Hong Kong shifts towards quality control, management, marketing, finance and accounts, product design, and production management. This skew towards higher value-added activities is sharpening the competitive edge of Hong Kong toy makers, while expanding production capacity
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through relocation. Production on the mainland has been facilitated by an efficient network of supporting industries and services. This has greatly enhanced the competitiveness of Hong Kong toys in terms of its productivity, quality, reliability and delivery. Building on the base of plastic molded toys, Hong Kong toy manufacturers have added production skills from the clothing industry, the electronics industry and the metal goods industry. The toy industry employs a wide range of manufacturing technologies. Computer aided design and manufacturing systems (CAD/CAM) are most commonly used. Many manufacturers have earned the International Organisation for Standardisation (ISO) 9000 certification and some have the CARE Seal of Compliance certificate. Competition remains keen, especially from indigenous Chinese enterprises in open items. The rapid expansion of production capacity on the mainland set up by Hong Kong manufacturers also put much downward pressure on prices and profit margins.
Orders received are smaller in lot size, and shorter delivery lead time is generally required. Adversely affected by the hardware transition underway as the next-generation video game consoles are only on the horizon, Hong Kong’s toys market started to lose momentum since the second quarter of 2018 and finally fell into negative territory with a 1% decline on total toys exports in 2018. Notwithstanding a 7% growth witnessed in ASEAN, the export performance worsened entering 2019, with a 33% year-on-year plunge recorded during the first half of 2019. Weaknesses were seen across most of the major markets, with exports to the US, the EU, Japan and mainland China down 37%, 28%, 40% and 48%, respectively. Item-wise, electronic and video games were the most affected trade category, with exports plummeting 55% year-on-year in January-June 2019, along with an 8% decrease on traditional toys and games exports. The share of electronic and video games in Hong Kong’s toys exports therefore shrank from 53% in 2018 to 37%. Sales Channels Hong Kong exporters are known for producing high-quality toys. A large share of industry revenues are generated from contract manufacturing with overseas industry giants, brand owners and licence holders, such as Disney, Hasbro, Mattel and Warner Bros. in the US, Zapf in Germany, as well as Bandai and Takara Tomy in Japan. Production specifications and product designs are usually provided by these overseas buyers. This type of arrangement, in effect, minimises local manufacturers’ risks relating to product designs, inventory taking and marketing. However, Hong Kong manufacturers have increasingly offered expertise in design, engineering, modeling, tooling, quality control and other technical know-how to its customers, and developed their own brands. Some well-known brands of Hong Kong companies include Hero Cross, Playmates and Vtech. On the other hand, some manufacturers also export generic products as open items. Trading companies source a wide range of open items from different small manufacturers.
toys and baby products industry - company and industry Performance of Hong Kong Toy Exports 2017 2018 Share (%) Growth (%) Share (%) Growth (%)
By category Traditional toys and games
Jan-Jun 2019 Share (%) Growth (%)
Toys & Dolls
Model, Construction Sets & Wheeled Toys
Festive & Carnival Items
Other Traditional Games
Electronic and Video Games
Electronic Toys & Games
*Insignificant Source: Hong Kong Trade Statistics, Census and Statistics Department
Product Trends Continued growth in video games market: Video games have been gaining popularity globally, creating a huge demand for online and mobile games. The ownership of gaming devices soars as mobile phones, tablets and laptop computers become increasingly a daily necessity. With higher disposable incomes and easier access to the internet, video, especially online games showed an exponential growth in recent years, also thanks to the rise of online and mobile gaming and electronic sports (e-sports). On the back of rapid product development and innovation, the latest models of PlayStation and Xbox, which support 4K Ultra High Definition (UHD) and High Dynamic Range (HDR) video graphics, have brought gaming experience to a new, higher level. In addition, Nintendo Switch, which is both a static and a handheld gaming device, has also opened a new market of miniature multimode gaming. The upcoming release of Microsoft’s Xbox Project Scarlett and Sony’s PlayStation 5 are expected to drive the sales of video games. Sustained interest in licensing: Licensing has been a key driver of toys sales globally, particularly for traditional toys. While a certain proportion of licensed toys is associated with evergreen characters such as Hello Kitty and Mickey Mouse, blockbuster
movies and TV cartoons remain the major source of properties. Big players like Mattel and Lego often create “special edition” lines on the latest movies. Recently, a number of Hollywood-created properties including Frozen, Minions and Star Wars have created unprecedented success for the licensees. However, in general, the trade of licensed toys of movie characters is subject to a rather short boom-and-bust cycle. According to market research firm the NPD Group, sales of movie-related toys experience a quick growth in the three weeks prior to cinematic release, then a slowdown in the six weeks after the movie has come out. On the other hand, video games and social media are now constantly inventing new characters. Angry Birds and Minecraft are the prominent examples. Parents increasingly emphasize on children’s development and realise the importance of learning through play. Manufacturers are seen to respond by designing toys that aim to enhance children’s intellectual, social, emotional, and/or physical development. Interlocking bricks like Lego, puzzles and construction sets that improve hand-eye coordination, patience, creativity and spatial skills continue to be highly sought-after; board and card games that develop skills such as turn-taking and decision-making remain
“Sales of movie-related toys experience a quick growth in the three weeks prior to cinematic release.”
popular as well. Examples include STREAM toys such as robots, science and experiment kits, and arts and crafts. A Hong Kong company Fame Master, has developed 4D (3 dimensions with details) educational puzzles on animals and human organs. Meanwhile, some internet retailers provide subscription box services and regularly send curated educational toys to children based on the areas of interest previously indicated by the parents. This kind of curated subscription box service has become more prevalent in countries like the US, as it is a convenient method for parents who are looking for toys tailormade for their children. The worldwide mega-trend is to integrate electronics and new technology with toys. Many dolls and toy robots can now be remote-controlled by an Android or iOS device and updated with apps to create additional and new playing possibilities. Recently, the tiny robot BB-8, a character in the Star Wars franchise, has gained a lot of attention. The companion app is packed with official Star Wars sound effects and other features like recording holographic messages. Other traditional toys are also increasingly connected with the digital world. On the other hand, toys incorporating virtual, augmented and mixed reality are expected to be big hits.
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company and industry - cosmetics and toiletries industry
Specialty cosmetic chains take the lead
Brands like Sasa, Bonjour, Aster, Colourmix and Angel Beauty Barentices offer customers discounts and private label products.
he cosmetics and toiletries manufacturing sector in Hong Kong is small, with most manufacturers concentrating on the production of midpriced toiletries and perfumes, particularly for markets such as mainland China, Southeast Asia and the United States. These are usually produced under their own brands. Most companies in the industry are traders, acting as agents to sell to mainland China, the US, Macao, Japan, Southeast Asia and the EU. Several Hong Kong spa and beauty salons also act as agents for cosmetics and skincare products looking to sell into Asia. A number of traders have good connections, serving as useful links for selling professional product lines to beauty salons on the mainland. Hong Kong traders make good partners for foreign brands, given their market knowledge, skills, connections and integrity. They are also useful when it comes to handling entry procedures for goods being imported, with these tending to require the disclosure of confidential information, such as product
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formula. Most companies in the industry are traders who act as agents for international cosmetics brands looking to sell to mainland China, Macao and Southeast Asian markets. Hong Kong is home to a large number of experienced distributors, many of whom are well versed in regional market conditions and regulations. They are capable of acting as distributors for popular brands, targeting the general public and devising comprehensive marketing initiatives. Hong Kong’s cosmetics and toiletries manufacturers, such as Choi Fung Hong, tend to highlight the Hong Kong origin of their products, which are targeted at the retail markets in mainland China and Southeast Asia. Large numbers of mid- and high-end foreign brands have established sales counters in local department stores and opened outlets in shopping malls. Their experience stores at shopping malls provide customers a learning platform for using their products. Many international cosmetics and toiletries brands have also set up offices in Hong Kong to assist in market development.
“Large numbers of mid- and high-end foreign brands have established sales counters in local department stores and in shopping malls.” Specialty cosmetics chains are well developed in Hong Kong, with Sasa, Bonjour, Aster, Colourmix and Angel Beauty Bar taking the lead. These companies mainly sell international brands with deep discounts, offering private label products as well, and they are very popular among consumers. Health and personal care chains, such as Watson’s and Mannings, have shifted their focus more towards cosmetics and skincare products in recent years, selling mainly international brands. Social media has become an important feature of modern living in recent years. Many cosmetics and skincare brands have begun to promote their products through social media, such as Instagram and YouTube. Some brands have even invited internet celebrities or key opinion leaders (KOLs) to review their products for marketing purpose. Industry Trends The world cosmetics market, especially the upper-end segment, has long been dominated by a number of global giants such as P&G, Unilever, Shiseido, L’Oreal and Estee Lauder. Armed with technology and cost advantages and supported by global production plants, they occupy the top tier of the market. Yet, in recent years, cosmetics from other regions, notably South Korea, have been gradually gaining popularity among Asian consumers. These brands’ products mostly come in a diverse mix at a price lower than those of international brands. They are, therefore, highly appealing to the young generation, who usually have lower income but a stronger appetite for novelty and a notable preference for product personalisation. OEM production is not widespread in the cosmetics sector. This is largely due to the strict requirements on quality control and secrecy with regard to product formulas. Many manufacturers have set up their own R&D departments to develop unique formulas for their products. As mainland China has gradually grown into a major market, a substantial number of international brands have set up R&D bases on the mainland to develop specific products for mainland consumers and those in other Asian regions. Several international suppliers have
cosmetics and toiletries industry - company and industry Total Exports by Category
2017 Share (%) Growth (%)
2018 Share (%) Growth (%)
January Share (%)
Beauty or make-up preparations for skin care
Perfumes and toilet waters
Preparations for use on the hair
Perfumed bath salts and other bath preparations
Preparations for oral or dental hygiene
Source: Census and Statistics Department
reached licensing agreements with supermodels and fashion brands with regard to developing fragrances and cosmetics products. Some have also collaborated with top fashion brands to offer more personalised choices to consumers under their private labels, notably Anna Sui, Chanel, Christian Dior and Armani. The growing importance of online sales and digital marketing has drawn widespread concern from the sector regarding the impact of new retail formats on sales performance. In the meantime, the ease of online access to product information has posed a challenge to cosmetics brands in maintaining consumer brand loyalty. They are therefore keen to publicise the unique values and ideas of their products so as to gain the approval of consumers and retain their customer base in the long run. CEPA Provisions Following the implementation of the third phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA III) in January 2006, all products of Hong Kong origin can be imported into the mainland at zero tariffs. In December 2018, mainland China and Hong Kong entered into the Agreement on Trade in Goods under the CEPA framework to enhance the arrangements for CEPA Rules of Origin. With effect from 1 January 2019, all goods of Hong Kong origin enjoy zero-tariff preference when imported into the mainland. The new
Agreement on Trade in Goods allows products currently not covered by the CEPA Rules of Origin to enjoy tariff-free treatment provided they comply with the general rule of origin requirement calculated on the basis of Hong Kong’s valueadded content. Product Trends Cosmetics tends to have a shorter life cycle than many other types of consumer goods. In advanced markets, the average product life of cosmetics items could be as short as one month. Colours and shades play an important role, and these elements are heavily influenced by fashion trends, popular tastes and seasonal moods. These trends usually originate in large-scale trade fairs in Europe, spread to the US, then Japan and other Asian regions, through trendsetter magazines. Giant cosmetics companies always have a huge influence on those magazines. It is important for manufacturers to offer a wide selection of trendy colours and shades for each season. The ageing population is driving the recent surge in ‘cosmeceutical’ products that combine cosmetics with vitamins, herbal extracts and sometimes pharmaceuticals, such as vitamin-C lotions, tea tree oil-infused cleansers and collagen masks (collagen is formally used in the treatment of burns). Many medicinal beauty products tend to highlight their anti-ageing skincare functions. Dermatology is incorporated into product development, and products catering for different
“The growing importance of online sales and digital marketing has drawn widespread concern from the sector regarding the impact of new retail formats on sales performance.”
skin types are available. Active ingredients are being added to cosmetics, and plant extracts and traditional Chinese herbs are also very common, especially among Chinese, Japanese and Korean-made cosmetics. Organic and natural cosmetics made from mineral pigments and organic plant extracts, which provide natural sunscreen or long-lasting colour, and deliver a healthy-looking radiant glow, are also gaining popularity. Unlike conventional cosmetics, none of these products contain artificial fragrances or oil by-products, making them ideal for those with sensitive skin. An increasing number of professional products with specific functions have emerged in recent years, in line with consumers’ increasing knowledge on product application. Such consumers pay more attention to the ingredients and functions of products, and can manage more steps and more specific applications. Many products are also moving towards beauty salon standards and claiming to deliver salon quality results. A number of at-home bodyfirming products, such as Estee Lauder Perfectionist, Fancl Shape Design and L’Oreal Perfect Slim, for instance, all represent attempts to compete with salon products. This trend may continue in the long term as the persistence of the slimming trend is still driving consumer demand for firming products. Men’s skincare products are also expected to become more specialised as the market matures.
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company and industry - processed food and beverages industry
F&B firms set up factories outside Hong Kong
Many Hong Kong food and beverages manufacturers deal directly with overseas importers and supermarket chains.
he processed food and beverages industry in Hong Kong is characterised by active trading activities. Major food importers/traders in Hong Kong include Dah Chong Hong, Four Seas Food Investment, EDO Trading Co, Kampery and Sun Shun Fuk. Food and beverages production in Hong Kong is a large-scale business, with most of the output sold locally. Key products include instant noodles, pasta, biscuits, pastries, cakes and drinks. Other related activities include the canning, preserving and pro cessing of seafood (fish, shrimps, prawns and crustaceans), and the manufacture of dairy products (fresh milk, yoghurt and icecream) and seasonings. Hong Kong’s foods and condiments, such as soy sauce, oyster sauce and Chinese pastries, have become increasingly popular on the mainland and overseas. In response to this, some Hong Kong companies have begun proactively expanding their overseas markets by promoting food and beverages with local characteristics to overseas consumers. These products have proved very
popular. Lee Kum Kee, Kee Wah Bakery and Kampery are some outstanding examples. In addition, some brands have successfully marketed new uses of their conventional products. For instance, soy milk sold as a substitute for milk added to drinks has received a positive market response. The industry has also attracted substantial overseas investment. A notable example is Japan’s Nissin, which now produces instant noodles in its factory in Tai Po Industrial Estate and is the leading player in Hong Kong’s instant noodles market. These overseas companies constantly launch localised products, and are highly integrated into the local market. Large Hong Kong manufacturers have expanded their global networks and set up offices or factories in several major markets. For example, Lee Kum Kee has factories and regional offices on the mainland, in the US and in Malaysia, and Vitasoy has offices and factories on the mainland as well as in Australia and Singapore. Kampery, which has its headquarters in Hong Kong, has also established regional offices on the mainland,
“Hong Kong’s food and beverages trading companies have played a pivotal role in introducing Western foods to mainland consumers.” and in Canada and France.telemedical services and less-invasive procedures. Sales Channels Many Hong Kong food and beverages manufacturers deal directly with overseas importers and supermarket chains. However, Hong Kong’s food and beverages trading companies have played a pivotal role in introducing Western foods to mainland consumers, and in assisting smaller producers based locally and on Mainland China to sell abroad. Many Hong Kong brands have successfully entered overseas markets. Garden (biscuits, cakes and sweets), Kee Wah Bakery (traditional Chinese pastries), Vitasoy (soft drinks), Amoy and Lee Kum Kee (cooking sauces), Lam Soon (edible oils) and Kampery (instant milk tea mix) are the leading local brands. Many of these brands have appointed distributors and/ or established overseas offices to promote overseas sales. These Hong Kong brands have expanded vigorously into overseas markets and have received increased international recognition. Some companies have also set up overseas factories to produce for, and to serve, their local markets. For example, Vitasoy Group has spread far beyond Hong Kong and now sells its products in more than 40 markets throughout the world. The group now has production plants in Australia and Singapore, as well as in Hong Kong, Shenzhen, Foshan, Wuhan and Shanghai. In order to establish connections and explore market opportunities, processed food and beverages manufacturers and traders can join trade fairs and pavilions organised by HKTDC, such as the Food Expo in Hong Kong, the Canton Fair in Guangzhou, the China International Import Expo in Shanghai and the Style Hong Kong in various mainland cities. HKTDC also organises study or matchmaking missions for Hong Kong manufacturers to visit specific markets to help build new business relations. Industry Trends Health and wellness products are being increasingly adapted to meet the expectations of consumers. In particular,
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processed food and beverages industry - company and industry Industry Features Manufacturing
Import and Export
No. of establishments
1,491 (Mar 2019)
30,637 (Mar 2019)
35,740 ( 2018)
“Plant-based foods (such as plant-based protein drinks and artificial meat) are also becoming more popular.”
help protect against chronic disease and promote overall bodily health. Some industry players noted that plant protein replacing animal protein has a positive impact on climate change, conserving natural resources and respecting animal welfare. Products such as plant protein egg and vegan burger are becoming more popular. Food manufacturers are increasingly introducing products low in cholesterol, carbohydrates or added sugar. Because many consumers want to be healthier and slimmer, companies such as Danone, Unilever and Kraft have developed diet foods that contain added fibre to make the food more filling and delay digestion. Catering to this trend requires food manufacturers to invest more in R&D capabilities and advanced production technology. Increasing sales of organic food is a major trend in both developed and developing countries. According to the Organic Trade Association of the US, organic food sales in the US reached US$47 billion in 2016, an increase of US$4 billion from 2015. Organic food encompasses a wide range of products, including cheese, meat, wine, spices, nuts and canned goods. Organic generally means food grown or produced without the use of chemical synthetic fertilisers, pesticides and preservatives and unaffected by genetic engineering. Organic foods are increasingly available in supermarkets. Halal food is becoming a more important market, even amongst non-Muslims due to concerns over food safety. The non-Muslim market for Halal food is yet to be fully tapped.
Note: Industry statistics over activities in Hong Kong only.
ageing populations and a rise in health awareness are creating a receptive environment for products that help people maintain their health, such as high-fibre biscuits and lowsugar drinks. The growth of convenience foods, such as microwaveable and packaged foods, is also looking promising. With people becoming more health conscious, organic food is growing in popularity. Organic foods are foods produced using ‘natural’ farming methods, which do not involve the use of synthetic pesticides and chemical fertilisers. Growing numbers of consumers have also begun to adopt vegetarian diets in recent years, so plantbased foods (such as plant-based protein drinks and artificial meat) are also becoming more popular. There has been growing concern recently amongst consumers about allergens in food, such as peanuts, gluten, soybean, eggs and milk, which may trigger allergic reactions. They have begun demanding clearer indications on food packaging to help them select the right foods. Online grocery shopping is becoming increasingly popular in Asia. In Taiwan and Japan, many working women buy food such as fresh fruits and vegetables through the internet. Online grocery shopping is popular throughout Mainland China. Online shopping and delivery of fresh food items have become extremely popular in some large cities in recent years. GM Food Labelling The regulatory approaches on genetically modified (GM) food labelling vary between countries and regions, but can be broadly
classified as voluntary or mandatory. Under the voluntary labelling approach, only GM food that is significantly different from its conventional counterpart, in terms of composition, nutritional value and allergenicity, needs to be labelled. Mandatory labelling can be further divided into “panlabelling” and “labelling for designated products only”. Pan-labelling requires labelling for any food products that either contain GM materials exceeding a threshold level or have any significantly different characteristics as a result of genetic modification. The “labelling for designated products only” category requires that only the designated products which are genetically modified need to be labelled. The international community is working towards a consensual policy on GM food labelling. However, the Codex Alimentarius Commission of the United Nations is unlikely to be able to set internationally agreed standards in the near future. Product Trends In developed economies like the US and the EU, there has been a shift in consumer taste in favour of healthy foods, partly because these economies’ ageing populations want easy-toprepare, high quality nutritional foods to compensate for their lowered taste sensitivity. There is a growing movement towards replacing animal protein with plant protein in people’s diet. Plant protein is lower in essential amino acids than animal protein, it also contains components that can
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company and industry - sporting goods industry
Foreign brands dominate sporting goods scene
Many Hong Kong sporting goods are exported under licensing and contract manufacturing arrangements with overseas manufacturers.
he major categories of Hong Kong sporting goods exports include sports equipment and accessories (61.7% of the total), sports apparel (22.7%) and sports footwear (15.6%). Sports equipment and accessories cover a wide range of products, including sporting bags, life-jackets, water-skis, surf-boards, skateboards, golf equipment, fishing and hunting requisites, and tennis and badminton racquets. Although they have largely relocated their production bases to the Mainland China, Hong Kong’s sports apparel manufacturers still receive strong support from a number of ancillary industries. Sportswear production benefits greatly from the strong presence of the clothing industry in Hong Kong. A variety of quality threads, fabrics, zippers, labels and other components, all are widely available at reasonable prices. This easy sourcing of materials and components adds a truly competitive edge to Hong Kong’s sports goods sector. The majority of Hong Kong sporting goods are exported under OEM/ODM
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arrangements with overseas manufacturers and brand owners, notably Adidas, Fila, Nike, Puma, Reebok, Timberland and Umbro. Only a few Hong Kong manufacturers have looked to develop their own brands. Notable examples, though, include Neil Pryde (windsurfing sails), Super-X (sportswear), Re:echo (outdoor gear and clothing) and Nikko (camping gear and accessories). Several Hong Kong companies act as local agents/distributors for foreign sporting goods companies, such as Co-Service Sports Equipment Company, GigaSports, Marathon Sports, Sportshouse and The Overlander.the jewellery sector will continue to proliferate. Over the longer term, the development of internet shopping represents a new direct sales method for Hong Kong jewellers in promoting their products. Many Hong Kong sporting goods are exported under licensing and contract manufacturing arrangements with overseas manufacturers and brand owners, such as Adidas, Converse, Decathlon, Jako, New Balance, Nike, Puma, Reebok and
“Hong Kong manufacturers, though, are increasingly becoming adept at product design and development, engineering, modelling, tooling and quality control.” Timberland. Typically, buyers provide the production specifications and product designs. Hong Kong manufacturers, though, are increasingly becoming adept at product design and development, engineering, modelling, tooling and quality control, allowing them to generate higher value along the supply chain. Sales Channels A few large local manufacturers, as mentioned earlier, export products under their own brand names. “Nikko” knapsacks and “Neil Pryde” sails, for example, are well-known in overseas markets. Meanwhile, more young designers have started their own businesses by creating their own brands such as “Miss Runner” to sell fashionable yet high-performance sportswear at affordable prices around the world. It is a common practice for these manufacturers to appoint overseas distributors in order to help promote sales. A good distributor is a valuable source of market information and can be helpful in advising Hong Kong companies on appropriate pricing strategies. However, Hong Kong companies should ensure that any potential partner is well-established in the market, supported by warehousing and product-handling facilities, and possesses a good knowledge of the dynamics of the local market. On the mainland, sporting goods are channelled through shopping centres in first-tier cities and specialised retail stores in the second- and third-tier cities. Other distribution methods include selling to discount stores, speciality stores and traders. For instance, large discount chain stores in the US, such as Walmart and Target, buy from Hong Kong exporters. The large speciality chain stores selling sporting goods in the US include Sports Authority, while the big players in Europe include Decathlon, Intersport and Go Sport. The International Sportsmen Exposition (ISE) in the US and ISPO MUNICH in Germany are the leading trade fairs for sporting goods. As well as staging trade fairs like Hong Kong Sports and Leisure Expo, the HKTDC also organises study or match-making missions for Hong Kong manufacturers, many of which are OEM firms, to visit specific markets in order to help building new
sporting goods industry - company and industry Industry Features No. of establishments Employment
Import and Export
N.A. (Dec 2018)
670 (Dec 2018)
60 (Dec 2018)
2,820 (Dec 2018)
SOURCE: Quarterly Report of Employment and Vacancies Statistics, Census and Statistics Department
2017 Share (%) Growth (%)
2018 Share (%) Growth (%)
Jan-Jun 2019 Share (%) Growth (%)
Sports Equipment and accessories
Source: Hong Kong Trade Statistics, Census and Statistics Department
business connections. Retail consolidation is one of the biggest issues facing the sporting goods industry. Retailers are transforming into super-sized stores with a “shoppertainment” format. Manufacturers are dealing with fewer but more powerful retailers such as Walmart, or large speciality chains, such as Sport Chek and Foot Locker. These sporting goods retailers, in turn, put increasing pressure on manufacturers to offer better deals. They also shift the inventory risk on to the manufacturers. Industry Trends The rise in the number of sporting events and fitness centres is expected to continue, encouraging more people to participate in various sports. Asia Pacific and other emerging markets, such as India and China, will most likely be the growth regions because of their rising disposable income and improving living standards. Generic sporting goods tend not to be influenced by changes in the popularity of particular sports, though they are still highly vulnerable to changing fads and fashions. Luxury brands such as Chanel, Gucci, Hugo Boss and Moncler Grenoble have entered into the sporting goods business by introducing their own sneakers and sporting accessories. A “life cycle hypothesis” has been proposed to describe the boom and bust in the specialised
sporting equipment market. As people grow older, they prefer hiking, fishing, golf and exercise equipment, as opposed to the more strenuous sports, such as kickboxing, football and tennis. With the exception of capital intensive products, sporting goods are like other consumer goods, with R&D and marketing figuring highly in the value-added part of the process. Many businesses, including Hong Kong manufacturers, look to off-shore their physical production to the Mainland China, Vietnam, Indonesia and Thailand in order to lower their production costs. With international players focusing their R&D on the use of new materials and generating designs incorporating engineering, biomechanics and physiology, several Hong Kong manufacturers have also looked to strengthen their R&D capabilities. For example, Platysens, an HKSTP’s IncuTech start-up, is marketing its pioneering app-based bone conduction headset that provides swimmers with real-time audio feedback during training. Endorsement deals with sports stars, as well as sponsorship and licensing agreements with sports events are important factors in making sports products/ brands a success. In line with this, sporting goods companies have often become the sponsor of sports stars, teams and tournaments, launching limitededition and/or customised
“Many businesses, including Hong Kong manufacturers, look to off-shore their physical production to the Mainland China, Vietnam, Indonesia and Thailand in order to lower their production costs.”
products such as T-shirts and accessories. Close connections with sports stars and coaches prove a resource that provides a competitive advantage. Feedback on products from such individuals can help direct R&D activities. With the rise of e-sports, sports brands are sponsoring teams to take part in worldwide leagues and tournaments such as Tencent League of Legends Pro League (LPL). Home to the largest and most passionate e-sports fan base, China has become a major host of e-sports competitions such as the LOL Worlds 2020 China Championship which reportedly attracted off-line audiences of more than 80 million in 2017. Internet and social media have become increasingly indispensable for sales and marketing of sports appeal, when most sports brands engage their customers on corporate social media. Facebook, with 2.3bn active users, remains the most popular social media worldwide, followed by Youtube (1.9bn) and Instagram (1bn). Social media users are increasingly receptive to in-app shopping, making IG and Facebook shops a more viable marketing tool for sports brands. Examples of popular IG shops selling sports fashion in Hong Kong are Shoes Kid, Take Me With You and Skechers. On the other hand, Youtubers and key opinion leaders (KOLs) are becoming more influential on consumption behaviour.
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company and industry - houseware industry
E-commerce boosts houseware sales
Efficient logistics system and inventory management are becoming more important for both e-tailers and brick-and-mortar outlets.
ong Kong is an important globally recognised sourcing centre for houseware products. The houseware industry covers a wide range of products, including tableware, kitchenware, non-electric domestic cooking/ heating appliances, sanitary ware and home decorations. These are made in a wide variety of materials, including ceramic, metal, glass, paper, plastic, porcelain and china. Companies in the field of metal cookware and kitchenware provide a comprehensive selection of products, including saucepans, casseroles, frying pans, Dutch ovens, steamers, egg poachers, double boilers and frying baskets. Stainless steel is the most commonly used material due to its durability. Aluminium-made cookware is also available, with porcelain-enamelled exteriors and interiors coated with nonstick material. Silicone cooking tools and utensils are also gaining popularity among consumers due to its high-heat resistance level and durability. Other companies focus on plastic ware,
including tableware, kitchen utensils, water pots, trash bins and bathroom accessories. Most of them are small to medium-sized businesses, as the production of plastic houseware, especially the smaller items, requires comparatively little labour input and capital investment. Sophisticated moulding techniques are generally not required for lower-end products. As such, some toy manufacturers also produce plastic houseware as a side-line business. On the other hand, the production of larger plastic houseware, such as buckets, basins and baskets, is dominated by a few large manufacturers since heavy capital investment is required for installing large machinery. Owing to the high production costs in Hong Kong, most Hong Kong manufacturers have relocated their production to the mainland. Other high value adding functions, such as sourcing, logistics, product development and marketing are maintained by the Hong Kong offices. Most Hong Kong houseware production is
â€œOwing to the high production costs, most Hong Kong manufacturers have relocated their production to the mainland.â€œ performed on an OEM (original equipment manufacturing) basis. However, facing intensified competition from indigenous Chinese companies and other Asian suppliers, Hong Kong manufacturers are shifting from OEM to ODM (original design manufacturing). A few also create and market their own brands (OBM). More resources are being used in product design and maintaining product quality to increase the competitiveness of Hong Kong products. Department stores, retail chains and mass merchants remain the dominant retail channels for houseware products in mature markets like the US, EU and Japan. but increasingly, consumers also go online for houseware goods, especially those small home and kitchen appliances. Hong Kong manufacturers usually deal directly with overseas retailers or through their buying offices or agents in Hong Kong. Some Hong Kong companies also enter into licensing agreements for production with overseas brand holders. This is especially common for kitchenware and cookware. In markets with smaller order sizes, trading firms often act as an intermediary. A few well-established manufacturers have their own overseas offices which are responsible for marketing and other liaison activities. Industry Trends In most mature markets, the retail industry for houseware is dominated by a few large chain stores or discount giants. These overseas buyers have strong bargaining power as they usually place large-volume and repeated orders from a few suppliers. Over the years, Hong Kong manufacturers have proved themselves reliable and maintained a good market position by providing quality products at a competitive price. However, they are now facing fierce competition from other suppliers in the region. To stay competitive, Hong Kong manufacturers are undertaking more ODM and licensing arrangements. Licensing is especially common in the kitchenware sector for US and European brands as consumers in general favour brand-named products as well as other private label items owned by department stores and chain stores. On the distribution side, internet and mobile sales of houseware have continued to
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houseware industry - company and industry Performance of Hong Kong Exports of Houseware Products Household Products
Domestic Exports Re-exports of Chinese mainland origin Total Exports
2017 Growth %
2018 Growth %
Jan-Jun 2019 HK$mn Growth %
Source: Hong Kong Census and Statistics Department
Metal cookware & kitchenware
Non-electric cooking appliances
Source: Hong Kong Census and Statistics Department
grow as consumers increasingly enjoy the ease, convenience and range of online shopping. Besides buying from pureplay online retailers, it is also common to buy online and pick up the goods at the local stores. This means that an efficient logistics system and inventory management are becoming more important for both e-tailers and brick-and-mortar outlets. Furthermore, the use of big data analytics enables retailers to be more responsive to consumer preferences. Product Trends Recent years have seen the arrival of new products with smart designs, multi-functional and innovative features. One example of this is the KIGI food storage container featured in the HKTDC Houseware Fair 2019. Supported by its KIGI mobile app, users can keep track of the food conditions and receive shelf life reminder so as to avoid food waste. The KIGI app will also suggest a variety of cooking recipes based on the current stock of food. Besides, tech gadgets have started to enter the kitchen space. For example, some kitchen baking scales can now be connected to an iPad app that provides instructions for making a cake. Built-in touchscreen of Samsung smart refrigerator
offers recipe suggestions that synced with food storage and allow users to automatically reorder food with credit card. Consumers have become more eco-conscious and are buying more environmentally friendly products. Manufacturers have also realised the potential cost savings that can be made from the use of green materials and packaging. These two factors have combined to make green designs and materials popular with houseware producers and buyers. Reusable food wrap has slowly taken over the places of plastic wrap to achieve longer form of food storage. Cotton wraps which come in multiple colour and patterns can be reused after washes. Plastic straws are also phasing out and replaced by reusable straws made in stainless steel and biodegradable bamboo. Demographic shifts and shrinking household size have resulted in a purchasing shift towards small-size houseware products such as electronic appliances and kitchenware goods. To meet this changing demand, manufacturers have been increasing their production of slimmer and smaller appliances. Single-serving coffee makers, mini smoothie blenders and pint-size stand mixers are some popular items for small
â€œDemographic shifts and shrinking household size have resulted in a purchasing shift towards small-size houseware products.â€?
or single-person household. Foldable lunch boxes and water bottles are also trending as they can be easily stored or fit into handbags. Minimalist trend takes root in the houseware sector as consumers are increasingly aware of the elements of nature with its durable quality. Natural materials and fibres have become the highlights of this trend, which has led to an increase in the use of timber, rope and seagrass in the production of kitchen furniture like dining tables and chairs. Natural elements can also be found in kitchenware, such as bamboo-made kitchen tools, copper kitchen accessories and cooking knives with handles made from reclaimed hardwood. People are getting more health-conscious and prefer eating healthier and simpler. Kitchen tools that help cook healthy meals and craft a simple lifestyle will continue to be popular. Air fryer is one good example which offers healthful alternative for making fried food. Handy gadgets such as salad choppers and juicers are much sought-after. Hydration and hydration-related products such as water bottles, infusion and filtration products continue to see increasing demand driven by the consumer trends of health and wellness.
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company and industry - printing industry
Printing firms rev up tech as foreign demand grows
Digital printing enables sending texts and graphics directly from the computer to the printing machine without the use of plates.
rinting is a support industry for publishing and advertising, and also for various light consumer goods industries (toys, food, cosmetics etc). Most printing companies in Hong Kong are small and medium enterprises (SMEs). They produce a wide range of printing materials, including books, booklets, brochures and leaflets, and paper and paperboard labels, advertising materials, commercial catalogues, calendars, postcards and greeting cards. Some specialise in the production of higher value-added/hi-tech printing products, such as children’s novelty books with pop-ups and additional objects, cheque books, passports, bills and statements, securities and prospectuses. Creating these products requires considerable specialist skill, substantial capital investment and confidentiality. Overseas customers are increasingly looking for faster turnaround and shorter delivery time in order to maximise return through smaller but more frequent orders. Hong Kong printers are known for quality, quick delivery, competitive pricing and the
ability to cope with short-notice printing jobs. Their quality is comparable to that of printing businesses in US, Germany and Japan, the pioneers in printing technology. Hong Kong printers are also known for their inventiveness and willingness to find solutions to production problems. Major printers are relocating production to mainland China with purpose-built plants to reduce operation costs. Such development has changed the workflow and logistics and greatly improved efficiency and output quality. However, they still maintain their offices in Hong Kong to receive overseas orders. The ability to meet high quality requirements has allowed Hong Kong to become a major global printing and publication centre, despite the increasing price competition from mainland printers. Rising labour costs on the mainland are encouraging greater automation and mechanisation. Automation can also reduce human errors while increasing efficiency, productivity and quality. Hong Kong’s excellent telecommunication networks are great assets of the industry. In
“Major printers are relocating production to China with purpose-built plants to reduce operation costs. effect, publishers in Hong Kong can quickly access information from various parts of the world, a vitally important advantage for time-sensitive publications. With proximity to the mainland market and a high degree of freedom of the press, Hong Kong has attracted many international publishers/news agencies (especially media firms) to set up regional centres here, including The Financial Times, The Economist and The International New York Times. Printing is an industry in which technology is constantly being updated. The ability to keep up with new production techniques is crucial. Hong Kong printers are equipped with advanced models of laser-setters, electronic colour scanners, electronic page-composing systems, digital printers, automatic finishing systems and one to five-colour printing machines. They have also introduced computer-to-plate (CTP) systems, equipment for security printing, and latest machines designed to enhance digital printing capabilities. Sales Channels A large share of the export business is attributable to orders received directly from overseas countries. This also includes orders from major international publishers in Hong Kong. Export orders are mainly handled by larger printers or dealers, who have established business relationships with overseas customers. In an effort to capture overseas business, large Hong Kong printing companies have established offices overseas. In order to expand business networks, explore market opportunities, and promote their company image abroad, Hong Kong manufacturers and distributors participate in trade fairs and study missions organised by the Hong Kong Trade Development Council (HKTDC), such as the Hong Kong International Printing and Packaging Fair. HKTDC also organises study or match-making missions for Hong Kong manufacturers, allowing them to visit specific markets to explore business potential and establish new business relationships. Other important international trade fairs include Germany’s Drupa and the International Printing Machinery and Allied Trades Exhibition (IPEX) in the UK. Industry Trends Many emerging trends in printing pertain
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printing industry - company and industry Performance of Hong Kong’s Exports of Printed Matter 2017 HK$mn Growth %
2018 HK$mn Growth %
Jan-Jun 2019 HK$mn Growth %
of Chinese mainland origin Total Exports Source: Hong Kong Census and Statistics Department
to the advent of new technology or production techniques. Digital printing has gradually developed and applied in a wide range of fields within the printing industry. Inkjet has become a preferred choice for most magazine/book printers with the improvements of inks which are able to stick to gloss coated paper without the need for pre-treatment. 3D printing has caught significant attention within the print industries and more utilisation is expected in the future. There is also development of a new printing technology that uses soundwaves to detach liquid droplets from the print nozzle. E-commerce will continue to be an important channel for procurement in printing. The clumsy processes of specifying requirements, enquiries, checking the sample draft, amending information, confirming the order and so on, can all be done online. Besides, through the online portal, consumers can receive quotations with greater ease and speed, and products such as banners and brochures can be ordered and shipped more quickly. Automation is another trend. This helps cut costs, improve quality and speeds up the production process, especially on large quantity orders. For example, a printer can set up pre-designed templates for frequent print orders such as business name cards so that they will be readily available to print on demand. The automated function of bulk uploading allows business name cards for multiple people to be ordered at the same time with a single digital file, saving time and effort and ensuring consistency.
Advertising and marketing materials would remain one of the largest sectors of the printing industry, despite the rise of online advertising. Posters, flyers, brochures and other more complex marketing products are still popular but are increasingly printed using digital technology. Digital printing enables direct imaging – sending texts and graphics directly from the computer to the printing machine without the use of plates. This shortens production time and cost, and improves speed and accuracy. It is easy to operate and is suitable for printing small quantities where flexibility, short lead time and customisation are important. Examples of this would be the printing of personalised direct mailing and tickets. Digital printing also enables the development of personalisation in packaging. Some printers are also offering the “total solution” service, which includes auxiliary services like design, data-processing, translation and editing, and electronic publishing. A number of large printers have developed vertically, such as manufacturing or trading paper, or forming strategic partnerships with suppliers, in order to minimise the effects of paper price fluctuations and allow the company to have better control over material supplies. The Mainland and Hong Kong CEPA CEPA was concluded in June 2003 and subsequently expanded in following years. All products made in Hong Kong, subject to CEPA’s rules of origin, enjoy duty-free access to the mainland.
“Advertising and marketing materials would remain one of the largest sectors of the printing industry.”
Detailed information is available from this website. Product Trends Traditional printed products need more innovative designs to meet the emerging demands of various market segments. Children books, for example, are becoming more sophisticated as children now expect to interact with them. They may listen and talk to them, use them to build models or solve puzzles, or even play with soft toys that are housed inside the book. Everyday items such as calendar can take different forms, from desktop models to large 3D wall calendars. In order to meet the need for higher printing quality, 5-colour/7-colour presses are being introduced. With the rising adoption of inkjet technology in commercial printing, printers can create more personalised books such as planners and notebooks. It allows personalisation in all aspects, including the cover, back and spine design, font and colour as well as the interior design and format. Print shops are being pushed to use more environmentally friendly supplies such as recycled paper and synthetic paper, polyesterbased fabrics, UV ink and soy/ vegetable-based ink. The chemical-free plate system has also been introduced. Although the use of FSC or PEFC-certified paper remains relatively small, it is increasing rapidly. Some printers are also embracing technologies such as ondemand printing and variable data printing in order to reduce wasteful production practices caused by overprinting.
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High-Flyers 2019 Profiles of Hong Kong’s Outstanding Enterprises and Business Leaders
Standard Chartered Bank 60 | Archikris Design Group 64 | Concord Medical Limited 66 | Elite Concepts 68 | FTLife Insurance Company Limited 70 | Hang Seng Bank Limited 72 | Headwin Logistics 74 | HKBN Enterprise Solutions Limited 76 | Hyatt Regency Hong Kong 78 | Lifestyle Insurance 80 | Lindt & Sprüngli (Asia-Pacific) Ltd 82 | Nintex 84 | OZO Wesley Hong Kong 86 | PrimeCredit Limited 88 | Standard Chartered Bank 90 | Thomas, Mayer & Associés 92 | Vastcom Technology Limited 94
CONTRIBUTING WRITERS: Clarist Mae Zablan, Jennifer Chan, Marianne Estioco, Krysten Boado, Karen Atienza, Michael Jamias
Mary Huen Chief Executive Officer, Hong Kong Standard Chartered Bank (Hong Kong) Limited
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SETTING THE PACE FOR BANKING IN HONG KONG
tandard Chartered distinguished itself as the bank to beat in the highly competitive Hong Kong market, especially in profitability and customer experience, under the helm of a visionary CEO and by wedging deeper its digital advantage. Having established a significant retail banking presence in the Hong Kong market, Standard Chartered has spent the past year further pressing its advantage, pursuing a visionary roadmap set by Hong Kong CEO and executive director Mary Huen. The veteran and well-accomplished leader—who has over 25 years of experience in business management and banking services, and transformed the retail banking business in Hong Kong to one of the most successful segments for the banking group globally—has focused on enhancing the bank’s customer value proposition and upgrading its product offerings. The bank launched SC Ventures, a new business unit created to promote innovation, invest in disruptive financial technology and explore alternative business models. Huen is all too familiar with the essential role that Hong Kong plays in being a super-connector between China and the world after her successful stint as the regional head of retail banking for Greater China and North Asia. “We’re an experienced player with deep-rooted presence and relationships in Hong Kong and I’m proud to say we are actively exploring opportunities including digital technologies for the benefit of our clients,” said Huen, adding that the bank is in an especially “good position” to ride on the promising growth potential of the Greater Bay Area, which some estimates predict will become the
world’s largest banking city cluster by 2023. The Bank’s market-first platform SC Ventures Fintech Bridge focuses on bridging innovation inside and outside the bank. The initiative was structured to help connect community builders such as startups, investors and accelerators to the bank’s innovation champions, challenges and use cases. “Ultimately, fintech innovation is about delivering a superior service. To do this, we’re taking our clients and staff along on our fintech journey, and we’re seeing a real shift in customer behaviour towards digital technology,” said Huen, The CEO has also continued to drive business growth by introducing new digital capabilities as well as bolstering existing ones in order to enhance the customer value proposition. A notable new capability is QR Cash, a first in the Hong Kong market, which enables clients to pre-order cash withdrawal cardlessly using the mobile platform. Clients then get cash by scanning the QR code on the ATM without having to use their card. Another pioneering capability is the keyboard banking feature from SC Mobile, with which clients can enjoy the convenience of sending payments and checking balances straight from the mobile keyboard without switching between apps. “Our strategy focuses to accelerate transformation of traditional banking experiences to deliver seamless omni-channel services across digital and staff-assisted touchpoints,” said Vicky Kong, Head of Retail Banking, Hong Kong at Standard Chartered Bank. “In contrast to virtual banks, we have more than 70 branches in Hong Kong serving our clients across all segments, our key advantage is our omni-
HONG KONG BUSINESS ANNUAL 2020 61
channel servicing which includes both staff-assisted and digital access” This strategy has helped the bank deliver solid growth despite a rocky 2019 landscape. Retail banking has been resilient with good growth in deposit income, according to Yee-Mann Hau, CFO, Hong Kong at Standard Chartered Bank, adding that income in the first half of 2019 was broadly stable compared to the same period in the prior year. She said all segments saw improvement despite global macroeconomic uncertainty and local unrest, with private banking recording robust growth on the back of previous investments. Meanwhile, corporate and institutional banking as well as commercial banking groups showed “reasonably well” performance during the period. Winning with a digital-powered customer experience The bank said customer experience is at the core of every bank’s winning strategy, but Standard Chartered is raising the bar in this very competitive area by offering exemplary omni-channel customer experiences. The SC Mobile was further enhanced with new features, including the artificial intelligence-powered 24/7 virtual assistant Stacy, the SC Pay for Faster Payment System, online account opening and Mobile FX. The enhanced SC Mobile enables customers to quickly set up their bank account without having to step inside a physical branch and transfer to their friends and merchants instantly, whilst e-Statements and virtual assistant Stacy allow them to conveniently check relevant transaction and account details and approach for assistance all at one stop. The Mobile FX platform allows customers to perform transactions automatically at pre-set rates with personalised FX news and economic indicators, and unlock exclusive FX rates and cash rewards at different accumulated transaction tiers. These initiatives
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have helped boost the bank’s digital active client base by double digits. Nurturing a digital-driven culture As with all banks, Standard Chartered grappled with the challenge of sustaining its innovative streak due to the inherent traditional mindset in the banking industry. However, the bank was determined to infuse a digital culture throughout all aspects of its business segments, and this commitment culminated in the launching of the eXellerator innovation lab in Hong Kong. “The eXellerator is a space to test, learn and brainstorm with our customers while we encourage our colleagues to learn their own transformation and engage with the fintech community,” said Kong. The innovation lab was designed to encourage employees to not only come up with fresh and exciting ideas by themselves and with their teams, but also to ideate with customers. Since its establishment, the space has birthed many proof-of-concepts either via internal team meetings, lunch and learn sessions or fintech talks. “We believe the process of rewiring the DNA of banking involves a combination of innovation from the outside, innovation from the inside and obviously the creation of ventures. To be successful, one needs the combination of all three to create a flow of information and people that has a much bigger transformational impact than any pillar by itself,” said Andy Nam, Regional Chief Information Officer, Greater China & North Asia at Standard Chartered Bank. The bank has set up eXellerator innovation labs in Singapore, Hong Kong, Shanghai, London, Nairobi and San Francisco, which Nam reckoned are attractive avenues for his colleagues to present ideas that could potentially solve real business problems that clients either currently face or will likely
BANK OF THE YEAR INSIGHT
Standard Chartered is a leading international banking group, with a presence in 60 of the world’s most dynamic markets, and serving clients in a further 85. Our purpose is to drive commerce and prosperity through our unique diversity, and our heritage and values are expressed in our brand promise—Here for good.
• The history of Standard Chartered in Hong Kong dates to 1859. It is currently one of Hong Kong SAR’s three longest standing note-issuing banks. Standard Chartered incorporated its Hong Kong business on 1 July 2004, and now operates as a licensed bank in Hong Kong under the name of Standard Chartered Bank (Hong Kong) Limited, a wholly owned subsidiary of Standard Chartered PLC.
Mary Huen (second from left), CEO of Standard Chartered Hong Kong, launching the world’s first Belt & Road Relay at the Standard Chartered Hong Kong Marathon 2019
face in the future. A vital part of this ideation process is working closely with clients to know their needs at an intimate level, resulting in tailor-made solutions. “The eXellerator innovation labs are where we innovate from the inside by creating catalysts for change,” said Nam, citing how more than 1,800 ideas have so far been submitted through the “intrapreneurs” programme, which is an internal term the bank uses to refer to staff that put on their thinking caps and propose ideas. “We design for our customers from the start and continuously, leveraging human centred design and rapidly testing and iterating to deliver the experience customers want from us.” Across the 10 countries where the eXellerator program is running, 29 teams have been formed, of which 15 have advanced to the prototyping and proof-of-concept or PoC stages. Nine teams have received funding to bring their ideas to life with the aim of global reach and making waves in their target markets. Nam noted that the eXellerator program has not only driven the creation of new products, but also opened the way to instilling an innovation-centric mindset among banking staff, which will be critical if the bank is to remain relevant in the coming years. “The skills we provide our intrapreneurs are those we are putting into practice with our businesses and are in our minds fundamental for being relevant in banking in the future—across different levels including leadership,” he said. “In short, we hope to find the next generation of bankers to shape the industry.” The Hong Kong banking industry has taken notice of Standard Chartered’s efforts and thought leadership in the digital space, with the bank’s retail banking team receiving more than 10 industry awards in 2019, such as Best Digital Banking and Best Digital Bank. Taking banking to the next level As Standard Chartered looks toward a future that will likely continue to be defined by the age of data culture, it plans to focus on better leveraging on its data to provide better client service and improve risk management. It will also put priority in enhancing analytics capabilities, leveraging on big data and personalised communications and solutions to its key affluent
Opposite page: Standard Chartered Bank at HK FinTech Week (Top left); Standard Chartered’s Exchange Square Branch (Top right); Staff Celebration of Standard Chartered Bank’s 160th Anniversary in Hong Kong (Bottom) and emerging affluent clients based on customer behaviour and patterns. However, the bank noted that whilst its digital channels will receive further investments to bolster speed and efficiency, physical and face-to-face channels will likewise receive continued allocations given the value that Hong Kong clients still place on human interaction. The bank also understands its role as a socially responsible corporate citizen in the community. In the past 22 years, Standard Chartered sponsored the Hong Kong Marathon to promote a healthy lifestyle and the marathon spirit in Hong Kong. It has become the largest participatory sporting event in Hong Kong, with more than 70,000 runners participating in the talk-of-thetown event each year. The bank is keen on driving success by nurturing leadership and culture that embraces diversity and inclusion. “Our differentiator is our network— the diversity and mix of our products, people and places,” said Florence Wong, HR Head at Standard Chartered Bank, adding that the bank builds inclusivity through so-called People Leaders, with over 90% having attended its Inclusive Leadership Programme. “As a diverse and international workforce, we need our people to understand the power of our network and how to bring together our strengths around our clients, to think broadly and across borders, and put the client first in all of our decision making,” said Wong. “Our people and our leaders need to be relentless in breaking down barriers, constantly improving how work gets done and increasing productivity.” Huen herself believes that the bank can only reach its full potential when it constantly nurtures a culture of diversity and inclusion. “When I first started my career in banking, I was often one of the few, if not the only female, in the meeting room,” she shared. “Over the years, there has been an encouraging representation of female executives, thanks to a conscious will to be more diverse and inclusive in the community regardless of one’s gender, ethnicity and age.” “In driving gender diversity at work, Standard Chartered has done a lot to champion this important cause,” Huen added. “Diversity in leadership brings the most out of the workforce and this is something we should never take for granted.”
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ARCHIKRIS DESIGN GROUP
THE UNSHAKEABLE ARCHIKRIS DESIGN
rchikris Design Group, the mother company of residential design house Zchron Design and commercial practice Krisveman Design, has retained the Interior Design awards for 13 consecutive years. Helmed by interior veteran Nison Chan, the team has been busy turning around residential and commercial space defined by decadence, elegance and well-thought-out grandeur for all bon vivant in town. For more than 20 years, Archikris has been steadfast in adherence to the principles of integrity, punctuality and budgetary control that set the practice apart in today’s interior design world. With rigorous space planning and deep understanding of the details, Archikris is one of Hong Kong’s foremost interior design houses that boasts a list of heavyweight clients marked by return business and referrals. A vote of confidence One of the firm’s proudest reappointed assignments is a housing renovation project in Beacon Hill, an upscale residential area in Kowloon Tong prized for its exclusivity. Given the firm’s track record of delivering projects on time, the homeowner reappointed the firm to work on his other home in Yau Yat Chuen, also a wealthy neighbourhood in Kowloon Tong, before referring the service to a friend who lives in the Mid-levels. “Long-lasting client relationship is built on trust,” states Chan. “Keeping our promises to clients, delivering on time, using the right materials and keeping our project cost estimations accurate are key to build trust with clients and to cement client relationships,” Nison says.
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Another notable repeat client is Sa Sa International Holdings. The team was first entrusted with a residential project for the group’s vice president on her deluxe apartment in Deep Water Bay. Impressed by Archikris’ longtime commitment to deliver on time, the cosmetics retailer then assigned the firm to handle the group’s 15,000 square feet headquarters in Chai Wan. “Clients coming back to us because we honour our commitments with them. It is this core value that sets us apart from the market norm,” Nison remarks. With a predominant focus on sizeable condominiums, Zchron has completed more than 100 luxury residential projects over the past three years with an average size of 2,000 square feet. This year also sees a total of five housing projects completed with domestic escalators. “Design firms that are capable to handle the installation of domestic escalator is rarely seen in Hong Kong. It cannot be done without a professional team comprised of experienced architects and engineers.” Nison believes building trust with clients is key to deliver bespoke luxury homes that reflect the characters of the occupants. “A good design requires a comfortable balance between the designer’s insights and client requirements,” he stressed. Its exuberant work for condos can be found across some of the most prominent affluent properties in town, including a duplex in Jardine’s Lookout, the Century Tower and The Mayfair in the Mid-levels, The Masterpiece in Tsim Sha Tsui as well as the Ventris Place and Beverly Hill
INTERIOR DESIGNER PHILOSOPHY
Quality and punctuality underpin the company’s ethos and premium service that every client is guaranteed.
Archikris Design Group predominantly focuses on sizeable luxury residences with an average size of more than 2,000 square feet. Its work signifies the essence of opulence. The practice adheres to its core values of integrity, punctuality and budgetary control which contribute to keeping its list of heavyweight clients coming back. The Archikris team is straight with using high-quality materials from around the globe whilst maintaining price transparency.
Opposite page:A luxury house with swimming pool in Ho Man Tin. This page: An opulent design project at Celestial Heights and an upscale private housing estate on Quarry Hill (Top); Green design of Carlsberg office in HK (Bottom) at Happy Valley, to cite a few. Pre-eminent commercial design Another key focus for Archikris is commercial space. The group’s commercial discipline, Krisveman Design, stays at the forefront of infusing office and retail space with exquisite visual identity. Among them is a 20,000 square feet working premises for China Duty Free Group in Wan Chai, completed with modern silhouettes and upbeat colour scheme; a 12,000 square feet retail space for Donnabel Holistic Medical Beauty & Wellness in Central that exudes elegance; and a 15,000 square feet headquarters for Poly Property Group themed by a dash of oriental touch. Krisveman has retained a selection of renowned corporations and international labels through reappointed projects. Global brewer Carlsberg, for example, appointed the team twice on its 10,000 square feet offices. Meanwhile, high-end designer label Escada also reappointed the team on some of its working premises in town. “On-time delivery and budgetary control is of the utmost important when it comes to commercial design,” Nison states. “We’ve developed good friendships with our clients throughout the years.” Archikris
Design’s other prestigious commercial clients include Dr.Reborn, GMF Group, China Railway Construction Corporation Limited and LEICHT (Chest Apply Asia), to name but a few. Material matters With an acute attention to detail, Archikris’ work demonstrates tactile craftsmanship upholstered by refined and sustainable materials. “We provide our clients with high-quality construction materials from around the globe, and we make sure all basic home supplies meet international standards,” Nison explains, adding that “we keep material pricing transparent so that clients can make choices based on their budgets.” To keep up with business growth, the practice is set to open more branches in the coming year. Looking ahead, Chan reiterates the Archikris team will spare no effort in upholding the values of integrity, punctuality and budgetary control to ensure on-time and quality delivery from concept to completion that tailored to client’s needs. “We’ll continue to step up efforts to remain as a leader in the cluttered luxury interior sector with professionalism and integrity in mind,” Nison concludes.
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CONCORD MEDICAL LIMITED
COMPETITIVENESS THROUGH INNOVATION
oncord Medical Limited., though not well known in Hong Kong’s beauty and cosmetics sector, has developed over the years into a brand trusted by international consumers who believe that aesthetic maintenance and physical health are essential elements of selfconfidence and a positive way of life. The company’s philosophy—“always stay competitive”—is manifested in its efforts to consistently deliver products and services whose quality is worthy of top-performing enterprises in the market. This philosophy also applies to the mindset and behaviour of Concord Medical’s management and staff. Now on its 10th year of business, the company is recognised by award-giving bodies as a leader in innovative production. In August 2019, it received the top prize in the “Designed in Hong Kong Awards.” The rewards of dedicated work Denise Mak, Concord Medical’s director, traces the firm’s success to the efforts of its founder and managing director, Frankie Ng, whose competencies have been honed by two decades of industrial experience in Hong Kong and mainland China. Frankie “assisted the mainland staff to obtain experience in building up facilities as well as equipment and gave technical support in using raw materials. At the same time, he kept up with the pace of Hong Kong because he believed that the region was a wonderful place for diversification and connection with the world. It’s a base where he could always broaden his horizon and knowledge,” says Denise.
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Even though Concord Medical excelled in serving as a bridge between mainland China and the rest of the world, the company has not been spared from challenges. For example, during the Asian financial crisis in 1997–1998, Concord suffered losses due to runaway debtors, an experience that was similar to the problem of many other small enterprises at the time. However, Frankie saw this challenge as an opportunity to initiate Concord Medical’s transformation into an industrial entity that provides “one-stop services to clients including product design, manufacturing, marketing, exporting, and brand building.” Thus, Concord Medical Limited formally began corporate operations in 2010. Its location enabled it to have easy access to professional advisers from the Hong Kong Polytechnic University while also reinforcing its knowledge of American skincare brands and German dermal engineering technology. This strategic achievement has paved the way for the company’s entrance into medical skincare. Concord Medical’s manufacturing facility, which is located in Dongguan, produces medical grade products that are ISO certified. Approval from the US FDA and EU requires the company to abide by stringent production and management regulations. To ensure conformity with international standards, Mr Ng has focused on staff training and guaranteeing product quality through the use of clean production rooms and in-house ETO sterile facilities. Dealing with an evolving market In 2017, Concord Medical scored a market coup by manufacturing SiO
INNOVATIVE SKIN CARE TECHNOLOGY PHILOSOPHY
Concord Medical’s business philosophy is to “Always stay competitive,” which applies to management, staff, service and products.
Annual sales growth of 25% since 2014 An increase of 25% YoY in export volume as of November 2019 Purchase orders confirmed in the first quarter of 2020 on track with annual goal More than 100,000 IG followers for American Skin Care partner, SiO Beauty, in less than two years
This page: Frankie Ng, Concord Medical’s founder and managing director, being interviewed by the famous radio host Chan Wing Luk; Group staff and visiting customers in full suit during production Opposite page: Concord Medical Limited at MEDICA in Düsseldorf, Germany SkinPad, a skin rejuvenation pad made of medical-grade silicone. The result of a two-year R&D collaboration with SiO Beauty New York, this washable and reusable product revitalises skin in hardto-reach areas of the body. Effective in reducing wrinkles and improving underskin circulation, the skin rejuvenation pad saw a stunning 100% increase in sales growth since it was launched. In the past two years, the medical formula for the pad was adjusted and new shapes were designed to fit different body parts, thereby improving the product’s effectiveness, durability, and appearance. At present, Concord Medical must traverse carefully amidst uncertainties in the economic and political landscapes. However, these conditions—along with the trade war between China and the US—did not stop the company from establishing a Hong Kong factory in July 2019. The “Made in Hong Kong” skin physiotherapy pads were first shipped to the US at the end of October, and confirmed purchase orders are tentatively scheduled until March 2020. At this time, the goal was not only to serve its American clientele but also to develop an original product in collaboration with a local research institution. The outcome of this project is a scar care pad that was jointly developed with HK Polytechnic. After two months of renovation and factory registration, the Hong Kong team now consists of five technical people and three in the managerial and clerical division. Professionalism is a core value that is nurtured through intensive on-the-job training, which enables the personnel to develop a strong work ethic, resourcefulness, and consideration for others.
A clear path to the future The popularity of Concord Medical’s skin physiotherapy pads in foreign markets is a major factor in its thriving export business. Participation in international trade fairs has also brought significant insights into the government’s role in supporting homegrown SMEs and brands. Denise cites the influence of the South Korean government in turning many local brands into global bestsellers. A helpful approach, she believes, is to simplify the application and registration process for aspiring manufacturers in Hong Kong. She also hopes that after the success of Concord Medical’s products in markets such as Germany, Sweden, Australia, Singapore, and Japan, more Hong Kong-based consumers will also appreciate the efficacy of these products. Denise said Concord’s presence in the Düsseldorf MEDICA event has yielded new ideas, particularly related to the trend of wearable electronic devices that are in close contact with human skin. “We believe that the ‘medical-grade silicone’ we are using now has great potential to be developed further because we are good at improving the adhesiveness of our skin care pads as well as lessening the effects of allergies.” Aiming to continuously enhance its product quality and marketing strategy, as well as leading the push towards improvement in Hong Kong’s policy of supporting the local manufacturing industry, Concord Medical is definitely using innovation as its main instrument for growth in an evolving, competitive market.
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VISIONARY RESTAURATEUR MARKS 25 YEARS OF SUCCESS
ocated atop Tsim Sha Tsui’s dazzling retail and entertainment centre is Nanhai No. 1, a glamorous Michelin-starred restaurant serving contemporary Chinese cuisine. Through its sophisticated selection of freshly-caught seafood from the South China Sea, patrons can engage in an epic adventure of luxury and discovery while enjoying breathtaking views of Victoria Harbour. Nanhai No. 1 is one of the most iconic concepts in Elite Concepts’ diverse portfolio of high quality freestanding restaurants. For over 25 years, the company has been at the forefront of Hong Kong’s hospitality industry, crafting innovative and timely dining concepts including American Country, French Provençal, Rustic Italian, Slick Japanese, and Retro-Vietnamese. Elite Concepts’ restaurants have revitalised the city’s favorite dining and entertainment districts such as Lan Kwai Fong and Knutsford Terrace. Revel in a luxurious adventure “At Nanhai No. 1, our glamorous ‘sea-and-be-seen’ dining room with soaring picture windows will attract Hong Kong and visiting gourmands with our pioneering approach to Chinese cuisine,” explains Antonio Chan, General Manager of Nanhai No. 1. Named after the pioneering Chinese naval explorer Zheng He’s 15thcentury ‘treasure fleet’, the 200-seat Nanhai No. 1 is envisioned as a culinary voyage of exploration inspired by the sea. Longquan celadon, the main trading product of the day, are also displayed.
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The restaurant offers seafood prepared in a variety of culinary expressions – ranging from roasted, steamed and sautéed to baked, stir-fried, pan-fried or grilled. Signature dishes include King Prawn in Bang Sauce, Superior Shark’s Fin with Crab Roe in Soup and Pan Fried Gigan Scallop. “Our guests love our fried king prawn served in bang sauce with fried mantou (金榜醬煮大蝦),” Antonio shares. “Whenever we recommend this dish to guests, we always receive very positive comments. Guests like the sauce very much and we always get asked how to make the sauce and what ingredients are inside,” he says. The classy, expansive interior is decorated with historical maritime artefacts, such as ancient trading route maps plotting Zheng He’s voyage and a scale model of the original ship. Longquan celadon, the main trading product of the day, are also prominently displayed in various areas of the restaurant. All set before soaring floor to ceiling windows which frame jaw-dropping views of the Victoria Harbor. “The restaurant also offers the city’s sexiest rooftop deck, Eyebar, where the glitterati soak in the cool maritime vibe while sipping exotic fruit cocktails under the stars,” Antonio adds. This luxury bar is named after the ‘eye’ painted on the prow of old Chinese ships to protect the sailors from evil on their voyage and offers over 100 different types of wine, with 30 types of grape variety from 12 different countries.It also boasts a wide range of exotic fruit
INNOVATIVE F&B CONCEPTS PHILOSOPHY
Elite Concepts believes that every hospitality concept must show an understanding of local tastes and maintain a strong connection with the people and their culture. With both a firm footing in the soil and a limitless capacity for innovation, Elite Concepts will continue to set the course for hospitality trends in Asia.
• Nanhai No.1: 2 consecutive years, 1 Michelin Star (2011 & 2012) • Eyebar is a perfect place to bring you on the top of the world of excellent services and convenience. The only bar with an indoor and alfresco lounge that suits everyone’s taste. • Elite Concepts was founded in 1991 to bring high-quality free-standing restaurants to Hong Kong. It has evolved into a dynamic enterprise which transforms visionary ideas into commercial successes.
Opposite page: Antonio Chan, General Manager of Nanhai No. 1 cocktails, wines and spirits, along with its signature seafood bites. The Eyebar’s signature cocktail, the Suzie Wrong, is best enjoyed while marvelling at the glittering architectural array of Asia’s World City. The bar inside Eye Bar runs the entire length of the restaurant, offering both indoor and al fresco dining on the city’s highest open-air rooftop deck. Guests can relax on the sofas in the openair patio, appreciating the exotic decoration of the bar while overlooking the panoramic Victoria Harbour. Reinventing hospitality Elite Concepts was founded in 1991 with the aim to fill a market niche for high-quality free-standing restaurants. It has since evolved into a dynamic enterprise with the capability to transform visionary ideas into commercial successes. With an ambition to “open up a new dining world conceiving new concepts which can delight food lovers,” Paul Hsu, founder and executive director of Elite Concepts, diverged from the norm of securing high-traffic locations in favour of quiet alleys such as Lan Kwai Fong and Knutsford back in the day. The group began life at Lan Kwai Fong in 1991 with The American Pie, a dessert joint offering apple crumbles as well as cream cakes and pies at a time when American desserts had limited supply in Hong Kong. Now, Elite Concepts restaurants including yè shanghai, nanhai no.1, eyebar, Deng G and SHU K are all widely acclaimed for cutting-edge interior design, and famous city panoramas, each with a story of its own. The group’s longevity is dictated largely by filling the culinary gap with new elements. “Good food is just the fundamental, many other elements count,” Hsu says. “We
know we are going far and beyond, and we keep working on new chemistries, surprising our customers with something from time to time.” Elite Concepts believes that every hospitality concept must show an understanding of local tastes and maintain a strong connection with the people and their culture. With both a firm footing in the soil and a limitless capacity for innovation, Elite Concepts will continue to set the course for hospitality trends in Asia. “Young, growing, bursting with potential, the acorn embodies our philosophy. We’re a youthful, can-do company, with young ideas ready to grow into tomorrow’s hospitality trends. That’s why we’ve taken this western symbol of growth, success, and permanence and given it new Asian roots. In order to find new markets, expand clientele base, and achieve new successes, Elite Concepts has taken its vision one step further by working with synergy partners and striking out into new directions. For instance, its game-changing yè shanghai concept has expanded into various lifestyle capitals of the world, now with branches in Hong Kong, Kowloon, Shanghai and Taipei. The company is also working on bringing its concept to Beijing, Berlin and New York. For Nanhai No. 1 and Eyebar, Hsu shares that the company is planning to open more branches under this concept in Sanya, a bustling resort city on Hainan Island. “We think globally. We have a clear idea of our position in the market and who our customers are.With this in mind, we have product diversification riding on our target market, giving us another clear direction of development. You can now find an Elite Concept far beyond Hong Kong, and our offerings cater to people all over the world,” explains Hsu.
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ON REACHING NEW HEIGHTS
TLife Insurance Company Limited (“FTLife”) is one of the most wellestablished life insurance companies in Hong Kong. In 2019, it joined New World Group and became a wholly-owned subsidiary of NWS Holdings Limited. From the protection for children’s health and education to savings and retirement protection for customers’ twilight years, FTLife journeys alongside their clients as they attain financial freedom that ultimately leads to fulfilling lives. FTLife strives to become Asia’s premier insurance group by cultivating connections with their clients and bringing new experiences beyond insurance. Integrating in New World Group’s ecosystem, FTLife will strive to provide innovative products and services to meet the changing needs of customers, combining the outstanding network, resources and strengths of New World Group. Sturdy roots Taking pride in their solid foundations and banking on their heritage of professionalism and excellence in service, FTLife has served the Hong Kong community for over three decades, providing a diverse showcase of financial protection and wealth management products. The customer-centric company is backed by a strong professional team of licensed insurance agents. This professional distribution network became the driving force behind the enterprise’s robust business growth, and the global stage has not failed to acknowledge that a growing number of FTLife consultants have been granted membership at the
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Million Dollar Round Table (MDRT), considered to be the pinnacle of success in the insurance industry. Actively investing in sales channel management, FTLife is rapidly and steadily expanding its sales team via various channels and innovative platforms. To maintain this high level of professionalism, FTLife established a Financial Talent Development Center in 2019, an outstanding financial talent platform that unleashes the full potential of FTLife licensed insurance agents through recruitment, training and development. To attract high-calibre licensed insurance agents in joining the company, FTLife hosts career opportunity seminars, wealth management trainings and career expos. To meet the needs of consultants who have different aspirations, customised professional training programs are offered with clear learning paths and goals. The FTLife Financial Talent Development Center also boasts a solid leader development program where experienced trainers and industry elites monitor consultants’ performance and career-building progress so that the latter can become industry leaders. Besides focusing on talent development, Angela Yam, Chief Marketing Officer, expressed that FTLife takes pride in its product offerings. The Regent Insurance Series offers a Policy Continuation Option as well as unlimited changes of the insured, which enable perpetual succession of family wealth. This means clients achieve long-term returns and whole life protection, which translate to a hassle-free retirement, quality education for children and extension of succession for future generations. Meanwhile, “HealthCare 168” Critical Illness Protector 2 offers various
LIFE INSURANCE PHILOSOPHY
FTLife seeks to become a leading insurance group in Asia. It serves individual and institutional clients from a diverse portfolio of financial protection and wealth management products. FTLife aims to excel by cultivating lasting relationships and dedicates itself to providing clients with best-of-breed financial services to help them lead fulfilling lives.
Its financial status is confirmed by global rating agencies (Aby Fitch Ratings and Baa1 by Moody’s).
In 2017 and 2018, FTLife recorded annualized premium equivalent growth of 20% and 44%, respectively. Supported by annualized premium equivalent growth and continuous product mix optimization, FTLife’s new business value increased by 89% year-on-year in 2017 and 74% year-on-year in 2018.
This page: FTLife takes pride in its product offerings that help customers realise their dreams at different life stages. Opposite page: FTLife is the only insurance company in Hong Kong to display two neon signs overlooking Victoria Harbour. (Photo credits to POAD) innovative product advantages as well as extra benefits. The “HealthCare 168” Critical Illness Protector 2 encompasses full coverage against 168 illnesses, including all congenital critical illnesses and juvenile illnesses which have not yet been detected at policy issue. Besides providing exceptional critical illness protection, FTLife also introduced the health manager concept. Their health manager platform is committed to increasing health awareness among clients through regular health talks and workshops as well as online sharing of latest health information. On the other hand, the company remains at the forefront of technology with versatile customer services such as the all-new mobile app “Reach FTLife”. With a simple touch of a button, “Reach FTLife” allows clients to pay premiums, switch investment choices, access policy details, update contact information and submit claim applications. The new app “Reach FTLife” provides 24-hour services enabling customers to manage policies conveniently at their fingertips whenever and wherever they may be. The company promises to enhance the mobile app with new functions and offer more privileges for better customer experience. “The culture of prioritizing both their clients and consultants is the secret of FTLife’s continued success,” Yam said, noting that this enables the 8,500 square feet customer service center in the heart of Tsim Tsa Tsui to fly to new heights and set their eyes onto the next goal: developing the insurance ecosystem of the Greater Bay Area. For the future FTLife is in a good position to reap the fruits from the robust long-term
outlook for the region’s life insurance industry, which is primarily driven by a growing high net worth population, an aging population and Hong Kong’s high savings rate. All in all, the future shines bright for FTLife, and as their hummingbird wings continue to take them to greater heights, the company takes their customers with them in their flight towards financial security and stability. FTLife will continue to adhere to the customer-centric purpose, play a synergistic effect with the business of New World Group.
FTLife Insurance Company Limited (Incorporated in Bermuda with limited liability) This document is intended to be distributed in Hong Kong only and shall not be construed as an offer to sell or a solicitation to buy or provision of any of our insurance products outside Hong Kong. FTLife Insurance Company Limited hereby declares that it has no intention to offer to sell, to solicit to buy or to provide any of its products in any jurisdiction other than Hong Kong in which such offer to sell or solicitation to buy or provision of any product of FTLife Insurance Company Limited is illegal under the laws of that jurisdiction. The information in this document is intended as a general summary of information for reference only and does not constitute financial, investment or taxation advice or advice of whatsoever kind. You are recommended to seek professional advice from your independent advisors if you find it necessary. Please refer to the relevant product brochures and policy provisions for details.
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HANG SENG BANK
EVER GROWING FOR THE EVER CHANGING
ver growing—this is the meaning behind the name of Hang Seng Bank. This is also the mission of every business and as a longterm partner of commercial customers, Hang Seng Bank actively supports growth through a full range of commercial banking services, from business account opening to loans and trade financing, as well as cash management. Entrepreneurial corporate and local businesses are integral to the Hong Kong success story. With roots sinking deep in their home, Hong Kong, the bank spares no effort in building a healthy and long-lasting relationships with their clients, providing them necessary assistance and services throughout different milestones of their business development. As business needs change, Hang Seng Bank keeps up with the times by shifting to a more digital approach in order to maintain their service excellence. Incorporating innovations to enhance their services and introducing new initiatives as part of their ongoing efforts in fintech development, they are determined to live up to their name and mission: to grow alongside their clients. The secret to success As of June 2019, the company’s market capitalisation amounted to HK$371.9b—a testament to their ever-growing success. Considered a company milestone, Hang Seng Bank takes pride in providing timely and tailor-made solutions for their clients, which are possible thanks to the close ties formed between customers and the bank’s relationship managers.
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Ultimately, the Professional Relationship Management Team is the secret to Hang Seng Bank’s continued success alongside their philosophy of working towards service excellence and forming a longlasting relationship with their customers. “Being a high-flyer is to provide services and products that exceed customers’ expectations, which can be a moving force in their business development,” said Donald Lam, Head of Commercial Banking at Hang Seng Bank Limited. Support for SMEs, innotech sector Besides focusing on their commercial aspects, Hang Seng Bank has also crafted measures to support SMEs in Hong Kong. The bank fully supports the SME Financing Guarantee Scheme which features guarantee fee subsidy and trade service fee discount. In the latest 90% Guarantee Product, the bank further provides full handling fee waiver and full guarantee fee subsidy. The scheme was designed to boost SMEs’ productivity and give them a competitive edge amidst the challenging business environment. Hang Seng Bank also recognises the importance of a thriving innovation and technology community and its role as a growth engine for an economic future of prosperity. Acknowledging the momentous trend, the bank collaborates with the Hong Kong Science & Technology Parks Corporation and and Hong Kong Cyberport Management Company Limited to spearhead the launch of the company’s Inno Booster business solutions.
BEST COMMERCIAL BANK PHILOSOPHY
Strive for service excellence and build long-term relationship with customers.
Founded in 1933, Hang Seng Bank serves over half of Hong Kong’s adult population with around 280 service outlets.
With a team of professionals in eight business banking centres, the company provides a full range of commercial banking services, from business account opening to loans and trade financing, as well as cash management, etc.
Opposite page: Donald Lam, Head of Commercial Banking at Hang Seng Bank (right); Amos Chan, Head of Business Banking (centre); and John Wong, Head of Global Liquidity and Cash Management (left). The initiative is a tailor-made banking and finance solution for eligible innotech companies. It lets them secure loans up to HKD500,000 and avail other preferential banking service offers. By equipping tech elites with the necessary financial boost, Hang Seng Bank promotes empowerment across the innotech sector, allowing innotech companies to further develop to the next business stage. Digital innovations To adapt to their clients evolving needs and maintain their service excellence, Hang Seng Bank made a series of enhancements in their payment services, forex functionality, cash management, and online application platform. “Hang Seng is committed to providing commercial customers with simpler, faster and more convenient service experiences by continuing to invest in digital innovations and technology,” Lam said. BERI, the bank’s artificial intelligence chatbot for business banking service, has been enhanced to provide a seamless forex transactional experience from pre-logon to post-logon, further moving towards a contextual banking experience. Complementing the comprehensive forex services is the forex order watch, which lets clients set up a Target Limit Order. This means that when a customer’s pre-set target rate is met, forex buy and sell will be conducted instantly on the spot. Faster and simpler process can also been seen in commercial credit card application, loan services as well as setting up an account. Incorporating the O2O platform, which features document online uploading and a live chat window that can assist customers in any queries during the application process, business owners can enjoy faster
and simpler banking services remotely online. As for the cash management aspect, Hang Seng Bank extended One Collect, their all-in-one digital payment collection solution for both online and offline merchants with greater support via faster payment systems (FPS) and a new FPS QR code solution, accelerating the cash flow cycle of the businesses. Hang Seng is also dedicated to digitalise trade services to enhance business’ efficiency. eTrade Connect, an industry-wide trade finance blockchain platform, was launched to reduce risk and surpass trade financing accessibility. Trade Transaction Tracker enables clients to monitor the status of trade transactions in real time via a mobile app. The bank now uses Optical Character Recognition to draw out data from a client’s image and populate the said data into the workflow document management system, reducing handling time significantly. Growing stronger With their long-standing reputation and their commitment towards service excellence, Hang Seng Bank’s roots continue to sink deeper as they flourish across Hong Kong. When asked about their outlook for the future, the company circles back to its philosophy, which remains centred on their clients and their financial growth. As new trends emerge and revolutionise the entire banking experience, one can expect Hang Seng Bank to thrive and continue to enhance their services to provide only the best for their customers. After all, they are ever growing, and growth does not happen without executing change.
To borrow or not to borrow? Borrow only if you can repay!
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FROM CHINA TO THE WORLD
s the transport and logistics industry evolves, consignment has expanded to adapting new technologies when it comes to delivering goods and satisfying customer needs. Determined to maintain their status as an industry leader, Headwin Logistics constantly improves their skills, system and service level in order to reduce customers’ logistics costs. “We have been constantly improving our ability, resources and technology to reduce cost for customers, improve efficiency and upgrade our IT to meet with the technology driven logistics service provider,” the company said in an interview. With their latest digital innovation and their commitment to deliver outstanding services to their global clientele, Headwin Logistics soars high as a key player in the international logistics market. Honouring their roots Established in 2001 in Ningbo, China, Headwin Logistics is one of the premier providers of international logistics solutions. Their business revolves around ocean and air freight forwarding, buyer’s consolidation, Non-Vessel Operating Common Carriers (NVOCC), project logistics, third party logistics, as well as supply chain management. Their NVOCC services are approved not only by China’s Ministry of Communications. They have also been approved by the USA’s
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Federal Maritime Commission. The company also works as the class A sales agency for air freight transportation. They have also earned approval and certification from the China Air Transport Association. Despite being grounded in China, Headwin Logistics runs offices, branches and subsidiaries in multiple locations such as Los Angeles, Dallas, New York, and Hong Kong. As a global agent, the transport and logistics enterprise has cemented a worldwide network comprised of over 300 overseas agents in 81 countries, which allows them to provide ocean and air freight forwarding as well as multimodal transportation services for import and export trade between primary Chinese ports and major ports across the globe. Consequently, they deliver quality international logistics solutions for over 30,000 clients and offer space booking, rate consultations as well as customs brokerage services for various domestic and foreign counterparts. Upon undergoing rapid development for over 19 years, Headwin Logistics has become the primary forwarder of major shipping lines and airlines. True to their mission Based in China and serving to global—these words are etched in Headwin Logistics’s day-to-day operations as one of the country’s leading logistics’ companies. From the minute a client reaches out to them for their full logistics services to the moment the customer’s cargo have been delivered, Headwin Logistics is committed to put
LEADING PROVIDER OF INTERNATIONAL LOGISTICS SOLUTIONS PHILOSOPHY
Headwin Logistics’ mission is to keep learning, keep innovating and continuously push up our competency level and service level.
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010-2019 – Top 100 China 2 International Freight Forwarder 2010-2019 – Top 50 Air Freight Forwarder, Top 50 Sea Freight Forwarder 2015 – Top 100 Enterprises Logistics Brand Value 2016 – Top 10 Business Innovation Company 2016 – Chairman, Bin Liu Top 10 Entrepreneurial Leaders 2017-2019 – Credit Management Model Enterprise 2018 – Best Service NVOCC 2019 – Freight Service Innovation Award
This page: Mr. Bill Liu, Chairman of Headwin Logistics Opposite page: Headwin Logisitics’ head office their best foot forward when it comes to logistics and transport. The company’s over 500-strong team of trained logistics professionals tailors solutions to meet the unique needs of each client, carrying on their objective to provide clientele with costeffective personalised service and custom-made logistic models. “We want to hear our customers saying that Headwin Logistics is a trustworthy company,” they said, stating that this has been the organization’s mission all along. Whilst their performance has earned them a broad international clientele and has helped them achieve overall business growth, the organisation has hopped on board the technology innovation training with the launch of their newest digital logistics platform, PLOUTO 2.0. PLOUTO 2.0 is a purchase order management system that provides better offline and online visualisation to the O2O integration of the company’s professional service. Keeping the satisfaction of their customers in mind, Headwin Logistics embarked towards the digitalisation path with PLOUTO 1.0, which was incorporated into company operations in 2010. PLOUTO 2.0 is an upgrade that boasts key improvements to customer service. Since its incorporation, the company has been on the path of transformation, changing its identity from a traditional logistics company to a visual digital logistics company. Their efforts have paid off, since being established in 2001. They now enjoy an annual revenue that amounts to over RMB 1 billion. Moreover, large international buyers and manufacturers also trust Headwin Logistics’ capabilities as a third-party logistics partner and supply chain solutions provider. With their utmost dedication to providing premier logistics and transport services across the
globe, it is no surprise that Headwin Logistics is trusted by many. As expected, the company has also garnered multiple awards and accolades for their performance. In 2018, they were listed in Ningbo’s Top 100 Best Service Companies and Top 100 Most Competitive Companies. In 2017, they were also included in China’s Top 100 Freight Forwarder list. Meanwhile, in March 2018, Cathay Pacific and Dragonair recognised the organisation as the Best Sales Agency in their Annual Commendation Conference, where they have been a continuous winner for 4 years (2015-2018). A stellar future As Headwin Logistics bags another accolade as a Hong Kong Business High Flyer, customers can expect the company to continue being a preeminent figure in the transport and logistics industry. “Being awarded with the ‘leading provider of international logistics solutions’ means a lot to us also serve as a recognition of our teams’ never-ending belief in our hard work and honest objective to provide professional and customer-oriented services to our customers,” the company said in an interview. In the coming years, customers can look forward to the enterprise’s investments on internet applications, big data, crossborder integration, online platforms, blockchains as well as supply chain finance. They can also expect enhanced services as well as more digital innovations that make logistics seem like a breeze. As new technologies shape the future of the logistics industry, Headwin Logistics will continue to be an industry leader, merging cutting-edge, future-forward technology with their commitment to their extensive clientele.
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HKBN ENTERPRISE SOLUTIONS LIMITED
PASSIONATE PURSUIT OF PURPOSEFUL PROFIT
o make Hong Kong a better place to live—this is the core purpose that premier Information and Communications Technology (ICT) service provider HKBN Group (HKBN) upholds. This is also the same promise that fuels the group’s enterprise solutions arm HKBN Enterprise Solutions (HKBNES) on its transition from a telco to an ICT solutions leader by offering a wide range of ICT solutions to help customers do business easier. Established in 1999, HKBN has always been dedicated to providing a full range of services such as broadband, data connectivity, managed Wi-Fi, mobile, voice communications, integrated cloud solutions, data centre facilities, business continuity and information security at an exceptional level of desirability that drives better uptake and overall, purposeful profits. While citizens would like nothing more than to see their home flourish and thrive, delivering this vow does not come easy, yet by uniquely combining the strengths of three leading telcos, a Wi-Fi expert, a cloud expert and a preeminent technology provider, HKBNES has unleashed the power of business with a full suite of ICT solutions. “We believe the role of purpose, when unleashed by more businesses with premier ICT solutions, can have a transformative effect to make the world a better place,” said Billy Yeung, Co-Owner and Chief Executive Officer - Enterprise Solutions, HKBN. Combined strength of tri-carrier network diversity Constantly looking for and delivering new ways to disrupt the market, HKBN has become a leading ICT solutions provider to both enterprise and residential markets, thanks to their strategic integrations. Throughout this
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journey of incredible change, the group’s goal has remained the same: to give customers the best, the most innovative and reliable service possible. Exceptional to Hong Kong, HKBN is the city’s only carrier that possesses a tri-carrier fibre network that combines the company’s strength with New World Telecom (NWT) and WTT networks. Covering 2.4 million households and over 7,200 commercial buildings and facilities, this unique tri-carrier network allows customers to enjoy unprecedented diversity and resilience. The total investment of these tri-carrier future-proofed fibre networks was around $15 billion. Returns from the said investment are now ripe for picking. Additionally, HKBN have also placed powerful cloud pioneer I Consulting Group Limited (ICG) under their belt to aid enterprise customers in achieving success in digitalisation through the incorporation of avant-garde cloud technology. Renaming the cloud expert to HKBN Enterprise Solutions Cloud Services Limited, HKBNES now has a multi-cloud trusted adviser that can serve both customised and standardised cloud solutions, be it private, public or hybrid solutions. “We are now well-positioned to take a holistic approach from reliable network infrastructure, superb connectivity to sophisticated system integration support with a full-suite of ICT solutions. Our vision is to drive innovation and facilitate technology adoption that in turn drive business growth serving all business sectors in Hong Kong,” explained Doris Chan, Co-Owner and Chief Operations Officer - Enterprise Solutions, HKBN.
BEST NETWORK, BROADBAND, CLOUD & ICT SERVICES PROVIDER PHILOSOPHY
HKBN is driven by a passionate pursuit of Purposeful Profits, striving to become Hong Kong’s most preferred Information and Communications Technology (ICT) solutions provider.
HKBN continued to deliver a solid set of results in FY19 after consolidating four months of results of WTT Group. Group revenue, EBITDA and Adjusted Free Cash Flow (AFF) increased year-on-year by 29%, 45% and 30% respectively, to over $5.1 billion, $1.7 billion and $750 million.
The company’s enterprise revenue increased by 69% year-on-year to over $2.3 billion. Total number of enterprise customers doubled to 103,000. Network covers over 7,200 commercial buildings & facilities.
This page: More than 1,000 HKBN Enterprise Solutions Talents joined hands in expressing their determination to achieve heights for FY20! The group’s strategic acquisitions have yielded in an expanded network coverage from 2,400 to 7,200 commercial buildings and facilities and a staggering customer base increase from 57,000 to 103,000 enterprise customers. HKBN has completed the acquisition of preeminent technology partner and system integrator JOS and renamed it to HKBN JOS Limited. This acquisition will cement HKBNES’s position in the system integration and connectivity space and provide essential value creation opportunities and revenue synergies to both entities’ wide customer bases. Stronger as ONE At HKBN, management and Talents believe that to succeed means to evolve relentlessly. Broader coverage. More innovations. The latest technologies. With the digital world sprouting exciting new possibilities, the group is delivering even better services to make daily life easier and doing business far more profitable. “To achieve all this, we’ve accelerated expansion of our expertise through mergers and acquisitions, and spurred change on the inside. By uniquely combining the elite strengths of acquisitions and mergers, namely, Y5Zone, NWT, ICG, WTT and JOS to our bench, we have transformed our competitiveness and capabilities to create one united, stronger HKBN – ready to disrupt and lead the market,” NiQ Lai, Co-Owner and Group Chief Executive Officer, HKBN explained. Running HKBN with skin in the game To foster growth, eclipse competition and deliver outstanding shareholder returns, HKBN incorporates a unique Co-Ownership plan with strong interest alignment from an enlarged Talent base, explained NiQ. NiQ says that the group’s leadership is powered by Co-Ownership plans, which grants all supervisory and management-level Talents to voluntarily invest their own savings to obtain HKBN stocks.
The broad-based Co-Ownership maximises a kind of Legal Unfair Competitive Advantage (LUCA), which drives HKBN Talents to work passionately for success, and ultimately, strive to deliver better shareholder returns. In August 2019, an overwhelming number of shareholders approved CoOwnership Plan III Plus, which offers 1,200 out of 6,000 Talents the chance to become HKBN Co-Owners. The chance to put “skin in the game” with a common goal – to achieve assertive market share gains and operating efficiency. This initiative will begin in 2020. As both investors and Talents, HKBN’s Co-Owners are motivated to monitor all aspects of the group’s performance and competitiveness. By throwing their hat in the ring, HKBN’s dedicated Co-Owners always have the group’s best interest at heart. More than ready to disrupt and lead At present, HKBN serves one out of three families and one in two active enterprises in Hong Kong. Throughout HKBN’s journey of incredible change, the group has never lost sight of their primary goal: to give customers the best, most innovative and reliable service possible. The future shines bright for HKBNES as well, and while the enterprise market is still dominated by its present Goliaths, there is space for competition, especially when they strive to offer better value at highly competitive prices. As new markets and opportunities emerge, HKBN rings true to their reputation for bringing disruption. With 5G set to be rolled out next year, the group seeks to take advantage of this highly beneficial technology, setting sights on every possible opportunity to bring 5G to Hong Kongers. Returning to their core purpose, the premier ICT solutions provider has one certain path paved for the future: to make Hong Kong a better place to live.
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HYATT REGENCY HONG KONG, TSIM SHA TSUI
A DECADE OF CARING HOSPITALITY WITH AN INSPIRING HISTORY
pened in 2009 at a prime location at the heart of Tsim Sha Tsui with harbour view guest rooms, renowned restaurants and bars as well as versatile event venues, Hyatt Regency Hong Kong, Tsim Sha Tsui has been a popular hotel to leisure and business clientele, dining guests, events and wedding guests ever since. To make travel free from stress and filled with success, Hyatt Regency Hong Kong, Tsim Sha Tsui is contemporarily and thoughtfully designed for guests to focus on the task at hand or come together to share, socialize and collaborate. Conveniently located in the heart of Tsim Sha Tsui’s business and tourist district with numerous shopping options, the hotel allows guests to travel around the city without hassle. Sitting atop K11 Art Mall with boutiques and restaurants and the first project of its kind to integrate art concepts and exhibits to enhance dialogues between local artists and shoppers, the hotel also features an exclusive retail experience that brings art, people and nature together. Apart from being a hub of business, retail, cultural development, there are also different colonial establishments around the district for tourists to visit, which makes it a much loved place for visitors. New cultural establishments were opened recently such as the Xiqu Centre and the High Speed Rail Station, more are slated to
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be opened in the coming years, including the M+ Museum and the Hong Kong Palace Museum. History When the hotel opened in 2009, Hyatt Regency Tsim Sha Tsui replaced the former Hyatt Regency Hong Kong located a few hundred metres away from its current location. The former Hyatt Regency Hong Kong, launched in 1969, was the first international Hyatt hotel ever opened. A true cultural hub and a landmark in the heart of Kowloon, Hyatt Regency Hong Kong has attracted many celebrities and VIPs, it was an iconic and popular establishment in the community. Hugo’s, founded on the fictional story of a Bavarian host and namesake Hugo Ludwig Wilhelm von Gluckstein who served only the best food and wine, was the beloved restaurant within the former Hyatt Regency Hong Kong. It has dedicated in the past decades to offering authentic and traditional European cuisines and has remained in the hearts of the loyal diners. Being brought over from the former legacy, Hugo’s continues to serve gourmet cuisine as a landmark of Hyatt Regency Hong Kong, Tsim Sha Tsui. Even decorations from the old Hugo’s were brought over, including a suit of armour, ornate mirrors, chandeliers, guns and shield plaques, the Christofle hors d’oeuvres and dessert trolleys.
BEST CITY HOTEL PHILOSOPHY
We care for people so they can be their best.
ituated in the heart of Tsim S Sha Tsui business and tourist district with direct access to MTR stations, Hyatt Regency Hong Kong, Tsim Sha Tsui offers 381 guestrooms and suites, state-of-the-art meeting and private dining facilities, including a pillarless ballroom and five meeting venues of various sizes. The hotel is home to three restaurants and a bar, including Hugo’s, The Chinese Restaurant, Cafe and Chin Chin Bar.
This page: From the loyal fans of Hugo’s, the mainstay from the former Hyatt Regency Hong Kong, to the repeated guests who keep coming back for comfortable accommodations and remarkable events, showing genuine care and making connection are the keys to success. Opposite page: The hotel is popular to leisure and business clientele. Creating connections and understanding through listening To celebrate Hugo’s golden anniversary in 2019, in a recent social media campaign entitled “How well do you know Hugo’s?”, the hotel launched a five-week challenge with 10 questions to ask its fans about Hugo’s secrets and history. “With more than 300 participations received, it was interesting to see that more than 40% of our fans could answer the questions correctly. A high engagement of the fans with the hotel were observed, and they even recalled the names of the restaurant manager of 20 years ago, the off-menu dishes back then, and the cigar gifted to gentlemen after meal. Some fans even suggested to have particular dishes return to the menu so that they can experience these dishes again, and we are considering it,” explained Per Kredner, General Manager of Hyatt Regency Hong Kong, Tsim Sha Tsui. Caring for the guests and the team, a key to success “It is important to create genuine connections and truly understand our guests including our associates. We live Hyatt’s purpose ‘We care for people so they can be their best’ to the max. In hospitality, human factor is the core essence to success and care is at the heart of our business.” Kredner said. As the first overseas Hyatt hotel back in 1969, Hyatt also celebrated the 50th year of going global in 2019. Today the Hyatt
network spans more than 875 properties in over 60 countries across 20 brands. And to mark this milestone, Hyatt also celebrated the second annual Global Day of Gratitude on 11 December 2019, not only guests were encouraged to send digital Gratitude Grams to their friends and families, Hyatt colleagues around the globe were also recognized for their sense of care and commitment that made Hyatt a unique and special place to work. Amazing participation was seen on the Global Day of Gratitude. Nearly 60,000 Gratitude Grams were sent from 20+ countries around the world. In return, Hyatt Hotels Foundation will donate $60,000 USD ($30,000 USD per organization) to Youth Career Initiative and Grads of Life – both of which prepare deserving and at-risk youth for lifelong careers in hospitality. The campaign went viral also on social media: across Hyatt’s social channels, more than 3,600 engagements – likes, shares and comments were generated by nearly 534,000 people. “The digital Gratitude Gram idea has been well-received. We have also prepared our signature cart noodles in Hong Kong style for our associates on the Global Gratitude Day. Every day we care for our colleagues, and our colleagues care for our guests to make them feel like home, and it’s this distinct guest experience that makes guests becoming our loyal guests and keep returning to our hotel whenever they visit Hong Kong again,” Kredner said.
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PROFESSIONAL INDEMNITY: NO INDIVIDUAL OR COMPANY IS SAFE
n today’s business world, where others are eager to gain advantage, litigation is increasing. Any claims against you, be they legitimate or unfounded, will require significant funds to investigate, defend and settle. The damage to reputation can also take a huge toll on your balance sheet. A Professional Indemnity (PI) or Professional Liability Insurance policy will indemnify insured parties for losses that they become legally liable to pay as a result of claims alleging a breach of their professional duty in the provision of their professional services, as well as associated legal costs in defending such claims. A lawsuit can be brought against any professional for alleged or actual mistakes and even if no error was made, simply defending these suits can be very costly. Professional indemnity insurance provides protection for businesses, sole traders or freelancers who offer advice or services to third parties, including both the general public and other businesses. As a result of the professional services that you offer, you owe a duty of care to those who might rely upon what you tell them. This means that a vital part of your insurance will be Professional Indemnity (PI) cover. A PI policy can offer coverage for compensation you may need to pay to correct a mistake you made, or cover any legal costs due to negligence, such as giving incorrect advice. Traditionally, the coverage was closely connected with high-risk
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professions such as lawyers, doctors, engineers, accountants and financial advisors. Nowadays, the term “professional” is applied broadly and as such many different professions should carry Professional Indemnity Insurance. Companies that perform professional services for others can make mistakes, overlook a critical piece of information, misstate a fact, or be misunderstood. They can be sued by their clients over allegations such as: error, omission, or negligence in providing a service; failure to provide a service, fraud, improper documentation, malpractice, nondisclosure, violation of state and federal law. When providing a quotation, insurers consider a number of factors in determining the type of coverage and terms and conditions that will be imposed. Considerations include (but are not limited to): scope of professional services provided; annual fee income or projected revenue; split of activities across different jurisdictions; claims history; the scope of coverage including the limit of liability and deductible required. What isn’t covered by a Professional Indemnity policy? Policies may vary according to the insurer but a professional indemnity insurance policy would typically not cover the following: Insolvency, Terrorism, Intentional damage or wrongdoing, pollution, general liabilities including property damage or bodily injury, pending or prior circumstances and/or claims.
INSURANCE BROKER – BUSINESS & GENERAL INSURANCE PHILOSOPHY
Our guiding principles are Independence, Competence, Client Support & Innovation combined with a holistic product range that enables us to offer the most appropriate solutions for our clients’ needs.
• • •
Business Class Group Core values Committed, loyal, and clientfocused team Staff with a depth of specialist experience coupled with ongoing training and mentoring to strive for continuous improvement Led by Directors with a passion for perfection and a drive for success Well respected by clients for the core values of honesty and integrity
Opposite page: Mark Kirkham, CEO of Lifestyle Insurance
Why take the chance with a lawsuit that could financially cripple your company? We now live in a World with ever increasing demands being placed upon the services that we offer, and mistakes are not easily forgiven. Place this against a backdrop of a tightening regulatory and contractual framework that we all work within, and the risks are clear. No professional is safe without the right PI insurance to protect them from civil liability as well as financial and reputational loss. Can you afford not to be covered? Case Study Let’s take an example of the Interior Designer who accepted a contract for the design and fit-out of a boutique hotel. The configuration of the lift and lobby area did not meet the original project specifications in that there was not sufficient room within the concierge and reception area. This resulted in additional costs, materials and time delays to the project, all of which the Interior Designer was held liable for.
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LINDT & SPRÜNGLI (ASIA-PACIFIC) LTD
LINDT: EVERYDAY CHOCOLATE LUXURY FOR 175 YEARS
hen it comes to chocolate, nobody does it better than Lindt. Lindt is a global leader in the premium chocolate industry, having almost 175 years of history in delighting chocolate lovers around the world with its masterful chocolate creations. Lindt originated from Zurich, Switzerland, which is home to most of the iconic chocolate brands and companies in the world. Swiss heritage Lindt’s Swiss heritage remains strong throughout the centuries, particularly when it comes to perfecting its conching techniques. It was Rudolph Lindt who invented the conche machine back in 1879 in Switzerland, which produced the first melting, velvety smooth chocolate piece in the world. Currently, Lindt has 26 subsidiaries around the world, and 12 production plants based in Switzerland, Europe and the United States. It boasts more than 460 branded stores worldwide, which give chocolate lovers access to what the company describes as “everyday chocolate luxury.” As a multinational company, Lindt generates half of its overall sales in Europe, and about 40% of its overall sales in the United States. In Asia-Pacific, the Hong Kong office looks after the company’s sales in 12 markets across the region. The presence of Lindt has been growing robustly in the region, thanks to the successful
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collaboration with local distributors, and the appeal of Lindt as a global brand especially during festive seasons. “The success of Lindt is founded on the combination of tradition and innovation. With a continuous flow of innovative chocolate recipes being invented by Master Chocolatiers based in Switzerland, Europe, and the United States, Lindt is able to delight the people of Hong Kong with a few new flavours every year,” said David Leuenberger, Regional Director, Asia-Pacific, at Lindt. From Bean to Bar “The combination of tradition and innovation is what set us apart from our competitors. Lindt is committed to producing and delivering high quality chocolate that is exclusively manufactured in Switzerland, Europe and the US,” said Leuenberger. “We are also committed to creating a consistent taste profile that is immediately recognisable by our customers.” Another advantage that Lindt has over its competitors, he said, is the company’s control over the production and distribution process. This ensures the highest quality in every single step from harvesting, manufacturing, to delivering Lindt chocolates to every customer around the world. “Lindt has full control over the entire process of chocolate-making, from cocoa bean selection, cocoa mass production, and all the way to crafting the chocolate into perfect shapes. This is what we call ‘the Lindt difference’.”
PREMIUM CHOCOLATIER FAST FACTS • 12 own production sites in Switzerland, Europe and the USA • 26 subsidiary companies, 460 own stores, more than 100 independent distributors around the globe • 14,500 employees • Global sales of CHF 4.3 billion in 2018 • Visit at www.chocolate.lindt.com
This page: Lindor products (Topright); Lindt’s Outdoor Ad (Bottom) Opposite page: Lindt’s Excellence Collection Last year, the company was able to bring the first Asia-inspired Lindor recipe, Lindor Matcha, to the Hong Kong market. The Lindor Matcha is made of a delicate white chocolate shell, which contains an aromatic, irresistibly smooth matcha filling made with real matcha powder. It is a fine example of how Lindt takes culture, local ingredients, and domestic market preferences into its innovation process. There is little wonder why Lindt is so fondly loved by so many in each of the markets it serves. A taste for Hong Kong Besides its ability to innovate, the long-standing presence of Lindt’s “hero products”, such as the iconically shaped Lindor Cornets or the thinly shaped dark Excellence tablets, also contribute to its success. These products are highly distinguishable in the market, having been recognised by customers year after year. They have subsequently become iconic chocolate products for festive seasons. The Lindor gift boxes, for example, could reach hundreds of thousands of sales during Chinese New Year.
“Hong Kong is the most established market for Lindt within the Asia-Pacific region, where we have been present for over 60 years. We have achieved a widespread distribution in supermarkets and department stores, where we have a whole range of Lindt products distributed all year round. We also have an increasingly prominent in-store visibility during festive seasons, thanks to our globally famous Lindor pralines range,” said Leuenberger. Giulia Muzzin Scevola, Marketing Director, Asia-Pacific at Lindt, said the company had made significant investments in advertising, including TV, digital, and outdoor displays. ‘We aim to paint the city in red with Lindor from Christmas to Chinese New Year,” said Muzzin Scevola. “We invite everyone to enjoy a moment of sweet indulgence with our signature smooth melting chocolate offere by Lindor pralines. Lindt Excellence, on the other hand, offers an amazing journey of dark chocolate sensations through various degrees of cocoa content from 47% to 99%, all crafted in Lindt’s iconic thin shape to bring you the perfect chocolate experience.”
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USING RPA BOTS IN AUTOMATING BUSINESS PROCESSES
eports from consultants and analysts have suggested that up to half of robotic process automation (RPA) projects have failed. There are three reasons for this. One, many companies find themselves accelerating bad processes by going right for deployment without studying and understanding the processes they wish to automate. Two, many companies use RPA for problems that are best addressed with a different kind of automation technology. Third, RPA bots can easily fail when the user interface (UI) changes, which will require someone to reconfigure and relaunch it so it can run again. This is why workflow management solution provider Nintex recommends companies use RPA for repetitive processes that come out the same way every time, without deviation, without the need for any human support or interaction. This kind of process is particularly common in finance, accounting, procurement, customer service, call centres and HR fields. It is especially effective at logging into applications, opening e-mail and attachments, moving files and folders, reading/writing to databases, scraping data from the web, making calculations, collecting social media statistics, and more. “It works by mimicking human keystrokes and mouse clicks. Think of someone in a bank or insurance company, copying data from a field on one screen and pasting it into a field on the other screen. Or transferring information from a paper form into an app
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on a screen,” according to Eric Johnson, Nintex CEO. For instance, Johnson Financial Group, one of Nintex’s customers, was able to save up as much as 95% in man-hours after using just RPA’s scripting ability to process data on mortgage loans. Easy to use Nintex RPA in particular stands out in its ease of use. Many RPA offerings tend to require developers to have its often-backlogged IT department to write the code, which makes them harder to give much of a priority. On the other hand, Nintex RPA does not require this at all—business analysts can even deploy it themselves. “And it delivers results quickly—in hours or days, rather than the weeks or months required by other types of solutions,” Johnson said. On top of that, whereas other vendors tended to price their solutions based on the number of bots and encourage their customers to use many, Nintex instead prices theirs based on the number of processes the customers needed to automate. The company emphasises that RPA, for the reasons mentioned earlier, is not always the right choice for every automation need. “Many processes have several components, each calling for a different type of automation, that can be stitched together in an end-to-end solution. But vendors that sell only one type of automation solution tend to pitch their offerings as universal—
ENTERPRISE SOFTWARE PHILOSOPHY
As the global standard in process management and automation, Nintex improves the way people work by offering the most comprehensive end-to-end platform available today.
More than 8,000 industry leaders and innovators in both public and private sectors across 90 countries rely on the Nintex Process Platform to accelerate their digital transformation journeys by quickly and easily managing, automating and optimizing business processes. Nintex is the fastest way to build sophisticated apps, has the lowest cost of ownership, and has the highest overall customer satisfaction in the industry. With Nintex, customers can identify the processes best suited for or in need of automation and get started with clicks, not code. Nintex was recognized as a leader and ranked highest for strategy, among all 10 vendors evaluated in The Forrester Wave™: Digital Process Automation for Wide Deployments, Q1 2019.
Opposite page: Nintex CEO, Eric Johnson, sharing the organisation’s mission to transform the way people work, at Nintex ProcessFest 2019 when your only solution is a hammer, you describe every problem as a nail,” Johnson said. This is why Nintex offers a full suite of automation technologies. This year alone, besides RPA, Nintex has rolled out the Adobe Sign-powered e-signature capability Nintex Sign, Nintex Workflow Generator, and an expansion in Europe through its European Union data centre. “Nintex provides a complete suite of automation technologies so the customer can make good decisions not just about what to automate but also about how to automate,” Johnson added. ‘Manage, automate, optimise’ But how would one choose which type of automation to apply? Nintex suggests an approach that can be summarised as “manage, automate, optimise.” Firstly, customers should map and document their processes — this would allow them to discover which ones needed to be improved before doing the actual automation. This would also help them figure out which type of automation is the best one to use. It could be RPA. For processes that require collaboration, judgement and decisions, workflow automation might be best. For generating complex documents, it could be document automation. For reducing data-entry errors whilst saving time in the process, digital forms could work. For easy and portable access and sharing of information on any device, mobile apps are great.
According to Johnson, it’s often a combination of these solutions. Many of Nintex’s customers have automated thousands of processes, with a large government entity automating as many as 120,000 different processes. After applying the right type of technology, they can check to see where, how often and how efficiently their processes are running, and if they run into any bottlenecks or breakdowns, so that they can figure out how to streamline them. “When you do all three— manage, automate, optimise—you can continuously improve your processes. And if your automation platform is easy to use, you can drive ‘viral adoption’ across the enterprise,” Johnson said. For 2020, Nintex is planning to steadily enhance new features across the board, and will particularly focus on artificial intelligence. They will be using advanced image analytics and cognitive services to recognise data in paper form and instantly produce digital versions of them, solving the problem of digitising millions of paper forms. They are also planning to upgrade their natural language processing solutions to create workflows from verbal descriptions, by adding a capability to do this through speaking into a recorder. They’re aiming to do the reverse, too, where it can enable the instant creation of process maps from automated workflows. “Enterprises worldwide are discovering the importance and power of process automation—we think there has never been a better time to be in the automation business,” Johnson added.
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OZO WESLEY HONG KONG
OZO WESLEY’S WINNING FORMULA: THE BASICS DONE RIGHT
ractical yet stylish, they say, accurately defines OZO Wesley Hong Kong, which has won the Best Corporate Accommodation award at the Hong Kong High Flyers 2019. The brand highlights the property’s goal to provide comfort, connectivity, and inspiration for business and leisure travellers who are keen to discover the most interesting characteristics of their destination. Jay Wong, Director of Operations – Hong Kong at ONYX Hospitality Group, OZO’s parent firm, says that the company caters to business clients’ needs by offering excellent meeting facilities, rooms that ensure restful sleep, as well as an energising buffet-style breakfast and a refreshing drink that invigorates the mornings. Strategically located in the area between Admiralty and Wanchai, OZO Wesley provides accessibility to the Hong Kong Convention and Exhibition Centre, numerous corporate offices, and entertainment and retail establishments. The simplicity of the property appeals to value-conscious clients who prefer prime locations, quality rooms, nourishing food, and a fast internet connection but do not need luxurious amenities such as a business centre and a swimming pool. These conditions, according to Ms Wong, are encapsulated in a straightforward formula: “the basics done right.” Uniquely Asian hospitality ONYX Hospitality Group is a Thailand-based multi-brand company
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with more than 50 years of experience in operating some of the most successful hotels and welcoming various categories of guests from the Asia-Pacific region. OZO is the midscale brand that ONYX has maintained along with the upscale, full-service Amari brand and the Shama serviced apartments. The minimalist philosophy of OZO is manifested in its emphasis on the guests’ comfort, well-being, and an overall positive experience. Recognising that corporate clients value their time and want more control over their activities, the property simplifies the check-in process through a fast, paperless method using a touchscreen at the Spot reception counter. Staff are always around to respond to guests’ requests, and the vocal local team members can even provide advice on must-see cultural sites and activities to do in Hong Kong. Furthermore, the property has a Snooze Zone with four types of guestrooms: Sleep, Dream, Dreamspace, and OZO Suite. A total of 251 intuitively designed rooms and suites are equipped with the most comfortable beddings. To ensure that guests can fulfil their work requirements during their stay, the rooms have flexible workspaces with height-adjustable desks, an ergonomic IPTV system mounted on the wall, and a multimedia panel with built-in connectors. Complimentary access to high-speed Wi-Fi is available in all parts of the property. In addition, OZO Wesley has a fitness room called Tone, where guests can perform their exercise routines at their
BEST CORPORATE ACCOMMODATION PHILOSOPHY
The OZO philosophy is all about delivering restful nights, energising mornings and the tools to offer guests a quality experience without all the fuss. Practical yet stylish, OZO exceeds expectations by offering value and comfort for travellers looking for insider experiences. With Sleep.Connect.Explore as the brand hallmarks, OZO is committed to offering an enhanced sleep experience and seamless connectivity for travellers who are keen to embark on a deeper exploration of the destination.
ONYX Hospitality Group introduced the OZO brand in 2010, a mid-scale hotel experience created for those who crave the basics done right, with OZO Wesley Hong Kong being the first OZO property opened in 2013.
OZO Wesley’s Snooze Zone incorporates 251 guestrooms and suites with superb bedding and intuitively designed rooms, giving guests just what they need for the perfect night’s sleep. The property also features Tone the fitness room, Spot the reception counter, Zaan the breakfast outlet and Talk the multifunctional meeting space.
This page: OZO Wesley Hong Kong exterior, sleep room (twin), tone fitness centre, and meeting room setup Opposite page: OZO Wesley’s The Spot preferred time. Also available is a well-lit multifunctional meeting space, Talk, which has a complete audio-visual system. The space can accommodate a minimum of 12 people in a boardroom setting and as many as 100 guests for a cocktail reception. Excellent service and the path to expansion Although OZO Wesley’s sales team aims to attract a large number of new guests, its primary objective is to bring in repeat guests through excellent customer service. The company is committed to forming long-term relationships with customers and relies on the impact of guests’ positive feedback about products and services. Expressing care for guests and solving their problems are part of the staff’s daily duties, as well as keeping up with knowledge about the latest trends in technology and digital communication. Customer complaints
are also considered as opportunities for improvement. Due to this constant dedication, the company is assured that around 70%-80% of guests intend to return to the property. All employees undergo the necessary service training and empowerment so that they can grow with the company as they internalise their role in the organisation’s success. The management intends to continue delivering the highest standard of service by maintaining its qualified, experienced workforce and remaining focused on the needs of customers. As a gateway to Hong Kong’s vibrant culture and economy, OZO Wesley is an establishment where global nomads are meant to feel at home. In addition to it, other OZO properties in ONYX’s portfolio include those in Koh Samui and Phuket in Thailand and in Kandy and Colombo in Sri Lanka. Properties in Pattaya, Penang, and the Maldives are also being prepared for opening in the coming year, which will add over 1,500 rooms to the OZO network.
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EMPOWERING A NEW GENERATION OF DIGITALLY SAVVY CONSUMERS
rimeCredit has designed a top-of-the-line finance app, a virtual card and other consumer credit services that appeal to young consumers and educate them on how to jump on the right opportunities, with a convenient, hassle-free digitalised customer experience.
Mun Roads When PrimeCredit was initially formed, the company had a vision of enabling young people to participate in the wealth of opportunities in the investing world in a responsible way. These young people aged 18 to 25, many of whom were aggressive and were ready to take investing risks, needed the right kind of finance apps and services to support them, which is where PrimeCredit has focused its efforts in the past few years. The company most recently rolled out Mun Roads, ranked as one of the top finance apps in the App Store and Google Play Store since launching in March, according to SimilarWeb, that provides useful information and knowledge on how to earn money. The app has become popular and easy-to-use amongst the younger consumer market in terms of providing information about different ways to earn money, with plenty of support features to address the queries of investors, including invited expert speakers who can share their investing knowledge and answer real-time Live Chat questions from
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app users. Financial and business advice can be tough to come by, especially for younger users who may not have the established network nor the services of a wealth advisor. This led the company to invite regular speakers on the Mun Roads app, where they share their tips on investing and building start-up business, and interact with viewers through a live question-and-answer show format. Features in the app facilitate interaction, where users get to meet other like-minded young investors, and even form communities while progressing towards their short- and long-term personal goals. Mun Roads and many other PrimeCredit products and services fill a palpable need for financial investing advice and capital fundraising for consumers who may not be traditionally accommodated by large banks and financial institutions. According to a PrimeCredit survey, 94% of respondents have an investment or will invest if they have capital, although most of them lack knowledge in investing and do not have enough capital to jump on an investing opportunity even if it presents itself. Mun Roads provides an instant and hassle-free source of capital to younger investors, said Susanna Liew, CEO of PrimeCredit, citing how the company, as a responsible lender providing available, affordable and accessible financing services, waives traditionally restrictive loan requirements such as income and residential proofs.
OUTSTANDING FINANCE COMPANY PHILOSOPHY
With over 40 years experiences in offering financial products and services, PrimeCredit is committed to providing high-quality customer service, professional consultation and tailor-made solutions. Whilst ensuring all their staff are well trained with a high standard of product knowledge, PrimeCredit also emphasizes its understanding of what the customers feel, think and wish, in order to provide them with a comprehensive range of all-round, customer-centric and value-added services.
• PrimeCredit Limited is a leading finance company in Hong Kong established in 1977 focusing on Personal Loan and Credit Card services. • In August 2004, Standard Chartered PLC acquired PrimeCredit, and PrimeCredit became a wholly-owned subsidiary of Standard Chartered Bank (Hong Kong) Limited. • In May 2015, PrimeCredit was acquired by PrimeCredit Holdings Limited which is a consortium formed by a collaboration of China Travel Financial Holdings Company Limited, Pepper Australia Pty Limited and York Capital Management Global Advisors, LLC.
This page: Virtual Card and Munroads Mobile App Opposite page: Susanna Liew, PrimeCredit’s Chief Executive Officer With the scaled-down approval process by leveraging advanced technology as well as the online channels for application, loans are generally quicker to be approved and disbursed. To suit the preferences of the younger generation, the loan proceeds can be withdrawn round-the-clock through FPS, users are accorded a first month interest rebate, and there is no imposition of annual, transaction or overlimit fees. WeWa Virtual Card In the same vein, PrimeCredit earlier this March introduced the WeWa Virtual Card, which has been tailor-made for online shopping, a popular and fast-growing activity amongst younger consumers. The WeWa card functions almost identically as a physical card, with the advantage of becoming instantly available to use upon approval. Liew said that during the application for a WeWa Virtual Card, potential cardholders would undergo an electronic Know Your Customer or eKYC procedure. PrimeCredit’s system has digitalised most of the steps in the card application and enabled users to complete them via their mobile phones instead of visiting a physical branch, including capturing and confirming the identity using facial recognition. “Once approved, card information such as card number, expiry date and security code or CVV will be instantly available at the OmyCard mobile app. With these information, cardholders can start shopping online and at retail stores immediately without waiting for several days to receive the physical card,” said Liew.
One of the key drivers for WeWa Virtual Card’s popularity after its launch is a limited time welcome offer campaign that has been effective in attracting the right kind of cardholders, reckoned Liew. When a customer searches for flight deals on an online travel site, for example, a banner message appears along the lines of “Enjoy HK$400 off your ticket fare by applying WeWa Virtual Card.” After the customer clicks on the banner and successfully applies for WeWa Virtual Card, both the card and the HK$400 discount welcome offer, sent in the form of a promo code, are instantly made available at the OmyCard mobile app. The often-delighted customer then proceeds to use the discount to purchase a flight ticket, with a bonus 4% cash rebate on their travel purchases when using their newly approved virtual card. “The marketing strategy of WeWa Virtual Card is all about relevancy – delivering the right message to the right person at the right time,” said Liew. “It means our target audience might discover something they are interested that lead to higher click-through rate and more conversions.” Currently, WeWa Virtual Card can be applied via selected merchant websites such as Hutchgo.com, ZALORA, VIVELAND HK VR and Travelliker.
Warning: You have to repay your loans. Don’t pay any intermediaries. Complaint Hotline: 2111 2999 Money Lender’s Licence Number: 383/2019
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STANDARD CHARTERED’S CUTTING-EDGE DIGITAL PLATFORM
tandard Chartered is transforming Hong Kong’s retail banking landscape with its trailblazing digital offerings. From cardless cash withdrawal to a fully mobile account opening, Standard Chartered is turning retail banking into a seamless and personalised experience. “As part of our digital transformation journey, we have introduced new digital capabilities or enhanced our existing capabilities to strengthen our proposition and offer a seamless digital experience for our clients, responding to their evolving digital needs,” notes Vicky Kong, Head of Retail Banking, Hong Kong at Standard Chartered Bank. “As we enter the age of digital banking, consumers in Hong Kong are getting increasingly digitally savvy and the current retail landscape is being disrupted by the entrants of innovative FinTechs and virtual banks,” Kong adds. “Customer experience is the core of every bank’s winning strategy and for SCB, we have raised the bar by providing exemplary services via offering omni-channel customer experiences.” Top-of-the-line services Among the various digital initiatives which the bank has launched this year is QR Cash, a cardless cash withdrawal service. With QR Cash, customers can pre-set cash withdrawal instructions via SC Mobile on their smartphones, then go to any of the SC Automatic
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Teller Machines (ATM) in Hong Kong, scan the QR code and get cash instantly without using any card. Standard Chartered is the first in the market to roll out QR Cash capability in 2019. In addition to this, the bank has also rolled out new features on SC Mobile, including the artificial intelligence-powered 24/7 virtual assistant Stacy, SC Pay for Faster Payment System, online account opening, Mobile FX, insurance and unit trust. “We have enriched SC Mobile with a suite of new functions, including SC Pay via Faster Payment System (FPS), Mobile account opening service, Mobile FX and Mobile Insurance services. With the addition of Standard Chartered’s Virtual Assistant Stacy, we have truly made personal banking simpler, faster and with a human touch around the clock,” Kong says. With SC Pay, clients can enjoy the convenience of real-time inter-bank and person-to-person (P2P) transfers via the Faster Payment System (FPS). Through this service, clients can send money instantly for free in HKD or RMB for up to HKD10,000 or equivalent daily using SC Mobile. Meanwhile, with mobile account opening, the bank has digitised the process of identity verification—clients can complete their bank account applications just by scanning their HKIDs and taking a selfie for facial recognition. As a result, a bank account can be opened without having to go to a physical branch. Application can be completed in 8 minutes. The virtual assistant Stacy is also available to answer
RETAIL BANKING PHILOSOPHY
Our purpose is to drive commerce and prosperity through our unique diversity. Our heritage and values are expressed in our brand promise, Here for good.
• The history of Standard Chartered in Hong Kong dates to 1859. It is currently one of the longest-standing Hong Kong SAR’s three note-issuing banks. Standard Chartered incorporated its Hong Kong business on 1 July 2004, and now operates as a licensed bank in Hong Kong under the name of Standard Chartered Bank (Hong Kong) Limited, a wholly owned subsidiary of Standard Chartered PLC.
This page: SC Mobile and QR Cash (ATM) Opposite page: Vicky Kong, Head of Retail Banking, Hong Kong banking questions 24/7, such as what to do if a client lose their credit card. “The enhanced SC Mobile was designed to help customers set up their bank account in a fast and simple way without having to visit a physical branch. To drive digital adoption and usage, we have also enabled e-Statements via our mobile platform to make it easy and more convenient for our clients. As such, we have seen a doubledigit jump in our digital active client base,” Kong says. Building a culture of innovation Standard Chartered is also fostering digital innovation among its staff and employees. In October, the bank launched its second eXellerator innovation lab to inculcate an innovative culture across the Bank and to engage the fintech ecosystem to develop innovative solutions that meet the evolving banking needs of clients. “The eXellerator is a collaborative space built for nurturing innovative ideas and to ideate with our customers. This has led to many proof-of-concepts created across internal teams within the bank, lunch and learn sessions and fintech talks held in the eXellerator,” Kong explains. “The eXellerator is also a space to test, learn and brainstorm with our customers while we encourage our colleagues to learn their own transformation and engage with the fintech community.” The new eXellerator reflects Hong Kong’s status as Standard Chartered’s largest retail market. Hong Kong is also home to a vibrant ecosystem for technology and innovation. “Leveraging on
our significant market presence in Hong Kong, we kept our focus on growing our affluent business, constantly enhancing our customer value proposition and upgrading our product offerings to meet the evolving needs of our customers,” Kong says. With its central location, the new eXellerator will be a focal point for engagement with the stakeholders of the Hong Kong fintech ecosystem, including regulators, government-backed organisations, business partners, clients and technology companies. At the same time, the eXellerator in Kwun Tong, which opened in 2018, will be focused on developing solutions and tackling client pain points for the Retail Banking business. The bank is also committed to meeting clients’ needs by leveraging on data analytics. “In this age of data culture, it has also been increasingly pertinent for us to focus on better leveraging on our data to better service our clients and manage risk. As such, we continue to enhance our analytics capabilities, leveraging on big data and sending personalized communications via event triggers based on customer behaviour and patterns. We remain focused and committed on providing personalised solutions for the affluent and the emerging affluent clients,” Kong says. “We will continue to focus on delivering best-in-class omnichannel experiences seamless across our physical network of more than 70 branches and digital channels. Whilst we endeavour to deliver a fast and efficient digital experience, our clients in Hong Kong still value human interaction. As such we will also invest and enhance our physical and face-to-face channels,” Kong says.
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THOMAS, MAYER & ASSOCIÉS
BRINGING FRENCH LEGAL EXPERTISE TO HONG KONG
stablished in 1995, Thomas, Mayer & Associés (TMA) is the largest French law firm in Asia. With a diverse group of lawyers specialising in various fields of law, TMA has built its reputation by providing tailor-made solutions to corporate clients seeking to expand their operations in China and the greater AsiaPacific region. TMA specialises in commercial transactions between Europe and Asia. It focuses on the economic migration of companies from Europe to South-East Asia, particularly China, and from SouthEast Asia to Europe, particularly France. Its practice areas include international business law, mergers and acquisitions and joint ventures, corporate and commercial law, international tax law, international arbitration and litigation, private international law, and immigration law. “The legal landscape of Hong Kong has always been that of an international financial centre, i.e., a place with an enormous amount of transactions which need to be legally structured and often require complex legal documentation. Our firm has always been involved in advising clients in the field of their international operations in the region,” explains Eric-Jean Thomas, Senior Partner at TMA. Tailor-made solutions The firm’s presence in the region spans 25 years, allowing it to build
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up an enviable and efficient network across Hong Kong, China, and the Asia Pacific Region. TMA’s knowledge of these cultural, economic and legal environments makes it the go-to law firm for companies seeking to do business in China. Further, in September 2010, TMA Hong Kong opened a French subsidiary in Paris: the SELARL Thomas, Mayer & Associés Paris, registered with the Paris Bar Association. TMA’s clients seek the firm’s legal advice as soon as their projects begin, even before they expand to the Asia-Pacific region. TMA Hong Kong then assists their clients once their projects are implemented in Asia. “We have put in place a whole chain of operations for our clients. Typically, when a company wants to penetrate, for instance, the Chinese market, it must first set up a limited company in Hong Kong and, in the second place incorporate a Wholly Foreign Owned Enterprise (WFOE) in China,” Thomas illustrates. With over a quarter of a century of experience, TMA provides its clients with the opportunity to carry out their investment projects based on its in-depth knowledge of the economic and legal environments of China, Hong Kong and the greater Asia-Pacific Region. “Such an operation covers company law, tax law, investment law, immigration law, employment law, etc. in Hong Kong and China. Because we have been working in Asia for 25 years and have built
LAW FIRM PHILOSOPHY
The firm focuses on making a valuable contribution to the progress of its clients’ business in a complex international environment.
The practice was established in Hong Kong 25 years ago and employs 30 staff.
Practice areas: International business law, mergers and acquisitions, joint ventures, company and commercial law, international tax law, international arbitration, private international law, and immigration law.
TMA has offices both in Hong Kong and in Paris, and all its lawyers are members of the Paris Bar. In addition, lawyers practicing in Hong Kong are registered with the Law Society of Hong Kong.
This page: TMA meeting room with the partners up an excellent network around our firm, we can provide all these services to our clients,” he adds. The firm’s roster of clients range from mid-sized companies to major groups doing business in an international environment. The firm’s diverse set of clients illustrates TMA’s dedication to providing tailor-fit solutions suited for each of its clients’ needs. The firm develops long-term relationships with its clients built on mutual trust and adapts its services according to the size of the client’s prospects. By taking into account the size of the company and its resources, TMA optimises its services and achieves the objectives set out by its clients. An international edge TMA’s diverse team of lawyers is composed of 30 individuals led by Senior Partner Eric-Jean Thomas and Managing Partner Eric Mayer. “We are very selective when we choose our lawyers,” explains Thomas. “In principle, they have an advanced university degree in an appropriate discipline from an Anglo-American university, plus at least one internship in an English speaking country. Several of them have studied in China or Hong Kong and speak Chinese.” TMA’s lawyers speak several languages, with most speaking French as a mother language. All of TMA’s lawyers are members of the Paris Bar, and those in Hong Kong are also registered with the Law Society. They are knowledgeable about common law, civil law,
and the Chinese economic and cultural landscape. “All this is their edge over other lawyers. In fact, this is all about our cultural and technical edge. TMA has been successful over the years precisely owing to this multicultural dimension and, of course, its know-how in the field of international business law,” Thomas says. In addition to its lawyers, TMA has an experienced company secretarial service, and its total headcount in Hong Kong currently includes 30 employees in total. “Frankly, the first years were a little complicated as we had to go through the setting up of our organisation,” Thomas shares. “But, just like Hong Kong, we proved to be resilient, here we are now with the present situation and our indefectible belief that, once again, Hong Kong will go through the storm and carry on!” he notes. Thomas adds that despite the prevailing uncertainty in the territory, foreign direct investment (FDI) from Hong Kong to China had nonetheless increased by more than 8% from January to September 2019. Moreover, investments from Hong Kong to China still account for over two-thirds of China’s overall FDI inflows. TMA is an active member of Euro-American Lawyers Group (EALG), an association of law firms which comprises more than 400 lawyers, working in 22 countries. It also maintains a working relationship with various other solicitor firms which allows it to provide its clients with a wide range of legal services including corporate and litigation.
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VASTCOM TECHNOLOGY LIMITED
VASTCOM CONTINUES TO MAKE WAVES IN MACAU
astcom Technology Limited (Vastcom) once again snatched the IT Solutions Company Awards for the second year running by demonstrating a visionary approach to information technology (IT) and robust business performance. Established in Macau since 2014, Vastcom strives to deliver excellent IT solutions to an impressive roster of integrated resort and hospitality clients under its belt. It offers a comprehensive range of IT services end point solution (Internet Protocol television, digital signage, table touch screen etc.), maintenance, IT consulting and manpower outsourcing. With its unparalleled IT knowledge and a keen eye for technological trends, Vastcom is behind some of the world’s biggest casino names including Sands, MGM and Wynn, to name but a few. The latest additions are Parisian, MGM Cotai and Wynn Palace, adding some MOP90 million in revenue between 2016 and 2018. This year marks another milestone for the firm, as it taps into the growing demand for cybersecurity services in the gaming industry. This approach comes at a time when big data is beginning to gain a foothold in the field. The next frontier “Macau is a pioneer in gambling technology,” states Victor Ieong, general manager at Vastcom. “The industry is now betting big on
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the mass market as the VIP and casino junket market in Macau continues to shrink.” In light of this, he says casino operators are adopting cloud computing and artificial intelligence to collect customer data, such as their preferred games or spending habits, in order for operators to provide more personalised features for guests and to create targeted marketing. “Cybersecurity is the next big thing in the area,” Ieong added. Since the beginning of 2019, the firm has teamed up with tech giants such as Automation Anywhere, IBM, Tableau and Ensign to offer not only cybersecurity but also Robotic Process Automation (RPA) solution and big data analytic services to casinos. The company has also expanded its cybersecurity footprint to non-gaming sectors, including urban infrastructure, as the city embarks on an aggressive infrastructure-building spree. The firm secured in the beginning of this year a MOP18 million data centre project for the city’s urban rail transit. “We have established a strong reputation in Macau on cybersecurity,” says the IT veteran, noting that “with local insights and specific skill sets, we edged out strong global rivals and earned the client’s trust.” As part of the tender, the company has joined hands with Japanese IT service provider Fujitsu to offer onsite staffing to handle day-to-day IT operations for the transit. Cybersecurity
IT SOLUTIONS COMPANY PHILOSOPHY
Skills and experience help deliver business value and drive business success.
Established in 2014 in Macau, Vastcom offers a comprehensive range of IT services including end point solution, maintenance, IT consulting and manpower outsourcing to a wide selection of casinos in town.
2019 marks the year the company expands its solutions to cybersecurity and Robotic Process Automation (RPA), and extends its service scope to finance, government and higher education sectors for the first time.
This page: General Manager Victor Ieong with Vastcom’s team of engineers (Top); Victor Ieong sharing some of the awards and recognition (Bottom) Opposite page: Victor Ieong, General Manager of Vastcom Technology Limited products now make up 30% of the company’s revenue. Along with other big wins mainly from casinos, the firm doubled its annual revenue to about MOP200 million this year.
Employees at Vastcom are given opportunities to hone their crafts via trainings and workshops in neighbouring countries, including Singapore.
Global vision, local insight To keep up with the growth, the company has increased its headcount to 50 people, some of them from outside town. “Due to local talent shortage, we’ve been recruiting talents from Hong Kong, China and the Philippines,” notes Ieong, adding that the city is facing a deficiency of skilled manpower in the IT field as the government reins in foreign employment. But the firm is well prepared. “Hiring foreign workers for casinos has a cycle of three to six months. But since we have a handful of work permits ready for foreign talents, we can hire staff within a week,” he says. Over the past year the firm has brought onboard a number of engineers from China and sales talents from Hong Kong. Ieong believes a diverse workforce can bring new perspectives and ideas to the table, which would help boost creativity and bolster problemsolving skills. But there’s a flip side. Managing a sizeable team with diverse cultural backgrounds is challenging, he admits. “More work needs to be done to sync up our cross-border team and to foster productivity.” Cultivating talents is equally importance, Ieong stressed.
Going digital To maximise business efficiency and productivity, the team has taken up a digital-first approach to its operation, using the Enterprise Resource Planning (ERP) cloud solution by Oracle. “We adopted the ERP solution to standardise operation process and to optimise financial management efficiency,” he says. Looking ahead, Vastcom is set to automate some of its back-end operations with the Robotic Process Automation (RPA) software programme. “We plan to implement RPA to optimise our routine manual work in order to increase staff efficiency,” notes Ieong. An RPA system is designed to automate mundane rule-based processes usually performed by humans. Consulting firm McKinsey suggests that automating physical clerical tasks through RPA could lead to an attractive Return on Investment of up to 200% in the first year. “The implementation of the RPA system is expected to reduce up to 30% of admin resources,” Ieong says. Five years into operation, the firm is steadfast in the quest to shake up digital infrastructure for both private and public sector entities. “We believe that establishing enjoyable long-term relationships with clients, vendors and employees is the best way to move our clients and the company towards success.”
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COMPANIES AND INDUSTRIES Fintech and insurtech continue to shape Hong Kong’s finance sector
China’s infra push a boon for construction industry
Mainland firms snap up most accounting exports
Dispute resolution buoys Hong Kong’s legal sector
Government bolsters sustainability tech efforts
High costs prompt biotech firms to relocate production to China
MNCs lead electronics manufacturing
Startups drive Hong Kong’s tech innovation push
Air cargo services lead Hong Kong’s logistics
Local designers build on rising demand in China
Spectacles and goggles take up most exports
Film industry rides on foreign recognition
Mainland competition hits local toy firms’ profits
Specialty cosmetic chains take the lead
F&B firms set up factories outside Hong Kong
Foreign brands dominate sporting goods scene
E-commerce boosts houseware sales
Printing firms rev up tech as foreign demand grows
HONG KONG’S HIGH FLYERS Outstanding Enterprises 2019 60 Standard Chartered Bank
82 Lindt & Sprüngli (Asia-Pacific) Ltd
64 Archikris Design Group
66 Concord Medical Limited
86 OZO Wesley Hong Kong
68 Elite Concepts Ltd
88 PrimeCredit Limited
70 FTLife Insurance Company Limited
90 Standard Chartered Bank
72 Hang Seng Bank Limited
92 Thomas, Mayer & Associés
74 Headwin Logistics
94 Vastcom Technology Limited
76 HKBN Enterprise Solutions Limited 78 Hyatt Regency Hong Kong, Tsim Sha Tsui 80 Lifestyle Insurance
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